Stock Code: 2628
Annual Report 2017
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Contents
Prelude
Chairman’s Statement
Management Discussion and Analysis
Embedded Value
Significant Events
Corporate Governance
Other Information
Financial Report
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11
19
44
52
70
135
142
Prelude
Definitions and Material Risk Alert
Company Profile
Core Competitiveness
Business Highlights
Financial Summary
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5
7
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Definitions and Material Risk Alert
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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 business and risks
relating to investments and profitability. 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”.
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Except for “the Company” referred to in the Consolidated Financial Statements.
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China Life Insurance Company Limited Annual Report 2017
Company Profile
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 2017, the Company had approximately 268 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.
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I. BASIC INFORMATION
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
Registered Office Address
16 Financial Street, Xicheng District, Beijing, P.R. China
Postal Code
100033
Current Office Address
16 Financial Street, Xicheng District, Beijing, P.R. China
Postal Code
Telephone
Fax
Website
Email
100033
86-10-63633333
86-10-66575722
www.e-chinalife.com
ir@e-chinalife.com
Hong Kong Office Address
16/F, Tower A, China Life Centre, One Harbour Gate, 18 Hung Luen Road,
Hung Hom, Kowloon, Hong Kong
Telephone
Fax
Name
Office Address
Telephone
Fax
Email
852-29192628
852-29192638
II. CONTACT INFORMATION
Board Secretary
Li Mingguang
Securities Representative
Li Yinghui
16 Financial Street, Xicheng District,
Beijing, P.R. China
16 Financial Street, Xicheng District,
Beijing, P.R. China
86-10-63631241
86-10-66575112
ir@e-chinalife.com
86-10-63631191
86-10-66575112
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
China Life Insurance Company Limited Annual Report 2017
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III. INFORMATION DISCLOSURE AND PLACE FOR OBTAINING THE REPORT
Media for the Company’s
A Share Disclosure
CSRC’s Designated
Website for the Company’s
Annual Report Disclosure
China Securities Journal, Shanghai Securities News, Securities Times
www.sse.com.cn
The Company’s H Share
Disclosure Websites
HKExnews website of Hong Kong Exchanges and Clearing Limited 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 Type
A Share
H Share
ADR
IV. STOCK INFORMATION
Exchanges on which the
Stocks are Listed
Stock Short Name
Stock Code
Shanghai Stock Exchange
China Life
601628
The Stock Exchange of
Hong Kong Limited
New York Stock
Exchange
China Life
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V. OTHER RELEVANT INFORMATION
2628
LFC
H Share Registrar and
Transfer Office
Computershare Hong Kong
Investor Services Limited
Address: Shops 1712-1716, 17th Floor, Hopewell
Centre, 183 Queen’s Road East, Wanchai, Hong
Kong
Depositary of ADR
Deutsche Bank
Address: 60 Wall Street, New York, NY 10005
Domestic Legal Adviser
King & Wood Mallesons
International Legal Advisers
Latham & Watkins
Debevoise & Plimpton LLP
Domestic Auditor
International Auditor
Ernst & Young Hua Ming LLP
Ernst & Young
Auditors of the Company
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
Address: 22/F, CITIC Tower, 1 Tim Mei
Avenue, Central, Hong Kong
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China Life Insurance Company Limited Annual Report 2017
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Core Competitiveness
Long
history
and
excellent
brand
Prominent
principal
business
and solid
financial
strength
Well-
established
network
and leading
technologies
Profound
and extensive
customer base
Professional
and stable
core team
The predecessor of the Company, one of the first batch of enterprises to underwrite insurance
business in China, was approved by the Central Government for establishment in October 1949,
when the People’s Republic of China was founded. After the restructuring and reorganization,
the Company was successively listed at home and abroad, becoming the first financial insurance
enterprise in China triple-listed on the Shanghai Stock Exchange, the Hong Kong Stock Exchange
and the New York Stock Exchange. The Company is a key member of China Life Insurance
(Group) Company, which is enlisted in Fortune “Global 500” and “The World’s 500 Most
Influential Brands”. Since its establishment, the Company has played the role of an explorer and
pioneer in China’s life insurance industry, and has committed to creating a world-class financial
insurance brand. Through long-term and continuous brand building, China Life has become one
of the famous and strong brands in the world with growing brand value and influence. As at 31
December 2017, the brand of China Life has been ranked as one of the “The World’s 500 Most
Influential Brands” published by World Brand Lab for eleven consecutive years, and was again
ranked No. 4 on the 2017 (the 14th session) “China’s 500 Most Valuable Brands” list published
by World Brand Lab.
The Company sticks to its principal business, further explores the huge potentials of the life
insurance market, and maintains its leading position in China’s life insurance market. In 2017, the
Company’s gross written premiums exceeded RMB500,000 million, achieving a new record high.
Through the long-term development and accumulation, the Company has solid financial strength
comparable to world-class enterprises in the world. As at 31 December 2017, the Company’s total
assets amounted to RMB2,897,591 million, ranking No. 1 in the life insurance industry in China.
As one of the largest institutional investors in China, the Company becomes one of the largest
insurance asset management companies in China through its controlling shareholding in China
Life Asset Management Company Limited. As at the end of 2017, the total market capitalization
of the Company was USD120,834 million, which ranked No. 1 among all listed life insurance
companies in the world.
The Company has a sound institutional and services network, with its business outlets and services
counters covering both urban and rural areas. As at the end of the Reporting Period, the total
number of sales force of the Company across all channels was 2.025 million, which forms a unique
and powerful distribution and services network in China and through which, the Company
becomes the life insurance service provider within the reach of customers. Moreover, the Company
vigorously promotes the upgrade of “Online China Life”, “Intelligent China Life” and “Digital
China Life” by taking advantages of mobile internet technologies, so as to cultivate its first-class
operational management, risk control and customer services. The Company strives to establish
a customer services system equipped with mobile, intelligent and sociable features, and leverages
technologies to provide convenient insurance services to the public.
The Company has an extensive customer base. As at 31 December 2017, the Company had
approximately 268 million long-term individual and group life insurance policies, annuity
contracts and long-term health insurance policies in force, offering insurance services for over 500
million customers.
During the long course of its development, the Company has accumulated a wealth of
experience in operation and management and has a stable and professional management team
that is well versed in the art of management in China’s life insurance market. The Company’s
core management team and key 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, experienced underwriting personnel, insurance actuaries and investment managers.
During the Reporting Period, there was no change of these personnel which might have a material
impact on the Company.
China Life Insurance Company Limited Annual Report 2017
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Business Highlights
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Gross written premiums
RMB511,966
a year-on-year increase of 18.9%
million
First-year regular premiums
RMB113,121
a year-on-year increase of 20.4%
million
First-year regular premiums with ten
years or longer payment duration
RMB66,003
million
a year-on-year increase of 28.5%
Renewal premiums
RMB288,106
a year-on-year increase of 28.9%
million
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China Life Insurance Company Limited Annual Report 2017
Gross investment income
RMB129,021
million
a year-on-year increase of 19.3%
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Gross investment yield
5.16%
an increase of 0.55 percentage point
Value of one year’s sales
RMB60,117
million
a year-on-year increase of 21.9%
Embedded value
RMB734,172
million
a year-on-year increase of 12.6%
Net profit attributable to
equity holders of the Company
RMB32,253
million
a year-on-year increase of 68.6%
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Financial Summary
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 inflows/(outflows) from operating activities
As at 31 December
Total assets
Investment assets2
Total liabilities
Total equity holders’ equity
Under International Financial Reporting Standards (IFRS)
2017
2016 6
Change
2015
2014
2013
RMB million
643,355
506,910
608,827
466,043
41,671
32,253
31,873
200,990
540,781
426,230
522,794
407,045
23,842
19,127
18,741
89,098
19.0%
18.9%
16.5%
14.5%
74.8%
68.6%
70.1%
125.6%
507,449
362,301
463,492
352,219
45,931
34,699
34,514
(18,811)
440,766
330,105
404,275
315,294
40,402
32,211
32,211
78,247
417,883
324,813
391,557
312,288
29,451
24,765
24,765
68,292
2,897,591
2,591,652
2,572,281
320,933
2,696,951
2,453,283
2,389,303
303,621
7.4%
5.6%
7.7%
5.7%
2,448,315
2,287,639
2,122,101
322,492
2,246,567
2,100,870
1,959,236
284,121
1,972,941
1,848,681
1,750,356
220,331
Per share (RMB)
Earnings per share (basic and diluted)3
Equity holders’ equity per share
Net cash inflows/(outflows) from operating activities per share
1.13
11.35
7.11
0.66
10.74
3.15
70.1%
5.7%
125.6%
1.22
11.41
(0.67)
1.14
10.05
2.77
0.88
7.80
2.42
Major financial ratio
Weighted average ROE (%)
10.49
6.16
Ratio of assets and liabilities4(%)
88.77
88.59
Gross investment yield5(%)
5.16
4.61
11.56
12.83
11.22
86.68
87.21
88.72
6.47
5.42
4.97
increase of
4.33
percentage
points
increase of
0.18
percentage
point
increase of
0.55
percentage
point
Notes:
1.
2.
3.
4.
5.
6.
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.
Investment assets = Cash and cash equivalents + Securities at fair value through profit or loss + Available-for-sale securities +
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 = (Gross investment income – Interest paid for securities sold under agreements to repurchase)/
((Investment assets at the beginning of the period – Securities sold under agreements to repurchase at the beginning of the period
+ Investment assets at the end of the period – Securities sold under agreements to repurchase at the end of the period)/2)
The figures as at the end of the past years were adjusted on the same basis.
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China Life Insurance Company Limited Annual Report 2017
Chairman’s Statement
Chairman’s Statement
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Yang Mingsheng, Chairman
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As the spring thunder awakens the land, the gorgeous
clouds welcome the spring back. In this beautiful season
where the whole world is flourishing and thriving, I,
on behalf of the Company’s board of directors, hereby
report to shareholders and the public the Company’s
a c h i e v e m e n t s m a d e i n 2 0 1 7 a n d i l l u m i n a t e o u r
blueprint in the new era.
OUTSTANDING RESULTS ACHIEVED IN 2017
WITH CONSISTENT EFFORTS
In 2017, we achieved outstanding operating results
by adhering to the operating guideline of “prioritizing
value, strengthening sales force, optimizing business
structure, achieving stable growth and safeguarding
against risks”, putting great efforts in implementing
the overall “innovation-driven development strategy”
and consistently pushing forward the three key tasks of
“accelerated development, transformation and upgrade,
and risk prevention and control” in a coordinated way.
Business development reached a new high. In 2017,
on the high base of 2016, the Company maintained a
strong growth in business development and achieved
gross written premiums of RMB511,966 million, an
increase of 18.9% year-on-year, as a result of which,
the Company became the first insurance company
in China achieving premiums over RMB500,000
million. In particular, gross written premiums from
the exclusive individual agent channel amounted to
RMB353,668 million, an increase of 25.4% year-on-
year. First-year regular premiums were RMB113,121
million, an increase of 20.4% year-on-year, exceeding
RMB100,000 million for the first time; first-year regular
premiums with ten years or longer payment duration
reached RMB66,003 million, an increase of 28.5%
year-on-year; renewal premiums were RMB288,106
million, an increase of 28.9% year-on-year; and short-
term insurance premiums were RMB47,068 million, an
increase of 17.5% year-on-year.
Business value and profitability were improved
significantly. The Company put great efforts to
constantly improve its business value which was the
strategic focus. In 2017, the value of one year’s sales of
the Company reached RMB60,117 million, an increase
of 21.9% year-on-year. Seizing the opportunity of
interest rate hike, the Company increased its allocation
in fixed income assets, leveraged the opportunities
in equity market and optimized its assets structure,
through which, the Company’s gross investment yield
reached 5.16% and its comprehensive investment yield
reached 4.55%, an increase of 0.55 percentage point
and 2.12 percentage points year-on-year, respectively.
B y s t r e n g t h e n i n g t h e c o n t r o l o f a d m i n i s t r a t i v e
expenses, the Company’s administrative expense ratio2
dropped to 5.59% from 5.89% in the corresponding
period of 2016, indicating the expense structure
being continuously optimized and cost control being
constantly effective. Due to the impact of a fairly fast
increase in investment income and the update on the
discount rate assumption for reserves of traditional
insurance contracts, net profit attributable to equity
holders of the Company during the Reporting Period
was RMB32,253 million, a significant increase of 68.6%
year-on-year.
Business structure was further optimized. In 2017, the
Company further accelerated the development of regular
premium business. During the Reporting Period, the
percentage of first-year regular premiums in long-term
first-year premiums was 63.99% and the percentage
of first-year regular premiums with ten years or longer
payment duration in first-year regular premiums was
58.35%, an increase of 7.71 percentage points and
3.66 percentage points year-on-year, respectively.
The percentage of renewal premiums in gross written
premiums was 56.27%, an increase of 4.35 percentage
points year-on-year. The Company emphasized playing
the due role of insurance in protection, further pushed
forward its product diversification strategy and achieved
rapid growth of its protection-oriented businesses.
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Administrative expense ratio = Administrative expenses/Total revenues
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Development foundation was strengthened effectively.
While maintaining the steady growth in its size, the
quality of the Company’s sales force was notably
improved. In 2017, the Company’s total sales force
across all channels reached 2.025 million, a net increase
of 0.211 million year-on-year. The average productive
agents on a quarterly basis in the exclusive individual
agent channel increased by 29.8% year-on-year. The
Company introduced new measures in customer relation
management and actively expanded its customer base, as
a result of which, the number of new customers of long-
term individual insurance business increased by 18.9%
year-on-year.
GRASPING THE “CHANGE” AND
“UNCHANGE” IN LIFE INSURANCE
OPERATION BY PROACTIVE THINKING AND
DILIGENT PRACTICING
The life insurance industry is a traditional industry
engraved with a history of several hundred years,
a n d a l s o a s u n r i s e i n d u s t r y e m b r a c i n g p o s i t i v e
restructuring. In the face of changing economic and
social conditions, diversification and globalization of
the industry development and increasingly fierce market
competition, I, together with other members of the
Company’s board of directors, have navigated China
Life, a flagship in the industry, at a resolute and steady
pace, and gained a better understanding on the “change”
and “unchange” in the operation of life insurance.
Everything has its inherent rule, so is a company’s
development. We shall unremittingly pursue our
original aspiration, abide by rules, uphold social
responsibilities and care for people’s well-being, respect
regulations and strive for accelerated development while
maintaining stability and resilience.
— Observing the rule of life insurance operation and
maintaining strategic consistency. We emphasized
playing the due role of insurance in protection, adhered
to the value-oriented principle, made great efforts in
developing protection-oriented and long-term savings
insurance products, accelerated the development of mid-
to-long-term regular businesses, optimized the business
structure and continuously enhanced development
sustainability and value-creation capability. We attached
great importance to management of assets and liabilities
and upheld the philosophies of “long-term investment,
value-oriented investment and safe investment”,
supplying long-term funds, riding on industry trends
and discovering long-term value. We committed to
supporting the real economy and allocated assets in the
backdrop of national economic development to achieve
asset appreciation and returns on investments.
— Continuously improving service quality and putting
customers’ needs in priority. We are dedicated to
provide every customer with our high-quality services.
We pushed forward the systematic and diversified
product development and introduced competitive
products such as the “Xin” series, the “Shengshi” series
and the “Guoshoufu” series through our extended
service network, covering more than 500 million people
in both urban and rural areas. We enhanced quality
management and upgraded the quality and efficiency
of our basic services. We provided individualized and
differentiated services to middle-and high-end customers
by way of categorized management. We attached great
importance to the management of customer complaints,
effectively protected interests of customers, and fulfilled
our commitment of “Life-time promise, life-long
partner” by carrying forward integrity and sincerity
culture. In 2017, the Company achieved a record-high
level of customer satisfaction.
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— Respecting market rules to ensure healthy business
development and safeguard against various risks.
A company who manages risks must ensure its own
safety first. We consciously acted in accordance with
the highest international internal control standards,
strictly complied with the regulatory rules for listed
companies, and carried out our businesses in compliance
with various laws and regulations. Under the stringent
supervision, we considered compliances and external
supervision as opportunities for making the Company’s
development sound and stable, and promoted transition
of risk prevention and control system from “remedy
afterwards” to “forestalling beforehand” through building
a long-acting risk control system and management
mechanism and enhancing audit supervision and risk
pre-warning. With sufficient cash flow and the solvency
ratio as high as over 270%, the Company firmly held
the bottom line of risk management, and maintained
stable and healthy development for the Company as well
as the industry, and therefore, the Company was praised
as the “stabilizer” and “firm rock” of the industry.
With the past yet to be fading and the future already
unfolding, we shall catch up with the time, strive
to overcome inherent inertia, embrace changes and
transformation, and become the pioneer of the era.
— Upholding social responsibilities and caring for
people’s well-being. We focused on our principal
business and enhanced our expertise to exert the
function of insurance in long-term risk management
and protection. We worked hard to build a protection
network for people’s well-being. In particular, we have
provided claims settlement services to more than 43
million people on an accumulative basis since 2013,
with a benefit payment of RMB110,000 million for
commercial insurances; we made maturity payment of
RMB505,300 million. By implementing the “Healthy
China” initiative, we undertook over 260 supplementary
major medical expenses insurance programs covering
420 million people and paid more than RMB40,000
million on an accumulative basis to over 17 million
people in relation to supplementary major medical
expenses insurance. We carried out administration for
over 400 basic social healthcare programs entrusted by
local governments which provided medical coverage
to more than 68 million people. By implementing
the national targeted poverty alleviation initiative, we
provided insurance coverage of RMB2.4 trillion to more
than 22 million registered poverty-stricken persons
and supported more than 1,200 poverty alleviation
working sites. We also provided insurance coverage of
RMB1.5 trillion for micro-insurance business, with
the number of insured for micro-insurance business
reaching nearly 100 million. We strengthened people-
oriented management, promoted the culture of “Success
for you, success by you”, shared interests and shouldered
responsibilities to build the Company into a spiritual
and career homeland for our employees, agents and
sales representatives, so that the working enthusiasm of
employees was stimulated and a positive atmosphere of
integrity and harmony was created, which paved the way
for the prosperity and bright future of the Company.
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— Closely following “changes” in the information
era and building “Technology-driven China Life”.
Technology is an important pillar for the Company’s
operation and management. Since 2015, we have
accelerated our pace in building “Technology-driven
China Life”, and basically completed the development
of a “New Generation of Integrated Business Processing
System” with the objectives of “being customer-
c e n t e r e d , f e a t u r e d w i t h I n t e r n e t a n d a r t i f i c i a l
intelligence, quick response and safe and reliable
architecture”. We developed an advanced business
structure, rebuilt and optimized the business processes
with an end-to-end and scenario-based approach, and
independently designed and built a fully open cloud
architecture, based on which, we greatly facilitated
t r a n s f o r m a t i o n a n d u p g r a d e o f t h e C o m p a n y ’ s
operation and management. As online platforms
for agents and customers, “China Life E-store” and
“ C h i n a L i f e E - B a o ” , t h r o u g h i n t e r c o n n e c t i o n s ,
significantly supported customer relations and sales
force management and provided customers with various
application functions such as insurance policy services
and purchase. “China Life E-store” had average monthly
active users of 1.242 million. “China Life E-Bao”
had 24.01 million new registered users. 95% policy-
related services of the Company were available online.
We rolled out 25,000 digital field offices. Besides, we
launched the “China Life Health Platform”. Smarter
customer services were provided by introducing
the loop-locked digital information operation and
management system and customer family unified view.
— Keeping a close eye on “changes” in the insurance
market and giving full play to internal potentials.
Being market-oriented, we initiated to take global
best practices as the benchmark to actively develop
a market-oriented performance assessment matrix
and remuneration mechanism, put great efforts in
facilitating development of individual insurance business
and markets in large and medium-sized cities and rural
areas, based on which, the Company’s inner vitality
has been put into full play and market expanding
capabilities have been improved significantly. In 2017,
the Company maintained a market leading position in
terms of gross written premiums and business and sales
force of the exclusive individual agent channel, and the
core competitiveness of the Company was continuously
enhanced.
— Taking advantage of sales model “changes” and
enhancing growth dynamic. With rapid expansion of
the Company’s sales force and in response to market
changes, we actively learned from advanced experiences
at home and abroad, and pushed forward transformation
of our sales management model by actively developing a
professional operation and management system for the
exclusive individual agent channel. While enhancing
the Company’s professional management and supports,
we also improved our appraisal and compensation
m e c h a n i s m , p u t m o r e e f f o r t s i n i m p r o v i n g t h e
capabilities and quality of our sales force, and gradually
enhanced the dominant role of agent managers at all
levels in daily operation and management of their teams,
thereby further strengthened the Company’s growth
dynamic.
16
China Life Insurance Company Limited Annual Report 2017
In 2018, we will reembark on our journey with high-
quality development, from now and from here.
C
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By Order of the Board
Yang Mingsheng
Chairman
Beijing, China
22 March 2018
SEEKING PROGRESS UNDER THE PREMISE
OF STABILITY AND ExCELLING IN HIGH-
qUALITY DEVELOPMENT
In the near future, the main characteristic of China’s
economic development will turn from fast growth to
high-quality development, and the insurance industry
will play a more important role than ever before in risk
protection and risk management. Changes in major
groups of insurance consumers and their purchase
habits, diversification of product demands and high
requirements of service quality, along with the stringent
and strengthened supervision which led to ongoing
i n d u s t r y t r a n s f o r m a t i o n s , n o t o n l y p u t f o r w a r d
challenges for the industry but also present new room
for the Company’s development. Despite the challenges
and pressures in a short term, in general, there will be
long-term benefits for the Company which has long
been upholding a prudent and value-oriented strategy.
2018 is the first year for the Company to enter the era
of high-quality development. We will actively adapt to
changes in customer needs and regulatory requirements
in the new era, deepen the construction of supply
system, investment system, innovation system, talent
system and risk control system and spare no efforts to
complete the five major tasks of “transforming sales
management model, adjusting business structure,
revitalizing and taking lead in large and medium-
sized cities, building technology-driven China Life
and preventing and controlling risks” by sticking to
the general keynote of “making steady progress” and
satisfying the fundamental requirements of high-quality
development. We will also actively seek to build a
“customer-oriented, extensive service-supported and
digitalization-featured” operation and management
system, transform the Company from a leader in size
to a leader in quality, provide customers with better
services, create more value for shareholders and make
more contributions to the society.
China Life Insurance Company Limited Annual Report 2017
17
Management
Discussion and Analysis
Review of Business
Operations in 2017
Analysis of Major Items of the
Consolidated Financial
Statements
Other Analysis
Performance of the Corporate
Social Responsibility
Future Prospect and Risk Analysis
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40
42
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From left to right: Mr. Zhan Zhong, Mr. Zhao Peng, Mr. Zhao Lijun, Mr. Xu Haifeng, Mr. Lin Dairen, Mr. Xu Hengping,
Mr. Li Mingguang, Mr. Xiao Jianyou, Mr. Ruan Qi, Ms. Yang Hong
In 2017, facing the complicated and changing external environment and fierce market competition, the Company
actively implemented an innovation-driven development strategy, adhered to the value-oriented principle, adopted
multiple measures, sped up business development and promoted transformation and upgrade by adhering to the
operating guideline of “prioritizing value, strengthening sales force, optimizing business structure, achieving stable
growth and safeguarding against risks”. The Company operated in a generally sound and prudent manner, with
its business maintaining a rapid growth and its sales force expanding with better quality. During the Reporting
Period, the Company’s gross written premiums were RMB511,966 million, an increase of 18.9% year-on-year.
The Company’s market share3 was approximately 19.7%, maintaining the first place in life insurance industry in
China. With the investment yield growing steadily and the business value and profitability improving significantly,
the Company achieved sound and fast development.
Gross written premiums
(RMB million)
2017
2016
511,966
430,498
18.9%
0
100,000
200,000
300,000
400,000
500,000
600,000
3
Calculated according to the premium data of life insurance companies in 2017 released by the CIRC.
20
China Life Insurance Company Limited Annual Report 2017
I.
REVIEW OF BUSINESS OPERATIONS IN 2017
(I) Key Performance Indicators
Gross written premiums
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 Note 1
Including: Exclusive individual agent channel
Bancassurance channel
Group insurance channel
Policy Persistency Rate (14 months) (%) Note 2
Policy Persistency Rate (26 months) (%) Note 2
Embedded value
Number of in-force policies (hundred million)
Notes:
1.
Numbers may not be additive due to rounding.
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RMB million
2017
2016
511,966
223,860
113,121
66,003
129,021
32,253
60,117
53,170
6,536
410
90.90
85.70
430,498
206,996
93,945
51,378
108,151
19,127
49,311
46,326
2,610
375
90.20
85.90
As at
31 December 2017 31 December 2016
As at
734,172
2.68
652,057
2.46
2.
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.
China Life Insurance Company Limited Annual Report 2017
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Value of one year’s sales
(RMB million)
Continuous improvement in business value. In
2017, the value of one year’s sales of the Company
was RMB60,117 million, an increase of 21.9% year-
on-year. As at 31 December 2017, the embedded
value of the Company was RMB734,172 million,
an increase of 12.6% year-on-year; the Company
had approximately 268 million long-term insurance
policies in-force, an increase of 8.9% year-on-year;
and the surrender rate4 was 4.13%, an increase
of 0.59 percentage point year-on-year. During
the Reporting Period, the Policy Persistency Rate (14 months and 26 months) reached 90.90% and 85.70%,
respectively.
49,311
60,117
2016
2017
21.9%
70,000
30,000
60,000
50,000
40,000
10,000
20,000
0
66,003
63,671
2017
47,068 47,118
Gross written premiums structure
(RMB million)
Constant optimization in premiums structure.
During the Reporting Period, out of the premiums
from new policies, first-year regular premiums
amounted to RMB113,121 million, an increase of
20.4% year-on-year, and single premiums amounted
to RMB63,671 million, a decrease of 12.8% year-
on-year. First-year regular premiums with ten years
or longer payment duration reached RMB66,003
million, an increase of 28.5% year-on-year. Renewal
premiums amounted to RMB288,106 million, an
increase of 28.9% year-on-year. The percentage of first-year regular premiums in long-term first-year premiums,
the percentage of first-year regular premiums with ten years or longer payment duration in first-year regular
premiums and the percentage of renewal premiums in gross written premiums increased by 7.71, 3.66 and 4.35
percentage points, respectively. The first-year regular business and renewal business became stronger driving forces,
which further optimized the premium structure and reinforced the sustainable development of the Company.
First-year regular premiums with 10 years or longer payment
duration
First-year regular premiums with payment
duration less than 10 years
Short-term premiums
223,502
288,106
Renewal premiums
2016
72,991
51,378
42,567
40,060
Single premiums
28.5%
28.9%
10.7%
17.5%
12.8%
500,000
400,000
350,000
150,000
200,000
300,000
250,000
450,000
100,000
50,000
0
Gross investment income
(RMB million)
Significant increase in the Company’s profit. In
2017, interest income from investment portfolios
achieved a stable growth, and the net fair value
gains through profit or loss increased greatly.
The Company’s gross investment income was
RMB129,021 million, an increase of 19.3% year-
on-year. Due to the impact of a fairly fast increase
in investment income and the update on the
discount rate assumption for reserves of traditional insurance contracts, net profit attributable to equity holders of
the Company during the Reporting Period was RMB32,253 million, an increase of 68.6% year-on-year.
129,021
108,151
2016
2017
19.3%
120,000
140,000
100,000
60,000
20,000
40,000
80,000
0
4
Surrender rate = Surrender payment/(Liability of long-term insurance contracts at the beginning of the period + Premium
income of long-term insurance contracts during the period)
22
China Life Insurance Company Limited Annual Report 2017
(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
Total
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RMB million
2017
2016
429,822
168,909
63,653
105,256
260,913
67,708
40,845
33,124
7,721
26,863
14,436
14,106
13,962
144
330
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
511,966
430,498
Note: Single premiums in the above table include premiums from short-term insurance business.
During the Reporting Period, gross written premiums from the life insurance business of the
Company amounted to RMB429,822 million, an increase of 18.8% year-on-year. In particular,
first-year regular premiums were RMB105,256 million, an increase of 20.1% year-on-year, and the
percentage of first-year regular premiums in first-year premiums was 62.32%, an increase of 7.76
percentage points year-on-year. Single premiums were RMB63,653 million, a decrease of 12.8% year-
on-year, and renewal premiums were RMB260,913 million, an increase of 29.6% year-on-year. Gross
written premiums from the health insurance business amounted to RMB67,708 million, an increase
of 25.4% year-on-year. Gross written premiums from the accident insurance business amounted to
RMB14,436 million, basically remaining at the same level of 2016.
Gross written premiums from the health
insurance business
(RMB million)
2017
2016
67,708
54,010
25.4%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
China Life Insurance Company Limited Annual Report 2017
23
2. Gross written premiums categorized by channel
For the year ended 31 December
RMB million
2017
2016
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Exclusive Individual Agent 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
Group Insurance 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.
353,668
90,629
389
90,240
253,586
9,453
113,505
80,731
59,777
20,954
31,880
894
26,207
4,368
3,425
943
999
20,840
18,586
1,064
80
984
1,641
15,881
282,136
74,813
283
74,530
199,826
7,497
108,256
85,882
68,047
17,835
21,813
561
24,915
5,430
4,571
859
703
18,782
15,191
811
90
721
1,160
13,220
511,966
430,498
Other channels mainly include supplementary major medical expenses 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.
Exclusive Individual Agent Channel. During the Reporting Period, the exclusive individual agent
channel maintained a strong growth with its business structure continuously optimized and the
quality of its sales force further enhanced. Gross written premiums from the exclusive individual
agent channel amounted to RMB353,668 million, an increase of 25.4% year-on-year. In particular,
first-year regular premiums from the exclusive individual agent channel increased by 21.1% year-
on-year, first-year regular premiums with ten years or longer payment duration increased by 26.9%
year-on-year, and 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 86.50% and 65.16%, respectively. Short-term insurance premiums increased
24
China Life Insurance Company Limited Annual Report 2017
by 26.1% year-on-year. Renewal premiums from the exclusive individual agent channel increased
by 26.9% year-on-year, which significantly drove gross written premiums from this channel. With
adherence to the development strategy of improving the quality and expanding the size of its sales
force, the Company upgraded its system of cultivation for new agents and agent managers and put
more efforts in the improvement of their quality while maintaining the steady growth of its sales
force. As at the end of the Reporting Period, the number of exclusive individual agents reached 1.578
million, a 5.6% increase from the end of 2016, and the average productive agents on a quarterly basis
in the exclusive individual agent channel increased by 29.8% year-on-year, showing a positive trend
for the quality of its sales force.
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First-year regular premiums from the
exclusive individual agent channel
(RMB million)
2017
31,444
11.5%
58,796
26.9%
2016
28,193
46,337
21.1%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
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
13.50%
13.80%
21.34%
2017
(cid:3)
24.03%
2016
65.16%
62.17%
First-year regular premiums with 10 years or longer payment
duration
First-year regular premiums with payment
duration less than 5 years
First-year regular premiums with payment
duration from 5 to 9 years
Size expansion and quality improvement of the
exclusive individual agents
2017
the number of exclusive
individual agents
increased by 5.6(cid:8)(cid:3)
the number of
exclusive individual
agents of the
Company was
1.578 million in total
the average productive agents on a
quarterly basis in the exclusive
individual agent channel increased
by 29.8% year-on-year
China Life Insurance Company Limited Annual Report 2017
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20,000
46.2%
12.2%
17.5%
21,813
17,835
20,954
68,047
59,777
31,880
2017
2016
Long-term premiums from the
bancassurance channel
(RMB million)
Bancassurance Channel. In 2017, the bancassurance
channel put more efforts in business transformation.
While further controlling the scale of single premium
business, the Company strengthened the development
of regular premium business to improve the value
contributed by bancassurance channel. During the
Reporting Period, gross written premiums from the
bancassurance channel were RMB113,505 million,
an increase of 4.8% year-on-year. In particular, single
premiums were RMB59,777 million, a decrease of
12.2% year-on-year, first-year regular premiums were RMB20,954 million, an increase of 17.5%
year-on-year, and renewal premiums were RMB31,880 million, an increase of 46.2% year-on-year.
First-year regular premiums with ten years or longer payment duration were RMB6,139 million,
an increase of 46.3% year-on-year. The percentage of first-year regular premiums with five years or
longer payment duration in first-year regular premiums was 55.9%. The value of one year’s sales of
the bancassurance channel increased by 150.4% year-on-year, with a rise of 5.6 percentage points
of its proportion in the value of one year’s sales of the Company. The bancassurance channel kept
on expanding the electronic bank sales channels, such as online banking, self-service terminals and
mobile banking, etc., to enhance its service network, as a result of which the regular premium business
operated through the channels of major banks and postal offices achieved a fast growth. As at the end
of the Reporting Period, the number of sales representatives in the bancassurance channel reached
0.339 million, an increase of 43.9% from the end of 2016. The average active insurance planners on a
monthly basis in the bancassurance channel increased by 11.3% year-on-year.
First-year regular premiums
Renewal premiums
Single premiums
120,000
100,000
40,000
80,000
60,000
Gross written premiums from the
group insurance channel
(RMB million)
Group Insurance Channel. By closely following national
strategies, the group insurance channel actively played
the role in offering services for people’s livelihood,
consistently promoted the diversification of business
development, and effectively pushed forward the steady
development of its various businesses. During the
Reporting Period, gross written premiums from the
group insurance channel amounted to RMB26,207
million, an increase of 5.2% year-on-year. Short-
term insurance premiums from the group insurance channel amounted to RMB20,840 million, an
increase of 11.0% year-on-year. As at the end of the Reporting Period, the number of direct sales
representatives reached over 0.104 million, an increase of 21.4% from the end of 2016.
Short-term insurance premiums
Long-term insurance premiums
2016
2017
20,840
18,782
6,133
5,367
12.5%
11.0%
20,000
10,000
15,000
25,000
30,000
5,000
0
Other Business Channels. During the Reporting Period, gross written premiums from other channels were
RMB18,586 million, an increase of 22.3% year-on-year. The Company actively and steadily developed its
supplementary major medical expenses insurance business and basic social healthcare programs entrusted
by local governments, maintaining its leading position in the market. In particular, 31 branches at the
provincial level carried out more than 260 supplementary major medical expenses insurance programs,
providing services to 420 million urban and rural residents, and carried out administration for over 400
basic social healthcare programs, covering more than 90 million people. The Company actively responded
to the pilot long-term care insurance programs and won the bids for seven projects. In addition, the
Company actively promoted the pilot program of tax-advantaged health insurance throughout China and
carried out online sales with the premiums and number of policies from internet sales increasing rapidly.
26
China Life Insurance Company Limited Annual Report 2017
(III) Asset Management
In 2017, the global economy continued to recover with ongoing expansion and mild inflation in general,
and the developed economies were inclined to tighten their monetary policies. The Chinese economy
maintained a stable growth with its structure continuously optimized and both quality and efficiency
further improved. In the context of preventing risks and deleveraging in the financial industry, the Chinese
government maintained a prudent and moderate monetary policy and intensely introduced a variety of
regulatory policies. Bond yield increased significantly, and A Share market experienced obvious structural
differentiation. In 2017, the Company seized the opportunity of the interest rate hike and increased its
allocation in bonds with long duration and debt-type financial products. The Company maintained its
allocation in equity investment in the open market at a reasonable level and seized structural opportunities,
and also attached great importance to the value of allocation of stocks in the Hong Kong market. The
Company actively pursued good investment opportunities, such as infrastructure, supply-side reforms and
debt-to-equity swap, etc., to broaden the sources of its incomes. As at the end of the Reporting Period, the
Company’s investment assets reached RMB2,591,652 million, an increase of 5.6% from the end of 2016. In
2017, the Company’s gross investment income reached RMB129,021 million, an increase of RMB20,870
million from 2016 and an increase of 19.3% year-on-year; and the gross investment yield was 5.16%, an
increase of 0.55 percentage point from 2016; the net investment yield was 4.91%, an increase of 0.25
percentage point from 2016; the gross investment yield including net share of profit of associates and joint
ventures was 5.16%, an increase of 0.47 percentage point from 2016; the comprehensive investment yield
taking into account the current net fair value changes of available-for-sale securities recognised in other
comprehensive income5 was 4.55%, an increase of 2.12 percentage points from 2016.
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6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Investment yield
5.16%
4.61%
4.91%
4.66%
4.55%
2.43%
Gross
investment yield
Net
investment yield
2016
2017
Comprehensive
investment yield
5
Comprehensive investment yield = (Gross investment income – Interest paid for securities sold under agreements to repurchase
+ Current net fair value changes of available-for-sale securities recognised in other comprehensive income)/((Investment assets at
the beginning of the period – Securities sold under agreements to repurchase at the beginning of the period + Investment assets
at the end of the period – Securities sold under agreements to repurchase at the end of the period)/2)
China Life Insurance Company Limited Annual Report 2017
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1. Investment Portfolios
As at the end of the Reporting Period, our investment assets categorized by investment object are set
out as below:
Investment category
Amount
Percentage
Amount
Percentage
As at 31 December 2017
As at 31 December 20161
RMB million
Fixed-maturity investments
Term deposits
Bonds
Debt-type financial products2
Other fixed-maturity
investments3
Equity investments
Common stocks
Funds4
Bank wealth management
products
Other equity investments5
Investment properties
Cash and others6
2,094,289
449,400
1,188,606
301,761
154,522
409,528
173,450
101,236
40,327
94,515
3,064
84,771
80.81%
17.34%
45.86%
11.65%
5.96%
15.80%
6.69%
3.91%
1.56%
3.64%
0.12%
3.27%
1,920,125
538,325
1,119,388
131,880
130,532
421,383
140,166
119,973
81,854
79,390
1,191
110,584
78.27%
21.94%
45.63%
5.38%
5.32%
17.17%
5.71%
4.89%
3.34%
3.23%
0.05%
4.51%
Total
Notes:
1.
2,591,652
100.00%
2,453,283
100.00%
The figures as at the end of last year were adjusted on the same basis.
2.
Debt-type financial products include debt investment schemes, equity investment plans, trust schemes,
project asset-backed plans, credit asset-backed securities, specialized asset management plans, and asset
management products, etc.
3.
Other fixed-maturity investments include policy loans, statutory deposits-restricted, bank wealth
management products, and interbank certificates of deposits, etc.
4.
Funds include equity funds, bond funds and money market funds, etc. In particular, the balances of money
market funds as at 31 December 2017 and 31 December 2016 were RMB6,942 million and RMB13,609
million, respectively.
5.
Other equity investments include private equity funds, unlisted equities, preference shares, equity
investment plans, and specialized asset management plans, etc.
6.
Cash and others include cash, cash at banks, short-term bank deposits and securities purchased under
agreements to resell.
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In 2017, by seizing the opportunity of the interest rate hike, the Company increased its allocation
in fixed income assets and increased moderately in stock investments. Among the major types of
investments, the percentage of investment in bonds increased to 45.86% from 45.63% as at the end
of 2016, the percentage of term deposits changed to 17.34% from 21.94% as at the end of 2016, the
percentage of investment in stocks and funds (excluding money market funds) increased to 10.33%
from 10.05% as at the end of 2016, and the percentage of investment in debt-type financial products
increased to 11.65% from 5.38% as at the end of 2016.
2. Investment Income
For the year ended 31 December
Net investment income2
+Net realized gains on financial assets
+Net fair value gains 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
2017
122,796
42
6,183
129,021
7,143
136,164
4.91%
5.16%
RMB million
20161
109,207
6,038
(7,094)
108,151
5,855
114,006
4.66%
4.61%
5.16%
4.69%
Notes:
1.
The figures for the same period of last year were adjusted on the same basis.
2.
Net investment income includes interest income from debt investments, interest income from deposits,
dividend and bonus from equity investments, interest income from loans, and net income from investment
properties, etc.
3.
Gross investment income = Net investment income + Net realized gains on financial assets + Net fair value
gains 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 – Interest paid for securities sold under agreements to
repurchase)/((Investment assets at the beginning of the period – Securities sold under agreements to
repurchase at the beginning of the period + Investment assets at the end of the period – Securities sold under
agreements to repurchase at the end of the period)/2)
6.
Gross investment yield = (Gross investment income – Interest paid for securities sold under agreements
to repurchase)/((Investment assets at the beginning of the period – Securities sold under agreements to
repurchase at the beginning of the period + Investment assets at the end of the period – Securities sold under
agreements to repurchase at the end of the period)/2)
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 – Interest paid for securities sold under
agreements to repurchase)/((Investment assets at the beginning of the period + Investments in associates
and joint ventures at the beginning of the period – Securities sold under agreements to repurchase at
the beginning of the period + Investment assets at the end of the period + Investments in associates and
joint ventures at the end of the period – Securities sold under agreements to repurchase at the end of the
period)/2)
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The balances of the Company’s fixed income investment and equity investment increased along
with the continuous expansion of its investment scale. In 2017, the interest income from investment
portfolios grew steadily, the net fair value gains through profit or loss increased, and the gross
investment income increased by 19.3% from 2016. During the Reporting Period, the Company’s net
investment income was RMB122,796 million, an increase of RMB13,589 million from 2016, and the
net investment yield was 4.91%, an increase of 0.25 percentage point from 2016; the gross investment
income was RMB129,021 million, an increase of RMB20,870 million from 2016, and the gross
investment yield was 5.16%, an increase of 0.55 percentage point from 2016; the gross investment
yield including net share of profit of associates and joint ventures was 5.16%, an increase of 0.47
percentage point from 2016; the comprehensive investment yield taking into account the current
net fair value changes of available-for-sale securities recognised in other comprehensive income was
4.55%, an increase of 2.12 percentage points from 2016.
3. Major Investments
During the Reporting Period, there was no material equity investment or non-equity investment of the
Company that is subject to disclosure requirements.
(IV) Operational Support and Customer Services
Adhering to the “customer-oriented” operating concept, the Company has consistently pushed forward the
product diversification development strategy and made greater efforts in developing protection-oriented and
long-term saving products so as to meet multifarious insurance demands of customers. In 2017, through
construction of the “New Generation of Integrated Business Processing System”, the Company focused
on the critical needs of customer service and key problems restricting the improvement of management
efficiency, optimized 159 sub-processes, established a customer experience management system and greatly
pushed forward transformation of its operational service system into a more digitalized and intelligent one.
The efficiency and convenience of customer services was significantly improved. 95% of policy services
could be processed online and the percentage of policy conservation through online channels increased
by 15 percentage points year-on-year. Mobile claims settlements were available at all service centers, with
the number of the claims settled increased by nearly 10 times year-on-year. As the Company adopted fast-
track claims settlement, the number of claims settled increased by 4.5 times year-on-year. The use of the
“Smart Voice Navigation” system has shortened customers’ waiting time by 65%, and the launch of “Smart
Customer Service” system enabled quick responses to customer service requests. 19.16 million return visits
were made by customers via WeChat or “China Life E-Bao”, which replaced 50.3% of return visits by
telephone, and 15.98 million policy receipts were sent via WeChat, which replaced 86% of receipts delivered
by agents. The Company actively participated in the offsite settlement and reimbursement for medical
services across provinces under the New Village Cooperative Medical Scheme launched by the National
Health and Family Planning Commission, facilitating offsite settlement for patients by building a unified
settlement platform. The Company continued to introduce various services to customers. It took the lead
in the industry in rolling out intelligent robots to provide various smart services to customers at counter,
which integrated insurance services with artificial intelligence. The Company put more efforts in carrying
out activities of customer care services by building the “China Life Health Platform”, launching new services
such as chronic disease management, in-patient and out-patient consulting and health consulting services,
and organizing nearly 20,000 online and offline activities on a variety of topics such as health, sports and
parents-children relationship. In addition, the Company continued to broaden the scope for the global
emergency assistance services and VIP services in order to satisfy the multi-layer and personalized demands
of customers.
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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
2017
2016
Change Main Reasons for Change
Net premiums earned
Life insurance business
506,910
429,267
426,230
361,649
18.9%
18.7%
Health insurance business
63,323
50,590
25.2%
Accident insurance
14,320
13,991
2.4%
business
Investment income*
Net realised gains
on financial assets
122,727
42
109,147
6,038
12.4%
-99.3%
Net fair value gains through
profit or loss
6,183
(7,094)
N/A
Other income
7,493
6,460
16.0%
–
Fast growth in renewals and first-
year regular premiums
Rapid development in protection-
oriented businesses
–
Please refer to the table below
A decrease in spread income of
stocks and funds in available-for-
sale securities
An increase in spread income and
fair value of stocks in securities at
fair value through profit or loss
An increase in commission fees
earned from CLP&C
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*
Investment Income
For the year ended 31 December
RMB million
2017
2016
Change
Main Reasons for Change
Investment income from
securities at fair value
through profit or loss
Investment income from
available-for-sale
securities
Investment income from
held-to-maturity
securities
4,538
6,210
-26.9% A decrease in interest income
46,627
37,243
resulting from the reducing
scale of commercial papers in
bonds at fair value through
profit or loss
25.2% An increase in dividend
income from available-for-sale
equity investment
30,669
24,854
23.4% An increase in interest income
resulting from the growth of
allocation in financial bonds
Investment income
23,827
27,851
-14.4% A decrease in interest income
from bank deposits
resulting from the reducing
scale of deposits
Investment income
16,320
12,018
35.8% An increase in interest income
from loans
Other investment income
746
971
from the increasing scale of
trust schemes
-23.2% A decrease in the scale of
securities purchased under
agreements to resell
Total
122,727
109,147
12.4% –
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2. Benefits, Claims and Expenses
For the year ended 31 December
RMB million
2017
2016
Change Main Reasons for Change
Insurance benefits and
claims expenses
Life insurance business
466,043
407,045
14.5%
–
409,410
360,922
13.4%
Health insurance business
50,624
40,513
25.0%
Accident insurance
6,009
5,610
7.1%
business
Investment contract benefits
8,076
5,316
51.9%
Policyholder dividends
21,871
15,883
37.7%
resulting from
participation in profits
Underwriting and
policy acquisition costs
64,789
52,022
24.5%
Finance costs
4,601
4,767
-3.5%
Administrative expenses
Other expenses
35,953
6,426
31,854
4,859
12.9%
32.2%
Statutory insurance
fund contribution
1,068
1,048
1.9%
An increase in the scale of life
insurance business
An increase in the scale of health
insurance business
Fluctuation in claims expenses of
certain businesses
An increase in the scale of
investment contracts
An increase in investment yield
from participating accounts
An increase in underwriting costs
for regular premium business due
to the growth of the Company’s
business and the optimization of
its business structure
A decrease in interest paid due
to redemptions of subordinated
debts
The growth of business
Payable to third party holders
of consolidated structured
entities and the change of foreign
exchange rates applicable to the
currency for foreign assets and
liabilities
The growth of insurance business
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3. Profit before Income Tax
For the year ended 31 December
RMB million
2017
2016
Change Main Reasons for Change
Profit before income tax
Life insurance
business
41,671
29,315
23,842
14,732
74.8%
99.0%
Health insurance
3,246
2,093
55.1%
business
Accident insurance
business
Other businesses
528
852
-38.0%
8,582
6,165
39.2%
–
The impact of a fairly fast
increase in investment income
and the update on the discount
rate assumption for reserves of
traditional insurance contracts
An increase in investment income
Fluctuation in claims expenses of
certain businesses
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 RMB8,919 million, a year-on-
year increase of 109.5%. 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
RMB32,253 million, a year-on-year increase of 68.6%. This was primarily due to the impact of a
fairly fast increase in investment income and the update on the discount rate assumption for reserves
of traditional insurance contracts.
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(II) Analysis of Major Items of the Consolidated Statement of Financial Position
1. Major Assets
As at 31
December
2017
As at 31
December
2016
Change Main Reasons for Change
RMB million
Investment assets
Term deposits
2,591,652
449,400
2,453,283
538,325
5.6%
-16.5%
Held-to-maturity
securities
Available-for-sale
securities
Securities at fair
value through
profit or loss
Securities purchased
under agreements
to resell
Cash and cash
equivalents
717,037
594,730
20.6%
810,734
766,423
5.8%
136,809
209,124
-34.6%
36,185
43,538
-16.9%
48,586
67,046
-27.5%
Loans
383,504
226,573
69.3%
Statutory deposits –
6,333
6,333
0
restricted
Investment properties
3,064
1,191
157.3%
Investments in associates
and joint ventures
161,472
119,766
34.8%
–
The maturity of certain term
deposits
An increase in the allocation of
financial bonds
An increase in the allocation
of stocks in available-for-sale
securities
A decrease in the scale of
commercial papers in bonds at
fair value through profit or loss
The needs for liquidity
management
The needs for liquidity
management
An increase in the allocation of
trust schemes in loans
–
An increase in investment
properties
New investments in associates
and joint ventures
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2. Major Liabilities
As at 31
December
2017
As at 31
December
2016
Change Main Reasons for Change
RMB million
Insurance contracts*
2,025,133
1,847,986
9.6%
Investment contracts
232,500
195,706
18.8%
Securities sold under
agreements to repurchase
Policyholder
dividends payable
Annuity and other insurance
balances payable
Interest-bearing loans and
other borrowingsNote
Bonds payable
87,309
81,088
7.7%
83,910
87,725
-4.3%
18,794
16,170
16.2%
–
37,998
N/A
Deferred tax liabilities
4,871
7,768
-37.3%
The accumulation of insurance
liabilities from new insurance
business and renewal business
An increase in the scale of certain
investment contract accounts
The needs for liquidity
management
Dividends paid to policyholders
An increase in borrowings in
foreign currency
Redemptions of subordinated
debts
Affected by a decrease in the
fair value of available-for-sale
securities
44,820
39,038
14.8%
An increase in maturities payable
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 USD970 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 one-month bank loan of EUR100 million with a maturity date on 11 January 2018. All the above
are fixed rate loans. A three-year loan of EUR400 million with a maturity date on 6 December 2020,
which is floating rate loan.
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*
Insurance Contracts
Life insurance
Health insurance
Accident insurance
Total of insurance contracts
Including: Residual marginNote
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As at
31 December
2017
1,914,597
102,190
8,346
2,025,133
607,941
RMB million
As at
31 December
2016
1,762,363
77,837
7,786
1,847,986
515,374
Note:
The residual margin is a component of insurance contract reserve, which results in no Day 1 gain at the
initial recognition of an insurance contract. The residual margin is set to zero if it is negative. The growth
of residual margin arises mainly from new business.
As at the date of the statement of financial position, the reserves of various insurance contracts of the
Company passed the liability adequacy test.
3. Equity Holders’ Equity
As at the end of the Reporting Period, equity holders’ equity was RMB320,933 million, a 5.7%
increase from the end of 2016. This was primarily due to the combined impact of total comprehensive
income and profit distribution during the Reporting Period.
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(III) Analysis of Cash Flows
1. Liquidity Sources
Our cash inflows mainly come from insurance premiums, income from non-insurance contracts,
interest income, dividend and bonus, and proceeds from sales and maturity of investment 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 RMB48,586 million.
In addition, the vast majority of our term deposits in banks allow us to withdraw funds on deposits,
subject to a penalty interest charge. As at the end of the Reporting Period, the amount of term
deposits was RMB449,400 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 policy loans.
We believe that our sources of liquidity are sufficient to meet our current cash requirements.
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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
2017
2016
Change Main Reasons for Change
Net cash inflows/(outflows)
from operating activities
Net cash inflows/(outflows)
from investing activities
200,990
89,098
125.6%
(173,676)
(104,703)
65.9%
Net cash inflows/(outflows)
from financing activities
(45,595)
6,270
N/A
(179)
285
N/A
Foreign exchange gains/
(losses) on cash and
cash equivalents
Net decrease in cash
and cash equivalents
The change in the scale of
securities at fair value through
profit or loss
The adjustment of investment
asset structure and an increase in
the allocation of bonds with long
duration and debt-type financial
products
Change in account balance of
securities sold under agreements
to repurchase from time to
time as a result of liquidity
management activities
–
(18,460)
(9,050)
104.0%
–
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III. OTHER ANALYSIS
(I) 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 As at 31 December
2016
2017
706,516
706,623
254,503
277.61%
277.65%
639,396
677,768
228,080
280.34%
297.16%
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.
As at the end of the Reporting Period, the Company’s comprehensive solvency ratio decreased by 19.51
percentage points from the end of 2016. The decrease in the Company’s solvency ratio was due to the
impact of various factors, including the development of the Company’s insurance business and the
redemptions of subordinated debts.
(II) Sale of Material Assets and Equity
During the Reporting Period, there was no sale of material assets and equity of the Company.
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(III) Business Operations of Our Main Subsidiaries and Affiliates
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RMB million
Registered
Capital
Shareholding
Total
Assets Net Assets Net Profit
4,000
60%
9,237
8,339
1,126
3,922
3,086
14
3,400
70.74% is
held by the
Company, and
3.53% is held
by AMC
15,000
40%
79,601
20,463
820
15,402
43.686%
2,072,915
113,846
10,204
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
Note: For details, please refer to Note 8 and Note 33(e) in the Notes to the Consolidated Financial Statements in this
annual report.
(IV) Structured Entities Controlled by the Company
Details of structured entities controlled by the Company is set out in the Note 40(c) to the Consolidated
Financial Statements in this annual report.
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IV. PERFORMANCE OF THE CORPORATE SOCIAL RESPONSIBILITY
For the performance by the Company of its corporate social responsibility during the Reporting Period, please
refer to the 2017 Corporate Social Responsibility Report separately disclosed by the Company on the website of
the SSE (http://www.sse.com.cn) and the HKExnews website of the Hong Kong Exchanges and Clearing Limited
(http://www.hkexnews.hk).
V.
FUTURE PROSPECT AND RISK ANALYSIS
(I) Market environment
The year 2018 marks the 40th anniversary of China’s reform and opening-up. With the focus on changes in
major social contradiction, China will promote changes in quality, efficiency and motivation according to
the requirement of high-quality development. It is expected that China’s economic development will remain
stable in general with structures becoming more balanced. In particular, it is expected that China will make
steady progresses in prevention and mitigation of major risks, targeted poverty alleviation and pollution
prevention and control, and achieve a healthy social and economic development, which will provide a
stable and good development environment for the insurance industry. In the new era, people’s demands
for insurance protections and wealth management increase rapidly, with their focus on more diversified
insurance products. Online and offline purchases are further integrated, and more differentiated and
personalized services are required with people’s increased demands on their service experiences. The Chinese
government highly values the development of modern service industries such as pension and health, attaches
more importance to the use of insurance mechanism to support and supplement public services, increases the
protection level of supplementary major medical expenses insurance and basic medical insurances, actively
promotes tax preferential health insurances, and carries out pilot long-term care insurance programs and
pilot individual income tax deferred pension insurance programs, which enables the insurance industry
to play a more important role in economic improvement in terms of quality and efficiency, people’s well-
being protection and social governance. Aiming to serve the real economy, safeguard against risks and push
forward in-depth reforms, the regulatory authorities strive to promote the development of market standards
in an orderly manner and to constantly improve the capabilities of the industry to better serve economic and
social development by strengthening supervision and promoting transformation.
(II) Development strategies and business plans
In 2018, the Company will firmly stick to the general keynote of “making steady progress” and the due role
of insurance in protection. With the “13th Five-Year Plan” of the Company as its guideline, the Company
will adhere to the operating guideline of “prioritizing value, strengthening sales force, optimizing business
structure, achieving stable growth and safeguarding against risks” in accordance with the requirement of
high-quality development, and implement the innovation-driven development strategy. The Company will
push forward the “Three Strategies” in relation to the development of individual insurance and markets in
large-and medium-sized cities and rural areas, and make great efforts to accomplish the five major tasks of
“transforming sales management model, adjusting business structure, revitalizing and taking lead in large
and medium-sized cities, building technology-driven China Life and preventing and controlling risks”, so as
to achieve all the targets set for the year. The Company will seek to maintain steady business development
and its leading market position, achieve a fast growth of protection-oriented products, and further optimize
its business structure. The Company will strive to achieve a steady growth in the number of productive
agents with the quality of sales force further improved, continuously improve the operational and service
capabilities with deepened technology innovation, and ensure stable and healthy operation by effectively
preventing and controlling risks, thus facilitating the Company’s progress in all aspects with high-quality
development.
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(III) Major potential risks and measures in relation thereto
In 2018, the Company will consistently strengthen its analysis of macro-economic trends and complex risk
factors, and strive 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 are set below:
Firstly, risks relating to business. Since 2016, the Chinese financial regulatory authorities launched a
series of stringent regulations to deal with irregularities with unprecedented efforts. In long term, the
“stringent supervision” will further regulate the industry and create a favorable environment for the healthy
development of the industry; in short term, the Company will face greater pressure in its transformation
and risk prevention and control. With the market interest rate remaining at a high level and cross-sector
competition existing in the financial market, the competitiveness of savings-type insurance products will
decline. The Company will be under certain pressures in maintaining a faster business growth, and may face
more uncertainties and complexities.
Secondly, risks relating to investments and profitability. In the event that the domestic and international
economies do not develop as expected, the volatility of financial markets may become greater and the
market risks relating to investment portfolios and credit risk may rise. The Company may develop new
investment channels, utilize new investment vehicles or appoint new investment managers, which may
expose the Company to new risks. All of the above factors may affect the Company’s investment income
and the book value of its assets. Moreover, some of the Company’s assets are held in foreign currencies,
which may give rise to the risk of exchange gains and losses arising from exchange rate fluctuations. In
addition, the operational and financial risks of associated enterprises and the fluctuation in their profitability
may undermine the expected returns on investment, which may have certain impacts on the Company’s
profitability.
As such, the Company will keep a close eye on market development, maintain its strategic consistency
and tactical flexibility, consider development as its first priority, put more efforts in pushing forward
transformation and upgrade and consolidating its development foundation, conduct its business in strict
compliance with laws and regulations, and properly address challenges from all aspects, so as to ensure a
stable and healthy development of the Company.
It is expected that the Company will have sufficient capital to meet its insurance business expenditures
and new investment needs in general in 2018. At the same time, if there is any further capital demand, the
Company will make corresponding financing arrangements based on capital market conditions to further
implement its future business development strategies.
China Life Insurance Company Limited Annual Report 2017
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Embedded Value
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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.
China Life Insurance Company Limited Annual Report 2017
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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
return is assumed to be 5%. 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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SUMMARY OF RESULTS
The embedded value as at 31 December 2017 and the value of one year’s sales for the 12 months ended 31 December
2017, the corresponding results as at 31 December 2016 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.
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RMB million
31 December
2017
31 December
2016
370,500
398,723
(35,050)
363,673
734,172
64,627
(4,510)
60,117
349,528
332,317
(29,787)
302,530
652,057
53,952
(4,641)
49,311
China Life Insurance Company Limited Annual Report 2017
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VALUE OF ONE YEAR’S SALES BY CHANNEL
The value of one year’s sales for the 12 months ended 31 December 2017 by channel is shown below:
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Table 2
Value of One Year’s Sales by Channel
Channel
Exclusive Individual Agent Channel
Bancassurance Channel
Group Insurance Channel
Total
Note: Numbers may not be additive due to rounding.
RMB million
31 December
2017
31 December
2016
53,170
6,536
410
60,117
46,326
2,610
375
49,311
The new business margin of one year’s sales for the 12 months ended 31 December 2017 by channel is shown below:
Table 3
New Business Margin of One Year’s Sales by Channel
Channel
Exclusive Individual Agent Channel
Bancassurance Channel
Group Insurance Channel
By FYP
By APE
31 December
2017
31 December
2016
31 December
2017
31 December
2016
47.2%
8.0%
1.1%
51.1%
3.0%
1.0%
47.3%
23.2%
1.1%
51.2%
10.2%
1.1%
Note: FYP (First Year Premium) is the written premium used for calculation of the value of one year’s sales and APE (Annual Premium
Equivalent) is calculated as the sum of 100 percent of first year regular premiums and 10 percent of single premiums.
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MOVEMENT ANALYSIS
The following analysis tracks the movement of the embedded value from the start to the end of the Reporting Period:
Table 4
Analysis of Embedded Value Movement in 2017
ITEM
Embedded Value at the 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 2017 (sum A through J)
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RMB million
652,057
52,472
60,117
529
(4,280)
(5,926)
(11,549)
(459)
(7,164)
(1,625)
734,172
Notes: 1)
2)
Numbers may not be additive due to rounding.
Items B through J are explained below:
B
Reflects expected impact of covered business, and the expected return on investments supporting the 2017 opening
net worth.
Value of one year’s sales for the 12 months ended 31 December 2017.
Reflects the difference between actual operating experience in 2017 (including mortality, morbidity, lapse, and
expenses etc.) and the assumptions.
Compares actual with expected investment returns during 2017.
Reflects the effects of appraisal methodology and model enhancement, and assumption changes.
Change in the market value adjustment from the beginning of year 2017 to 31 December 2017 and other
adjustments.
Reflects the gains or losses due to changes in exchange rate.
Reflects dividends distributed to shareholders during 2017.
Other miscellaneous items.
C
D
E
F
G
H
I
J
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SENSITIVITY RESULTS
Sensitivity tests were 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 5
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
9.
10% decrease in lapse rates
10.
10% increase in morbidity rates
11.
10% decrease in morbidity rates
12.
13. Using 2016 EV appraisal assumptions
8.
RMB million
Value of In-Force
Business after Cost of
Required Capital
Value of One Year’s
Sales after Cost of
Required Capital
363,673
347,884
380,622
425,453
302,186
358,884
368,460
361,113
366,227
363,021
364,137
358,936
368,448
357,052
60,117
57,470
62,964
68,690
51,558
56,878
63,356
59,400
60,835
59,149
61,030
58,997
61,235
60,114
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China Life Insurance Company Limited Annual Report 2017
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 as at 31 December 2017
(“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 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.
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Scope of work
Our scope of work covered:
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a review of the methodology used to develop the embedded value and value of one year’s sales as at 31 December
2017, 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 2017;
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
Benjamin Chen
22 March 2018
China Life Insurance Company Limited Annual Report 2017
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Significant Events
Material Litigations or Arbitrations
Major Connected Transactions
Material Contracts and
Their Performance
Undertakings
Restriction on Major Assets
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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 Rules Governing the Listing of Securities on the HKSE
(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, the framework agreements entered into by CLWM with the Company,
CLIC, CLP&C, China Life Insurance (Overseas) Company Limited (“CLO”) and CLI, respectively, and
the framework agreement between CLI and AMP. 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. Each of CLWM and AMP 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 framework agreements entered into by AMP with
the Company, Pension Company, CLIC and CLP&C, respectively, the asset management agreement for
alternative investments between the Company and CLI, and the “Framework Agreement in relation to the
Subscription and Redemption of Trust Products and Other Daily Transactions” between the Company and
Chongqing International Trust Inc. (“Chongqing Trust”). Such agreements and the transactions thereunder
have been approved by the independent shareholders of the Company. Chongqing Trust is an associate of
CLIC and CLP&C by virtue of its acting as the trustee of a trust scheme of which CLP&C is a beneficiary,
and is therefore also a connected person of the Company pursuant to Rule 14A.13(2) of the Listing Rules.
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.
China Life Insurance Company Limited Annual Report 2017
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In addition, after the Reporting Period, the Company also carries out certain continuing connected
transactions, including the framework agreements entered into by CLWM with Pension Company and
China Life E-commerce Company Limited (“CLEC”), respectively, and the framework agreement between
CLWM and Chongqing Trust, which are subject to the reporting, announcement and annual review
requirements but are exempt from the independent shareholders’ approval requirement under the Listing
Rules. As CLIC holds the entire equity interest in CLEC, CLEC is a connected person of the Company.
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 acted as a service provider under the agreement and did 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 ended 31 December 2017 was
RMB1,037 million. The Company and CLIC entered into the 2018 policy management agreement
on 26 December 2017, with a term from 1 January 2018 to 31 December 2020. Pursuant to the
agreement, the Company will continue to accept CLIC’s entrustment to provide policy administration
services relating to the non-transferred policies. The annual cap for each of the three years ending 31
December 2020 is RMB708 million.
For the year ended 31 December 2017, the service fee paid by CLIC to the Company amounted to
RMB739.56 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 2017, the Company paid AMC a service fee of RMB1,153.58
million.
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(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 2017, CLIC paid AMC a service fee of RMB106.79 million.
(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 30 June 2017. As approved by the 2016 Annual General Meeting of the
Company, the Company and CLI entered into the 2017-2018 asset management agreement
for alternative investments on 30 June 2017, with retrospective effect from 1 January 2017
until 31 December 2018. 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 regulatory authorities 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, a floating management fee
and a performance-based bonus. For details as to the method of calculation of the investment
management service fee, floating management fee and performance-based bonus, please refer to
Note 33 in the Notes to the Consolidated Financial Statements. In addition, the assets entrusted
by the Company to CLI will also be partially used for the subscription of the related financial
products established and issued by CLI or of which CLI has participated in the establishment
and issuance, and such related financial products will be limited to infrastructure investment
schemes and project asset-backed schemes.
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The contractual amount of the assets entrusted by the Company to CLI for investment and
management will not exceed RMB550,000 million or its equivalent in foreign currency
(including the contractual amount of the assets already entrusted prior to the execution of
the agreement and the contractual amount of the assets newly entrusted during the term of
the agreement) as at the expiry date of the agreement. In particular, the annual cap on the
contractual amount of the assets newly entrusted for investment and management for 2017
is RMB200,000 million or its equivalent in foreign currency (including the annual cap of
RMB80,000 million or its equivalent in foreign currency for the subscription of the related
financial products, and the annual cap of RMB100,000 million or its equivalent in foreign
currency in respect of the contractual amount of the assets newly entrusted by the Company
in its co-investments with CLIC and CLP&C), and the annual cap on the amount of the
investment management service fee, floating management fee and performance-based bonus
is RMB630 million or its equivalent in foreign currency; the annual cap on the contractual
amount of the assets newly entrusted for investment and management for 2018 is RMB200,000
million or its equivalent in foreign currency (including the annual cap of RMB80,000 million
or its equivalent in foreign currency for the subscription of the related financial products, and
the annual cap of RMB100,000 million or its equivalent in foreign currency in respect of the
contractual amount of the assets newly entrusted by the Company in its co-investments with
CLIC and CLP&C), and the annual cap on the amount of the investment management service
fee, floating management fee and performance-based bonus is RMB990 million or its equivalent
in foreign currency.
For the year ended 31 December 2017, the investment management service fee, floating
management fee and performance-based bonus paid by the Company to CLI amounted to
RMB395.82 million. As at 31 December 2017, the contractual amount of the assets entrusted
by the Company to CLI for investment and management was RMB246,193.00 million, among
which, for the year of 2017, the contractual amount of the assets newly entrusted by the
Company was RMB112,267.00 million (including the contractual amount of RMB0 million
for the subscription of the related financial products, and the contractual amount of the
assets newly entrusted by the Company of RMB0 million in its co-investment with CLIC and
CLP&C).
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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 was automatically extended
for another year after its expiry in accordance with its terms. 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 ended 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 ended 31 December 2017 under the 2015
insurance sales framework agreement to RMB3,000 million and RMB5,000 million, respectively. The
Company and CLP&C entered into the 2018 insurance sales framework agreement on 31 January
2018, with a term of three years from 8 March 2018 to 7 March 2021. Pursuant to the agreement,
CLP&C will continue to entrust the Company to act as an agent to sell selected insurance products
within the authorized regions. The annual caps for the three years ending 31 December 2020 were
RMB4,260 million, RMB5,540 million and RMB7,050 million, respectively.
For the year ended 31 December 2017, CLP&C paid the Company an agency service fee of
RMB3,030.41 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 expired on 31 December 2016. 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. 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
2019, the annual cap of the subscription price and corresponding subscription fee for the
subscription of fund products is RMB72,600 million; the annual cap of the redemption price
and corresponding redemption fee for the redemption of fund products is 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 cap of the fees for other daily transactions is RMB100 million.
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For the year ended 31 December 2017, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB10,310.12 million, the redemption price and
corresponding redemption fee for the redemption of fund products was RMB12,017.20 million,
the sales commission fee and client maintenance fee paid by AMP was RMB0 million, the
management fee and performance-based fee paid by the Company for the asset management for
specific clients was RMB23.45 million, and the fees for other daily transactions were RMB0.68
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 expired on 31 December 2016. 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. 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 2019, the annual cap of the
subscription price and corresponding subscription fee for the subscription of fund products is
RMB10,000 million; the annual cap of the redemption price and corresponding redemption
fee for the redemption of fund products is RMB10,000 million; the annual cap of the sales
commission fee and client maintenance fee payable by AMP is RMB100 million; the annual cap
of the management fee and performance-based fee payable by Pension Company for the asset
management for specific clients is RMB100 million; and the annual cap of the fees for other
daily transactions is RMB100 million.
For the year ended 31 December 2017, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB534.07 million, the redemption price and
corresponding redemption fee for the redemption of fund products was RMB1,750.70 million,
the sales commission fee and client maintenance fee paid by AMP was RMB0 million, the
management fee and performance-based fee paid by Pension Company for the asset management
for specific clients was RMB0 million, and the fees for other daily transactions were RMB0
million.
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(3)
(4)
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 expired on 31 December
2016. 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. 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
2019, the annual cap of the subscription price and corresponding subscription fee for the
subscription of fund products is RMB10,000 million; the annual cap of the redemption price
and corresponding redemption fee for the redemption of fund products is RMB10,000 million;
and the annual cap of the management fee and performance-based fee payable by CLIC for the
asset management for specific clients is RMB100 million.
For the year ended 31 December 2017, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB4,082.23 million, the redemption price and
corresponding redemption fee for the redemption of fund products was RMB7,617.19 million,
and the management fee and performance-based fee paid by CLIC for the asset management for
specific clients was RMB20.41 million.
Framework Agreement between CLP&C and AMP
CLP&C and AMP entered into the “Cooperation Framework Agreement” on 6 June 2014.
The agreement expired on 31 December 2016. 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. 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 2019, the annual cap of the subscription price for the fund
products is RMB10,000 million; the annual cap of the redemption price for the fund products
is RMB10,000 million; the annual cap of the subscription fee for the fund products is RMB100
million; the annual cap of the redemption fee for the fund products is RMB100 million; the
annual cap of the sales commission fee and client maintenance fee payable by AMP is RMB100
million; the annual cap of the management fee and performance-based fee payable by CLP&C
for the asset management for specific clients is RMB100 million; and the annual cap of the fees
for other daily transactions is RMB100 million.
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For the year ended 31 December 2017, the subscription price for the fund products was RMB0
million, the redemption price for the fund products was RMB66.61 million, the subscription
fee for the fund products was RMB0 million, the redemption fee for the fund products was
RMB0.10 million, the sales commission fee and client maintenance fee paid by AMP was
RMB0 million, the management fee and performance-based fee paid by CLP&C for the asset
management for specific clients was RMB2.30 million, and the fees for other daily transactions
were RMB0.07 million.
(5)
Framework Agreement between CLI and AMP
CLI and AMP entered into the “Framework Agreement in relation to Subscription and
Redemption of Fund Products, Asset Management for Specific Clients and Other Daily
Transactions” on 20 December 2017. The agreement became effective upon signing by the
parties and will expire on 31 December 2019. Pursuant to the agreement, CLI and AMP
will conduct certain daily transactions, including the subscription and redemption of fund
products, asset management for specific clients 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 2019, the annual caps of the subscription price and corresponding
subscription fee for the subscription of fund products are RMB5,000 million, RMB7,000
million and RMB7,000 million, respectively; the annual caps of the redemption price and
corresponding redemption fee for the redemption of fund products are RMB5,000 million,
RMB7,000 million and RMB7,000 million, respectively; the annual cap of the management
fee and performance-based fee payable by CLI for the asset management for specific clients is
RMB50 million; and the annual cap of the fees for other daily transactions is RMB50 million.
For the year ended 31 December 2017, the subscription price and corresponding subscription
fee for the subscription of fund products was RMB688.02 million, the redemption price and
corresponding redemption fee for the redemption of fund products was RMB0 million, the
management fee and performance-based fee paid by CLI for the asset management for specific
clients was RMB0 million, and the fees for other daily transactions were RMB0 million.
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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 expired on 31 December 2017. Pursuant to
the agreement, the Company and CLWM entered into certain daily transactions, including
asset management services, sales agency services for asset management products 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 2017, the annual caps of the management
fee payable by the Company for the asset management services were RMB55 million, RMB180
million and RMB240 million, respectively; the annual caps of fees in connection with the sales
agency services payable by CLWM, including the sales commission fee, client maintenance fee,
handling fee and intermediary fee, were RMB25 million, RMB50 million and RMB100 million,
respectively; and the annual caps of the fees for other daily transactions were RMB25 million,
RMB50 million and RMB100 million, respectively. The Company and CLWM entered into
the 2018 framework agreement on 28 December 2017, pursuant to which the Company will
continue to conduct certain transactions with CLWM during the period from 1 January 2018
to 31 December 2020, including the asset management services, the sales agency services for
asset management products and other daily transactions permitted by laws and regulations. For
the three years ending 31 December 2020, the annual cap of the management fee payable by
the Company for the asset management services is RMB240 million; the annual cap of fees in
connection with the sales agency services payable by CLWM, including the sales commission
fee, client maintenance fee, handling fee and intermediary fee, is RMB100 million; and the
annual cap of the fees for other daily transactions is RMB100 million.
For the year ended 31 December 2017, the management fee paid by the Company for the asset
management services was RMB1.80 million; the fees in connection with the sales agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee, were RMB0 million; and the fees for other daily transactions were RMB5.49
million.
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(2)
(3)
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 expired on 31 December 2017. Pursuant to the agreement, CLIC subscribed for the asset
management products, in respect of which CLWM acted as the manager, according to its
needs of asset allocation. 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 2017, the annual caps of the management fee payable by CLIC
for the asset management services were RMB40 million, RMB70 million and RMB80 million,
respectively. CLIC and CLWM entered into the 2018 framework agreement on 27 December
2017, pursuant to which CLIC will continue to conduct certain transactions with CLWM
during the period from 1 January 2018 to 31 December 2020, including the asset management
services and advisory services. For the three years ending 31 December 2020, the annual caps
of the management fee payable by CLIC for the asset management services are RMB50 million,
RMB120 million and RMB180 million, respectively; and the annual caps of the advisory fee
payable by CLIC for the advisory services are RMB50 million, RMB80 million and RMB120
million, respectively.
For the year ended 31 December 2017, the management fee paid by CLIC for the asset
management services was RMB0.73 million.
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 expired on 31 December 2017. Pursuant to the agreement,
CLP&C and CLWM entered into certain daily transactions, including asset management
services, sales agency services for asset management products 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 2017, the annual caps of the management
fee payable by CLP&C for the asset management services were RMB5 million, RMB180
million and RMB300 million, respectively; the annual caps of fees in connection with the sales
agency services payable by CLWM, including the sales commission fee, client maintenance
fee, handling fee and intermediary fee, were RMB2 million, RMB150 million and RMB200
million, respectively; and the annual caps of the fees for other daily transactions were RMB5
million, RMB50 million and RMB50 million, respectively. CLP&C and CLWM entered
into the 2018 framework agreement on 29 December 2017, pursuant to which CLP&C will
continue to conduct certain transactions with CLWM during the period from 1 January 2018 to
31 December 2020, including the asset management services, advisory services and other daily
transactions permitted by laws and regulations. For the three years ending 31 December 2020,
the annual caps of the management fee payable by CLP&C for the asset management services
are RMB50 million, RMB150 million and RMB240 million, respectively; the annual caps of the
advisory fee payable by CLP&C for the advisory services are RMB40 million, RMB80 million
and RMB120 million, respectively; and the annual caps of the fees for other daily transactions
are RMB150 million, RMB400 million and RMB700 million, respectively.
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For the year ended 31 December 2017, the management fee paid by CLP&C for the asset
management services was RMB5.83 million; the fees in connection with the sales agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee, were RMB0 million; and the fees for other daily transactions were RMB0.04
million.
(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 expired on 31 December 2017. Pursuant to the agreement,
CLO and CLWM entered into certain daily transactions, including asset management services,
sales agency services for asset management products 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 2017, the annual caps of the management fee payable by
CLO for the asset management services were RMB10 million, RMB30 million and RMB50
million, respectively; the annual caps of fees in connection with the sales agency services payable
by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee, were RMB5 million, RMB5 million and RMB10 million, respectively; and
the annual caps of the fees for other daily transactions were RMB5 million, RMB5 million and
RMB10 million, respectively.
For the year ended 31 December 2017, there was no relevant transaction between CLO and
CLWM.
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(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 expired on 31 December 2017. Pursuant to the agreement, CLI
and CLWM entered into certain daily transactions, including asset management services, sales
agency services for asset management products 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 2017, the annual caps of the management fee payable by CLI for the asset
management services were 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 sales agency services payable by CLWM,
including the sales commission fee, client maintenance fee, handling fee and intermediary fee,
were RMB10 million, RMB40 million and RMB80 million, respectively; and the annual caps of
the fees for other daily transactions were RMB10 million, RMB40 million and RMB80 million,
respectively. CLI and CLWM entered into the 2018 framework agreement on 20 December
2017, pursuant to which CLI will continue to conduct certain transactions with CLWM
during the period from 1 January 2018 to 31 December 2020, including the asset management
services, advisory services and other daily transactions permitted by laws and regulations. For
the three years ending 31 December 2020, the annual caps of the management fee for the asset
management services are RMB40 million, RMB80 million and RMB120 million, respectively;
the annual caps of the advisory fee for the advisory services are RMB40 million, RMB80 million
and RMB120 million, respectively; and the annual caps of the fees for other daily transactions
are RMB20 million, RMB80 million and RMB160 million, respectively.
For the year ended 31 December 2017, the management fee paid by CLI for the asset
management services was RMB1.15 million; the fees in connection with the sales agency services
paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and
intermediary fee, were RMB0 million; and the fees for other daily transactions were RMB0
million.
(6)
Framework Agreement between Pension Company and CLWM
Pension Company and CLWM intended to enter into the “Framework Agreement in relation
to Daily Connected Transactions”, pursuant to which CLI will conduct certain transactions
with CLWM during the period from 1 January 2018 to 31 December 2020, including the
asset management services, advisory services and other daily transactions permitted by laws and
regulations. For the three years ending 31 December 2020, the annual caps of the management
fee payable by Pension Company for the asset management services are RMB100 million,
RMB150 million and RMB200 million, respectively; the annual caps of the advisory fee payable
by Pension Company for the advisory services are RMB40 million, RMB80 million and RMB90
million, respectively; and the annual caps of the fees for other daily transactions are RMB90
million; RMB180 million and RMB270 million, respectively.
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(7)
Framework Agreement between CLEC and CLWM
CLEC and CLWM entered into the “Framework Agreement in relation to Daily Connected
Transactions” on 29 December 2017, pursuant to which CLEC will conduct certain
transactions with CLWM during the period from 1 January 2018 to 31 December 2020,
including the asset management services, advisory services and other daily transactions permitted
by laws and regulations. For the three years ending 31 December 2020, the annual caps of
the management fee payable by CLEC for the asset management services are RMB5 million,
RMB10 million and RMB15 million, respectively; the annual caps of the advisory fee payable
by CLEC for the advisory services are RMB5 million, RMB10 million and RMB15 million,
respectively; and the annual caps of the fees for other daily transactions are RMB200 million;
RMB300 million and RMB400 million, respectively.
6.
Framework Agreements with Chongqing Trust
(1)
(2)
Framework Agreement between the Company and Chongqing Trust
As approved by the 2016 Annual General Meeting of the Company, the Company and
Chongqing Trust entered into the “Framework Agreement in relation to the Subscription and
Redemption of Trust Products and Other Daily Transactions” on 21 June 2017. The agreement
became effective upon signing by the parties and will expire on 31 December 2019. Pursuant
to the agreement, the Company and Chongqing Trust will conduct the subscription and
redemption of trust products and other daily transactions permitted by laws and regulations in
their ordinary course of business and on normal commercial terms. 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 2019, the annual
cap of the subscription amount of the trust products is RMB50,000 million (including the
trustee’s remuneration of no more than RMB500 million per year to be received by Chongqing
Trust from the trust assets); the annual cap of the redemption amount of the trust products
is RMB4,500 million; and the annual cap of the fees for other daily transactions is RMB100
million.
For the year ended 31 December 2017, the subscription amount of the trust products was
RMB8,174.00 million, the redemption amount of the trust products was RMB0 million, and
the fees for other daily transactions were RMB0 million.
Framework Agreement between CLWM and Chongqing Trust
CLWM and Chongqing Trust entered into the “Framework Agreement in relation to Daily
Connected Transactions” on 29 December 2017, with a term from 1 January 2018 to 31
December 2019. Pursuant to the agreement, CLWM and Chongqing Trust will conduct the
subscription of trust products, asset management services, advisory services and other daily
transactions permitted by laws and regulations in their ordinary course of business and on
normal commercial terms. 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
each of the two years ending 31 December 2019, the annual cap of the subscription amount of
the trust products is RMB10,000 million (including the trustee’s remuneration of no more than
RMB150 million per year to be received by Chongqing Trust from the trust assets); the annual
cap of the management fee for the asset management services is RMB150 million; the annual
cap of the advisory fee for the advisory services is RMB150 million; and the annual cap of the
fees for other daily transactions is RMB100 million.
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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.
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(II) Other Major Connected Transactions
1.
2.
Formation of Partnership with Ningbo Meishan Bonded Port Area Baiyi Investment Management
Partnership (Limited Partnership) (“Fund GP”)
The Company (as the limited partner) entered into the special fund partnership agreement and
its supplemental agreement with Fund GP (as the general partner) on 27 November 2017 for
the formation of Ningbo Meishan Bonded Port Area Baining Investment Partnership (Limited
Partnership) (the “Special Fund Partnership”). The total capital amount raised by the Special Fund
Partnership from the limited partner is RMB5,600 million, all of which is contributed by the
Company. Following the establishment of the Special Fund Partnership, the Special Fund Partnership
and Baidu, Inc. (each as a limited partner) entered into the Baidu fund partnership agreement with
Fund GP (as the general partner) on 27 November 2017 for the formation of Ningbo Meishan
Bonded Port Area Baishan Investment Management Partnership (Limited Partnership) (the “Baidu
Fund Partnership”). The total capital of the Special Fund Partnership will be invested in the Baidu
Fund Partnership. The Baidu Fund Partnership will primarily make equity investment or quasi equity
investment in private equity projects at the middle to later stages in the internet sector, including
internet, mobile internet, artificial intelligence, internet finance, consumption upgrade, and internet+.
Formation of Partnership with China Life Properties Investment Management Company Limited
(“China Life Properties”)
The Company (as the limited partner) and China Life Properties (as the general partner) entered
into the partnership agreement on 19 December 2017 for the formation of Shanghai Wansheng
Industrial Partnership (Limited Partnership) (the “Partnership”). The total capital amount of the
Partnership is RMB4,160.1 million, of which RMB4,160 million is contributed by the Company and
RMB0.1 million is contributed by China Life Properties. The capital raised by the Partnership will
be used to acquire 21.4% equity interest in Shanghai Rui Hong Xin Cheng Co., Ltd. from Hollyfield
Holdings Limited, through which the Partnership will obtain 49.5% interest in the land use rights
corresponding to Lot 10, Lot 3 shopping mall (Hall of the Moon), Lot 6 shopping mall (Hall of the
Stars) and phase II shopping mall within the territory of the Rui Hong Xin Cheng Project held by
Shanghai Rui Hong Xin Cheng Co., Ltd.
Each of Fund GP and China Life Properties is an associate of CLIC and therefore a connected
person of the Company. The transactions regarding the formation of the partnerships as described
above constituted connected transactions of the Company that were subject to the reporting
and announcement requirements but were exempt from the independent shareholders’ approval
requirement under 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.
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(III) Statement on Claims, Debt Transactions and Guarantees etc. with Connected Parties
outside the Course of its Business
During the Reporting Period, the Company was not involved in claims, debt transactions or guarantees with
connected parties outside the course of its business.
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. The Company neither gave external guarantees nor provided guarantees to its non-wholly owned subsidiaries
during the Reporting Period.
3.
Entrusted wealth management during the Reporting Period or any wealth management 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.
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IV. UNDERTAKINGS OF THE COMPANY, SHAREHOLDERS, EFFECTIVE 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.
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 legally practicable measures to resolve the issue and will bear potential losses suffered by the Company as a
result of the defective ownership.
V. RESTRICTION ON MAJOR ASSETS
The major assets of the Company are financial assets. During the Reporting Period, there was no major asset of the
Company being seized, detained or frozen that is subject to the disclosure requirements.
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Corporate
Governance
Report of the Board of Directors
Report of the Supervisory
Committee
Changes in Ordinary Shares
and Shareholders Information
Directors, Supervisors, Senior
Management and Employees
Corporate Governance
71
82
85
89
108
Report of the Board of Directors
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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. Yuan Changqing, Mr. Liu Huimin, Mr. Yin Zhaojun, 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
Yuan Changqing
Miao Jianmin
Wang Sidong
Liu Jiade
Liu Huimin
Yin Zhaojun
Independent Directors
Chang Tso Tung Stephen
Robinson Drake Pike
Tang Xin
Leung Oi-Sie Elsie
(appointed as Director with effect from 11 February 2018)
(resigned with effect from 7 April 2017 due to adjustment
of working arrangements)
(resigned with effect from 12 January 2018 due to adjustment
of working arrangements)
(resigned with effect from 8 August 2017 due to adjustment
of working arrangements)
(appointed as Director with effect from 31 July 2017)
(appointed as Director with effect from 31 July 2017)
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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 section headed “Management Discussion
and Analysis” 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 ecological environment relates to the future of our race and people’s well-being. The Company, based
on its features of energy consumption, strived to cut down its energy consumption and carbon emissions
at each operating segment by means of electronic office processing system, technological innovation and
adoption of new environment-friendly materials. The Company actively promoted and applied the spirits
of diligence and thrift to consistently increase the awareness of its employees on performing energy saving
measures, with a view to making contribution to the speedy reform for the system of ecological civilization
and the construction of a beautiful China.
The Company strictly complied with 15 national and local laws and regulations, including the “Energy
Conservation Law of the People’s Republic of China” and the “‘13th Five-Year’ Energy Saving and Emission
Reduction Comprehensive Work Plan”, and formulated the “Provisional Measures for the Administration
of Energy Saving and Emission Reduction of China Life Insurance Company Limited” to define the duties
and functions of the Company’s energy management committee with “strengthening the awarenesses on
efficiency and costs” as the starting point, in order to comprehensively draw up the Company’s overall plan
for the work of energy saving and emission reduction.
The Company launched an electronic office reviewing resolutions, dealing with affairs to be considered at
meetings and checking meeting files online, and also put online all ordinary electronic invoices for value-
added tax. The Company developed an electronic service platform to provide convenient services to its
customers while slashing the consumption of paper materials as much as possible. As at the end of 2017, the
Company had issued over 130 million electronic invoices on a cumulative basis. The launch of electronic
services helped reduce approximately 1,453.25 tonnes of paper. Through the adoption of electronic
insurance policies, the Company cut down its consumption of paper materials by approximately 1,420
million pages for the year. “China Life E-Bao”, as the intelligent service platform vigorously developed by
China Life, has adopted a highly efficient model designed for paperless services. Information technology has
made outstanding contribution to green energy saving and environmental protection. The adoption of a new
type of standard electronic equipment for energy saving and consumption reduction enabled the Company
to reduce its power consumption by approximately 165 million KWh for the year.
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With the integration of functions such as data processing, research and development, and educational
training, China Life Science and Technology Park adopts various technologies and measures on energy
saving and consumption reduction, including an energy storage air-conditioning system, photovoltaic
thermal system, rainwater collection system, reclaimed water treatment system, LED lighting and control,
natural lighting and planted roof, which will significantly reduce its operating costs. It is expected that the
running costs will be saved by a range between 20% and 30% as compared to similar ordinary buildings.
(III) Compliance by the Company with the relevant laws and regulations that have a significant impact
The Company adhered to the code of conduct of “being trustworthy, assuming risks, emphasizing on
services and being legal compliant”, adopted the business compliance concepts of “starting from the top
level, having responsibility for all to be compliant, and creating value from compliance”, and strictly
observed and effectively implemented applicable laws and regulations and regulatory requirements,
such as the Insurance Law, the Company Law and the “Regulations for the Administration of Insurance
Companies”. The Company strictly implemented the requirements of “1+4” series of documents6 released by
the CIRC and major regulatory documents on product development and design, retrospective administration
of sales practices and investment supervision, etc., strictly implemented the requirements of the CIRC with
respect to the special action of “combating sales chaos and cracking down upon illegal business” relating to
personal insurance, conducted rectifications in great depth with a focus on sales, channel and product chaos
as well as illegal business activities, so as to consolidate the foundation for the Company’s development and
prevent systemic risks. The Company constantly improved the relevant rules and mechanisms concerning
product design, business operation and risk control, and offered full cooperation, support and protection for
the three strategic missions of the Company – speedy development, transformation and upgrade, and risk
prevention and control.
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(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 pushes forward
the establishment of a customer-oriented business model in order to create value for its customers. The
Company has provided insurance services for more than 500 million customers. The evaluation results of
customer satisfaction and customer loyalty increased by 2.03% and 3.25% year-on-year, respectively.
6
With regard to “1+4” series of documents released by the CIRC, “1” stands for the “Circular of the CIRC on Further
Strengthening Insurance Regulation and Maintaining the Stable and Healthy Development of the Insurance Industry”, which
represents the overall concept of the current regulatory work; “4” stands for four implementing documents, namely, the
“Circular of the CIRC on Further Strengthening Risk Prevention and Control for the Insurance Industry”, the “Circular of the
CIRC on Strengthening Insurance Regulation, Clamping Down on Illegalities and Violations and Governing Irregular Practices
in the Market”, the “Circular of the CIRC on Remedying Regulatory Deficiencies and Establishing a Stringent and Effective
Insurance Regulatory System”, and the “Guiding Opinions of the CIRC on Supporting the Development of Real Economy by
the Insurance Industry”.
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By deeply exploring customers’ requirements, the Company optimized basic services and made innovation in
value-added services to consistently improve customer experience. In 2017, the Company further promoted
the global VIP care services, and constantly improved the services including the international travel and
medical emergency services, domestic medical emergency services, 12-hour health consultation hotlines
and global VIP benefit services. The Company organized the 11th “Hand-in-Hand with China Life” value-
added service activities, holding nearly 20,000 online and on-site activities with the theme of health, sports,
and parent-child activities. By organizing a variety of outdoor running and hiking activities, the Company
provided its customers with scientific activities to help them better enjoy healthy life; by organizing the
7th “Little Painters of China Life” activities, the Company was consistently concerned about the growth
of teenagers and children; by conducting the China Life customer festival activities on 16 June 2017, the
Company promoted the application of intelligent services and upgraded its customer experience. The
Company also broadened its service scope and deepened the customers’ understanding through a variety of
value-added service activities, thus maintaining good interaction with its customers.
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 artificial intelligence and big
data, in a bid to enhance the intelligent service capability of the contact center, increase its service efficiency
and optimize 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, mentoring, job rotation and exchange
of opinions, practice at local branches, assessment of competent staff, base platform training, and talent
cultivation under the Spark Program. The Company attached importance to humanistic concern by
safeguarding the legitimate rights and interest of employees in a practical manner and encouraging
employees to arrange vacations and annual leave in a scientific way, with an aim to achieve work-life balance.
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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 provincial 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 resolutions adopted by employee representative meetings, thus carrying out the
supervisory functions in a serious manner and constantly improving democratic management. The second
meeting of the second session of the Employee Representative Meeting of the Company was held in Beijing
on 18 April 2017. According to the spirit of alleviating poverty proposed at the Central Poverty Alleviation
and Development Conference, the Company consistently implemented the special plan for warm homes for
2016-2018 in great depth. In particular, 34 warm homes meeting the criteria of provincial branches and 185
warm homes meeting the criteria of local branches were preliminarily approved for establishment in 2017.
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.
2.
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;
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.
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 in
recent three years;
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3.
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.
(IV) Profit distribution plan and public reserves capitalization plan
1.
Profit distribution plan or public reserves capitalization plan for the year of 2017
In accordance with the profit distribution plan for the year 2017 approved by the Board on 22 March
2018, with the appropriation to its discretionary surplus reserve fund of RMB3,218 million (10%
of the net profit for 2017), the Company, based on 28,264,705,000 shares in issue, proposed to
distribute cash dividends amounting to RMB11,306 million to all shareholders of the Company at
RMB0.40 per share (inclusive of tax). The foregoing profit distribution plan is subject to the approval
by the 2017 Annual General Meeting to be held on 6 June 2018 (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.
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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:
Unit: RMB million
Net profit
attributable
to equity
holders of the
Company in the
consolidated
statements
for the year in
which dividends
were distributed
Percentage of
amount of
cash dividends
in net profit
attributable
to equity
holders of the
Company in the
consolidated
statements
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Year in which
dividends
were
distributed
Number of
bonus stocks
per ten shares
(shares)
Amount of Transfer of public
reserve into
dividends
share capital
per ten shares
per ten shares
(RMB)
(shares)
(including tax)
Amount of
cash dividends
(including tax)
2017
2016
2015
–
–
–
4.0
2.4
4.2
–
–
–
11,306
6,784
11,871
32,253
19,127
34,699
35%
35%
34%
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
RMB171 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.
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8.
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.
9.
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 PRC, the Enterprise Income Tax Law of the PRC, 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 12 June 2017 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 31
May 2017 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 2017. 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.
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 is 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.
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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 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 2017.
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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.
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 Connected 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.
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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 2017.
22. MAJOR CUSTOMERS
In 2017, 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 (22 March 2018), 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.
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25. AUDITORS
A resolution was passed at the 2016 Annual General Meeting to engage 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, who will hold office until the conclusion of the 2017 Annual
General Meeting. Ernst & Young Hua Ming LLP and Ernst & Young have been serving as the Company’s auditors
for five consecutive years.
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 the Company to the auditors in 2017 was as follows:
Service/Nature
Fees (RMB million)
Audit, review and agreed-up procedures fee
Including: Internal control audit fee
Non-audit services fee
Total
58.61
11.14
1.66
60.27
At the 2017 Annual General Meeting to be held on 6 June 2018, the Board will propose a resolution to continue
to appoint Ernst & Young Hua Ming LLP as the PRC auditor and the auditor for US Form 20-F of the Company
for the year 2018, and Ernst & Young as the Hong Kong auditor of the Company for the year 2018.
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By Order of the Board
Yang Mingsheng
Chairman
Beijing, China
22 March 2018
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Report of the Supervisory Committee
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From left to right:
Mr. Song Ping, Mr. Luo Zhaohui,
Mr. Miao Ping, Mr. Shi Xiangming,
Ms. Wang Cuifei
I.
ACTIVITIES OF THE SUPERVISORY COMMITTEE
(I) Currently, the fifth session of the Supervisory Committee comprises Mr. Miao Ping, Mr. Shi Xiangming,
Mr. Luo Zhaohui, Ms. Wang Cuifei and Mr. Song Ping, 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 Mr. Luo Zhaohui are Non-employee Representative Supervisors, and Ms. Wang Cuifei
and Mr. Song Ping are Employee Representative Supervisors. In August 2017, Mr. Zhan Zhong resigned
from his position as an Employee Representative Supervisor due to adjustment of work arrangements. In
January 2018, Mr. Li Guodong resigned from his position as an Employee Representative Supervisor due
to adjustment of work arrangements. In February 2018, Ms. Xiong Junhong resigned from her position as a
Non-employee Representative Supervisor due to adjustment of work arrangements.
(II) 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 2017, the fifth session of the Supervisory
Committee held five 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.
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(III) Attending and participating in corporate governance meetings and actively exercising their supervisory
role. In 2017, the Supervisory Committee attended the 2016 Annual General Meeting and the First
Extraordinary General Meeting 2017 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.
(IV) Actively conducting research and investigation activities and examining and understanding the business
operation of local branches. Mr. Miao Ping, the Chairman of the Supervisory Committee, together with Ms.
Xiong Junhong and Ms. Wang Cuifei, the members of the Supervisory Committee, carried out investigation
and research on local branches of the Company in Guangxi Province. The investigation and research team
successively listened to business reports from the local branches in Guangxi and Liuzhou and the local sub-
branch of the Company in Luzhai, held in-depth conferences with their respective key management, visited
field offices and communicated with the frontline employees at counters of the customer service center of
Liuzhou branch and Luzhai sub-branch. 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.
(V) Attending training courses and constantly enhancing duty performance of the Supervisors. In 2017, the
members of the Supervisory Committee attended the first and sixth special training courses of 2017 for
directors and supervisors of listed companies within the territory of Beijing as organized by the Listed
Companies Association of Beijing and the first seminar of 2017 for the chairmen of the supervisory
committees of listed companies as organized by China Association for Public Companies, which gave them
the opportunity to learn and understand the regulatory overview of listed companies within the territory of
Beijing, the latest regulatory policies of listed companies and the analysis of cases in relation thereto.
(VI) Actively participating in the meetings and activities organized by China Association for Public Companies.
In 2017, Mr. Miao Ping, the Chairman of the Supervisory Committee, was the vice chairman of the
professional committee of the second session of the supervisory committee of China Association for Public
Companies and attended the meeting for the change of members of the professional committee of the second
session of the supervisory committee of China Association for Public Companies in Shanghai, during which,
the “Work Plan of the Second Session of the Supervisory Committee” and the “2017 Work Plan of the
Supervisory Committee”, etc. were discussed. In order to strengthen the internal control compliance, audit
supervision and risk management of the Company, the Supervisory Committee of the Company participated
in the activity of the “Subject Study of the Supervisory Committees of Listed Companies” organized by
China Association for Public Companies, and submitted the “Study on the Issues Concerning the Work
Allocation between the Supervisory Committee and Independent Directors” as its subject of the study.
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II.
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”.
(I) 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.
(II) 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 and have issued unqualified auditors’ reports for the year ended
2017 in accordance with the China Standards on Auditing of PRC Certified Public Accountants and the
International Standards on Auditing, respectively.
(III) 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.
(IV) 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.
(V)
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 systems.
By Order of the Supervisory Committee
Miao Ping
Chairman of the Supervisory Committee
Beijing, China
22 March 2018
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Changes in Ordinary Shares and Shareholders Information
I. 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.
II.
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.
III. INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER
(I) 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: 120,420
No. of H Share
shareholders: 28,825
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: 138,231
No. of H Share
shareholders: 28,362
Particulars of top ten shareholders of the Company
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Name of shareholder
Nature of
shareholder
Percentage of
shareholding
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
Industrial and Commercial Bank of China
Limited – SSE 50 Exchange Traded Index
Securities Investment Fund
Other
Number of
shares held
as at the end of
the Reporting
Period
19,323,530,000
7,319,236,460
594,502,502
119,719,900
Increase/
decrease during
the Reporting
Period
0
+5,220,506
+22,190,586
0
54,985,761
-4,398,849
22,976,187
-4,314,048
18,452,300
15,015,845
0
0
68.37%
25.90%
2.10%
0.42%
0.19%
0.08%
0.07%
0.05%
0.05%
12,788,337
+440,300
China National Nuclear
Corporation
State-owned legal
person
0.04%
12,400,000
0
Unit: Shares
Number of
shares pledged
or frozen
Number of
shares subject
to selling
restrictions
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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Details of shareholders
1.
2.
3.
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.
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.
Industrial and Commercial Bank of China Limited – China Southern Flexible Allocation of Consumption and Vitality of Hybrid Securities Investment
Fund and Industrial and Commercial Bank of China Limited – SSE 50 Exchange Traded Index Securities Investment Fund have Industrial and Commercial
Bank of China Limited as their 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.
(II) 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
application 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 2017, CLIC held 1,785,098,644 H shares of Town Health
International Medical Group Limited, representing 23.7% of its total shares.
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China Life Insurance Company Limited Annual Report 2017
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.
IV. 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 2017,
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 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 the 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
China Life Insurance
(Group) Company
BlackRock, Inc. (Note 1)
Beneficial owner
A Shares
19,323,530,000 (L)
92.80%
68.37%
Interest in controlled
corporation
H Shares
541,161,285 (L)
4,209,000 (S)
7.27%
0.06%
1.91%
0.01%
The letter “L” denotes a long position. The letter “S” denotes a short position.
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(Note 1): BlackRock, Inc. was interested in a total of 541,161,285 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 3,711,000 H Shares, 4,697,000 H
Shares, 104,470,234 H Shares, 178,053,000 H Shares, 1,618,000 H Shares, 42,351,491 H Shares, 893,000 H
Shares, 3,709,000 H Shares, 30,752,026 H Shares, 1,074,000 H Shares, 5,247,389 H Shares, 3,347,700 H Shares,
53,517,031 H Shares, 43,306,825 H Shares, 28,510,653 H Shares, 477,000 H Shares, 23,795,364 H Shares,
11,026,572 H Shares, 562,000 H Shares and 42,000 H Shares respectively. All of these entities are either controlled
or indirectly controlled subsidiaries of BlackRock, Inc. Of these 541,161,285 H Shares, 850,595 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 4,209,000 H
Shares (0.06%). Of these 4,209,000 H Shares, 1,448,000 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 2017, 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.
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China Life Insurance Company Limited Annual Report 2017
Directors, Supervisors, Senior Management and Employees
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
emolument
from
connected
parties
of the
Company
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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
0
0
140.00
113.40
113.40
0
0
0
32.00
32.00
32.00
30.00
/
21.88
21.66
21.66
0
0
0
0
0
0
0
/
161.88
135.06
135.06
0
0
0
32.00
32.00
32.00
30.00
558.00
Yes
No
No
No
Yes
Yes
Yes
Yes
No
Yes
Yes
/
Name
Position
Gender
Date of Birth
Term
Yang Mingsheng
Lin Dairen
Xu Hengping
Xu Haifeng
Chairman of the Board,
Executive Director
Male
August 1955
Since 22 May 2012
Executive Director
Executive Director
Executive Director
Male
Male
Male
June 1958
Since 27 October 2008
November 1958
Since 11 July 2015
May 1959
Since 11 July 2015
Yuan Changqing
Non-executive Director Male
September 1961
Since 11 February 2018
Liu Huimin
Yin Zhaojun
Non-executive Director Male
Non-executive Director Male
June 1965
July 1965
Since 31 July 2017
Since 31 July 2017
Chang Tso Tung Stephen Independent Director
Robinson Drake Pike
Independent Director
Tang Xin
Independent Director
Male
Male
Male
November 1948
Since 20 October 2014
October 1951
Since 11 July 2015
September 1971
Since 7 March 2016
Leung Oi-Sie Elsie
Independent Director
Female
April 1939
Since 20 July 2016
Total
/
/
/
/
Notes:
1.
According to the “Procedural Rules for Board 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.
China Life Insurance Company Limited Annual Report 2017
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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 2016 Annual General Meeting of the Company and upon the approval by the CIRC,
the appointment of Mr. Liu Huimin and Mr. Yin Zhaojun as Directors of the Company became effective from 31
July 2017. Following the election at the First Extraordinary General Meeting 2017 of the Company and upon the
approval by the CIRC, the appointment of Mr. Yuan Changqing as a Director of the Company became effective
from 11 February 2018.
(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)
Number of
shares held at
the beginning
of the year
Number of
shares held
at the end
of the year
Reason
for
changes
Remuneration
paid/fee
in RMB ten
thousands
0
0
0
0
0
0
0
0
0
0
0
0
/
/
/
/
/
/
114.80
21.66
136.46
125.37
0
134.17
/
/
32.24
0
31.41
/
/
157.61
0
165.58
/
459.65
Whether
received
emolument
from
connected
parties
of the
Company
No
No
Yes
No
No
/
Name
Position
Gender
Date of Birth
Term
Miao Ping
Shi Xiangming
Luo Zhaohui
Wang Cuifei
Song Ping
Chairman of the
Supervisory Committee
Supervisor
Supervisor
Employee Representative
Supervisor
Employee Representative
Supervisor
Male
April 1958
Since 11 July 2015
Male
Male
November 1959
Since 25 May 2009
March 1974
Since 11 February 2018
Female
January 1964
Since 11 July 2015
Male
June 1964
Since 15 March 2018
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.
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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.
4.
Following the election at the First Extraordinary General Meeting 2017 of the Company and upon the approval
by the CIRC, the appointment of Mr. Luo Zhaohui as a Supervisor of the Company became effective from 11
February 2018. Following the election at the Sixth Extraordinary Meeting of the Second Session of the Employee
Representative Meeting of the Company and upon the approval by the CIRC, the appointment of Mr. Song Ping
as a Supervisor of the Company became effective from 15 March 2018.
(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
emolument
from
connected
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
0
0
0
0
/
/
/
/
/
/
/
/
/
/
/
140.00
113.40
113.40
113.40
113.40
112.00
26.25
98.00
21.88
21.66
21.66
21.84
21.71
21.71
5.54
29.94
161.88
135.06
135.06
135.24
135.11
133.71
31.79
127.94
32.67
10.33
/
/
/
/
43.00
/
1,038.79
No
No
No
No
No
No
No
No
No
No
/
Name
Position
Gender
Date of Birth
Term
Male
Male
Male
Male
Male
Male
Male
Male
June 1958
Since April 2014
November 1958
Since November 2014
May 1959
July 1969
Since November 2014
Appointed as Vice
President since November
2014, Chief Actuary
since March 2012, Board
Secretary since June 2017
July 1963
Since July 2016
September 1968
Since October 2016
April 1972
July 1966
Since March 2018
Refer to the Notes
Lin Dairen
President
Xu Hengping
Xu Haifeng
Li Mingguang
Zhao Lijun
Xiao Jianyou
Zhao Peng
Ruan Qi
Vice President
Vice President
Vice President,
Chief Actuary,
Board Secretary
Vice President
Vice President
Vice President
Vice President
(his qualification is
subject to the
approval of CIRC)
Zhan Zhong
Yang Hong
Marketing Director
Male
April 1968
Since August 2017
Operation Director
Female
February 1967
Since March 2018
Total
/
/
/
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China Life Insurance Company Limited Annual Report 2017
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Notes:
1.
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.
2.
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 twelfth meeting of the fifth session of the Board of Directors of the Company
and the approval by the CIRC, Mr. Li Mingguang was appointed as the Board Secretary of the Company with
effect from 28 June 2017. With the approval given at the fourteenth meeting of the fifth session of the Board
of Directors of the Company, Mr. Zhan Zhong was appointed as the Marketing Director of the Company with
effect from 24 August 2017. With the approval given at the fourteenth meeting of the fifth session of the Board
of Directors of the Company and the approval of the CIRC, Mr. Zhao Peng was appointed as an Assistant to the
President of the Company with effect from 12 October 2017. With the approval given at the nineteenth meeting of
the fifth session of the Board of Directors of the Company, Mr. Zhao Peng was appointed as the Vice President of
the Company with effect from 2 March 2018, Mr. Ruan Qi was appointed as the Vice President of the Company
(his qualification as the Vice President of the Company is subject to the approval of the CIRC), and Ms. Yang
Hong was appointed as the Operation Director of the Company with effect from 2 March 2018.
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(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
Salary/
Remuneration
paid
in RMB ten
thousands
Total
emolument
received
from the
Company
during the
Reporting
Period in
RMB ten
thousands
(before tax)
Whether
received
emolument
from
connected
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
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
0
0
0
79.67
20.82
100.49
37.92
11.47
49.39
35.00
10.39
45.39
Yes Resigned due
to adjustment
of work
arrangements
Yes Resigned due
to adjustment
of work
arrangements
Yes Resigned
adjustment
of work
arrangements
Yes Resigned due
to adjustment
of work
arrangements
No Resigned due
to adjustment
of work
arrangements
No Resigned due
to adjustment
of work
arrangements
No Resigned due
to adjustment
of work
arrangements
/
/
195.27
/
/
Previous
Position
Name
Gender Date of Birth
Term
Miao Jianmin
Non-executive
Director
Male
January 1965
27 October 2008
– 7 April 2017
Wang Sidong
Non-executive
Director
Male
December 1961
24 July 2012
– 12 January 2018
Liu Jiade
Non-executive
Director
Male
Feburary 1963
11 July 2015
– 8 August 2017
Xiong Junhong
Supervisor
Female December 1968
20 October 2014
– 23 February 2018
Zhan Zhong
Li Guodong
Employee
Representative
Director
Employee
Representative
Director
Male
April 1968
11 July 2015
– 21 August 2017
Male
April 1965
31 August 2017
– 2 January 2018
Zheng Yong
Board Secretary Male
November 1962
5 June 2013
– 27 April 2017
Total
/
/
/
/
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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 of
the head office 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 Deputy 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.
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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 Division Chief of the Personal Insurance Division of the
Company’s Fujian Branch since July 1996. Mr. Xu 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 E-commerce 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.
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Mr. Yuan Changqing, born in 1961, Chinese
Mr. Yuan became a Non-executive Director of the Company in February 2018. He is
the Vice Chairman, President and Deputy Secretary to the Party Committee of China
Life Insurance (Group) Company. Mr. Yuan served as the Chairman of the Supervisory
Committee and the Deputy Secretary to the Party Committee of Agricultural Bank of
China Limited from April 2015 to May 2017. He served as the Deputy General Manager
and the Secretary to the Discipline Inspection Committee of China Everbright Group
Corporation Limited from November 2014 to April 2015, the Secretary to the Discipline
Inspection Committee of China Everbright Group Limited from December 2008 to
August 2012, and an Executive Director, the Deputy General Manager and the Secretary
to the Discipline Inspection Committee of China Everbright Group Limited from
August 2012 to November 2014, during which he concurrently acted as the Chairman of
Everbright Securities Company Limited. During the period from 1995 to 2008, he served
as the Vice President, President and Secretary to the Party Committee of Xinjiang Branch,
the President and Secretary to the Party Committee of Henan Branch, and the Director
of the Organization Department of the Party Committee and the General Manager of the
Human Resources Department of the head office of Industrial and Commercial Bank of
China Limited. During the period from 1981 to 1995, he held various professional and
management positions in branch offices of the People’s Bank of China and Industrial and
Commercial Bank of China. Mr. Yuan, a senior economist, graduated from the University
of Hong Kong, majoring in international business administration with a master’s degree in
business administration.
Mr. Liu Huimin, born in 1965, Chinese
Mr. Liu became a Non-executive Director of the Company in July 2017. He has been
the Vice President of China Life Insurance (Group) Company since September 2013. He
served as the Vice President of China Life Asset Management Company Limited from
2004, and the President and a Director of the same company from 2006, during which he
concurrently served as the Chairman of China Life Franklin Asset Management Company
Limited and the Chairman of China Life AMP Asset Management Co., Ltd., etc. Mr.
Liu graduated from the Peking University with a doctoral degree in international law.
Before that, he graduated from the School of Social Sciences of the University of Sussex
in the United Kingdom with a master’s degree in development economics and the Peking
University with a bachelor’s degree in national economic management, respectively.
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Mr. Yin Zhaojun, born in 1965, Chinese
Mr. Yin became a Non-executive Director of the Company in July 2017. He has been
the Vice President of China Life Insurance (Group) Company since October 2016.
He joined the Bank of Communications in July 1990, and consecutively served as an
Assistant to the President of Beijing branch and the Vice President of Shanxi branch of
the Bank of Communications from 2005, and the President of Shanxi branch, Hebei
branch and Beijing branch of the Bank of Communications from 2011. Mr. Yin graduated
from the China University of Political Science and Law with a master’s degree in public
administration. Before that, he graduated from the Faculty of Accounting of the Beijing
College of Finance and Commerce with a bachelor’s degree in economics.
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’s degree of science
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 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’s
degree of arts in Chinese Language and Literature from Yale University and a master’s
degree of public affairs in development economics from Princeton University’s Woodrow
Wilson School.
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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 China Association for Pubic
Companies, 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. She has been an Independent Non-executive Director
of PetroChina Company Limited since June 2017.
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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 from September 2006,
the General Manager of the Company’s Jiangxi Branch from September 2004, and the
Deputy General Manager of the Company’s Jiangsu Branch from 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’s degree of science.
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Mr. Luo Zhaohui, born in 1974, Chinese
Mr. Luo became a Supervisor of the Company in February 2018. Mr. Luo worked at the
Risk Management Department of China Life Insurance Company and the General Office
of China Life Insurance (Group) Company from August 2002 to August 2013, and was
appointed as the Senior Manager of the Comprehensive Information Division of the
General Office of China Life Insurance (Group) Company in May 2009 and an Assistant
to the General Manager of the Strategic Planning Department of China Life Insurance
(Group) Company in August 2013. Mr. Luo was seconded to Shijiazhuang Branch of
the Company in Hebei Province as the Deputy General Manager during the period from
November 2013 to October 2015, and was then appointed as the Deputy General Manager
of the Strategic Planning Department of China Life Insurance (Group) Company in July
2016. Mr. Luo has been involved in strategic management related work for a long time,
with considerable working experience in such aspects as risk management, market analysis
and research, life insurance operation, as well as strategic planning and management. Mr.
Luo, a senior economist, graduated from Peking University, majoring in finance with a
doctoral degree.
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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 Work Department of the Trade Union of the Company since January
2018. Ms. Wang served as the General Manager of the Customer Services Department
of the Company from September 2014 to February 2018 and 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 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.
Mr. Song Ping, born in 1964, Chinese
Mr. Song became a Supervisor of the Company in March 2018. He has been the General
Manager of the Administration Office of the Company since January 2017. From 2006 to
2017, he successively served as an Assistant to the General Manager of the Development
and Reform Department, an Assistant to the General Manager of Beijing Branch,
the Deputy General Manager of the Legal and Compliance Department, the Deputy
General Manager of the Human Resources Department, and the General Manager of the
E-Commence Department of the Company. From 1999 to 2006, he successively served
as the Division Chief of the Agents Management Department, the Individual Insurance
Department and the Group Insurance Department of the Company. Mr. Song graduated
from Peking University in July 1987, majoring in Chinese language and literature with a
bachelor’s degree of arts.
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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 has been
the Chief Actuary of the Company since March 2012 and the Board Secretary of the
Company since June 2017. Mr. Li joined the Company in 1996 and subsequently served
as the Deputy Division Chief, the Division Chief, 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 with a bachelor’s degree in computer science 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, a Special Executive of the Board of Directors of the Insurance Institute of
China and a member of the China National Master of Insurance Education Supervisory
Committee.
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 Division Chief,
the Division Chief 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 industrial
accounting and finance in 1987, and from Tsinghua University with an EMBA in 2010.
Mr. Zhao is a senior accountant.
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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 Personal 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.
Mr. Zhao Peng, born in 1972, Chinese
Mr. Zhao became the Vice President of the Company in March 2018. He has been an
Assistant to the President of the Company since October 2017 and the General Manager
of Zhejiang Branch of the Company since January 2015. From 2014 to 2015, he had
successively served as the Deputy General Manager (at the general manager level of the
provincial branches) and the person-in-charge of Zhejiang Branch of the Company. From
2003 to 2014, he successively held various positions in China Life Insurance (Group)
Company, including the Division Chief of the Capital Management Division of the
Finance Department, an Assistant to the General Manager and the Division Chief of the
Capital Management Division of the Finance Department, an Assistant to the General
Manager, the Deputy General Manager and the General Manager of the Finance and
Accounting Department, and the General Manager of the Finance Department. From
1995 to 2003, Mr. Zhao successively served as a staff member of the Capital Division,
a staff member of the Financial Management Division, the Deputy Division Chief and
the Division Chief of the Capital Division of the Planning and Finance Department of
China Life Insurance Company. Mr. Zhao graduated from Hunan College of Finance
and Economics in July 1995, majoring in actuarial science with a bachelor’s degree in
economics, from Central University of Finance and Economics in June 2002, majoring
in finance with a master’s degree in economics, and from Tsinghua University in
January 2007, majoring in business administration with a master’s degree in Business
Administration.
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Mr. Ruan qi, born in 1966, Chinese
As approved by the nineteenth meeting of the fifth session of the Board of Directors of
the Company held in March 2018, Mr. Ruan was appointed as the Vice President of
the Company (whose qualification is subject to the approval of the CIRC). He has been
the Chief Information Technology Officer of the Company since October 2016 and
the General Manager (at the general manager level of the 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 successively served as the Deputy Division Chief of the Computer Division of Fujian
Branch, and the Deputy Manager (responsible for daily operation) and the Manager of
the Information Technology Department of the Company from 2000 to 2004. Mr. Ruan,
a senior engineer, graduated from Beijing Institute of Posts and Telecommunications
in August 1987, majoring in computer science and communications with a bachelor’s
degree in engineering and from Xiamen University with a master’s degree in business
administration for senior management (EMBA) in December 2007.
Mr. Zhan Zhong, born in 1968, Chinese
Mr. Zhan became the Marketing Director of the Company in August 2017 He has been
the General Manager (as the general manager level of the provincial branches) of the
Individual Insurance Division of the Company since July 2014. Mr. Zhan served as the
Deputy General Manager (responsible for daily operations) and the General Manager
of the Company’s Qinghai Branch from 2013 to 2014. From 2009 to 2013, Mr. Zhan
successively served as the Deputy General Manager (responsible for daily operations) and
the General Manager of the Individual Insurance Division of the Company. From 2005
to 2009, he had successively served as the General Manager of the Individual Insurance
Division of the Company’s Guangdong Branch and an Assistant to the General Manager
of the Company’s Guangdong Branch. From 1996 to 2005, he successively served as
the Director of the Marketing Department of the Chengdu High-tech Sub-branch of
Zhongbao Life Insurance Company, an Assistant to the Manager and the Manager of the
Marketing Department of the Chengdu Branch, and the Deputy General Manager of the
Chengdu Branch of Taikang Life Insurance Company. Mr. Zhan graduated from Kunming
Institute of Technology in July 1989, majoring in industrial electric automation with a
bachelor’s degree in engineering.
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Ms. Yang Hong, born in 1967, Chinese
Ms. Yang became the Operation Director in March 2018. She has been the General
Manager of the Operation Service Center of the Company since January 2018. Ms. Yang
successively served as the Deputy General Manager (responsible for daily operations)
and General Manager of the Research and Development Center, the General Manager
(at the general manager level of the provincial branches) of the Business Management
Department and the General Manager (at the general manager level of the provincial
branches) of the Business Process Management Department of the Company from 2011
to 2018. From 2002 to 2011, she successively served as an Assistant to the General
Manager and the Deputy General Manager of the Business Management Department, and
the General Manager of the Customer Service Department of the Company. Ms. Yang
graduated from the Computer Science Department of Jilin University in 1989, majoring
in system structure with a bachelor’s degree of science, and from the School of Economics
and Management of Tsinghua University in 2013 with a master’s degree in business
administration for senior management.
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 and SCUD Group Limited, all of which are listed on the main board of
the HKSE.
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II. POSITIONS HELD BY CURRENT DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
IN SHAREHOLDERS OF THE COMPANY
Name
Yang Mingsheng
Yuan Changqing
Liu Huimin
Yin Zhaojun
Luo Zhaohui
Name of shareholder
China Life Insurance (Group) Company
Position
Chairman
Term
Since March 2012
China Life Insurance (Group) Company
Vice Chairman, President
Since May 2017
China Life Insurance (Group) Company
Vice President
China Life Insurance (Group) Company
Vice President
China Life Insurance (Group) Company
Deputy General Manager of
Strategic Planning Department
Since September 2013
Since October 2016
Since July 2016
III. REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
1. Decision-making procedures for the remuneration of Directors, Supervisors and senior management: The
remuneration of Directors and Supervisors shall be approved by shareholders at general meetings, whereas
the remuneration of senior management shall be approved by the Board of Directors.
2.
3.
Basis for determination of the remuneration of Directors, Supervisors and senior management: The
remuneration of Directors, Supervisors and senior management are determined based on the operating
results of the Company and the performance appraisal conducted by the Board of Directors, and in
accordance with the measures for the administration of remunerations of the Company.
Actual payment of remuneration to Directors, Supervisors and senior management: During the Reporting
Period, the remuneration actually received by all Directors, Supervisors and senior management (including
the resigned Directors, Supervisors and senior management) from the Company totaled RMB18.1971
million. In accordance with the relevant requirements of the measures for the administration of
remuneration of the Company, the standard for performance-based bonus (as part of the compensation)
payable to Directors, Supervisors and senior management of the Company in 2017 has not yet been
determined.
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IV. EMPLOYEES
(I) Employees
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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
100,920
1,377
102,297
14
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
Number of Employees
Management and administration
Sales and sales management
Finance and auditing
Insurance verification, claim processing and customer services
Other expertise and technicians
Others
Total
22,307
38,859
5,122
27,960
4,106
3,943
102,297
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2.
Education Level
Education Level
Master or above
Bachelor
College Diploma
Secondary School
Others
Total
Number of Employees
4,219
59,810
31,861
2,347
4,060
102,297
(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 2017, 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 “speedy development, transformation and upgrade, and risk prevention and control” 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), and 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 2017.
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Corporate Governance
I. 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
Board Secretary
Board Secretariat/Company Secretary
(Corporate Governance Structure Chart)
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.
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3.
4.
5.
6.
7.
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.
The Company carried out the procedures relating to the resignation, retirement and appointment of
Directors, Supervisors and senior management in compliance with the regulatory requirements of its listed
jurisdictions and the provisions of its Articles of Association. Mr. Miao Jianmin, Mr. Wang Sidong and
Mr. Liu Jiade resigned from the Board due to adjustment of work arrangements. Mr. Zhan Zhong and
Mr. Li Guodong resigned from their positions as Employee Representative Supervisors due to adjustment
of work arrangements. The Board considered and approved the proposals in relation to the nomination of
Mr. Li Mingguang as the Board Secretary of the Company, nomination of Mr. Zhao Peng as an Assistant
to the President of the Company, nomination of Mr. Zhan Zhong as the Marketing Director of the
Company, nomination of Mr. Zhao Peng as the Vice President of the Company, nomination of Mr. Ruan
Qi as the Vice President of the Company and nomination of Ms. Yang Hong as the Operation Director
of the Company. Following the election at the 2016 Annual General Meeting of the Company and upon
the approval by the CIRC, the appointment of Mr. Liu Huimin and Mr. Yin Zhaojun as Directors of the
Company became effective from 31 July 2017. Following the election at the First Extraordinary General
Meeting 2017 and upon the approval by the CIRC, the appointment of Mr. Yuan Changqing as a Director
and Mr. Luo Zhaohui as a Supervisor became effective from 11 February 2018. Following the election at
the Sixth Extraordinary Meeting of the Second Session of the Employee Representative Meeting of the
Company and upon the approval by the CIRC, the appointment of Mr. Song Ping as a Supervisor of the
Company became effective from 15 March 2018.
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 Board and the Supervisory Committee of the Company have conducted extensive investigation and
research activities. The members of the Board subsequently carried out investigation and research on China
Guangfa Bank Co., Ltd. (“CGB”) and local branches of the Company in Guizhou Province for the purpose
of understanding the operation of the local branches and their implementation of decisions of the Board
and the management. The members of the Supervisory Committee carried out investigation and research on
local branches of the Company in Guangxi Zhuang Autonomous Region for the purpose of examining the
effectiveness of the implementation of decisions of the Board and the management, which thus enhanced the
legal compliance and risk prevention of the Company in a practical manner.
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8.
The Company has actively organized Directors and Supervisors to attend various training courses and
examinations. All Independent Directors of the Company attended internal training courses on the
business development and the regulations on the connected transactions of the Company as organized
by the departments of the Company such as the Strategy and Marketing Department and the Legal
and Compliance Department. Pursuant to the regulatory requirements of the CIRC, all Directors and
Supervisors attended training programs on anti-money laundering. The members of the Supervisory
Committee attended the seminar of 2017 for the chairmen of the supervisory committees of listed
companies as organized by China Association for Public Companies and special training courses of 2017
for directors and supervisors of listed companies within the territory of Beijing as organized by the Listed
Companies Association of Beijing, etc. The new Directors and Supervisors of the Company sat for the
examinations of the CIRC regarding the approval of qualifications of new directors, supervisors and senior
management officers of insurance institutions as organized by the CIRC. They attended training courses for
a total of 11 person-times.
9. During the Reporting Period, the Company was named by the CIRC as a “high-quality” company in its
corporate governance on-site evaluation. It also won the “Hong Kong Corporate Governance Excellence
Award (Main Board Companies – Hang Seng Composite Index Constituent Companies)” in the “Hong
Kong Corporate Governance Excellence Awards 2017” jointly organized by the Chamber of Hong Kong
Listed Companies and the Centre for Corporate Governance and Financial Policy, Hong Kong Baptist
University.
II. 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
2016 Annual General Meeting 31 May 2017
First Extraordinary
General Meeting 2017
20 December 2017
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 2017
20 December 2017
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Eleven proposals including: the “Proposal in relation to the Report of the Board of Directors of the
Company for the Year 2016”, the “Proposal in relation to the Report of the Supervisory Committee of the
Company for the Year 2016”, the “Proposal in relation to the Financial Report of the Company for the Year
2016”, the “Proposal in relation to the Profit Distribution Plan of the Company for the Year 2016”, the
“Proposal in relation to the Remuneration of Directors and Supervisors of the Company”, the “Proposal in
relation to the Election of Mr. Liu Huimin as a Non-executive Director of the Fifth Session of the Board
of Directors of the Company”, the “Proposal in relation to the Election of Mr. Yin Zhaojun as a Non-
executive Director of the Fifth Session of the Board of Directors of the Company”, the “Proposal in relation
to the Remuneration of Auditors of the Company for the Year 2016 and the Appointment of Auditors of the
Company for the Year 2017”, the “Proposal in relation to the ‘Framework Agreement for Daily Connected
Transactions’ between the Company and Chongqing International Trust Inc.”, the “Proposal in relation
to the ‘Entrusted Investment and Management Agreement for Alternative Investments with Insurance
Funds’ between the Company and China Life Investment Holding Company Limited” and the “Proposal in
relation to the General Mandate for the Issuance of H Shares by the Company”, etc. were considered and
approved by a combination of on-site and online voting, and the “Duty Report of the Independent Directors
of the Fifth Session of the Board of Directors of the Company for the Year 2016” and the “Report on the
Status of Connected Transactions and the Execution of Connected Transactions Management System of
the Company for the Year 2016” were received and reviewed at the 2016 Annual General Meeting held in
Beijing on 31 May 2017.
Two proposals including: the “Proposal in relation to the Election of Mr. Yuan Changqing as a Non-executive
Director of the Fifth Session of the Board of Directors of the Company” and the “Proposal in relation to
the Election of Mr. Luo Zhaohui as a Non-employee Representative Supervisor of the Fifth Session of the
Supervisory Committee of the Company” were considered and approved by a combination of on-site and
online voting at the First Extraordinary General Meeting 2017 held in Beijing on 20 December 2017.
2.
Attendance records of Directors at the shareholders’ general meetings convened during the Reporting
Period:
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Number of
shareholders’
general
meetings the
Director was
required to
attend during
the year
2
2
2
2
2
1
1
2
2
2
2
Name of Director
Type of Director
Yang Mingsheng
Lin Dairen
Xu Hengping
Xu Haifeng
Wang Sidong
Liu Huimin
Yin Zhaojun
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
Number of
meetings
physically
attended
Number of
meetings
attended by
telephony
Number of
meetings
attended
by proxies
Number of
meetings
absent
Attendance
rate
0
2
1
1
0
0
1
2
1
2
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2
0
1
1
2
1
0
0
1
0
1
0
100%
50%
50%
0
0
100%
100%
50%
100%
50%
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Attendance records of the resigned Directors at the shareholders’ general meetings convened during the
Reporting Period:
Number of
shareholders’
general
meetings the
Director was Number of Number of Number of
Name of Director
Type of Director
required to
attend during
the year
meetings
meetings
physically attended by
telephony
attended
meetings Number of
attended
by proxies
meetings Attendance
rate
absent
Miao Jianmin
Liu Jiade
Non-executive Director
Non-executive Director
0
1
0
0
0
0
0
0
0
1
0
0
III. 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, assessing the
internal control systems of the Company and reviewing the compliance by the Company with the Corporate
Governance Code. 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).
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In 2017, 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 of 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.
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 2017, 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.
Currently, 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. Yuan Changqing, Mr. Liu Huimin and
Mr. Yin Zhaojun, 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. Miao Jianmin, Mr. Wang Sidong and Mr. Liu Jiade resigned from their positions
as Directors due to adjustment of work arrangements.
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During 2017, all Independent Directors of the Company attended internal training on the business development
and the regulations on the connected transactions of the Company as organized by the departments of the
Company such as the Strategy and Marketing Department and the Legal and Compliance Department. Pursuant
to the regulatory requirements of the CIRC, all members of the Board attended training programs on anti-money
laundering for the purpose of understanding the latest anti-money laundering rules and regulations and the
Company’s work on anti-money laundering, and enhancing the capability of Directors to safeguard against the risk
of money laundering.
1. Meetings and attendance
In 2017, 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
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
Directors
failed to
attend two
consecutive
meetings
in person
Attendance
rate
6
6
6
6
6
3
3
6
6
6
6
3
6
4
5
3
3
2
4
5
6
5
0
0
0
0
1 Note 4
0
0
2 Note 7
0
0
1 Note 9
3 Note 1
0
2 Note 2
1 Note 3
2 Note 5
0
1 Note 6
0
1 Note 8
0
0
0
0
0
0
0
0
0
0
0
0
0
50%
100%
67%
83%
67%
100%
67%
100%
83%
100%
100%
No
No
No
No
Yes
No
No
No
No
No
No
Name of Director
Type of Director
Yang Mingsheng
Lin Dairen
Xu Hengping
Xu Haifeng
Wang Sidong
Liu Huimin
Yin Zhaojun
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 eleventh meeting of the fifth session of the Board held on 23 March 2017, Mr. Yang Mingsheng, the
Chairman of the Board, gave written authorisation for Mr. Lin Dairen to act as his proxy to attend, vote at
and chair the meeting; at the thirteenth meeting of the fifth session of the Board held on 14 July 2017, Mr.
Yang Mingsheng, the Chairman of the Board, gave written authorisation for Mr. Lin Dairen to act as his proxy
to attend, vote at and chair the meeting; at the sixteenth meeting of the fifth session of the Board held on 19
December 2017, Mr. Yang Mingsheng, the Chairman of the Board, gave written authorisation for Mr. Lin Dairen
to act as his proxy to attend, vote at and chair the meeting.
2.
At the eleventh meeting of the fifth session of the Board held on 23 March 2017, Mr. Xu Hengping gave written
authorisation for Mr. Xu Haifeng to act as his proxy to attend and vote at the meeting; at the fifteenth meeting of
the fifth session of the Board held on 26 October 2017, Mr. Xu Hengping gave written authorisation for Mr. Xu
Haifeng to act as his proxy to attend and vote at the meeting.
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3.
At the thirteenth meeting of the fifth session of the Board held on 14 July 2017, Mr. Xu Haifeng gave written
authorisation for Mr. Xu Hengping to act as his proxy to attend and vote at the meeting.
4.
At the thirteenth meeting of the fifth session of the Board held on 14 July 2017, Mr. Wang Sidong attended the
meeting by telephony.
5.
At the eleventh meeting of the fifth session of the Board held on 23 March 2017, Mr. Wang Sidong gave written
authorisation for Mr. Miao Jianmin to act as his proxy to attend and vote at the meeting; at the twelfth meeting of
the fifth session of the Board held on 27 April 2017, Mr. Wang Sidong gave written authorisation for Mr. Chang
Tso Tung Stephen to act as his proxy to attend and vote at the meeting.
6.
At the fifteenth meeting of the fifth session of the Board held on 26 October 2017, Mr. Yin Zhaojun gave written
authorisation for Mr. Liu Huimin to act as his proxy to attend and vote at the meeting.
7.
At the thirteenth meeting of the fifth session of the Board held on 14 July 2017, Mr. Chang Tso Tung Stephen
attended the meeting by telephony; at the fourteenth meeting of the fifth session of the Board held on 24 August
2017, Mr. Chang Tso Tung Stephen attended the meeting by telephony.
8.
At the thirteenth meeting of the fifth session of the Board held on 14 July 2017, Mr. Robinson Drake Pike gave
written authorisation for Mr. Tang Xin to act as his proxy to attend and vote at the meeting.
9.
At the thirteenth meeting of the fifth session of the Board held on 14 July 2017, Ms. Leung Oi-Sie Elsie attended
the meeting by telephony.
In 2017, 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
Attendance
rate
Whether
the Director
failed to
attend two
consecutive
meetings
in person
Name of Director
Type of Director
Non-executive Director
Non-executive Director
1
3
1
0
0
1 Note 1
0
2 Note 2
0
0
100%
33%
No
Yes
Miao Jianmin
Liu Jiade
Notes:
1.
At the eleventh meeting of the fifth session of the Board held on 23 March 2017, Mr. Liu Jiade attended the
meeting by telephony.
2.
At the twelfth meeting of the fifth session of the Board held on 27 April 2017, Mr. Liu Jiade gave written
authorisation for Mr. Xu Hengping to act as his proxy to attend and vote at the meeting; at the thirteenth meeting
of the fifth session of the Board held on 14 July 2017, Mr. Liu Jiade gave written authorisation for Mr. Wang
Sidong to act as his proxy to attend and vote at the meeting.
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2. Performance of duties by Independent Directors
In 2017, 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 2017, examining and approving
the Company’s business development, its financial management and connected transactions, focusing on
the necessity and compliance of the Company’s connected transactions and the fairness of their pricing
when reviewing the proposals in relation to 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. 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 2017, 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.
In 2017, the Independent Directors of the Company and the representatives from the external auditors
(Ernst & Young Hua Ming LLP and Ernst & Young) convened one special meeting to discuss on matters
including the audit for the year 2016, 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.
From 14 to 16 February 2017, Mr. Robinson Drake Pike, Mr. Tang Xin and Ms. Leung Oi-Sie Elsie,
all being Independent Directors of the Company, carried out investigation and research on CGB for the
purpose of understanding the insurance-banking collaboration and the risk control of CGB; from 31
July to 4 August 2017, Mr. Chang Tso Tung Stephen, Mr. Robinson Drake Pike and Mr. Tang Xin, all
being Independent Directors of the Company, carried out investigation and research on local branches of
the Company in Guizhou Province for the purpose of understanding the business development, financial
control, remuneration and incentive measures, and risk control of the local branches.
According to the arrangement of the Board for annual training courses, Mr. Chang Tso Tung Stephen, Mr.
Robinson Drake Pike, Mr. Tang Xin and Ms. Leung Oi-Sie Elsie, all being Independent Directors of the
Company, attended the internal training on the business development and the regulations on connected
transactions of the Company as organized by nine departments of the Company including the Strategy and
Marketing Department and the Legal and Compliance Department in Beijing from 31 May to 1 June 2017.
During the Reporting Period, no Independent Director has raised any objection against the proposals and
matters considered by the Board of the Company.
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IV. CHAIRMAN AND PRESIDENT
During the Reporting Period, Mr. Yang Mingsheng served as the Chairman of the Board 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, and promoting a culture of openness and debate. 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.
V. 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.
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.
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The fifth session of the Supervisory Committee of the Company comprises Mr. Miao Ping, Mr. Shi Xiangming
and Mr. Luo Zhaohui, all being Non-employee Representative Supervisors, Ms. Wang Cuifei and Mr. Song
Ping, being Employee Representative Supervisors, with Mr. Miao Ping acting as the Chairman of the Supervisory
Committee. In August 2017, Mr. Zhan Zhong resigned from his position as an Employee Representative
Supervisor due to adjustment of work arrangements. Mr. Li Guodong resigned from his position as an Employee
Representative Supervisor due to adjustment of work arrangements in January 2018. Ms. Xiong Junhong resigned
from her position as a Non-employee Representative Supervisor due to adjustment of work arrangements in
February 2018.
1. Meetings and attendance
In 2017, 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
Wang Cuifei
Li Guodong
Notes:
5/5
4/5Note 1
4/5Note 2
3/5Note 3
2/2
100%
80%
80%
60%
100%
1.
At the thirteenth meeting of the fifth session of the Supervisory Committee held on 26 October 2017, Mr. Shi
Xiangming gave written authorisation for Ms. Wang Cuifei to act as his proxy to attend and vote at the meeting.
2.
At the twelfth meeting of the fifth session of the Supervisory Committee held on 24 August 2017, Ms. Xiong
Junhong gave written authorisation for Mr. Shi Xiangming to act as her proxy to attend and vote at the meeting.
3.
At the tenth meeting of the fifth session of the Supervisory Committee held on 23 March 2017, Ms. Wang
Cuifei gave written authorisation for Mr. Zhan Zhong to act as her proxy to attend and vote at the meeting; at
the fourteenth meeting of the fifth session of the Supervisory Committee held on 19 December 2017, Ms. Wang
Cuifei gave written authorisation for Mr. Shi Xiangming to act as her proxy to attend and vote at the meeting.
During the Reporting Period, the attendance records of the resigned Supervisor at the Supervisory
Committee Meetings are as follows:
Name of Supervisor
Zhan Zhong
Number of meetings attended
Attendance rate
2/2
100%
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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VI. AUDIT COMMITTEE
The Company established its Audit Committee on 30 June 2003. In 2017, the Audit Committee comprised
only Independent Directors of the Company. Currently, the Audit Committee of the fifth session of the Board
comprises Mr. Robinson Drake Pike, Mr. Chang Tso Tung Stephen and Mr. Tang Xin, all being Independent
Directors, with Mr. Robinson Drake Pike acting as the Chairman.
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 2017, four 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
4/4
100%
4/4Note
4/4
100%
100%
Note: At the eleventh meeting of the Audit Committee of the fifth session of the Board held on 24 August 2017, Mr.
Chang Tso Tung Stephen attended the meeting by telephony.
2. Performance of duties by the Audit Committee
In 2017, 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 performed their
obligations in a responsible manner and reviewed 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 proposals
considered and discussed at the meetings.
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(1) Reviewing and approving financial reports. The Audit Committee, according to its duties, reviewed
and approved annual, interim and quarterly financial reports. 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 reports 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 arising during the audit.
(2) Reviewing connected transactions. In 2017, the Audit Committee reviewed the “Proposal in relation
to the ‘Framework Agreement for Daily Connected Transactions’ between the Company and
Chongqing International Trust Inc.”, and the “Proposal in relation to the Entrusted Investment and
Management Agreement for Alternative Investments with Insurance Funds between the Company
and China Life Investment Holding Company Limited”, and submitted them to the Board and
shareholders’ general meeting for approval; and listened to the report on the list of connected parties
of the Company on a regular basis. The Audit Committee reviewed the audit report on connected
transactions for conscientious 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) 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, 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, and review the work arrangement for the selection and engagement of auditors for the years
from 2018 to 2020. 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.
(4) 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.
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(5) Examining the internal audit functions of the Company. The Audit Committee reviewed proposals
including the “Proposal on the 2016 Internal Audit Summary and the 2017 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 2017 and the Internal Audit Work Plan for the Second Half of 2017”, 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.
(6) Conducting investigation and research of local branches. From 14 to 16 February 2017, 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 CGB for the purpose of understanding the
insurance-banking collaboration. From 31 July to 4 August 2017, Mr. Robinson Drake Pike, the
Chairman of the Audit Committee, together with Mr. Chang Tso Tung Stephen and Mr. Tang Xin,
members of the Audit Committee, carried out investigation and research on local branches of the
Company in Guizhou Province for the purpose of reviewing the financial control and internal control
system of the local branches, including the implementation of the recommendations given by the
internal audit department of the Company and the external independent auditors in the local branches
at different levels.
VII. 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. Currently,
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. Yuan Changqing, a Non-executive
Director, with Mr. Chang Tso Tung Stephen acting as the Chairman. In April 2017, Mr. Miao Jianmin resigned
from his position as a member of the Nomination and Remuneration Committee of the fifth session of the Board
due to adjustment of work arrangements, and Mr. Wang Sidong was appointed as a member of the Nomination
and Remuneration Committee. In January 2018, Mr. Wang Sidong resigned from his position as a member of the
Nomination and Remuneration Committee of the fifth session of the Board due to adjustment of work arrangements.
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. 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.
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1. Meetings and attendance
In 2017, four 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
meetings attended Attendance rate
Number of
Chang Tso Tung Stephen
Robinson Drake Pike
Wang Sidong
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
4/4Note
100%
4/4
100%
3/3
100%
Note: At the tenth meeting of the Nomination and Remuneration Committee of the fifth session of the Board held on 24
August 2017, Mr. Chang Tso Tung Stephen attend the meeting by telephony.
In 2017, the attendance records of the resigned Director at the Nomination and Remuneration Committee
Meetings are as follows:
Name of member
Position
Number of
meetings attended Attendance rate
Miao Jianmin
Non-executive Director, member of the Nomination
and Remuneration Committee of the fifth session
of the Board
1/1
100%
2. Performance of duties by the Nomination and Remuneration Committee
In 2017, the Nomination and Remuneration Committee performed its relevant duties and functions in
strict compliance with the “Procedural Rules for Nomination and Remuneration Committee Meetings”. All
members of the Nomination and Remuneration Committee performed their obligations in a responsible
manner and reviewed the proposals on the candidates for Directors, nomination of senior management
officers, business objectives and appraisal results, the remuneration of Directors, Supervisors and senior
management, and 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 guiding 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 the candidates for Directors, examined
and approved the proposal in relation to the nomination of Mr. Yuan Changqing as a Non-executive
Director of the fifth session of the Board of Directors of the Company 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 to ensure that the candidates meet the
requirements set by the Company, examined and approved the proposals in relation to the nomination
of Mr. Li Mingguang as the Board Secretary of the Company, nomination of Mr. Zhao Peng as an
Assistant to the President of the Company, nomination of Mr. Zhan Zhong as the Marketing Director
of the Company and nomination of Ms. Zhang Jun as the responsible person of the Company for
audit, etc, and submitted a review opinion to the Board.
(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.
(3) Carrying out the performance appraisal of senior management officers. The Nomination and
Remuneration Committee reviewed the “Proposal on the Remuneration of Directors and Supervisors
of the Company”, the “Proposal on the Remuneration of Senior Management Officers of the
Company”, the “Proposal on the Results of Performance Appraisal of Senior Management Officers
for 2016” and the “Proposal on the Performance Target Contract of Senior Management Officers for
2017”, and made recommendations to the Board in respect of matters such as the determination of
performance target, performance appraisal procedures and results.
(4) Conducting investigation and research on local branches. From 14 to 16 February 2017, Mr.
Robinson Drake Pike, a member of the Nomination and Remuneration Committee, carried out
investigation and research on CGB for the purpose of understanding the remuneration and incentive
system of CGB. From 31 July to 4 August 2017, Mr. Chang Tso Tung Stephen, the chairman of
the Nomination and Remuneration Committee, and Mr. Robinson Drake Pike, a member of the
Nomination and Remuneration Committee, carried out investigation and research on local branches
of the Company in Guizhou Province for the purpose of understanding the remuneration standard
and appraisal incentive measures of the local branches and their sub-branches.
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VIII. RISK MANAGEMENT COMMITTEE
The Company established its Risk Management Committee on 30 June 2003. Currently, the Risk Management
Committee of the fifth session of the Board comprises Ms. Leung Oi-Sie Elsie, an Independent Director, Mr.
Xu Hengping, an Executive Director, and Mr. Liu Huimin and Mr. Yin Zhaojun, the Non-executive Directors,
with Ms. Leung Oi-Sie Elsie acting as the Chairperson. In August 2017, Mr. Liu Jiade resigned from his position
as a member of the Risk Management Committee of the fifth session of the Board due to adjustment of work
arrangements.
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 systems, 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.
1. Meetings and attendance
In 2017, five 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
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Xu Hengping
Liu Huimin
Yin Zhaojun
Notes:
Independent Director, Chairperson 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
Non-executive Director, member 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
5/5
100%
3/5Note 1
60%
3/3
100%
2/3Note 2
67%
1.
At the sixth meeting of the Risk Management Committee of the fifth session of the Board held on 22 March 2017,
Mr. Xu Hengping gave written authorisation for Ms. Leung Oi-Sie Elsie to act as his proxy to attend and vote at
the meeting; at the ninth meeting of the Risk Management Committee of the fifth session of the Board held on
26 October 2017, Mr. Xu Hengping gave written authorisation for Ms. Leung Oi-Sie Elsie to act as his proxy to
attend and vote at the meeting;
2.
At the ninth meeting of the Risk Management Committee of the fifth session of the Board held on 26 October
2017, Mr. Yin Zhaojun gave written authorisation for Mr. Liu Huimin to act as his proxy to attend and vote at the
meeting.
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In 2017, attendance records of the resigned Director at the Risk Management Committee meetings are as
follows:
Name of member
Position
Liu Jiade
Non-executive Director, member of the
Risk Management Committee of the fifth
session of the Board
Number of
meetings attended Attendance rate
1/2Note
50%
Note: At the seventh meeting of the Risk Management Committee of the fifth session of the Board held on 26 April
2017, Mr. Liu Jiade gave written authorisation for Mr. Xu Hengping to act as his proxy to attend and vote at the
meeting.
2. Performance of duties by the Risk Management Committee
In 2017, 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 reviewed the proposals in relation to the internal control system of the Company,
risk management and construction in compliance with law. During meetings of the Risk Management
Committee, all members actively participated in discussions and gave guiding opinions on the proposals
considered and discussed at the meetings.
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(1) Reviewing the risk analysis on major matters concerning the business operation and management
of the Company. In 2017, the Risk Management Committee reviewed the risk analysis on major
matters concerning the business operation and management of the Company, reviewed and approved
the “Proposal in relation to the Financial Budget of the Company for the Year 2018”, the “Proposal
in relation to the Risk Analysis on the Investment Plan of the Company for the Year 2018” and the
“Proposal in relation to the Risk Compliance Analysis on the ‘Strategic Asset Allocation Plan of the
Company for the Years from 2018 to 2020’” and gave guiding opinions on risk control for major
matters concerning the business operation and management of the Company such as the financial
budget of the Company for the year 2018 and the investment plan of the Company for the year 2018
in accordance with the regulatory requirements of the CIRC on C-ROSS.
(2) Providing its opinions for the review of the proposals on risk management to the Board. In 2017, the
Risk Management Committee closely monitored and controlled and effectively prevented internal
and external risks of the Company, assisted the Board in improving an 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 2016 and the work plan for the year 2017, the report on the rectification of issues
identified during the anti-money laundering on-site enforcement inspection of the Company for
the year 2016 and the rectification plan in relation thereto, the statement of the Company on risk
preference for the year 2017, and the audit report on the solvency risk management system of the
Company for the year 2017, which offered professional support to the Board’s decision-making in a
scientific manner.
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(3) Receiving the report on the prevention against and control over misleading sales practices for the year
2017. In 2017, the Risk Management Committee received and reviewed the “Report on the Prevention
Against and Control Over Misleading Sales Practices for the Year 2017” and gave guiding opinions on
the commencement of anti-money laundering rectification measures by the Company in accordance with
the regulatory authorities for the purpose of enhancing the Company’ sales service level, improving its
reputation and social image and further strengthening the risk control over misleading sales practices.
(4) Conducting investigation and research on local branches. From 14 to 16 February 2017, Ms. Leung Oi-
Sie Elsie, the chairperson of the Risk Management Committee, carried out investigation and research on
CGB and received a special report given by Mr. Liu Jiade, the president of CGB, in respect of the current
development and future plan for the purpose of understanding the risk control of CGB. She also made
an on-site visit to Nanhai Financial Center of CGB and studied major investigation findings on risk
management and internal control matters and the management’s response to these findings.
Ix. 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. Currently, 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. Lin Dairen and Mr. Xu Haifeng, the Executive Directors, with Mr. Tang Xin acting as the
Chairman.
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.
1. Meetings and attendance
In 2017, five 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
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
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
100%
5/5
100%
4/5Note
80%
5/5
100%
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Note: At the tenth meeting of the Strategy and Investment Decision Committee of the fifth session of the Board held on
22 March 2017, Mr. Xu Haifeng gave written authorisation for Mr. Tang Xin to act as his proxy to attend and vote
at the meeting.
In 2017, attendance records of the resigned Director at the Strategy and Investment Decision Committee
meetings are as follows:
Name of member
Position
Wang Sidong
Non-executive Director, member of the Strategy
and Investment Decision Committee of the
fifth session of the Board
Number of
meetings attended Attendance rate
0/1Note 0
Note: At the tenth meeting of the Strategy and Investment Decision Committee of the fifth session of the Board held on
22 March 2017, Mr. Wang Sidong gave written authorisation for Mr. Lin Dairen to act as his proxy to attend and
vote at the meeting.
2. Performance of duties by the Strategy and Investment Decision Committee
In 2017, 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 annual related 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 proposals considered and
discussed at the meetings.
(1) Reviewing annual investment plans and entrusted investments of the Company. In 2017, the Strategy
and Investment Decision Committee carefully reviewed the proposals on investment plans such as the
annual investment plan of the Company and the annual investment plan of the Company for self-
use real estate, the proposals on authorisation of investments such as the annual authorisation by the
Company of investment in non self-use real estate, the annual authorisation of investment entrusted
by the Company in connection with Renminbi liberalization and the annual authorisation by the
Company of investment in equity investment funds, and the proposals on investment guidelines
such as the management guidelines on the investment made by AMC, Franklin Asset Management
Company Limited and CLI under the entrustment of the Company. The Strategy and Investment
Decision Committee fully reviewed the above proposals and submitted its opinions to the Board in
this regard.
(2) Discussing major strategic projects of the Company. In 2017, the Strategy and Investment Decision
Committee reviewed major strategic projects of the Company, such as the strategic asset allocation
plan of the Company for the years from 2018 to 2020, and investments by the Company in Jinxiu
Project, Jinhou Project and Jinhong Project, fully discussed the necessity, feasibility and risks of the
project proposals and made recommendations to the Board.
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(3) Finalizing the Company’s development plans and reports, and revising the measures for the
administration of investment of the Company. In 2017, the Strategy and Investment Decision
Committee discussed and reviewed proposals including the “Proposal in relation to the ‘Assessment
Report for the Outline of the 13th Five-year Development Plan for the Year 2016’”, and submitted
its opinions to the Board. Given that the CIRC subsequently rolled out a number of regulatory
requirements to expand the market scope for the application of insurance capital and the types of
investment and to set higher requirements for the management method and level of management of
insurance capital investments, the Strategy and Investment Decision Committee carefully reviewed
the “Proposal in relation to the Amendments to the ‘Measures for the Administration of Investment’
of the Company” after taking into account the establishment of internal departments of the Company
and the adjustment of their duties and functions.
(4) Conducting investigation and research on local branches. From 14 to 16 February 2017, Mr. Tang
Xin, the Chairman of the Strategy and Investment Decision Committee, and Ms. Leung Oi-Sie Elsie,
a member of the Strategy and Investment Decision Committee, carried out investigation and research
on CGB for the purpose of understanding the implementation of insurance-banking collaboration;
from 31 July to 4 August 2017, Mr. Tang Xin, the Chairman of the Strategy and Investment
Decision Committee, carried out investigation and research on local branches of the Company in
Guizhou Province for the purpose of understanding the business development of the local branches,
supervising, evaluating and examining major issues such as the implementation of the Company’s
strategy and use of funds.
x.
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 of 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 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.
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xI. 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 capability 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.
xII. 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.
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xIII. 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.
In 2017, 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 Company’s development strategies, business operations and major issues, and
increased the readability of periodic reports by adding charts and pictures. The Company extended the scope and
depth of information disclosure of periodic reports and announcements to ensure investors to obtain timely and
accurate information affecting their 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 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. The Company received the highest grade “A Grade” in the information
disclosure work assessment conducted by the SSE in 2017.
In 2017, the Company continuously improved and strengthened its relations with investors, which mainly
included holding the Annual General Meeting, holding results briefings, 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 March 2017, the Company created a WeChat official account for
investor relations and investors could obtain the latest news of the Company, check announcements, view results
briefings, attend conference calls and online roadshows, etc. from their mobile phones. Looking back to 2017,
the Company communicated with more than 3,000 investors and analysts through different channels, including
communicating with more than 900 investors who attended results briefings physically, by conference calls or
internet broadcast, holding over 140 meetings with approximately 1,200 investors and analysts who visited the
Company, communicating with more than 1,000 institutional investors by participating in 29 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 “China Securities Golden Bauhinia Awards 2017” held by Hong Kong Ta
Kung Wen Wei Media Group, the Company was awarded the title of the “Best Investment Value Award for Listed
Companies”. In the assessment and selection of the “Hong Kong Corporate Governance Excellence Awards 2017”,
the Company was awarded the title of the “Hong Kong Corporate Governance Excellence Award (the Main Board
Companies – Hang Seng Composite Index Constituent Companies)”.
xIV. CHANGES OF THE ARTICLES OF ASSOCIATION
During the Reporting Period, no amendment was made to the Articles of Association by the Company.
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xV. INTERNAL CONTROL AND RISK MANAGEMENT
The Company has consistently complied with the regulatory requirements of relevant regulatory authorities, such
as the SSE, the HKSE and the U.S. Securities and Exchange Commission (the “SEC”), with respect to corporate
internal control.
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 Section 404
of the “U.S. Sarbanes-Oxley Act”, 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 (2017 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.
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Pursuant to the requirements of the “Notice on the Proper Preparation for Disclosure of 2017 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 2017 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 2017 in its Form 20-F (U.S.
Annual Report) submitted to 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 2017 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 2017. 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 the 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.
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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.
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, bancassurance,
group insurance, health insurance and e-commerce. This internal control system regulates the relevant
authorisations 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 authorisations relating to the insurance underwriting, insurance claims settlement
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 2017, there had no material 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 early 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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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, authorisation 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 standing 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.
The Company has established a comprehensive information technology system to cover all aspects of
IT work and formed a closed-loop mechanism focusing on centralized review and publication, periodic
inspection and continuous improvement. By conducting internal control measures such as the inspection
of system implementation, the Company has guaranteed the effective implementation of the system and
facilitated the standardization and normalization of various IT work. Further, the Company has constantly
promoted the construction of an information safety system, and formulated and implemented a series of
effective information safety control measures at various stages including the request for construction of the
system, its design, development, testing, publication and arrangement, thereby strengthening the Company’s
information safety protection capability and effectively ensuring the successful commencement of its work.
The Risk Management Department, Audit Department and Supervision Department of the Company
are responsible for the supervision and inspection of its internal control measures. 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. In 2017, with the active
adaption to the stringent regulatory environment in the financial industry and after taking into account the
requirements of the regulatory regime, the Company adjusted the organizational structure of internal audit,
improved its internal audit system, strengthened the mechanism construction of internal audit organizations,
actively exerted the functions of internal audit supervision, and carried out the economic responsibility
audit on managers at all levels, anti-money laundering audit, and a variety of ad-hoc audits with a focus on
connected transactions, solvency risk management system, capital management, reimbursement or deduction
of commissions, supplementary medical fund business and lapsed insurance policies for the purpose of
implementing the stringent internal audit supervision. The Company has also constantly improved its
supervision and remedial mechanisms for identifying issues in internal audit, thus effectively exerting the
value of internal audit and facilitating the standardized management and compliance operation of the
Company. 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”. In 2017, the Company further
refined and optimized the “Rules for Handling the Violation of Laws, Disciplinary Rules and Regulations by
Employees” and the “Implementing Rules for Responsibility Attribution of Cases” pursuant to the standards
for administration of cases of insurance institutions promulgated by the competent authorities in charge
of supervision of the insurance industry. In order to actively adapt to the new developments of external
regulatory environment, the Company has established a sound compliance management system, clearly
defined the responsibilities of compliance management, built up a well-developed compliance management
regime, promoted the establishment of compliance culture, and actively prevented against and dissolved
compliance risks.
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2. 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.
Pursuant to the requirements of the CIRC on 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 pre-warning classification management, in order to enhance its ability of solvency
risk management. The Company conducts a self-assessment on solvency risk management capability every
year 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. The Company persists with its target as the leader of the industry and is
fully recognised by regulatory authorities. The Company was named by the CIRC as a unit exempted from
inspection in 2017. The Company conducts the risk assessments 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 its senior management. Based on the assessments, the overall risk
of the Company is within a controllable range.
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.
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 stated 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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Other Information
Announcement Index
Honors and Awards
136
140
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Information Disclosure Index
Serial
No.
Items
Date of disclosure
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Announcement of Premium Income
Election of Language and Means of Receipt of Corporate Communication
Reply Form
Announcement on Estimated Profit Decrease for the year 2016
Announcement – Forfeiture of Unclaimed Dividends
Change of Principal Place of Business in Hong Kong
Announcement of Premium Income
Notice of Board Meeting
Announcement of Premium Income
Announcement of Results for the year ended 31 December 2016
Announcement on Supplementary Information regarding the Compensation of
Directors, Supervisors and Senior Management Members in 2015
Announcement – Renewal of Continuing Connected Transactions in relation to the
Entrusted Investment and Management Agreement for Alternative Investments with
Insurance Funds
2017/1/17
2017/1/20
2017/1/20
2017/1/25
2017/2/8
2017/2/15
2017/2/15
2017/3/10
2017/3/14
2017/3/23
2017/3/23
2017/3/23
Announcement – Continuing Connected Transactions with Chongqing Trust
2017/3/23
Summary of Solvency Quarterly Report of Insurance Company (Fourth Quarter of
2016)
2017/3/23
China Life Insurance Company Limited 2016 Corporate Social Responsibility Report
2017/3/23
Overseas Regulatory Announcement – China Life Insurance Company Limited –
Announcement on Changes in Accounting Estimates
Announcement – Resignation of Non-Executive Director
List of Directors and Their Role and Function
Annual Report 2016
Reports of The Board & Supervisory Committee, Financial Report & Profit
Distribution Plan, Remuneration of Directors & Supervisors, Election of Directors,
Remuneration of Auditors & Appointment of Auditors, Continuing Connected
Transactions, General Mandate to Issue H Shares, Duty Report of the Independent
Directors of the Board of Directors, Report on the Status of Connected Transactions
& Execution of the Connected Transactions Management System & Notice of AGM
Notice of Annual General Meeting
Form of Proxy of H Share Shareholders for use at the Annual General Meeting of the
Company to be held on Wednesday, 31 May 2017
2017/3/23
2017/4/7
2017/4/7
2017/4/11
2017/4/11
2017/4/11
2017/4/11
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Serial
No.
Items
Date of disclosure
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
Reply Slip of H Share Shareholders
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-Registered Shareholders
Announcement of Premium Income
Announcement – Change of Composition of Board Committees
List of Directors and Their Role and Function
Notice of Board Meeting
Overseas Regulatory Announcement – 2017 First Quarter Report
2017/4/11
2017/4/11
2017/4/11
2017/4/13
2017/4/13
2017/4/13
2017/4/13
2017/4/27
Summary of Solvency Quarterly Report of Insurance Company (First Quarter of 2017)
2017/4/27
Overseas Regulatory Announcement – China Life Insurance Company Limited –
Announcement on Changes in Accounting Estimates
Announcement of Premium Income
Announcement – Resolutions Passed at the Annual General Meeting and Distribution
of Final Dividend
Announcement of Premium Income
Announcement of Premium Income
Announcement – Election of Employee Representative Supervisor
Announcement – Approval of Qualification as Directors by the CIRC and Resignation
of Director
List of Directors and Their Role and Function
Announcement of Premium Income
Notice of Board Meeting
Announcement – Resignation of Supervisor
2017/4/27
2017/5/15
2017/5/31
2017/6/14
2017/7/14
2017/7/20
2017/8/10
2017/8/10
2017/8/14
2017/8/14
2017/8/22
Announcement of Unaudited Interim Results for the six months ended 30 June 2017
2017/8/24
Announcement – Connected Transaction – Formation of Partnership
Summary of Solvency Quarterly Report of Insurance Company (Second Quarter of
2017)
Announcement – Nomination of Non-Executive Director and Non Employee
Representative Supervisor
Overseas Regulatory Announcement – China Life Insurance Company Limited –
Announcement on Changes in Accounting Estimates
Announcement – Approval of Qualification As Supervisor by the CIRC
2017/8/24
2017/8/24
2017/8/24
2017/8/24
2017/9/7
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Serial
No.
Items
Date of disclosure
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
2017 Interim Report
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-Registered Shareholders
Announcement of Premium Income
Announcement of Premium Income
Notice of Board Meeting
2017/9/8
2017/9/8
2017/9/8
2017/9/14
2017/10/16
2017/10/16
Announcement on Estimated Profit Increase for the First Three Quarters of 2017
2017/10/20
Overseas Regulatory Announcement – 2017 Third Quarter Report
Summary of Solvency Quarterly Report of Insurance Company (Third Quarter of
2017)
Announcement – Renewal of Continuing Connected Transactions under the Policy
Management Agreement
Announcement – Renewal of Continuing Connected Transactions between the
Company and CLWM
Announcement – Continuing Connected Transactions between AMP and CLI
Announcement – Proposed Acquisition of Properties jointly with CLP&C
Overseas Regulatory Announcement – China Life Insurance Company Limited –
Announcement on Changes in Accounting Estimates
Election of Mr. Yuan Changqing as a Non-Executive Director of the Fifth Session
of the Board of Directors, Election of Mr. Luo Zhaohui as a Non-Employee
Representative Supervisor of the Fifth Session of the Supervisory Committee and
Notice of the First Extraordinary General Meeting 2017
Notice of the First Extraordinary General Meeting 2017
Form of Proxy of Holders of H Shares for use at the First Extraordinary General
Meeting 2017 of The Company to be held on Wednesday, 20 December 2017
Reply Slip of Holders of H Shares
Notification Letter and Change Request Form to Registered Shareholders
Notification Letter and Request Form to Non-Registered Shareholders
Announcement of Premium Income
Announcement of Premium Income
Announcement – Premium Income exceeding RMB500 Billion
Announcement – Connected Transaction – Formation of Partnership
2017/10/26
2017/10/26
2017/10/26
2017/10/26
2017/10/26
2017/10/26
2017/10/26
2017/11/2
2017/11/2
2017/11/2
2017/11/2
2017/11/2
2017/11/2
2017/11/13
2017/12/12
2017/12/15
2017/12/19
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Serial
No.
73
74
75
76
Items
Date of disclosure
Announcement – Renewal of Continuing Connected Transactions under the Insurance
Sales Framework Agreement
Announcement – Continuing Connected Transactions with CLWM
Announcement – Continuing Connected Transactions between CLWM and
Chongqing Trust
2017/12/19
2017/12/19
2017/12/19
Announcement – Resolutions Passed at the First Extraordinary General Meeting 2017
2017/12/20
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Honors and Awards
Forbes
“2017 Forbes Global 2000”, ranking No. 52
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“China Securities Golden Bauhinia Awards” jointly organized by Hong Kong Ta Kung Wen Wei Media Group, the
Listed Companies Association of Beijing, the Hong Kong Chinese Enterprises Association, Chinese Financial Association
of Hong Kong, Chinese Securities Association of Hong Kong, the Hong Kong Institute of Chartered Secretaries and
Hong Kong Securities Professionals Association
“2017 China Securities Golden Bauhinia Award –
Best Investment Value Award for Listed Companies”
21st Century Business Herald – “Assessment and Selection of the Competitiveness of
Asian Financial Enterprises in the 21st Century”
“2017 Best Life Insurance Company in Asia”
Financial Times – “Gold Medal List of Chinese Financial Institutions”
“Golden Dragon Award – 2017 Best Life Insurance Company”
“Hong Kong Corporate Governance Excellence Awards 2017” jointly organized by the Chamber of Hong Kong Listed
Companies and the Centre for Corporate Governance and Financial Policy, Hong Kong Baptist University
“Hong Kong Corporate Governance Excellence Award (Main Board Companies –
Hang Seng Composite Index Constituent Companies)”
140
China Life Insurance Company Limited Annual Report 2017
Stone Business Review – “Global Top 100 Companies by Market Capitalization (Year-end edition)”
“2017 Global Top 100 Companies by Market Capitalization”, ranking No. 84
Jointly published by China Enterprise Research Centre of Tsinghua University and National Business Daily
“2017 Chinese Listed Companies with Brand Value”, ranking No. 12
“2017 Annual Conference for the Management of Assets and Liabilities of the PRC insurance Industry” organized by
Securities Times and the Insurance Asset Management Association of China
“Ark Prize for Trustworthy Insurance Company in 2017”
National Business Daily – the “2017 China Financial Development Forum and Golden Tripod Award
(the 8th Session)”
“Golden Tripod Award – the Insurance Company with the Most Social Responsibility of 2017”
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Financial Report
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
143
149
151
153
154
156
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 149 to 268, which comprise the consolidated statement of financial
position as at 31 December 2017, 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 2017, 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.
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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.
China Life Insurance Company Limited Annual Report 2017
143
Independent Auditor’s Report (continued)
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
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Valuation of insurance contract liabilities
The Group had significant insurance contract liabilities
stated at RMB2,025.13 billion as at 31 December 2017,
representing 78.73% 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
c a l c u l a t i o n o f i n s u r a n c e c o n t r a c t l i a b i l i t i e s . T h e
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, lapse rates, discount rates,
expense assumptions, and so on, are set up by 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 changes in key
assumptions on the performance of the Group.
In our audit, we involved our internal actuarial specialists
to perform 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 valuation 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.
144
China Life Insurance Company Limited Annual Report 2017
Independent Auditor’s Report (continued)
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
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 RMB13.63 billion as
at 31 December 2017. As the quoted market price of
this investment had been below its carrying value for
more than one year, the Group performed impairment
tests with the assistance from an external valuer in prior
years, based on which an accumulated impairment loss
of RMB1.01 billion was recorded as at 31 December
2016. During 2017, 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 2017 as well,
with the result that no further impairment loss was 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.
In our audit, our internal valuation specialists were
involved to review the technique and the discount rate
used in the impairment test with reference to valuation
guidelines and industry practices, and our procedures
included:
•
•
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
Sino-Ocean; 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.
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Independent Auditor’s Report (continued)
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 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 the valuation, verification and model approval
processes, and evaluated the design and operating
effectiveness of the internal controls over those processes.
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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 RMB147.10 billion as at 31 December 2017. These
investments are classified as level 3 in the fair value
hierarchy, as their fair values 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.
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.
146
China Life Insurance Company Limited Annual Report 2017
Independent Auditor’s Report (continued)
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.
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Independent Auditor’s Report (continued)
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)
•
•
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
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
22 March 2018
148
China Life Insurance Company Limited Annual Report 2017
Consolidated Statement of Financial Position
As at 31 December 2017
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
2017
RMB million
As at
31 December
2016
RMB million
42,707
3,064
161,472
717,037
383,504
449,400
6,333
810,734
136,809
36,185
50,641
14,121
3,046
33,952
48,586
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
Notes
6
7
8
9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
11
12
13
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Total assets
2,897,591
2,696,951
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
China Life Insurance Company Limited Annual Report 2017
149
Consolidated Statement of Financial Position (continued)
As at 31 December 2017
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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
2017
RMB million
As at
31 December
2016
RMB million
Notes
14
15
16
17
18
19
28
20
34
35
36
2,025,133
232,500
83,910
18,794
–
2,529
87,309
44,820
18,505
47,430
4,871
6,198
282
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
2,572,281
2,389,303
28,265
7,791
145,675
139,202
28,265
7,791
145,007
122,558
Attributable to equity holders of the Company
320,933
303,621
Non-controlling interests
Total equity
Total liabilities and equity
4,377
4,027
325,310
307,648
2,897,591
2,696,951
Approved and authorised for issue by the Board of Directors on 22 March 2018.
Yang Mingsheng
Director
Lin Dairen
Director
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
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China Life Insurance Company Limited Annual Report 2017
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2017
Notes
2017
RMB million
2016
RMB million
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 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
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511,966
(3,661)
508,305
(1,395)
430,498
(1,758)
428,740
(2,510)
506,910
426,230
122,727
42
6,183
7,493
109,147
6,038
(7,094)
6,460
643,355
540,781
(259,708)
(33,818)
(172,517)
(8,076)
(21,871)
(64,789)
(4,601)
(35,953)
(6,426)
(1,068)
(253,157)
(27,269)
(126,619)
(5,316)
(15,883)
(52,022)
(4,767)
(31,854)
(4,859)
(1,048)
(608,827)
(522,794)
7,143
5,855
41,671
(8,919)
23,842
(4,257)
32,752
19,585
32,253
499
19,127
458
21
22
23
24
24
24
25
26
20
8
27
28
Basic and diluted earnings per share
30
RMB1.13
RMB0.66
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
China Life Insurance Company Limited Annual Report 2017
151
Consolidated Statement of Comprehensive Income (continued)
For the year ended 31 December 2017
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
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Note
2017
RMB million
2016
RMB million
28
(15,003)
(42)
(44,509)
(6,038)
5,605
17,372
20
(865)
2,359
(864)
21
8,242
(7,926)
(25,776)
–
–
Other comprehensive income for the year, net of tax
(7,926)
(25,776)
Total comprehensive income for the year, net of tax
24,826
(6,191)
Attributable to:
– Equity holders of the Company
– Non-controlling interests
24,341
485
(6,647)
456
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
152
China Life Insurance Company Limited Annual Report 2017
Consolidated Statement of Changes in Equity
For the year ended 31 December 2017
Attributable to equity holders
of the Company
Other equity
instruments
RMB million
(Note 35)
Reserves
RMB million
(Note 36)
Retained
earnings
RMB million
Non-controlling
interests
Total
RMB million
RMB million
7,791
–
–
163,381
–
(25,774)
123,055
19,127
–
3,722
458
(2)
326,214
19,585
(25,776)
Share capital
RMB million
(Note 34)
28,265
–
–
–
–
–
–
–
–
28,265
28,265
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(25,774)
19,127
456
(6,191)
7,367
–
–
33
(7,367)
(12,257)
–
–
7,400
(19,624)
–
–
(151)
–
(151)
–
(12,257)
(151)
33
(12,375)
7,791
145,007
122,558
4,027
307,648
7,791
–
–
145,007
–
(7,912)
122,558
32,253
–
4,027
499
(14)
307,648
32,752
(7,926)
–
–
–
–
–
–
(7,912)
32,253
485
24,826
8,445
–
–
135
(8,445)
(7,164)
–
–
8,580
(15,609)
–
–
(135)
–
(135)
–
(7,164)
(135)
135
(7,164)
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
As at 31 December 2016
As at 1 January 2017
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
As at 31 December 2017
28,265
7,791
145,675
139,202
4,377
325,310
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The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
China Life Insurance Company Limited Annual Report 2017
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Consolidated Statement of Cash Flows
For the year ended 31 December 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax
Adjustments for:
Investment income
Net realised and unrealised (gains)/losses on financial assets
Insurance contracts
Depreciation and amortisation
Foreign exchange (gains)/losses
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
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2017
RMB million
2016
RMB million
41,671
23,842
(122,727)
(6,225)
176,148
2,240
(52)
(7,143)
76,378
931
38,967
(4,473)
4,497
778
(109,147)
1,056
131,354
2,083
(582)
(5,855)
(76,318)
1,539
124,466
(9,331)
5,465
526
Net cash inflows/(outflows) from operating activities
200,990
89,098
CASH FLOWS FROM INVESTING ACTIVITIES
Disposals and maturities:
Disposals of debt investments
Maturities of debt investments
Disposals of equity investments
Property, plant and equipment
Purchases:
Debt investments
Equity investments
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
Cash paid related to other investing activities
30,540
142,845
506,306
103
(516,051)
(500,737)
(9,619)
(37,304)
92,148
6,981
98,012
29,014
(15,515)
(399)
10,447
50,101
508,476
114
(173,628)
(537,012)
(5,310)
(65,158)
37,515
(22,035)
78,891
20,390
(7,483)
(11)
Net cash inflows/(outflows) from investing activities
(173,676)
(104,703)
The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
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China Life Insurance Company Limited Annual Report 2017
Consolidated Statement of Cash Flows (continued)
For the year ended 31 December 2017
CASH FLOWS FROM FINANCING ACTIVITIES
Increase/(decrease) in securities sold under agreements to repurchase, net
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
Foreign exchange gains/(losses) on cash and cash equivalents
2017
RMB million
2016
RMB million
6,228
(5,671)
(7,164)
(135)
3,121
4,034
(38,000)
(8,008)
(45,595)
(179)
49,999
(4,891)
(12,257)
(151)
13,831
2,939
(30,000)
(13,200)
6,270
285
Net decrease in cash and cash equivalents
(18,460)
(9,050)
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
67,046
76,096
48,586
67,046
47,444
1,142
64,364
2,682
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The notes on pages 156 to 268 form an integral part of these consolidated financial statements.
China Life Insurance Company Limited Annual Report 2017
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Notes to the Consolidated Financial Statements
For the year ended 31 December 2017
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 activities are the writing of life, health, accident and other types of personal
insurance business; reinsurance business for personal insurance business; fund management business permitted by
national laws and regulations or approved by the State Council of the People’s Republic of China, etc.
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 22 March 2018.
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 2017
Standards/Amendments
Content
Effective for annual periods
beginning on or after
IAS 7 Amendments
IAS 12 Amendments
IFRS 12 Amendments
included in Annual
Improvements to IFRSs
2014-2016 Cycle
Disclosure Initiative
Recognition of Deferred Tax Assets for
Unrealised Losses
Disclosure of Interests in Other Entities
1 January 2017
1 January 2017
1 January 2017
156
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017 (continued)
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. Disclosure of the changes in liabilities arising from financing
activities is provided in Note 37 to the financial statements.
IAS 12 Amendments – Recognition of Deferred Tax Assets for Unrealised Losses
Amendments to IAS 12 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 applied the amendments retrospectively. However, their
application has no impact on the Group’s financial position and performance, as the accounting treatment
of the Group for the previous period was consistent with the clarification in these amendments.
IFRS 12 Amendments – Disclosure of Interests in Other Entities
Amendments to IFRS 12 clarify that the disclosure requirements in IFRS 12, other than those disclosure
requirements in paragraphs B10 to B16 of IFRS 12, apply to an entity’s interest in a subsidiary, a joint
venture or an associate, or a portion of its interest in a joint venture or an associate that is classified as held
for sale or included in a disposal group classified as held for sale. The amendments have had no impact on
the Group’s consolidated financial statements as the Group has no interest in a subsidiary, a joint venture or
an associate that is classified as held for sale.
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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 2017
Standards/Amendments
Content
IFRS 2 Amendments
IFRS 9
IFRS 4 Amendments
IFRS 15
IFRS 15 Amendments
IAS 40 Amendments
IFRS 16
IFRS 17
IFRS 10 and IAS 28
Amendments
Classification and Measurement of
Share-based Payment Transactions
Financial Instruments
Applying IFRS 9 Financial Instruments
with IFRS 4 Insurance Contracts
Revenue from Contracts with Customers
Clarifications to IFRS 15 Revenue from
Contracts with Customers
Transfers of Investment Property
Leases
Insurance Contracts
Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
Effective for annual period
beginning on or after
1 January 2018
1 January 2018
1 January 2018
1 January 2018
1 January 2018
1 January 2018
1 January 2019
1 January 2021
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.
China Life Insurance Company Limited Annual Report 2017
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017 (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 an employee’s tax obligation 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. On adoption, entities are required to apply the amendments without restating
prior periods, but retrospective application is permitted if they elect to adopt for all three amendments and
other criteria are met. The Group will 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 replace 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. Based on the
current assessment, the Group expects the adoption of IFRS 9 will have a material impact on the Group’s
consolidated financial statements.
Classification and measurement
IFRS 9 requires that the Group classifies debt instruments based on the combined effect of application
of business model (hold to collect contractual cash flows, hold to collect contractual cash flows and sell
financial assets or other business models) and contractual cash flow characteristics (sole payments of
principal and interest on the principal amount outstanding or not). Debt instruments not giving rise to
cash flows that are sole payments of principal and interest on the principal amount outstanding would
be measured at fair value through profit and loss. Other debt instruments giving rise to cash flows that
are sole payments of principal and interest on the principal amount outstanding would be measured at
amortised cost, fair value through other comprehensive income (“FVOCI”) or fair value through profit
or loss (“FVTPL”), based on their respective business model. The Group is in the process of analysing the
contractual cash flow characteristics of financial assets and assessing the application of the business model.
Equity instruments would generally be measured at fair value through profit or loss unless the Group elects
to measure at FVOCI for certain equity investments not held for trading. This will result in unrealised
gains and losses on equity instruments currently classified as available-for-sale securities being recorded in
income going forward. Currently, these unrealised gains and losses are recognised in other comprehensive
income (“OCI”). If the Group elect to record equity investments at FVOCI, gains and losses would never
be recognised in income except for the received dividends which do not represent a recovery of part of the
investment cost.
158
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017 (continued)
Impairment
IFRS 9 replaces the “incurred loss” model with the “expected credit loss” model which is designed to include
forward-looking information. The Group is in the process of developing and testing the key models required
under IFRS 9 and analysing the impact on the expected loss provision; the Group believed the provision for
debt instruments of the Group under the “expected credit loss” model would be larger than that under the
previous “incurred loss” model.
Hedge accounting
The Group does not apply the hedge accounting currently, so the new hedge accounting model under IFRS
9 has no impact on the Group’s consolidated financial statements.
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 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 eligible entities to defer the implementation date of IFRS 9 until the effective date of
IFRS 17. The amendments clarify that an insurer may apply the temporary exemption from IFRS 9 if: (i)
it has not previously applied any version of IFRS 9, other than only the requirements for the presentation
of gains and losses on financial liabilities designated as FVTPL; and (ii) its activities are predominantly
connected with insurance on its annual reporting date that immediately precedes 1 April 2016. 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.
During 2016, the Group performed an assessment of the amendments and reached the conclusion that
its activities are predominantly connected with insurance as at 31 December 2015. There had been no
significant change in the activities of the Group since then that requires reassessment, and the Group
considered that it continues to meet the criteria of applying the temporary exemption. The Group decides to
apply the temporary exemption from IFRS 9 and, therefore, continue to apply IAS 39 to its financial assets
and liabilities in its reporting period starting on 1 January 2018.
IFRS 15 – Revenue from Contracts with Customers and IFRS 15 Amendments
IFRS 15, issued in May 2014, 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. Either a full retrospective application or a
modified retrospective adoption is required on the initial application of the standard. 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, and early adoption is permitted.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017 (continued)
IFRS 15 – Revenue from Contracts with Customers and IFRS 15 Amendments (continued)
The Group will adopt IFRS 15 from 1 January 2018 and plans to adopt the modified retrospective
approach. Given insurance contracts are scoped out of IFRS 15, the main impact of the new standard is on
the accounting treatment of income from administrative and investment management services. The Group
does not expect any significant impact on the Group’s consolidated financial statement.
IAS 40 Amendments – Transfers of Investment Property
Amendments to IAS 40, issued in December 2016, clarify when an entity should transfer property, including
property under construction or development into, or out of investment property. The amendments state that
a change in use occurs when the property meets, or ceases to meet, the definition of investment property and
there is evidence of the change in use. A mere change in management’s intentions for the use of a property
does not provide evidence of a change in use. The amendments are to be applied prospectively, and shall
be applied to the changes that occurred, during or after the financial year when it applies amendments for
the first time. An entity should reassess the classification of property held at the date that it first applies
the amendments and, if applicable, reclassify property to reflect the conditions that exist at that date.
Retrospective application is only permitted if it is possible without the use of hindsight. 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 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). The right-of-use asset is subsequently measured at cost
less accumulated depreciation and any impairment losses unless the right-of-use asset meets the definition
of investment property in IAS 40, or relates to a class of property, plant and equipment to which the
revaluation model is applied. The lease liability is subsequently increased to reflect the interest on the lease
liability and reduced for the lease payments. 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. The Group is assessing
the impact of IFRS 16 on its consolidated financial statements.
160
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017 (continued)
IFRS 17 – Insurance Contracts
In May 2017, the IASB issued IFRS 17 Insurance Contracts, a comprehensive new accounting standard for
insurance contracts covering recognition and measurement, presentation and disclosure, which replaces IFRS
4 Insurance Contracts.
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In contrast to the requirements in IFRS 4, which are largely based on grandfathering previous local
accounting policies for measurement purposes, IFRS 17 provides a comprehensive model (the general model)
for insurance contracts, supplemented by the variable fee approach for contracts with direct participation
features and the premium allocation approach mainly for short-duration which typically applies to certain
non-life insurance contracts.
The main features of the new accounting model for insurance contracts are, as follows:
•
•
•
•
•
•
•
•
The fulfilment cash flows including the expected present value of future cash flows and explicit risk
adjustment, remeasured every reporting period;
A Contractual Service Margin (CSM) represents the unearned profitability of the insurance contracts
and is recognised in profit or loss over the coverage period;
Certain changes in the expected present value of future cash flows are adjusted against the CSM and
thereby recognised in profit or loss over the remaining coverage period;
The effect of changes in discount rates will be reported in either profit or loss or other comprehensive
income, determined by an accounting policy choice;
The recognition of insurance revenue and insurance service expenses in the statement of
comprehensive income based on the concept of services provided during the period;
Amounts that the policyholder will always receive, regardless of whether an insured event happens
(non-distinct investment components) are not presented in the income statement, but are recognised
directly on the balance sheet;
Insurance services results are presented separately from the insurance finance income or expense;
Extensive disclosures to provide information on the recognised amounts from insurance contracts and
the nature and extent of risks arising from these contracts.
IFRS 17 is effective for annual reporting periods beginning on or after 1 January 2021, with comparative
figures required. Early application is permitted, provided the entity also applies IFRS 9 and IFRS 15 on or
before the date it first applies IFRS 17. Retrospective application is required. However, if full retrospective
application for a group of insurance contracts is impracticable, then the entity is required to choose either a
modified retrospective approach or a fair value approach.
The Group is currently assessing the impact of the standard upon adoption.
China Life Insurance Company Limited Annual Report 2017
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017 (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 adoption
now.
In addition, besides the amendments to IFRS 12, which are effective for annual periods beginning on
or after 1 January 2017, the Annual Improvements 2014-2016 Cycle issued in December 2016 set out
amendments to IFRS 1 and IAS 28, which are effective for annual periods beginning on or after 1 January
2018. The Annual Improvements 2015-2017 Cycle issued in December 2017 set out amendments to IFRS 3,
IFRS 11, IAS 12 and IAS 23, which are effective for annual periods beginning on or after 1 January 2019.
There is no material impact on the accounting policies of the Group as a result of these amendments.
2.2 Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries
for the year ended 31 December 2017. 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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.2 Consolidation (continued)
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.
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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.2 Consolidation (continued)
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.
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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.3 Associates and joint ventures (continued)
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.
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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.6 Property, plant and equipment (continued)
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.
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 form 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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.7 Investment properties (continued)
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 taking short-term profit. 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.
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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.8 Financial assets (continued)
2.8.b Recognition and measurement (continued)
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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 40(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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 claims 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 claims expenses based on the
reasonable estimates of the future payments for claims 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:
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 amortisation 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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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).
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 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.
174
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
2.19 Revenue recognition (continued)
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.
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 regulations are 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 and only if the Group has a legally enforceable
right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax
liabilities relate to income tax levied by the same taxation authority on either the same taxable entity or
different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to
realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts
of deferred tax liabilities or assets are expected to be settled or recovered.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
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.
176
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
3.1 Estimate of future benefit payments and premiums arising from long-term insurance
contracts (continued)
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.
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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
3.3 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.
3.4 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.
3.5 Determination of control over investee
The Group applies its judgement 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 2017, the Group has consolidated some fund products issued and
managed by the Company’s subsidiary, China Life AMP Asset Management Company (“CL AMP”), some
debt investment schemes issued and managed by the Company’s subsidiary, China Life Asset Management
Company Limited (“CL AMC”) and some trust schemes and debt investment schemes issued and managed
by third parties in the consolidated financial statements. Please refer to Note 40(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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.1 Types of insurance risks (continued)
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.
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:
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Product name
Premiums of long-term insurance
contracts
New Xin Feng Endowment (Type A) (a)
Xin Fu Ying Jia Annuity (b)
Kang Ning Whole Life (c)
Hong Ying Participating Endowment (d)
Hong Tai Endowment (e)
Others (f)
For the year ended 31 December
2017
2016
RMB million
%
RMB million
%
59,636
40,588
21,435
3,019
166
340,054
12.83%
8.73%
4.61%
0.65%
0.04%
73.14%
38,059
1,626
22,420
4,968
203
323,162
9.75%
0.42%
5.74%
1.27%
0.05%
82.77%
Total
464,898
100.00%
390,438
100.00%
Insurance benefits of long-term
insurance contracts
New Xin Feng Endowment (Type A) (a)
Xin Fu Ying Jia Annuity (b)
Kang Ning Whole Life (c)
Hong Ying Participating Endowment (d)
Hong Tai Endowment (e)
Others (f)
78
7,956
4,197
49,796
41,271
62,926
0.05%
4.79%
2.52%
29.96%
24.83%
37.85%
67
277
3,949
73,261
25,093
77,255
0.04%
0.15%
2.20%
40.72%
13.95%
42.94%
Total
166,224
100.00%
179,902
100.00%
China Life Insurance Company Limited Annual Report 2017
179
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.2 Concentration of insurance risks (continued)
As at 31 December 2017
As at 31 December 2016
RMB million
%
RMB million
%
Liabilities of long-term insurance contracts
New Xin Feng Endowment (Type A) (a)
Xin Fu Ying Jia Annuity (b)
Kang Ning Whole Life (c)
Hong Ying Participating Endowment (d)
Hong Tai Endowment (e)
Others (f)
69,280
19,771
268,708
70,506
16,730
1,554,071
3.47%
0.99%
13.44%
3.53%
0.84%
77.73%
43,794
987
244,112
117,946
57,356
1,361,761
2.40%
0.05%
13.37%
6.46%
3.14%
74.58%
Total
1,999,066
100.00%
1,825,956
100.00%
(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 Fu Ying Jia Annuity is an annuity insurance contract with the options for regular premium of 3
years, 5 years or 10 years. Its insured period extends from the effective date of Xin Fu Ying Jia Annuity
to the corresponding date when policyholders reach the age of 88. This product is applicable to
healthy policyholders between 28-day-old and 70-year-old. From the effective date to the contractual
date starting to claim of Xin Fu Ying Jia Annuity, the annuity payment of first policy year is paid
at 20% of the first premium of the product, the following annuity payments are paid at 20% of the
basic sum insured by Xin Fu Ying Jia Annuity. From the first corresponding date after the contractual
date starting to claim of annuity, to the corresponding date when the policyholders reach the age of
88-year-old, annuity is paid at 3% of the basic sum insured during the insured period if policyholders
live to the annual corresponding effective date; annuity is paid at the premium received (without
interest) during the insured period if policyholders live to the contractual date starting to claim of
annuity; the contract terminates and death benefit is paid at the premium received (without interest)
or the cash value of the contract, whichever greater when death incurred before the contractual date
starting to claim of annuity; the contract terminates and death benefit is paid at the cash value of
the contract when death incurred after contractual date starting to claim of annuity; the contract
terminates and accidental death benefit is paid at the premium received (without interest) less any
death benefit paid when accidents occurred and due to which death incurred within 180 days.
(c) 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.
180
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.2 Concentration of insurance risks (continued)
(d) 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.
(e) Hong Tai is long-term individual participating endowment insurance contract with options for single
premium or regular premium of 10 years, designed for healthy policyholders of age between 30-day-
old and 75-year-old. Insured period can be 5 years, 6 years or 10 years. Maturity benefit for single
premium is paid at 100% of basic sum insured. Maturity benefit for regular premium is paid at basic
sum insured multiplied by number of year of premium payments. Disease death benefit incurred
within first year is paid at premium received (without interest). All other death benefits incurred
are paid at basic sum insured or basic sum insured multiplied by the number of year of premium
payments for single premium and regular premium, respectively.
(f) Others consist of various long-term insurance contracts with no significant concentration.
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 RMB19,731 million
or RMB20,559 million (as at 31 December 2016: RMB16,746 million or RMB17,492 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 RMB1,940 million or RMB1,989 million (as at 31
December 2016: RMB2,823 million or RMB2,953 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 RMB70,732 million or RMB80,152
million (as at 31 December 2016: RMB57,591 million or RMB65,427 million) higher or lower,
respectively.
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China Life Insurance Company Limited Annual Report 2017
181
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.1 Insurance risk (continued)
4.1.3 Sensitivity analysis (continued)
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 RMB445 million (as at 31 December 2016: RMB372 million)
lower or higher, respectively.
The following table indicates the claim development for short-term insurance contracts without taking into
account the impacts of ceded business:
Estimated claims expenses
2013
Short-term insurance contracts (accident year)
2014
2015
2016
2017
Total
Year end
1 year later
2 years later
3 years later
4 years later
Estimated accumulated
claims expenses
Accumulated claims
expenses paid
11,476
11,872
11,775
11,775
11,775
16,499
17,265
16,726
16,726
20,497
21,427
21,422
27,120
27,303
33,926
11,775
16,726
21,422
27,303
33,926
111,152
(11,775)
(16,726)
(21,422)
(26,047)
(21,404)
(97,374)
Unpaid claims expenses
–
–
–
1,256
12,522
13,778
The following table indicates the claim development for short-term insurance contracts taking into account
the impacts of ceded business:
Estimated claims expenses
2013
Short-term insurance contracts (accident year)
2014
2015
2016
2017
Total
Year end
1 year later
2 years later
3 years later
4 years later
Estimated accumulated
claims expenses
Accumulated claims
expenses paid
11,331
11,743
11,645
11,645
11,645
16,379
17,127
16,589
16,589
20,359
21,262
21,259
26,897
27,107
33,700
11,645
16,589
21,259
27,107
33,700
110,300
(11,645)
(16,589)
(21,259)
(25,860)
(21,273)
(96,626)
Unpaid claims expenses
–
–
–
1,247
12,427
13,674
182
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017, 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 RMB35 million lower or higher
(as at 31 December 2016: RMB160 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 RMB11,463
million or RMB8,306 million (as at 31 December 2016: RMB6,948 million or RMB6,948 million)
lower or higher, as a result of a decrease or increase in the fair value of available-for-sale securities.
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China Life Insurance Company Limited Annual Report 2017
183
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 capital 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 2017, if the prices of all the Group’s equity securities had increased or decreased
by 10% with all other variables held constant, pre-tax profit for the year would have been RMB3,341
million or RMB5,393 million (as at 31 December 2016: RMB3,263 million or RMB3,400 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 RMB23,423 million or RMB32,651 million (as at 31 December 2016: RMB24,999 million or
RMB28,153 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.
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China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017 and 2016, expressed in RMB equivalent:
As at 31 December 2017
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
– Loans
– Available-for-sale securities
– Securities at fair value through
profit or loss
Term deposits
Cash and cash equivalents
8,697
28,859
–
–
–
37,556
4,707
155
952
1,229
435
7,744
1,246
146
1,088
2,690
1,198
–
–
–
–
–
185
–
–
–
18
–
282
–
–
–
5
–
128
–
–
–
5
–
3
9,829
155
952
1,229
463
7,744
1,844
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Total
25,165
29,190
1,388
2,823
1,206
59,772
Financial liabilities
Interest-bearing loans and
other borrowings
Total
12,480
12,480
–
–
2,413
3,901
2,413
3,901
–
–
18,794
18,794
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
through profit or loss
Debt securities
– Held-to-maturity securities
– Securities at fair value
through profit or loss
Term deposits
Cash and cash equivalents
6,968
12,791
–
–
148
19,907
3,906
164
348
6,106
2,685
128
–
–
–
2,083
1,115
2,475
1,135
8,759
–
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
China Life Insurance Company Limited Annual Report 2017
185
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.1 Market risk (continued)
(iii) Currency risk (continued)
As at 31 December 2017, 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 RMB308 million (as at 31 December 2016: RMB420 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 RMB3,541 million (as at 31 December 2016:
RMB1,743 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 2017
were RMB52 million (2016: exchange gains of RMB582 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 2017 and 2016.
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.
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186
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017,
99.9% (as at 31 December 2016: 99.0%) 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 2017, 99.9% (as at 31 December
2016: 99.9%) of the subordinated bonds or debts held by the Group either had 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 and updated at each reporting date.
As at 31 December 2017, 99.8% (as at 31 December 2016: 99.5%) 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 2017 and 2016.
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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 terms of no more than one year as at 31
December 2017 and 2016.
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.
China Life Insurance Company Limited Annual Report 2017
187
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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:
Contractual and expected cash flows (undiscounted)
Carrying
value
Without
maturity
Not later
than 1 year
Later
than 1 year
but not later
than 3 years
Later
than 3 years
but not later
than 5 years
409,528
1,255,052
383,504
449,400
6,333
36,185
50,641
14,121
48,586
409,528
–
–
–
–
–
–
–
–
–
127,830
141,679
104,976
4,084
36,185
44,789
14,121
48,586
–
240,582
105,063
252,571
734
–
5,602
–
–
–
271,538
64,386
133,013
2,106
–
250
–
–
Later than
5 years
–
1,240,465
128,753
2,823
–
–
–
–
–
As at 31 December 2017
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
Subtotal
2,653,350
409,528
522,250
604,552
471,293
1,372,041
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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
2,025,133
232,500
87,309
–
–
–
44,820
18,794
–
–
2,529
(2,529)
–
16,319
(15,308)
221,905
(29,981)
47,109
(26,892)
(3,807,542)
(388,320)
(87,309)
(44,820)
–
–
–
(1,240)
(18,557)
–
–
–
–
–
–
–
–
Subtotal
2,411,085
(2,529)
(132,358)
173,367
20,217
(4,195,862)
Net cash inflows/(outflows)
242,265
406,999
389,892
777,919
491,510
(2,823,821)
188
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.3 Liquidity risk (continued)
Contractual and expected cash flows (undiscounted)
Carrying
value
Without
maturity
Not later
than 1 year
Later
than 1 year
but not later
than 3 years
Later
than 3 years
but not later
than 5 years
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
–
–
–
–
–
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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
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
1,847,986
195,706
81,088
2,031
39,038
16,170
37,998
–
–
–
(43,322)
(15,880)
97,236
(34,147)
35,088
(33,128)
(3,229,394)
(259,905)
(81,088)
(2,031)
–
–
–
–
(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)
China Life Insurance Company Limited Annual Report 2017
189
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 RMB83,910
million as at 31 December 2017 (as at 31 December 2016: RMB87,725 million). As at 31 December 2017,
declared dividends of RMB68,731 million (as at 31 December 2016: RMB64,623 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 RMB56,709 million
and RMB173,557 million, respectively for the year ended 31 December 2017 (2016: RMB53,271 million
and RMB140,565 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 insurance fund requirement, statutory reserve fund requirement and general reserve
requirement discussed in detail in Note 9.4, Note 20 and Note 36, 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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.2 Financial risk (continued)
4.2.4 Capital management (continued)
The table below summarises the core and comprehensive solvency ratio, core capital, actual capital and
minimum capital of the Company under Insurance Institution Solvency Regulations (No.1-No.17):
Core capital
Actual capital
Minimum capital
Core solvency ratio
Comprehensive solvency ratio
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
706,516
706,623
254,503
278%
278%
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.1510 Notification of the Evaluation Results of Integrated Risk
Rating (Classification Regulation) for the Third Quarter of 2017, released by the CIRC, the latest Integrated
Risk Rating result of the Company was Category A.
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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
4
RISK MANAGEMENT (continued)
4.3 Fair value hierarchy (continued)
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 2017, assets classified as Level 1 accounted for approximately 32.93% 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 funds’ 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 the
reporting date as their fair market value and classified the investments as Level 1.
As at 31 December 2017, assets classified as Level 2 accounted for approximately 51.20% 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 2017, assets classified as Level 3 accounted for approximately 15.87% 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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017:
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
196,673
46,898
48,989
350,893
52,300
9,301
963
73,590
89,111
57,333
655
–
334,773
455,124
53,918
82,891
Total
305,172
474,435
147,099
926,706
Liabilities measured at fair value
Financial liabilities at fair value
through profit or loss
Investment contracts at fair value
through profit or loss
Total
(2,529)
(12)
(2,541)
–
–
–
–
–
–
(2,529)
(12)
(2,541)
The following table presents the changes in Level 3 assets for the year ended 31 December 2017:
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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
Disposals
Maturity
13,733
47,909
–
–
–
(519)
–
(3,790)
76,445
15,197
2,842
(5,598)
–
315
(90)
–
1,061
–
695
(1,059)
(42)
–
–
–
91,239
63,106
3,537
(6,657)
(42)
(204)
(90)
(3,790)
Closing balance
57,333
89,111
655
147,099
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 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 2017, RMB19,275
million (2016: RMB8,932 million) debt securities were transferred from Level 1 to Level 2 within the fair
value hierarchy, whereas RMB9,652 million (2016: RMB8,668 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 2017 and 2016, 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 2017 and 2016, 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 cost of the agency business in respect of transactions
with CLIC, etc., 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 on financial assets, net fair value gains 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 segments’ 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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
5
SEGMENT INFORMATION (continued)
Revenues
Gross written premiums
– Term life
– Whole life
– Endowment
– Annuity
Net premiums earned
Investment income
Net realised gains on financial assets
Net fair value gains through profit or loss
Other income
Including: inter-segment revenue
For the year ended 31 December 2017
Life
Health
Accident
Others
Elimination
Total
RMB million
429,822
4,110
36,496
198,418
190,798
429,267
115,316
41
5,690
1,276
–
67,708
–
–
–
–
63,323
5,454
2
269
75
–
14,436
–
–
–
–
14,320
456
–
23
–
–
–
–
–
–
–
–
1,501
(1)
201
7,268
1,126
–
–
–
–
–
–
–
–
–
(1,126)
(1,126)
511,966
506,910
122,727
42
6,183
7,493
–
Segment revenues
551,590
69,123
14,799
8,969
(1,126)
643,355
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
(257,300)
(2,383)
(25)
–
(152,110)
(7,798)
(27,992)
(20,249)
(278)
(21,748)
(48,781)
(3,967)
(24,286)
(5,508)
(1,071)
(777)
(123)
(8,494)
(187)
(5,615)
(376)
(51)
(180)
(5,826)
(158)
–
–
(4,565)
(16)
(3,423)
(147)
(4)
(111)
–
–
–
–
–
(2,949)
(431)
(2,629)
(1,521)
–
–
–
–
–
–
–
–
–
–
1,126
1,126
–
(259,708)
(33,818)
(172,517)
(8,076)
(21,871)
(64,789)
(4,601)
(35,953)
(6,426)
–
(1,068)
Segment benefits, claims and expenses
(522,275)
(65,877)
(14,271)
(7,530)
1,126
(608,827)
Share of profit of associates and joint ventures, net
–
–
29,315
3,246
Segment results
Income tax
Net profit
Attributable to
– Equity holders of the Company
– Non-controlling interests
–
528
7,143
8,582
Other comprehensive income attributable
to equity holders of the Company
(7,838)
(370)
Depreciation and amortisation
1,513
351
(31)
216
327
160
–
–
–
–
7,143
41,671
(8,919)
32,752
32,253
499
(7,912)
2,240
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
5
SEGMENT INFORMATION (continued)
Life
Health
Accident
Others
Elimination
Total
As at 31 December 2017
RMB million
Assets
Financial assets (including cash
and cash equivalents)
Others
2,478,739
8,402
114,045
8,149
9,390
552
38,422
161,472
Segment assets
2,487,141
122,194
9,942
199,894
Unallocated
Property, plant and equipment
Others
Total
Liabilities
Insurance contracts
Investment contracts
Securities sold under agreements to repurchase
Others
1,914,597
218,436
81,163
41,888
102,190
14,064
3,832
3,123
8,346
–
321
224
–
–
1,993
21,323
Segment liabilities
2,256,084
123,209
8,891
23,316
Unallocated
Others
Total
–
–
–
–
–
–
–
–
2,640,596
178,575
2,819,171
42,707
35,713
2,897,591
2,025,133
232,500
87,309
66,558
2,411,500
160,781
2,572,281
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
5
SEGMENT INFORMATION (continued)
For the year ended 31 December 2016
Life
Health
Accident
Others
Elimination
Total
RMB million
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Revenues
Gross written premiums
– Term life
– Whole life
– Endowment
– Annuity
Net premiums earned
Investment income
Net realised gains on financial assets
Net fair value gains through profit or loss
Other income
Including: inter-segment revenue
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)
–
–
Segment revenues
466,104
54,774
14,392
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)
(15,787)
(38,459)
(4,395)
(22,248)
(3,666)
(853)
(804)
(21,958)
(16,578)
(225)
(96)
(6,906)
(174)
(4,373)
(256)
(34)
(138)
(5,311)
(274)
–
–
(4,441)
(17)
(2,899)
(467)
(3)
(106)
–
–
–
–
–
–
899
(39)
(378)
5,919
890
6,401
–
–
–
–
–
(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
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–
–
–
–
–
–
–
–
–
(890)
(890)
430,498
426,230
109,147
6,038
(7,094)
6,460
–
(890)
540,781
–
–
–
–
–
–
–
–
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
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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
1,762,363
183,773
77,649
73,277
77,837
11,933
3,081
3,563
7,786
–
302
338
–
–
56
18,194
Segment liabilities
2,097,062
96,414
8,426
18,250
Unallocated
Others
Total
–
–
–
–
–
–
–
–
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
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017
Transfers upon completion
Additions
Transfers into investment
properties
Disposals
25,362
7,073
70
–
(48)
6,837
49
450
–
(463)
1,424
–
174
–
(195)
10,548
(7,520)
15,747
(1,931)
(148)
1,553
312
13
–
(48)
45,724
(86)
16,454
(1,931)
(902)
As at 31 December 2017
32,457
6,873
1,403
16,696
1,830
59,259
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As at 1 January 2017
Charge for the year
Disposals
(8,311)
(953)
16
(4,934)
(632)
444
(998)
(144)
187
As at 31 December 2017
(9,248)
(5,122)
(955)
–
–
–
–
–
–
–
–
–
(1,068)
(181)
46
(15,311)
(1,910)
693
(1,203)
(16,528)
–
–
–
–
–
(24)
–
–
–
(24)
–
–
–
–
–
426
448
10,548
16,696
485
627
30,389
42,707
Impairment
As at 1 January 2017
Charge for the year
Transfers into investment
properties
Disposals
As at 31 December 2017
Net book value
As at 1 January 2017
(24)
–
–
–
(24)
–
–
–
–
–
17,027
1,903
As at 31 December 2017
23,185
1,751
200
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 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
As at 31 December 2017, the net book value of buildings above which are in process to obtain title certificates is
RMB6,209 million (31 December 2016: Not significant).
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China Life Insurance Company Limited Annual Report 2017
201
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
7
INVESTMENT PROPERTIES
Cost
As at 1 January 2017
Additions
As at 31 December 2017
Accumulated depreciation
As at 1 January 2017
Charge for the year
As at 31 December 2017
Net book value
As at 1 January 2017
As at 31 December 2017
Fair value
As at 1 January 2017
As at 31 December 2017
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Buildings
RMB million
1,435
1,931
3,366
(244)
(58)
(302)
1,191
3,064
2,201
4,629
202
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
7
INVESTMENT PROPERTIES (continued)
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
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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.
As at 31 December 2017, the net book value of investment properties which are in process to obtain title
certificates is RMB1,872 million (31 December 2016: Nil).
The fair value of investment properties of the Group as at 31 December 2017 amounted to RMB4,629 million
(as at 31 December 2016: RMB2,201 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.
China Life Insurance Company Limited Annual Report 2017
203
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
8
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
F
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c
i
a
l
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t
As at 1 January
Change of the cost
Share of profit or loss
Declared dividends
Other equity movements
As at 31 December
Accounting
method
As at
31 December
2016
Cost
Change
of the
cost
Share of
profit
or loss
Other
Declared
equity
dividends movements
Movement
Equity Method
32,162
50,229
Equity Method
11,245
12,680
Equity Method
6,000
7,929
Equity Method
1,339
1,419
Equity Method
20,000
20,000
–
–
–
–
–
4,186
–
(956)
1,201
(553)
298
328
(69)
(3)
47
–
1,351
(20)
–
16
Equity Method
21,829
–
21,829 Note
(18)
–
(28)
Associates
China Guangfa Bank
Co., Ltd. (“CGB”) (i)
Sino-Ocean Group Holding
Limited (“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”)
China United Network
Communications Limited
(“China Unicom”) (iii)
Others (iv)
Equity Method
9,948
10,407
–
567
(776)
(466)
Subtotal
102,523
102,664
21,829
7,662
(1,418)
(1,139)
Joint ventures
China Life (Sanya) Health
Investments Co., Ltd
(“Sanya Company”)
Equity Method
306
301
–
(10)
–
–
Others (iv)
Equity Method
33,349
16,801
15,281
(509)
(444)
Subtotal
Total
33,655
17,102
15,281
(519)
(444)
136,178
119,766
37,110
7,143
(1,862)
(685)
454
454
2017
RMB million
2016
RMB million
119,766
37,110
7,143
(1,862)
(685)
161,472
47,175
68,387
5,855
(820)
(831)
119,766
Provision
As at 31
of December
2017
Percentage Accumulated
amount of
of equity
impairment
interest
impairment
–
–
–
–
–
–
–
–
–
–
–
–
53,459
43.686%
–
13,626
29.79%
(1,010)
–
–
–
–
8,185
40.00%
1,466
35.00%
21,347
43.86%
21,783
10.56%
9,732
–
129,598
(1,010)
291
51.00%
–
31,583
31,874
161,472
–
–
(1,010)
Note: Including the amount originally held by the Company.
204
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
8
INVESTMENT IN ASSOCIATES AND JOINT VENTURES (continued)
(i)
The Company proposed to subscribe for 1,869,586,305 additional shares offering of CGB at no more than
RMB7.01 per share, with a total consideration of RMB13.2 billion. The specific subscription price and
quantity will be subject to the adjustment based on the valuation result filed to state-owned assets authority.
Upon the completion of transaction, the Company will hold 43.686% of CGB’s ownership interest,
unchanged from prior to the transaction. As at 31 December 2017, the transaction has been reviewed and
approved by the Board of Directors of the Company, and the relevant parties of the transaction have not
entered into the contracts.
(ii) The 2016 final dividend of HKD0.12 in cash per ordinary share was approved and declared in the Annual
General Meeting of Sino-Ocean on 18 May 2017. The Company received a cash dividend amounting
to RMB239 million. The 2017 interim dividend of HKD0.167 in cash per ordinary share was approved
and declared by the board of directors of Sino-Ocean on 23 August 2017. The Company received a cash
dividend amounting to RMB314 million.
Sino-Ocean, the Group’s associate is listed in Hong Kong. On 29 December 2017 (the last trading day in
2017), the stock price of Sino-Ocean was HKD5.39 per share. As at 31 December 2017, 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 2017. 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 2017.
(iii) On 16 August 2017, the Company entered into an agreement to acquire 3,177,159,590 non-public offering
of A ordinary shares of China Unicom, with a total consideration of RMB21.7 billion to participate
into the Mixed Ownership Reform of China Unicom. Upon the completion of the transaction as at 31
October 2017, the Group’s share percentage of China Unicom increased from 0.08% to 10.56%, making
the Company the second largest shareholder of China Unicom. In accordance with the articles of China
Unicom, the Company is entitled to nominate candidates for the Board of Directors and Supervisors. The
candidate of Board of Directors nominated by the Company was approved in the General Meeting of China
Unicom on 8 February 2018. The management considered that the Group can exert significant influence
upon China Unicom, and therefore accounted for it as an associate. On 29 December 2017 (the last trading
day in 2017), the stock price of China Unicom was RMB6.33 per share. As at 31 December 2017, the
Company had not yet completed the valuation for fair value of the identifiable net assets of China Unicom.
(iv) The Group invested in real estate, industrial logistics assets and other industries through these enterprises.
(v) Except for a 36-month restricted period of the investment in China Unicom, as mentioned in (iii), the
Group has no restrictions to transact other investments in associates and joint ventures.
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China Life Insurance Company Limited Annual Report 2017
205
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
8
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
As at 31 December 2017, the major associates and joint venture of the Group are as follows:
Name
Associates
CGB
Sino-Ocean
CLP&C
COFCO Futures
Pipeline Company
China Unicom
Joint venture
Sanya Company
Country of incorporation
Percentage of equity interest held
PRC
Hong Kong, PRC
PRC
PRC
PRC
PRC
PRC
43.686%
29.79%
40.00%
35.00%
43.86%
10.56%
51.00%
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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%
The following table illustrates the financial information of the Group’s major associates and joint venture as at 31
December 2017 and for the year ended 31 December 2017:
CGB Sino-Ocean
RMB
RMB
million
million
2,072,915
1,959,069
113,846
191,894
133,166
58,728
CLP&C
RMB
million
79,601
59,138
20,463
COFCO
Pipeline
Futures Company
RMB
million
RMB
million
China
Sanya
Unicom Company
RMB
million
RMB
million
10,651
8,020
2,631
36,243
934
35,309
573,617
266,599
307,018
113,846
2,267
48,502
(2,617)
20,463
–
2,631
–
35,309
676
135,393
–
116,113
43.686%
53,459
–
53,459
50,531
10,204
(2,332)
7,872
45,885
29.79%
14,636
(1,010)
13,626
49,236
6,259
912
7,171
20,463
40.00%
8,185
–
8,185
61,142
820
(35)
785
2,631
35.00%
1,466
–
1,466
399
135
–
135
35,985
43.86%
21,347
–
21,347
5,644
3,055
–
3,055
135,393
10.56%
21,783
–
21,783
274,829
1,684
(230)
1,454
571
51.00%
291
–
291
–
(20)
–
(20)
888
317
571
571
–
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
206
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
8
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)
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 Sino-Ocean
RMB
RMB
million
million
CLP&C
RMB
million
Sanya
Pipeline
COFCO
Futures Company Company
RMB
RMB
million
million
RMB
million
2,047,592
1,941,618
105,974
151,265
101,935
49,330
105,974
3,163
43,999
(1,576)
72,773
52,950
19,823
19,823
–
109,137
43.686%
50,229
–
50,229
42,423
29.991%
13,690
(1,010)
12,680
19,823
40.00%
7,929
–
7,929
55,276
9,504
(1,070)
8,434
37,748
4,446
(164)
4,282
55,728
1,157
(526)
631
11,287
8,710
2,577
2,496
–
2,496
35.00%
1,419
–
1,419
375
66
–
66
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)
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The Group had no contingent liabilities with the associates and joint ventures as at 31 December 2017 and 31
December 2016. The Group had a capital contribution commitment of RMB20.996 billion with a joint venture
as at 31 December 2017 (31 December 2016: RMB2,991 million). The capital contribution commitment amount
has been included in the capital commitments in Note 39.
(i)
Including adjustments for the difference of accounting policies, fair value and others.
China Life Insurance Company Limited Annual Report 2017
207
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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
F
i
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a
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c
i
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l
R
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p
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t
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
125,866
241,808
200,869
148,494
97,196
169,001
178,444
150,089
717,037
594,730
91,631
136
19
625,251
64,192
144
20
530,374
717,037
594,730
The estimated fair value of all held-to-maturity securities was RMB692,984 million as at 31 December 2017
(as at 31 December 2016: RMB619,152 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 2017
RMB million
As at 31
December 2016
RMB million
22,496
112,932
288,496
293,113
717,037
30,615
71,661
231,608
260,846
594,730
208
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
107,957
275,547
92,442
134,131
383,504
226,573
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
128,856
132,575
90,556
31,517
112,592
70,978
25,503
17,500
383,504
226,573
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(i) Other loans mainly consisted of different types of asset management products. As at 31 December
2017, asset management products of RMB44,835 million (as at 31 December 2016: RMB37,679
million) were owned by the Group, which are issued by CL AMC (including its subsidiaries), a
subsidiary of the Company. The total assets of those products were RMB62,015 million (as at 31
December 2016: RMB114,499 million). Meanwhile, the Group also owned asset management
products of RMB202,255 million (as at 31 December 2016: RMB77,999 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 2017, the Group’s investment income from the above asset
management products was RMB10,150 million (2016: RMB6,820 million), and the related asset
management fee received by AMC (including its subsidiaries) for all asset management products it
issued was RMB222 million (2016: RMB236 million).
China Life Insurance Company Limited Annual Report 2017
209
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017
RMB million
As at 31
December 2016
RMB million
97,076
349,524
2,800
185,835
344,790
7,700
449,400
538,325
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As at 31 December 2017, term deposits of RMB16.691 billion (2016: RMB13.2 billion) deposited in banks
for overseas borrowings backed by domestic deposits business are restricted to use.
In September 2016, CL Hotel Investor, L.P. and Glorious Fortune Forever Limited, subsidiaries of the
Company, entered into a loan agreement with the New York and Seoul branches of the Agricultural Bank of
China, respectively. In December 2016, Sunny Bamboo Limited and Golden Bamboo Limited, subsidiaries
of the Company, entered into a loan agreement with the Hong Kong branch of the Agricultural Bank of
China. As at 31 December 2017, the Company arranged overseas borrowings backed by domestic term
deposit transactions with the Beijing Xicheng branch of the Agricultural Bank of China with amounts of
RMB6,861 million, RMB7,080 million and RMB750 million, respectively.
On 6 December 2017, New Fortune Wisdom Limited and New Capital Wisdom Limited, subsidiaries of the
Company’s subsidiary, Ningbo Meishan Bonded Port Area Guo Yang Guo Sheng Investment Partnership
(“Guo Yang Guo Sheng”), entered into a loan agreement with a subsidiary of the Agricultural Bank of
China. Guo Yang Guo Sheng arranged overseas borrowings backed by domestic deposit transactions with the
Beijing Xicheng branch of the Agricultural Bank of China. As at 31 December 2017, the amounts of term
deposits and current deposits are RMB2,000 million and RMB1,247 million, respectively.
9.4 Statutory deposits – restricted
Contractual maturity schedule:
Within one year
After one year but within five years
Total
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
3,933
2,400
6,333
1,720
4,613
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.
210
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017
RMB million
As at 31
December 2016
RMB million
24,632
157,765
197,133
13,495
430
61,669
21,653
146,310
188,337
16,708
11,321
15,429
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i
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a
n
c
i
a
l
R
e
p
o
r
t
Subtotal
455,124
399,758
Equity securities
Funds
Common stocks
Preferred stocks
Wealth management products
Others (i)
Subtotal
Available-for-sale securities, at cost
Equity securities
Others (i)
Total
91,344
129,424
31,651
40,327
42,027
105,290
100,131
27,880
81,854
30,673
334,773
345,828
20,837
20,837
810,734
766,423
(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.
China Life Insurance Company Limited Annual Report 2017
211
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
9
FINANCIAL ASSETS (continued)
9.5 Available-for-sale securities (continued)
Debt securities
Listed in Mainland, PRC
Unlisted
Subtotal
Equity securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted
Subtotal
Total
F
i
n
a
n
c
i
a
l
R
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p
o
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t
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
44,929
410,195
37,163
362,595
455,124
399,758
93,384
41,507
132
220,587
91,011
25,034
232
250,388
355,610
366,665
810,734
766,423
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 2017
RMB million
As at 31
December 2016
RMB million
42,410
153,630
167,552
91,532
33,261
144,443
113,779
108,275
455,124
399,758
212
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017
RMB million
As at 31
December 2016
RMB million
2,081
9,084
66,915
4,811
380
6,762
144,131
3,133
82,891
154,406
9,892
44,026
53,918
14,683
40,035
54,718
136,809
209,124
26,776
292
55,823
19,512
89
134,805
82,891
154,406
39,442
79
7,187
7,210
53,918
37,614
74
6,284
10,746
54,718
136,809
209,124
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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.
China Life Insurance Company Limited Annual Report 2017
213
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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
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Bank deposits
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Others
Total
Current
Non-current
Total
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
36,055
130
36,185
43,518
20
43,538
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
24,942
21,423
4,276
50,641
44,789
5,852
50,641
35,763
17,642
2,540
55,945
44,722
11,223
55,945
214
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017 December 2016 December 2017 December 2016
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
717,037
383,504
449,400
6,333
789,897
136,809
36,185
48,586
(232,500)
(2,529)
(87,309)
–
(18,794)
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)
692,984
375,899
449,400
6,333
789,897
136,809
36,185
48,586
(229,222)
(2,529)
(87,309)
–
(18,794)
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)
(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 RMB55,137 million and that under Level 2 was 637,847 million as at 31 December 2017 (as at 31
December 2016: Level 1 RMB76,299 million and Level 2 RMB542,853 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 value. The fair values of other loans, 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.
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China Life Insurance Company Limited Annual Report 2017
215
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
11 PREMIUMS RECEIVABLE
As at 31 December 2017, the carrying value of premiums receivable within one year was RMB14,079 million (as
at 31 December 2016: RMB13,346 million).
12 REINSURANCE ASSETS
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
2,351
64
527
104
3,046
695
2,351
3,046
1,783
123
125
103
2,134
351
1,783
2,134
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
15,466
6,201
3,050
2,705
987
403
5,140
33,952
25,933
8,019
33,952
911
5,855
2,814
1,718
927
6,571
3,217
22,013
15,665
6,348
22,013
Long-term insurance contracts ceded (Note 14)
Due from reinsurance companies
Ceded unearned premiums (Note 14)
Claims recoverable from reinsurers (Note 14)
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Total
Current
Non-current
Total
13 OTHER ASSETS
Investments receivable
Land use rights
Automated policy loans
Disbursements
Due from related parties
Prepaid to constructors
Others
Total
Current
Non-current
Total
216
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 the
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 2017
As at 31 December 2016
Discount rate assumptions
4.85%
4.45%~4.85%
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 spot discount rates
with risk margin for the past two years are as follows:
As at 31 December 2017
As at 31 December 2016
Discount rate assumptions
3.31%~4.86%
3.23%~4.68%
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.
(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.
Firstly, wide-ranging lifestyle changes could result in future deterioration in morbidity experience.
Secondly, 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.
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China Life Insurance Company Limited Annual Report 2017
217
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
14
INSURANCE CONTRACTS (continued)
(a) Process used to decide on assumptions (continued)
(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 the 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 2017
As at 31 December 2016
45.00
37.00~45.00
0.85%~0.90%
0.85%~0.90%
25.00
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.
(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.
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218
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
14
INSURANCE CONTRACTS (continued)
(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 2017
RMB million
As at 31
December 2016
RMB million
1,999,066
1,825,956
13,778
12,289
11,538
10,492
2,025,133
1,847,986
(2,351)
(1,783)
(104)
(527)
(103)
(125)
(2,982)
(2,011)
1,996,715
1,824,173
13,674
11,762
11,435
10,367
2,022,151
1,845,975
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China Life Insurance Company Limited Annual Report 2017
219
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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:
2017
RMB million
2016
RMB million
2,085
9,453
11,538
1,748
7,520
9,268
(21,404)
(10,460)
(16,364)
(8,877)
33,926
178
13,778
2,672
11,106
13,778
27,120
391
11,538
2,085
9,453
11,538
Net
7,857
10,367
(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
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The table below presents movements in unearned premium reserves:
2017
RMB million
Ceded
Net
Gross
2016
RMB million
Ceded
(125)
(527)
125
10,367
11,762
(10,367)
7,944
10,492
(7,944)
(87)
(125)
87
Gross
10,492
12,289
(10,492)
As at 1 January
Increase
Release
As at 31 December
12,289
(527)
11,762
10,492
(125)
10,367
220
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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
2017
RMB million
2016
RMB million
1,825,956
464,898
(379,262)
78,232
6,599
2,424
219
1,698,773
390,438
(353,048)
73,644
14,262
474
1,413
As at 31 December
1,999,066
1,825,956
(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 2017, the change in other assumptions was mainly caused by
the change in morbidity rate assumptions of certain products, which increased insurance contract
liabilities by RMB1,718 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 RMB706 million.
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.
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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 2017
RMB million
As at 31
December 2016
RMB million
57,153
175,335
12
53,688
142,006
12
232,500
195,706
China Life Insurance Company Limited Annual Report 2017
221
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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
2017
RMB million
2016
RMB million
53,688
4,829
(2,510)
(37)
1,183
50,295
4,680
(2,357)
(36)
1,106
57,153
53,688
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16
INTEREST-BEARING LOANS AND BORROWINGS
Maturity date
Interest rate
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
17 June 2019
27 September 2019
30 September 2019
9 June 2017
11 January 2018
6 December 2020
3.54%
2.30%
2.40%
1.50%
1.495%
EURIBOR + 3.8%(i)
2,413
6,338
6,142
–
780 –
3,121 –
2,339
6,579
6,521
731
18,794
16,170
Guaranteed loans
Guaranteed loans
Guaranteed loans
Guaranteed loans
Guaranteed loans
Credit loans
Total
(i)
3.8% when EURIBOR is negative.
17 BONDS PAYABLE
As at 31 December 2017, the carrying value of bonds payable is nil (as at 31 December 2016: the carrying value
and par value are RMB37,998 million and RMB38,000 million, respectively).
Issue date
Maturity date
Interest rate p.a.
29 June 2012
5 November 2012
29 June 2022
5 November 2022
4.70%
4.58%
Total
Par value
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
–
–
–
28,000
10,000
38,000
222
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
17 BONDS PAYABLE (continued)
The Company issued the above two subordinated bonds with a maturity term of 10 years to qualified investors
who met the relevant regulatory requirements. 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 five years are 6.70% and 6.58%, respectively. On 29 June 2017 and 6 November
2017, the Company exercised the option right to redeem the subordinated bonds issued on 29 June 2012 and 5
November 2012, and redeemed all of the subordinated bonds registered on the record dates of redemption, with
the amounts of RMB28,000 million and RMB10,000 million, respectively.
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 2017
RMB million
As at 31
December 2016
RMB million
75,002
12,307
87,309
87,309
87,309
65,479
15,609
81,088
81,088
81,088
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As at 31 December 2017, bonds with a carrying value of RMB79,543 million (as at 31 December 2016:
RMB76,207 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
2017, the carrying value of securities deposited in the collateral pool was RMB139,727 million (as at 31 December
2016: RMB81,280 million). The collateral is restricted from trading during the period of the repurchase
transaction.
China Life Insurance Company Limited Annual Report 2017
223
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
19 OTHER LIABILITIES
Salary and welfare payable
Interest payable to policyholders
Payable to third party holders of consolidated trust schemes and debt investment schemes
Brokerage and commission payable
Payable to constructors
Agent deposits
Stock appreciation rights (Note 31)
Tax payable
Interest payable of debt instruments
Others
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Total
Current
Non-current
Total
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
10,129
9,614
6,252
5,659
2,668
1,906
833
689
127
9,553
47,430
47,430
–
47,430
7,234
8,006
5,488
3,713
1,032
1,611
654
657
813
7,628
36,836
36,836
–
36,836
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.
224
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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
For the year ended 31 December
2016
RMB million
2017
RMB million
30,669
19,608
3,618
27,019
920
23,827
16,320
746
24,854
17,499
5,683
19,744
527
27,851
12,018
971
Total
122,727
109,147
For the year ended 31 December 2017, the interest income included in investment income was RMB94,788
million (2016: RMB88,876 million). All interest income was accrued using the effective interest method.
22 NET REALISED GAINS ON FINANCIAL ASSETS
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Debt securities
Realised gains
Impairment
Subtotal
Equity securities
Realised gains
Impairment
Subtotal
Total
For the year ended 31 December
2016
RMB million
2017
RMB million
(9)
(114)
(123)
2,808
(2,643)
165
42
189
(143)
46
8,505
(2,513)
5,992
6,038
Net realised gains on financial assets are from available-for-sale securities.
During the year ended 31 December 2017, the Group recognised an impairment charge of RMB619 million
(2016: RMB1,615 million) of available-for-sale funds, an impairment charge of RMB2,024 million (2016:
RMB898 million) of available-for-sale common stocks, and an impairment charge of RMB114 million (2016:
RMB143 million) of available-for-sale debt securities, for which the Group determined that objective evidence of
impairment existed.
China Life Insurance Company Limited Annual Report 2017
225
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
23 NET FAIR VALUE GAINS 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
2016
RMB million
2017
RMB million
(1,542)
8,179
(179)
(275)
6,183
(918)
(6,319)
191
(48)
(7,094)
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Gross
RMB million
Ceded
RMB million
Net
RMB million
For the year ended 31 December 2017
Life insurance death and other benefits
Accident and health claims and claim adjustment expenses
Increase in insurance contract liabilities
260,853
34,101
173,085
(1,145)
(283)
(568)
259,708
33,818
172,517
Total
468,039
(1,996)
466,043
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
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
2016
RMB million
2017
RMB million
1,033
3,144
424
4,601
3,126
1,460
181
4,767
226
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 (gains)/losses
Remuneration in respect of audit services provided by auditors
For the year ended 31 December
2016
RMB million
2017
RMB million
18,741
933
2,357
2,240
(52)
59
15,955
838
1,798
2,083
(582)
58
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
Total tax charges
For the year ended 31 December
2016
RMB million
2017
RMB million
9,457
(538)
8,919
5,200
(943)
4,257
(b) The reconciliation between the Group’s effective tax rate and the statutory tax rate of 25% in the PRC
(2016: 25%) is as follows:
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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
Income tax at the effective tax rate
For the year ended 31 December
2016
RMB million
2017
RMB million
41,671
10,418
(7,847)
6,105
6
(15)
252
8,919
23,842
5,961
(6,080)
4,259
58
(49)
108
4,257
(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.
China Life Insurance Company Limited Annual Report 2017
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
28 TAxATION (continued)
(c) As at 31 December 2017 and 2016, deferred income tax was calculated in full on temporary differences
under the liability method using the principal tax rate of 25%. The movements in deferred income tax assets
and liabilities during the year are as follows:
Deferred tax assets/(liabilities)
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
As at 1 January 2017
(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
As at 31 December 2017
Insurance
RMB million
(i)
Investments
RMB million
(ii)
Others
RMB million
(iii)
Total
RMB million
(1,451)
(614)
(16,686)
1,126
1,184
431
–
12,639
(4,343)
–
–
(54)
(6,408)
1,072
(2,975)
(1,279)
–
3,759
(1,401)
–
(6,737)
–
1
(494)
2,360
–
–
–
1,615
1,615
745
–
–
–
(16,953)
943
12,639
(4,343)
(54)
(7,768)
(7,768)
538
3,759
(1,401)
1
(4,871)
As at 31 December 2016
(6,408)
(2,975)
(i)
The deferred tax liabilities arising from the insurance category are 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) on available-for-sale securities and 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.
Unrecognised deductible tax losses of the Group amounted to RMB607 million as at 31 December 2017(as
at 31 December 2016: RMB807 million). Unrecognised deductible temporary differences of the Group
amounted to RMB243 million as at 31 December 2017 (as at 31 December 2016: RMB219 million).
228
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
28 TAxATION (continued)
(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 2017
RMB million
As at 31
December 2016
RMB million
1,980
4,493
6,473
3,024
3,626
6,650
(9,131)
(2,213)
(13,037)
(1,381)
(11,344)
(14,418)
(4,871)
(7,768)
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 RMB25,550 million (2016: RMB14,014 million).
30 EARNINGS PER SHARE
There is no difference between the basic and diluted earnings per share. The basic and diluted earnings per
share for the year ended 31 December 2017 are calculated based on the net profit for the year attributable to
ordinary equity holders of the Company and the weighted average of 28,264,705,000 ordinary shares (2016:
28,264,705,000 ordinary shares).
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2017. As at 31 December 2017,
there were 55.01 million units outstanding and exercisable (as at 31 December 2016: 55.01 million units). As at
31 December 2017, the amount of intrinsic value for the vested stock appreciation rights was RMB820 million (as
at 31 December 2016: RMB641 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 20% to 32%, an expected dividend yield of
no higher than 3% and a risk-free interest rate ranging from 0.51% to 1.02%.
The Company recognised a loss of RMB179 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 2017
(2016: fair value gains of RMB191 million). RMB820 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 2017 (as at 31 December 2016: RMB641 million and RMB13 million), respectively. There was no
unrecognised compensation cost for the stock appreciation rights as at 31 December 2017 (as at 31 December
2016: Nil).
32 DIVIDENDS
Pursuant to the shareholders’ approval at the Annual General Meeting on 31 May 2017, a final dividend of
RMB0.24 (inclusive of tax) per ordinary share totalling RMB6,784 million in respect of the year ended 31
December 2016 was declared and paid in 2017. The dividend has been recorded in the consolidated financial
statements for the year ended 31 December 2017.
A distribution of RMB380 million (inclusive of tax) to the holders of Core Tier 2 Capital Securities was approved
by management in 2017 according to the authorisation by the Board of Directors, which was delegated by the
General Meeting.
Pursuant to a resolution passed at the meeting of the Board of Directors on 22 March 2018, a final dividend of
RMB0.40 (inclusive of tax) per ordinary share totalling approximately RMB11,306 million for the year ended
31 December 2017 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 2017.
230
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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
o f p r e m i u m s a n d p a y m e n t o f
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
i n s u r a n c e c o m p a n i e s o r o t h e r
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.
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(b) Subsidiaries
Refer to Note 40(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
(“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
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
China Life Insurance Company Limited Annual Report 2017
231
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(e) Registered capital of related parties with control relationship and changes during the year
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”) (ii)
China Life (Beijing) Health
Management Co., Limited
(“CL Health”)
China Life Franklin (Shenzhen)
Equity Investment Fund
Management Co., Limited
As at 31
December 2016
million
RMB4,600
RMB4,000
RMB3,400
RMB1,060
RMB588
RMB200
RMB6,800
RMB1,730
(“Franklin Shenzhen Company”)
USD2
Increase
million
–
–
–
RMB931
–
–
–
–
–
Decrease
million
As at 31
December 2017
million
–
–
–
–
–
–
–
–
–
RMB4,600
RMB4,000
RMB3,400
RMB1,991
RMB588
RMB200
RMB6,800
RMB1,730
USD2
(i)
In March 2017, the Company completed a RMB260 million capital contribution to Suzhou Pension
Company, after which the paid-in capital of Suzhou Pension Company increased from RMB1,326
million to RMB1,586 million. As at 31 December 2017, Suzhou Pension Company completed its
business registration modification procedure for the registered capital with the amount increased from
RMB1,060 million to RMB1,991 million.
(ii)
In March and July 2017 respectively, the Company completed RMB370 million and RMB231 million
capital contributions to Rui Chong Company, after which the paid-in capital of Rui Chong Company
increased from RMB6,199 million to RMB6,800 million.
(iii) For those subsidiaries which were not set up or invested in Mainland China or incorporated as
partnership, the legal definition of registered capital is not applicable for them.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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 2016
Percentage
Amount
of holding
million
Increase
million
Decrease
million
As at 31 December 2017
Percentage
Amount
of holding
million
CLIC
RMB19,324
68.37%
–
–
RMB19,324
68.37%
Subsidiaries
As at 31 December 2016
Percentage
Amount
of holding
million
Increase
million
Decrease
million
As at 31 December 2017
Percentage
Amount
of holding
million
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AMC
RMB1,680
Pension Company
RMB2,746
China Life Franklin Asset
Management Company
Limited (“AMC HK”)
Suzhou Pension Company
CL AMP
CL Wealth
HKD130
RMB1,326
RMB500
RMB200
Golden Phoenix Tree Limited
King Phoenix Tree Limited
–
–
Rui Chong Company
RMB6,199
New Aldgate Limited
RMB1,167
Glorious Fortune
Forever Limited
CL Hotel Investor, L.P.
–
–
Golden Bamboo Limited
RMB1,734
Sunny Bamboo Limited
RMB1,632
Fortune Bamboo Limited
RMB2,176
China Century Core
Fund Limited
(“Century Core Fund”)
CL Health
USD894
RMB1,730
Franklin Shenzhen Company
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
–
–
–
RMB260
–
–
–
–
RMB601
–
–
–
–
–
–
USD2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
RMB1,680
RMB2,746
HKD130
RMB1,586
RMB500
RMB200
–
–
RMB6,800
RMB1,167
–
–
RMB1,734
RMB1,632
RMB2,176
USD896
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
China Life Insurance Company Limited Annual Report 2017
233
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(f) Percentages of holding of related parties with control relationship and changes during the
year (continued)
Subsidiaries (continued)
Guo Yang Guo Sheng (i)
New Capital Wisdom Limited (i)
New Fortune Wisdom Limited (i)
Wisdom Forever Limited
Partnership (i)
Shanghai Yuan Shu Yuan Jiu
Investment Management
Partnership
(Limited Partnership)
(“Yuan Shu Yuan Jiu”) (i)
Shanghai Yuan Shu Yuan Pin
Investment Management
Partnership
(Limited Partnership)
(“Yuan Shu Yuan Pin”) (i)
Shanghai Wansheng Industry
Partnership
(Limited Partnership)
(“Wan Sheng”) (i)
Ningbo Meishan Bonded
Port Area Bai Ning
Investment Partnership
(“Bai Ning”) (i)
As at 31 December 2016
Percentage
Amount
of holding
million
Increase
million
Decrease
million
As at 31 December 2017
Percentage
Amount
of holding
million
–
–
–
–
–
–
–
–
–
–
–
–
–
RMB3,250
–
–
USD447
RMB606
–
–
–
–
–
RMB3,250
–
–
USD447
RMB606
–
RMB606
–
RMB606
–
RMB3,900
–
RMB3,900
–
RMB1,680
–
RMB1,680
99.997%
directly
100.00%
indirectly
100.00%
indirectly
100.00%
indirectly
99.98%
directly
99.98%
directly
99.998%
directly
99.98%
directly
(i)
Guo Yang Guo Sheng, New Capital Wisdom Limited, New Fortune Wisdom Limited, Wisdom Forever Limited
Partnership, Yuan Shu Yuan Jiu, Yuan Shu Yuan Pin, Wan Sheng, and Bai Ning are new subsidiaries set up or
invested by the Company in 2017.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(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
Cash dividend from CLP&C (Note 8)
Payment of rental, project fee and other 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 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
2016
RMB million
2017
RMB million
740
107
4,638
125
119
14
44
16
3,030
1
59
69
50
78
9
–
396
37
64
1,382
92
553
27
55
700
869
124
8,116
143
74
36
49
18
2,337
2
43
135
44
81
13
141
298
38
56
685
42
248
38
60
337
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(g) Transactions with significant related parties (continued)
Transaction between other associates and joint
ventures and the Group
Distribution of profits from other associates and
joint ventures to the Group
Transactions between AMC and the Company
Payment of an asset management fee to AMC
Distribution of profits from AMC
For the year ended 31 December
2016
RMB million
2017
RMB million
Notes
1,240
437
(ii.e) (viii)
1,154
187
1,081
215
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
(vii)
(ii.f)
Transactions between Suzhou Pension Company and the Company
Capital contribution to Suzhou Pension Company
Transactions between Rui Chong Company and the Company
Capital contribution to Rui Chong Company
Transaction between other associates and joint ventures
and the Company
Distribution of profits from other associates and joint
ventures to the Company
Transactions between the consolidated structured
entities/other subsidiaries and the Company
Distribution of profits from the consolidated structured
entities to the Company
Distribution of profits from the Group’s other subsidiaries
to the Company
Notes:
43
42
10
14
260
601
34
31
14
14
526
–
203
134
3,944
70
443
–
(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.
236
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(g) Transactions with significant related parties (continued)
Notes (continued):
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(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 from and interests accrued for
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 28 June 2017, CL Overseas renewed an investment management agreement with AMC HK, effective from
1 January 2016 to 31 December 2016. 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. On 15 December 2017, CL Overseas renewed the agreement with
AMC HK, effective to the next year when the contract is signed and sealed. The terms are applied in 2017. The
agreement was subject to an automatic one-year renewal if no objections were raised by both parties with written
consent in 5 years.
(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 was effective from 1 January 2015 to 31
December 2016. The agreement was subject to an automatic one-year renewal if no objections were raised by
both parties upon expiry. On 1 January 2017, the agreement was automatically renewed to 31 December 2017. 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 was 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. On
30 June 2017, the Company and CLI renewed a management agreement of alternative investment of insurance
funds, which is retrospectively effective from 1 January 2017 to 31 December 2018. The management fee rates
of fixed-income projects and non-fixed-income projects remain the same as those in the previous agreement.
In addition, the Company adjusts the investment management fees for fixed-income projects and non-fixed-
income projects based on the annual evaluation results to CLI’s performance. The adjustment amount (variable
management fee) ranges from negative 10% to positive 15% of the investment management fee in the current
period.
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For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(g) Transactions with significant related parties (continued)
Notes (continued):
(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 18 September 2016, the Company and AMC HK renewed the offshore investment management service
agreement, which is effective from 19 September 2016 to 31 December 2018. 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. 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
2017, the agreement was automatically renewed for one year.
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. On 8 March 2017, the
agreement was automatically renewed for one year.
(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.
238
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(g) Transactions with significant related parties (continued)
Notes (continued):
(v) On 12 August 2016, 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 sale 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 the sale of each category individual insurance products after deducting the withdrawn policy
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 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.
On 23 March 2016, the Company and CGB signed another 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 sale 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 the sale of each category group insurance product after deducting the
withdrawn policy 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.
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(vi) On 26 October 2016, the Company and CL Ecommerce renewed a one year agreement for managing the regional
telemarketing centre, which was effective from 1 January 2016 and expired on 31 December 2016. The agreement
is subject to an automatic one-year renewal if no objections are raised by both parties. On 1 January 2017, the
agreement was automatically renewed for one year. 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.
China Life Insurance Company Limited Annual Report 2017
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(g) Transactions with significant related parties (continued)
Notes (continued):
(vii) 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 expired on 31 December
2017. The agreement is subject to an automatic one-year renewal if no objections were raised by either party
upon expiry. The commissions agreed upon in the agreement include the daily business commissions and the
annual promotional plans commissions. According to the agreement, 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 commissions 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 commissions 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 commissions 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 statement of the comprehensive income of the Group.
(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.
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China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(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 deposits with CGB, interbank
certificates of deposits of CGB, wealth management products of CGB and corporate bonds issued by Sino-
Ocean.
The resulting balances due from and to significant related parties of the Group
Amount due from 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 deposited with CGB
Interbank certificates of deposits of CGB
Wealth management products of CGB
Amount due from CGB
Amount due to CGB
Corporate bonds of Sino-Ocean
Amount due from Sino-Ocean
Amount due from CL Ecommerce
Amount due to CL Ecommerce
The resulting balances 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
(i) Key management personnel compensation
Salaries and other benefits
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
420
122
428
(6)
9
(265)
2
33,385
199
330
1,041
(31)
592
8
6
(78)
57
(19)
(207)
(4)
529
47
332
–
12
(206)
2
26,342
–
–
365
(17)
643
8
5
(66)
47
(17)
(604)
(8)
For the year ended 31 December
2016
RMB million
2017
RMB million
18
28
The total compensation package for the Company’s key management personnel for the year ended 31
December 2017 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 2016 has been approved by the relevant authorities. The total compensation of 2016 was RMB28 million,
including a deferred payment about RMB6 million.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
33 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(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 2017, 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 2017, 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 2017
As at 31 December 2016
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
As at 31 December 2017, 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 2017
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.
242
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
35 OTHER EqUITY INSTRUMENTS
(a) Basic information
As at 31
December 2016
RMB million
Increase
RMB million
Decrease
RMB million
As at 31
December 2017
RMB million
Core Tier 2 Capital Securities
Total
7,791
7,791
–
–
–
–
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. The Securities are issued in the specified denomination of USD200,000 and
integral multiples of USD1,000 in excess thereof. 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
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As at 31
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RMB million
As at 31
December 2016
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
320,933
313,142
7,791
4,377
4,377
303,621
295,830
7,791
4,027
4,027
Refer to Note 32 for the information of distribution to other equity instruments holders of the Company
for the year ended 31 December 2017. As at 31 December 2017, there were no accumulated distributions
unpaid attributable to other equity instrument holders of the Company.
China Life Insurance Company Limited Annual Report 2017
243
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
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
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(a)
(b)
(c)
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
As at 1 January 2017
Other comprehensive income for the year
Appropriation to reserves
Others
53,860
–
–
–
1,146
–
–
135
5,100
(7,086)
–
–
(738)
21
–
–
30,166
–
3,218
–
28,225
–
1,927
–
27,241
–
3,300
–
–
7
–
–
7
7
(847)
–
–
163,381
(25,774)
7,367
33
145,007
145,007
(7,912)
8,445
135
As at 31 December 2017
53,860
1,281
(1,986)
(717)
33,384
30,152
30,541
(840)
145,675
(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 RMB3,218 million for the year ended 31 December 2017 (2016:
RMB1,927 million).
Approved at the Annual General Meeting in May 2017, the Company appropriated RMB1,927 million to the
discretionary reserve fund for the year ended 31 December 2016 based on net profit under CAS (2016: RMB3,438
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 2017, the Company appropriated 10% of net profit under CAS
which amounted to RMB3,218 million to the general reserve for future uncertain catastrophes, which cannot be used for
dividend distribution or conversion to share capital increment (2016: RMB1,927 million). In addition, pursuant to the
CAS, the Group appropriated RMB82 million to the general reserve of its subsidiaries attributable to the Company in the
consolidated financial statements (2016: RMB75 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.
244
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
37 NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
Changes in liabilities arising from financing activities
Other
liability -
payable to
third party
holders of
Interest-
bearing
loans and
borrowings
RMB million
16,170
3,121
(497)
–
–
18,794
Bonds
payable
RMB million
37,998
(38,000)
–
–
2
–
Securities
sold under
agreements to
repurchase
RMB million
consolidated Other liability -
interest payable
trust schemes
related to
and debt
financing
investment
activities
schemes
RMB million
RMB million
81,088
6,228
–
(7)
–
5,488
764
–
–
–
813
(5,671)
–
–
4,985
Total
RMB million
141,557
(33,558)
(497)
(7)
4,987
87,309
6,252
127
112,482
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At 1 January 2017
Changes from financing cash flows
Foreign exchange movement
Changes arising from losing control
of consolidated structured entities
Interest expense
At 31 December 2017
38 PROVISIONS AND CONTINGENCIES
The following is a summary of the significant contingent liabilities:
Pending lawsuits
As at 31
December
2017
RMB million
As at 31
December
2016
RMB million
493
588
The Group involves in certain lawsuits arising from the ordinary course of business. 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
2017 and 2016, 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.
China Life Insurance Company Limited Annual Report 2017
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
39 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
2017
RMB million
As at 31
December
2016
RMB million
86,582
5,202
–
91,784
39,616
5,462
1
45,079
(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
2017
RMB million
As at 31
December
2016
RMB million
784
1,101
44
1,929
632
764
27
1,423
The operating lease payments charged to profit before income tax for the year ended 31 December 2017
were RMB1,204 million (2016: RMB994 million).
(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
2017
RMB million
As at 31
December
2016
RMB million
254
411
76
741
186
267
10
463
246
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS
Statement of financial position
As at 31 December 2017
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
40(a)
40(b)
40(c)
40(d)
40(e)
40(f)
40(g)
40(h)
40(i)
40(j)
40(k)
40(l)
11
12
40(m)
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
36,313
1,401
39,662
104,039
716,346
381,253
444,279
5,653
797,108
127,544
35,761
50,183
14,121
3,046
30,480
44,186
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
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Total assets
2,831,375
2,645,487
China Life Insurance Company Limited Annual Report 2017
247
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
Statement of financial position (continued)
As at 31 December 2017
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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
40(n)
40(o)
40(p)
20
34
40(q)
40(r)
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
2,025,133
232,500
83,910
–
85,316
44,820
18,505
39,678
3,991
6,081
282
1,847,986
195,706
87,725
37,998
81,039
39,038
35,252
30,556
7,543
1,141
491
2,540,216
2,364,475
28,265
7,791
144,240
110,863
28,265
7,791
144,116
100,840
291,159
281,012
2,831,375
2,645,487
248
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Property, plant and equipment
Office
equipment
furniture and
fixtures
Buildings
Assets
under
construction
Motor
vehicles
RMB million
Leasehold
improvements
Total
Cost
As at 1 January 2017
Transfers upon completion
Additions
Transfers into investment
properties
Disposals
24,688
6,918
70
–
(48)
6,682
49
416
–
(463)
1,405
–
170
–
(192)
10,387
(7,365)
8,280
(205)
(146)
1,525
312
9
–
(48)
44,687
(86)
8,945
(205)
(897)
As at 31 December 2017
31,628
6,684
1,383
10,951
1,798
52,444
Accumulated depreciation
As at 1 January 2017
Charge for the year
Disposals
(8,088)
(925)
15
(4,822)
(612)
444
As at 31 December 2017
(8,998)
(4,990)
Impairment
As at 1 January 2017
Charge for the year
Disposals
As at 31 December 2017
Net book value
As at 1 January 2017
(24)
–
–
(24)
–
–
–
–
16,576
1,860
As at 31 December 2017
22,606
1,694
(983)
(143)
186
(940)
–
–
–
–
422
443
–
–
–
–
–
–
–
–
10,387
10,951
(1,048)
(177)
46
(14,941)
(1,857)
691
(1,179)
(16,107)
–
–
–
–
477
619
(24)
–
–
(24)
29,722
36,313
F
i
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a
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China Life Insurance Company Limited Annual Report 2017
249
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(a) Property, plant and equipment (continued)
Office
equipment
furniture and
fixtures
Buildings
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
As at 31 December 2016
(24)
–
–
(24)
–
–
–
–
16,314
16,576
1,829
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
F
i
n
a
n
c
i
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250
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Investment properties
Cost
As at 1 January 2017
Additions
As at 31 December 2017
Accumulated depreciation
As at 1 January 2017
Charge for the year
As at 31 December 2017
Net book value
As at 1 January 2017
As at 31 December 2017
Fair value
As at 1 January 2017
As at 31 December 2017
Buildings
RMB million
1,513
205
1,718
(266)
(51)
(317)
1,247
1,401
2,377
2,688
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China Life Insurance Company Limited Annual Report 2017
251
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(b) Investment properties (continued)
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
F
i
n
a
n
c
i
a
l
R
e
p
o
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t
Buildings
RMB million
1,513
–
1,513
(217)
(49)
(266)
1,296
1,247
2,415
2,377
The fair value of investment properties of the Company as at 31 December 2017 amounted to RMB2,688
million (as at 31 December 2016: RMB2,377 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.
252
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(c)
Investments in subsidiaries
Unlisted investments at cost
As at
31 December
2017
RMB million
As at
31 December
2016
RMB million
39,662
27,353
(i)
The table below presents the basic information of the Company’s subsidiaries as at 31 December
2017:
Name
AMC
Pension Company
Place of incorporation
and operation
Percentage of
equity interest held
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
Guo Yang Guo Sheng
New Capital Wisdom Limited
New Fortune Wisdom Limited
Wisdom Forever Limited
Partnership
Yuan Shu Yuan Jiu
Yuan Shu Yuan Pin
Wan Sheng
Bai Ning
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
PRC
The British Virgin Islands
The British Virgin Islands
The British
Cayman Islands
PRC
PRC
PRC
PRC
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
99.997% directly
100.00% indirectly
100.00% indirectly
100.00% indirectly
99.98% directly
99.98% directly
99.998% directly
99.98% directly
F
i
n
a
n
c
i
a
l
R
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p
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t
Registered capital
Principal activities
RMB4,000 million
RMB3,400 million
Asset management
Pension and annuity
Not applicable
RMB1,991 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
RMB1,730 million
USD2 million
Not applicable
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
Health management
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Investment
Non-controlling interests in subsidiaries are not significant to the Company.
China Life Insurance Company Limited Annual Report 2017
253
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 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 2017:
Name
Percentage of shares held
Trust/investments received
Principal activities
Shang Xin – Ningbo Wu Lu Si Qiao
PPP Collective Fund Trust Scheme
Kun Lun Trust • Tianjin Urban
Communications Construction
No. 1 Collective Fund Trust Scheme
Shan Guo Tou • Jing Tou Corporate
Trust Loan Collective Funds
Trust Scheme
China Life – China Hua Neng
Debt-to-Equity Swap Investment
Scheme
Jiao Yin Guo Xin • China Aluminium
Co., Ltd. Supply-side Reform
Collective Fund Trust Scheme
Jiao Yin Guo Xin • Shaanxi Coal and
Chemical Industry Group Co., Ltd.
Debt-to-Equity Swap Collective
Fund Trust Scheme
Chongqing Trust Fund• China Life
Qing Hai Yellow River
Debt-to-Equity Swap Collective
Fund Trust Scheme
Zhong Xin Jing Cheng•Tianjin Port
Group Loans Collective Fund
Trust Scheme
China Life – Yanzhou Coal Mining
Debt Investment Scheme
CITIC Trust • CGB Trust Beneficial
Rights Investment Collective Fund
Trust Scheme
Kun Lun Trust • Jizhong Energy
Group Loan Collective Fund
Trust Scheme
Jiao Yin Guo Xin • CLI – China
Nonferrous Metal Collective
Fund Trust Scheme
88.02% directly
RMB11,099 million
Investment management
99.99% directly
RMB10,001 million
Investment management
100.00% directly
RMB10,000 million
Investment management
100.00% directly
RMB10,000 million
Investment management
99.99% directly
RMB10,000 million
Investment management
75.00% directly
and indirectly
RMB10,000 million
Investment management
100.00% directly
RMB8,000 million
Investment management
100.00% directly
RMB6,000 million
Investment management
100.00% directly
RMB6,000 million
Investment management
99.98% directly
RMB5,400 million
Investment management
99.98% directly
RMB5,000 million
Investment management
99.98% directly
RMB5,000 million
Investment management
(d) Investments in associates and joint ventures
As at 1 January
Investments in associates and joint ventures
As at 31 December
254
China Life Insurance Company Limited Annual Report 2017
2017
RMB million
2016
RMB million
76,427
27,612
104,039
27,810
48,617
76,427
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 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 2017
RMB million
As at 31
December 2016
RMB million
125,866
241,808
200,178
148,494
97,196
169,001
177,768
150,089
716,346
594,054
91,631
624,715
64,192
529,862
716,346
594,054
The estimated fair value of all held-to-maturity securities was RMB692,282 million as at 31 December 2017
(as at 31 December 2016: RMB618,436 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 2017
RMB million
As at 31
December 2016
RMB million
22,385
112,788
288,260
292,913
30,614
71,502
231,391
260,547
716,346
594,054
F
i
n
a
n
c
i
a
l
R
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China Life Insurance Company Limited Annual Report 2017
255
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(f) Loans
Policy loans
Other loans
Total
F
i
n
a
n
c
i
a
l
R
e
p
o
r
t
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 2017
RMB million
As at 31
December 2016
RMB million
107,957
273,296
92,442
129,093
381,253
221,535
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
128,473
130,913
90,350
31,517
109,979
69,753
24,303
17,500
381,253
221,535
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
95,155
346,324
2,800
182,871
344,790
7,700
444,279
535,361
As at 31 December 2017, the term deposits of RMB14.691 billion (2016: RMB13.2 billion) applying for an
overseas borrowing backed by domestic deposits business are restricted to use. Please refer to Note 9.3 for
the details.
256
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 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 2017
RMB million
As at 31
December 2016
RMB million
3,553
2,100
5,653
1,600
4,053
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)
Subtotal
Equity securities
Funds
Common stocks
Preferred stocks
Wealth management products
Others (i)
Subtotal
Available-for-sale securities, at cost
Equity securities
Others (i)
Total
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
24,230
157,689
195,244
13,495
–
52,545
21,198
146,310
187,287
16,708
11,000
11,683
443,203
394,186
90,865
129,388
31,651
40,119
41,123
104,432
100,116
27,880
81,544
29,885
333,146
343,857
20,759
20,759
797,108
758,802
F
i
n
a
n
c
i
a
l
R
e
p
o
r
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China Life Insurance Company Limited Annual Report 2017
257
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 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.
F
i
n
a
n
c
i
a
l
R
e
p
o
r
t
Debt securities
Listed in Mainland, PRC
Unlisted
Subtotal
Equity securities
Listed in Mainland, PRC
Listed in Hong Kong, PRC
Listed overseas
Unlisted
Subtotal
Total
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
44,328
398,875
36,691
357,495
443,203
394,186
93,349
41,507
132
218,917
90,756
25,034
232
248,594
353,905
364,616
797,108
758,802
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 2017
RMB million
As at 31
December 2016
RMB million
41,765
149,895
163,319
88,224
32,941
143,840
113,161
104,244
443,203
394,186
258
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 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 2017
RMB million
As at 31
December 2016
RMB million
2,021
8,985
61,516
4,323
372
6,578
143,871
3,133
76,845
153,954
8,682
42,017
50,699
14,093
35,999
50,092
127,544
204,046
24,974
292
51,579
19,486
89
134,379
76,845
153,954
36,846
79
7,187
6,587
50,699
33,339
74
6,284
10,395
50,092
127,544
204,046
F
i
n
a
n
c
i
a
l
R
e
p
o
r
t
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.
China Life Insurance Company Limited Annual Report 2017
259
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(k) Securities purchased under agreements to sell
F
i
n
a
n
c
i
a
l
R
e
p
o
r
t
Maturing:
Within 30 days
After 90 days
Total
(l) Accrued investment income
Bank deposits
Debt securities
Others
Total
Current
Non-current
Total
(m) Other assets
Investments receivable
Land use rights
Automated policy loans
Disbursements
Due from related parties
Others
Total
Current
Non-current
Total
260
China Life Insurance Company Limited Annual Report 2017
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
35,631
130
35,761
43,100
–
43,100
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
24,779
21,288
4,116
50,183
44,361
5,822
50,183
35,633
17,613
2,528
55,774
44,632
11,142
55,774
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
15,466
5,605
3,050
2,704
876
2,779
30,480
24,786
5,694
30,480
883
5,671
2,814
1,718
846
2,320
14,252
8,484
5,768
14,252
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 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 2017
RMB million
As at 31
December 2016
RMB million
73,683
11,633
85,316
85,316
85,316
65,430
15,609
81,039
81,039
81,039
As at 31 December 2017, bonds with a carrying value of RMB78,140 million (as at 31 December 2016:
RMB76,157 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 2017, the carrying value of securities deposited in the collateral pool was RMB139,314
million (as at 31 December 2016: RMB81,280 million). The collateral is restricted from trading during the
period of the repurchase transaction.
(o) Other liabilities
F
i
n
a
n
c
i
a
l
R
e
p
o
r
t
Interest payable to policyholders
Salary and welfare payable
Brokerage and commission payable
Payable to constructors
Agent deposits
Stock appreciation rights (Note 31)
Tax payable
Interest payable of debt instruments
Others
Total
Current
Non-current
Total
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
9,614
9,270
5,659
2,633
1,906
833
639
78
9,046
39,678
39,678
–
39,678
8,006
6,466
3,713
1,024
1,611
654
620
810
7,652
30,556
30,556
–
30,556
China Life Insurance Company Limited Annual Report 2017
261
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 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 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
As at 1 January 2017
(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 2017
Insurance
RMB million
Investments
RMB million
Others
RMB million
Total
RMB million
(1,451)
(614)
(16,504)
1,208
1,072
463
–
12,626
(4,343)
(6,408)
(6,408)
1,072
–
(2,670)
(2,670)
(998)
–
4,148
(1,401)
(6,737)
–
480
–
–
1,535
1,535
731
–
–
2,266
(16,883)
1,057
12,626
(4,343)
(7,543)
(7,543)
805
4,148
(1,401)
(3,991)
(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 2017
RMB million
As at 31
December 2016
RMB million
1,715
4,410
6,125
2,758
3,561
6,319
(7,983)
(2,133)
(12,552)
(1,310)
(10,116)
(13,862)
(3,991)
(7,543)
262
China Life Insurance Company Limited Annual Report 2017
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 STATEMENT OF FINANCIAL POSITION AND NOTES TO KEY ITEMS (continued)
(q) Other equity instruments
As at 31
December 2017
RMB million
As at 31
December 2016
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
291,159
283,368
7,791
281,012
273,221
7,791
Refer to Note 32 for the information of distribution to other equity instruments holders for the year ended
31 December 2017. As at 31 December 2017, there were no accumulated distributions unpaid attributable
to other equity instruments holders.
(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
F
i
n
a
n
c
i
a
l
R
e
p
o
r
t
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
As at 1 January 2017
Other comprehensive
income for the year
Appropriation to reserves
53,860
–
–
4,959
4,959
(8,239)
–
30,118
28,225
26,954
144,116
30,118
28,225
26,954
144,116
–
3,218
–
1,927
–
3,218
(8,239)
8,363
As at 31 December 2017
53,860
(3,280)
33,336
30,152
30,172
144,240
(s) Provisions and contingencies
The following is a summary of the significant contingent liabilities:
Pending lawsuits
As at 31
December 2017
RMB million
As at 31
December 2016
RMB million
493
588
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
40 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 2017
RMB million
As at 31
December 2016
RMB million
86,926
4,588
–
91,514
40,804
4,248
1
45,053
(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 2017
RMB million
As at 31
December 2016
RMB million
749
1,080
44
1,873
591
761
27
1,379
(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 2017
RMB million
As at 31
December 2016
RMB million
158
177
9
344
208
324
10
542
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
41 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 2017 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 2017 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 2017 are as follows:
Name
Yang Mingsheng
Lin Dairen
Miao Jianmin (i)
Liu Jiade (ii)
Liu Huimin (iii)
Yin Zhaojun (iv)
Wang Sidong
Chang Tso Tung Stephen
Xu Hengping
Xu Haifeng
Robinson Drake Pike
Tang Xin
Leung Oi-Sie Elsie
Remuneration
paid
Benefits in kind
Pension scheme
contributions
RMB thousand
–
1,400.0
–
–
–
–
–
320.0
1,134.0
1,134.0
320.0
320.0
300.0
–
131.2
–
–
–
–
–
–
129.0
129.0
–
–
–
–
87.6
–
–
–
–
–
–
87.6
87.6
–
–
–
Total
–
1,618.8
–
–
–
–
–
320.0
1,350.6
1,350.6
320.0
320.0
300.0
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(i) Miao Jianmin resigned as non-executive director on 7 April 2017.
(ii) Liu Jiade resigned as non-executive director on 8 August 2017.
(iii) Liu Huimin was appointed as non-executive director on 31 July 2017.
(iv) Yin Zhaojun was appointed as non-executive director on 31 July 2017.
China Life Insurance Company Limited Annual Report 2017
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
41 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 2016 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
–
1,400.0
–
–
–
125.0
250.0
41.7
1,134.0
1,134.0
–
250.0
208.3
125.0
–
1,400.0
–
–
–
25.0
70.0
11.6
1,134.0
1,134.0
–
70.0
58.4
25.0
–
2,800
–
–
–
150.0
320.0
53.3
2,268.0
2,268.0
–
320.0
266.7
150.0
–
840.0
–
–
–
–
–
–
680.4
680.4
–
–
–
–
–
125.7
–
–
–
–
–
–
125.6
125.3
–
–
–
–
–
119.9
–
–
–
–
–
–
119.2
116.5
–
–
–
–
Deferred
payment
included
in total
Actual paid
included
in total
–
840.0
–
–
–
–
–
–
680.4
680.4
–
–
–
–
–
2,205.6
–
–
–
150.0
320.0
53.3
1,832.4
1,829.4
–
320.0
266.7
150.0
Total
–
3,045.6
–
–
–
150.0
320.0
53.3
2,512.8
2,509.8
–
320.0
266.7
150.0
Name
Yang Mingsheng
Lin Dairen
Miao Jianmin
Zhang Xiangxian
Wang Sidong
Anthony Francis Neoh
Chang Tso Tung Stephen
Huang Yiping
Xu Hengping
Xu Haifeng
Liu Jiade
Robinson Drake Pike
Tang Xin
Leung Oi-Sie Elsie
The compensation amounts disclosed above for these directors and the chief executive for the year ended 31
December 2016 were restated based on the finalised amounts determined during 2017.
The directors and chief executive received the compensation amounts disclosed above during their term of
office in 2017 and 2016.
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.
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Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
41 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 2017 are as
follows:
Name
Miao Ping
Shi Xiangming
Xiong Junhong
Zhan Zhong
Wang Cuifei
Li Guodong
Remuneration
paid
Benefits in kind
Pension scheme
contributions
RMB thousand
1,148.0
1,253.7
–
796.7
1,341.7
379.2
129.0
195.2
–
129.0
196.4
67.9
87.6
127.2
–
79.2
117.7
46.8
Total
1,364.6
1,576.1
–
1,004.9
1,655.8
493.9
The aggregate amounts of emoluments paid to supervisors of the Company for the year ended 31 December
2016 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
1,148.0
571.6
–
593.6
527.5
1,148.0
786.5
–
1,007.0
640.4
2,296.0
1,358.1
–
1,600.6
1,167.9
688.8
–
–
–
–
125.6
190.2
–
189.8
191.4
119.2
110.1
–
114.7
101.5
Deferred
payment
included
in total
Actual paid
included
in total
688.8
–
–
–
–
1,852.0
1,658.4
–
1,905.1
1,460.8
Total
2,540.8
1,658.4
–
1,905.1
1,460.8
Name
Miao Ping
Shi Xiangming
Xiong Junhong
Zhan Zhong
Wang Cuifei
The compensation amounts disclosed above for these supervisors for the year ended 31 December 2016 were
restated based on the finalised amounts determined during 2017.
The supervisors received the compensation amounts disclosed above during their term of office in 2017 and
2016.
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267
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December 2017
41 DIRECTORS’, SUPERVISORS’, CHIEF ExECUTIVE’S AND SENIOR MANAGEMENT’S
REMUNERATION (continued)
(c) Five highest paid individuals
For the year ended 31 December 2017, the five individuals whose emoluments were the highest in the
Company include one director and three supervisors (2016: one director and four supervisors).
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
2017
RMB thousand
2016
RMB thousand
7,060
508
7,568
6,861
565
7,426
Number of individuals
For the year ended 31 December
2016
2017
–
5
–
–
–
–
5
–
–
–
For the year ended 31 December 2017, 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 (2016: 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.
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China Life Insurance Company Limited Annual Report 2017
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. Cui Yu.
Stock Code: 2628
Annual Report 2017
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