2. - 2 -
Forward-looking Statements
Certain statements contained in this presentation may be viewed as “forward-looking
statements” within the meaning of Section 27A of U.S. Securities Act and Section 21E of U.S.
Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors, which may cause the actual performance,
financial condition or results of operations of the Company to be materially different from any
future performance, financial condition or results of operations implied by such forward-
looking statements. Further information regarding these risks, uncertainties and other factors
is included in the Company’s Annual Report on Form 20-F for the fiscal year ended December
31, 2011 filed with the U.S. Securities and Exchange Commission, or SEC, on April 26, 2012;
and in the Company’s other filings with the SEC. The Company does not undertake any
obligation to update any forward-looking statement, except as required under applicable law.
All information provided in this presentation is as of the date of this presentation, and the
Company undertakes no duty to update such information, except as required under applicable
law.
Unless otherwise indicated, the Chinese insurance market information set forth in this
presentation is based on public information released by CIRC.
3. Agenda
2012 OverviewSection I
- 3 -
Investment PerformanceSection IV
Business ReviewSection II
Embedded ValueSection V
Financial SummarySection III
5. 2012 Business Development Overview
- 5 -
In 2012, the Chinese economy slowed down and the capital market
remained weak. The Company faced unprecedented challenges in both
underwriting and investment businesses amid a significant growth
deceleration of the life insurance industry. Guided by the keynote of
“tackling difficulties, making steady progress and striving for expansion”,
the Company continued to strengthen its market leading position and
achieved the following results:
Adapted to the complicated environment and achieved steady business
growth
Focused on both business scale and value and attained steady growth in
new business value
Product innovation and technological application effectively drove
business development
Maintained stable size of agent force while improving overall quality
6. Vigorously implement the “Innovation driving development
strategy ” , continue adhering to the keynote of “tackling difficulties,
making steady progress and striving for expansion”, equally
emphasize both scale and value to ensure market leadership and
sustainable development.
The Company’s Current Development Strategy
- 6 -
Propel business development and maintain steady growth of new business value
Adhere to business mix adjustment to promote business growth mode change
Foster product and service innovation to raise core competiveness
Apply modern technology to improve operational management
Proactively participate in policy-driven business to fulfill corporate social
responsibilities
7. Outlook for 2013
- 7 -
Opportunities
• Social and individual wealth
accumulation will set a solid
foundation for future development
of insurance industry.
• Further urbanization and
population aging will cause further
increase in demand for insurance.
• Improvements in multi-level social
security system will widen
insurance business scope and
facilitate development mode
change
• Investment channel expansion will
help improve investment yields and
asset-liability matching.
Challenges
• Economic growth is slowing down
and the insurance industry is
encountering challenges in
maintaining growth.
• Bank wealth management products
continue to exert pressure on the
bancassurance channel, resulting in
pressing needs for development
mode change.
• Labour cost keeps rising, and agent
force faces recruitment challenges.
• The industry is facing pressures
from increasing surrender and
maturity payments.
9. Development of the Life Insurance Industry in 2012
956,000
995,789
2011 2012
Industry Gross Written
Premiums
- 9 -
Overview of life insurance sector:
The life insurance industry’s growth rate
dropped noticeably due to complex macro-
economic environment, sluggish capital market
and competition from wealth management
products offered by banks.
As new business decreased, the growth of
total premiums was driven by renewal
premiums
Individual agent channel premiums
continued to grow with the help of renewal
premiums, while new premiums through
bancassurance channel decreased
significantly
Individual agent recruitment continued to
encounter difficulties
The development of new sales channels
accelerated
RMB mn
11. Business Structure Improvement
Long-term FYP
First-year Regular Premiums
Long-term Premiums
Short-term Premiums
33% 36%
67% 64%
2011 2012
First-year Regular Premiums Single Premiums
48%
34%
12%
25%
40% 41%
2011 2012
Less than 5 years 5-9 years 10 years and longer
51% 59%
49% 41%
2011 2012
Renewal Premiums Long-term FYP
55% 58%
45% 42%
2011 2012
Short-term Accident Short-term Health
- 11 -
12. Steady Increase of Business Value
- 12 -
Value of One Year’s Sales
RMB mn
In-force Business Value
20,199
20,834
2011 2012
125,282
153,444
182,588
209,088
0
50,000
100,000
150,000
200,000
250,000
2009 2010 2011 2012
Note:: Both value of one year’s sales and in-force business value are after cost of solvency margin
RMB mn
13. 7.1%
4.0%
-1.9%
8.7%
1.3%
Individual, Group and Short-term Business
- 13 -
Individual
Business
2012
305,841
Change2011
Group
Business
469
Short-term
Business
16,432
Short-term
Health
6,905 7,036
Short-term
Accident
9,527 8,766
302,012
438
15,802
RMB mn
14. Surrender Rate and Persistency Rate
Surrender Rate Long-term Individual Policy
Persistency Rate
- 14 -
2.79% 2.72%
2011 2012
93.0% 92.5%
91.0%
87.6% 86.9%
88.5%
72%
77%
82%
87%
92%
2010 2011 2012
14 Months 26 Months
Note :Surrender rate = Surrender amount during the year / (reserves for long-term health insurance and life insurance liabilities at the beginning of the period ＋
premiums from life insurance and long-term health insurance during the year)
Policy persistency rate = in-force policies within the review month that are commenced 14/26 months prior to the review month / policies that are commenced
14/26 months prior to the review month
15. 38,750 37,762
121,838
141,999
2011 2012
New Business Renewal Premiums
Individual Agent Channel
Business development：
Individual agent business achieved solid development，and business mix further improved
With clear product strategy, traditional protection business grew significantly
Sales Force Development：Sales team remained stable, total number: 693,000
- 15 -
Agent Channel GWP
50.5%
55.7%
23.7%
26.5%
5%
15%
25%
35%
45%
55%
2011 2012
Share in Gross Written Premiums Share in New Business
160,588
179,761
Agent Channel Share in
GWP & New Business
2.5%
16.5%
Note: In 2012, the Company's channel premium breakdown was presented based on the separate groups of sales personnels belonging to
exclusive individual agent team, direct sales representatives, bancassurance sales team, and other distribution channels respectively, with the
corresponding data for 2011 adjusted accordingly.
RMB mn
16. 112,330
91,580
32,033
37,283
2011 2012
New Business Renewal Premiums
96,974
78,151
15,299
13,373
2011 2012
Single Premiums First-year Regular Premiums
Bancassurance Channel
Business development: Affected by bank wealth management products as well as industry
regulation, bancassurance channel’s new business decreased, renewal premiums
continuously increased
Sales Force Development : the total number of account managers and financial advisors
reached 46,223, up by 1,712 than last year end.
- 16 -
Bancassurance FYP
144,363
128,863
Bancassurance GWP
18.5%
16.4%
19.4%
12.6%
RMB mn RMB mn
17. 298
232
194 324
2011 2012
New Business Renewal Premiums
10,039 10,804
2,770
2,758
2011 2012
Short-term Business Long-term Business
Direct Sales and other Channels
Direct Sales Channel ： Short-term business achieved good growth with further
improved business mix and consolidated market leadership. Number of direct sales
representatives was 16,000
Other Channels: Speeded up the layout of new channels, especially telemarketing
channel, and completed construction of 23 telemarketing centers. In 2012, telemarketing
channel achieved excellent business mix, conducive to its sustainable development
- 17 -
12,809
13,562
Direct Sales Channel GWP Other Channels* GWP
492
556
7.6%
0.4%
22.1%
67.0%
Note: Other channels mainly refer to telemarketing channel
RMB mn RMB mn
18. Operational Management Enhanced by New Technologies
- 18 -
The promotion of E-China Life mobile marketing system
facilitated business development
Upgraded counter service lifted customer satisfaction
remarkably
Fully launched telephone underwriting service to
promote business development
Initiated pilot CRM program to promote sales
19. 2013 Development Focuses
- 19 -
Continue to follow
the keynote of
“tackling difficulties,
making steady
progress and
striving for
expansion”, equally
emphasize scale and
value, and leverage
innovations to seek
breakthroughs, and
promote sustainable
and healthy
development.
Focus on first-year business development
Make efforts to enhance business value
Strive to promote product innovation
Effectively enhance service capabilities
Proactively explore new business areas
21. 60,722
1,705
(12,913)
337
73,243
4,167
(31,043)
(313)
Investment Income
Net Realized Gains
on Financial Assets Impairment Losses
Net fair value gains
through profit or
loss
2011 2012
Revenues
Net Premiums Earned Total Revenues
Investment Income & Realized/Unrealized
Gains and Impairment Losses
RMB mn RMB mn
RMB mn
318,276 322,126
2011 2012
370,899 371,485
2011 2012
- 21 -
22. Cost Control
Underwriting and Policy
Acquisition Cost Ratio
Administrative Expenses Ratio
7.4% 7.5%
2011 2012
5.8%
6.3%
2011 2012
Notes：Underwriting and Policy Acquisition Cost Ratio= Underwriting and policy acquisition costs/ total revenue
Administrative expenses ratio = Administrative expenses / total revenue
- 22 -
24. Equity Holders’ Equity
RMB mn
- 24 -
191,530
221,085
11,061
24,995
0
50,000
100,000
150,000
200,000
250,000
2011.12.31 Equity
Attributable to Equity
Holders of the Company
Net Profit Attributable to
Equity Holders of the
Company
Other Comprehensive
Income
Dividends 2012.12.31 Equity
Attributable to Equity
Holders of the Company
（6,501）
25. Solvency Ratio
Solvency Ratio
In 2012, the company's
solvency ratio improved
due to the increase in
comprehensive income.
Meanwhile, the company
grasped market
opportunity and issued
RMB 38 billion
subordinated term debt,
which further raised
solvency ratio.
- 25 -
170.12%
235.58%
2011.12.31 2012.12.31
27. 1,494,969
1,790,838
2011.12.31 2012.12.31
Investment Assets and Portfolio
Investment Assets
RMB mn
- 27 -
Investment Portfolio
44.6% 46.2%
34.8% 35.8%
12.2% 9.2%
3.7% 3.9%
4.7% 4.9%
2011.12.31 2012.12.31
Debt Securities Term Deposits
Equity Securities Cash & Cash Equivalents
Others
Note: Investment assets ＝Cash and Cash Equivalents+ Securities at fair value through income+Available-for-sale Securities ＋Held-to-maturity Securities +Term
Deposits +Securities Purchased under Agreements to Resell＋Loans + Statutory Deposits
28. Investment Yields
- 28 -
Gross Investment YieldNet Investment Yield
4.28%
4.44%
2011 2012
3.51%
2.79%
2011 2012
Comprehensive
Investment Yield
1.57%
4.97%
2011 2012
Notes: Net investment yield = (Investment income-Business tax and extra charges for investment)/((Investment assets at the beginning of the period +
Investment assets at the end of the period)/2)
Gross investment yield = (Investment income + Net realized gains/(losses) and impairment on financial assets + Net fair value gains/(losses) through
profit or loss - Business tax and extra charges for investment)/ ((Investment assets at the beginning of the period + Investment assets at the end of the
period)/2)
Comprehensive investment yield = (Investment income + Net realized gains/(losses) and impairment on financial assets + net fair value
gains/(losses) through profit or loss + current net fair value changes of available-for-sale securities recognized in other comprehensive income -
business tax and extra charges for investment) / ((investment assets at the beginning of the period + investment assets at the end of the period) / 2)
29. Alternative Investments
In 2012, the Company seized the opportunity to invest RMB
11.74 billion in new infrastructural debt plans and real estate
plans. Cumulated invested amount reached RMB 40.53
billion, accounting for 2.3% of investment assets
Debt Investment Plan
Equity Investment
- 29 -
The Company made unlisted equity investment in COFCO
Futures with a 35% stake, the first direct equity investment
since its deregulation in 2010. The Company also invested
RMB 600 million in the private equity fund - CITIC
Industrial Fund III
Alternative channels can help to facilitate the Company's strategic financial investment,
enhance net investment returns, share in the capital appreciation from China's economic
development, industry upgrades, and company public listings, and diversify the sources
of returns
31. Embedded Value Breakdown by Components
2012.12.31
128,507
337,596
245,134
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Adjusted Net Worth In-force Business Value Cost of Solvency Margin Embedded Value
- 31 -
（36,046）
Note：Numbers may not be additive due to rounding.
RMB mn
33. Embedded Value Movement Analysis
EV Movement from 2011 year end to 31, December 2012
- 33 -
292,854
337,596
30,215
20,834
9,676 304
（879）
（1,905）
（6,954） （49）
（6,501）
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
EV at
Beginning of
2012
Expected
Returns
Value of One
Year's Sales
Operating
Experience
Variance
Investment
Experience
Varience
Methodology
Model and
Assumption
Changes
Market Value
Tax and Other
Adjustments
Exchange
Gains or
Losses
Shareholder
Dividends
Others EV at
December
31,2012
Note：Numbers may not be additive due to rounding.
RMB mn
35. Appendixes: Sensitivity Analysis–Investment Return and
Discount Rate
Value of One Year’s Sales after Cost of
Solvency Margin
Value of In-force Business after Cost of
Solvency Margin
- 35 -
209,088
( 35,154)
( 10,296)
11,058
35,401
Investment
Return -10%
Risk Discount
rate=11.5%
Base Case
Scenario
Risk Discount
rate=10.5%
Investment
Return +10%
20,834
( 2,758)
( 1,089)
1,168
2,785
Investment
Return -10%
Risk Discount
rate=11.5%
Base Case
Scenario
Risk Discount
rate=10.5%
Investment
Return +10%
RMB mn RMB mn
Note：Numbers may not be additive due to rounding.
36. Sensitivity Analysis-Operational and other Assumptions
Sensitivity Analysis Results (after the cost of solvency margin)
- 36 -
Claim Ratio for Short Term
Business+/-10%
Morbidity Rates+/-10%
Lapse Rates+/-10%
Mortality Rate for Non-
Annuity Products +/-10%,
Mortality Rate for Annuity
Products -/+10%
Expenses+/-10%
Base Case Scenario
Value of In-force Business Value of One Year’s Sales
-1,760
-87
-177
-117
-596
1,760
88
177
118
596
-2,000 -1,000 0 1,000 2,000
-2,609
-1,903
-1,267
-2,053
-281
2,609
1,934
1,311
2,073
281
-3,000 -2,000 -1,000 0 1,000 2,000 3,000
209,088 20,834
Note：Numbers may not be additive due to rounding.
RMB mn
37. Sensitivity Analysis Results –other Assumptions
Sensitivity Analysis Results
- 37 -
Value of In-force
Business after the cost of
solvency margin
Value of One Year’s
Sales after the cost of
solvency margin
Base Case Scenario 209,088 20,834
Solvency Margin at 150% of
Statutory Minimum
200,097 19,154
Taxable income based on the
accounting profit in accordance
to “the Provisions on the
Accounting Treatment Related
to Insurance Contracts” under
one possible scenario
211,901 20,191
Using 2011 EV assumptions 209,383 21,068
RMB mn
38. Awards in 2012
“2012 China Fortune 500”ranking 10th
“2012 Annual Corporate Disclosure Award”
China Life has been selected in “Forbes Global 2000” for nine
consecutive years, ranking 65th in 2012.
“Top 50 Most Valuable Brands in China ” in 2013, ranking 7th.
- 38 -
39. Fulfilling Corporate Social Responsibilities
Sponsoring orphans
Continued sponsorship for Wenchuan Earthquake, Yushu
Earthquake and Zhouqu mudslide orphans, and held the
“Fourth China Life Summer Camp”.
Funding for school
building
Funded the building of three more China Life primary schools in
Shangri-La County, Diqing Tibetan Autonomous Prefecture of
Yunnan Province, Ziyang City of Sichuan Province, and Liangping
County of Chongqing city.
Caring for women’s
health
Donation was made to related foundations to provide women in
impoverished areas with “Screening for Two Gynecological
Cancers” and protection against major diseases.
- 39 -
Donation was made to the Beijing Municipal Public Security
Support Foundation for impoverished families of police officers
Aiding
impoverished
families
Note：These charitable undertakings were operated by China Life Foundation.
