As filed with the Securities and Exchange Commission on April 24, 2015

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

OR

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report                     

Commission file number 001-31914

(Exact name of Registrant as specified in its charter)

China Life Insurance Company Limited

(Translation of Registrant’s name into English)

People’s Republic of China

(Jurisdiction of incorporation or organization)

16 Financial Street

Xicheng District

Beijing 100033, China

(Address of principal executive offices)

Tian Zeng

16 Financial Street

Xicheng District

Beijing 100033, China

Tel: (86-10) 6363-1244

Fax: (86-10) 6657-5112

Email: zengtian@e-chinalife.com

(Name, Telephone, Email and/or Facsimile Number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
American depositary shares H shares, par value RMB1.00 per share	New York Stock Exchange New York Stock Exchange*

* Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares, each representing 15 H shares.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None.

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None.

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As of December 31, 2014, 7,441,175,000 H shares and 20,823,530,000 A shares, par value RMB1.00 per share, were issued and outstanding. H shares are listed on the Hong Kong Stock Exchange. A shares are listed on the Shanghai Stock Exchange. Both H shares and A shares are ordinary shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    x  Yes    ¨  No

If this report is an annual report or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    ¨  Yes    x  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ¨  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer  x                Accelerated filer  ¨                Non-accelerated filer  ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S.GAAP  ¨ International Financial Reporting Standards as issued by the International Accounting Standards Board  x Other  ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    ¨  Item 17    ¨  Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

CHINA LIFE INSURANCE COMPANY LIMITED

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS		1
CERTAIN TERMS AND CONVENTIONS		2
PART I		4
Item 1.	Identity of Directors, Senior Management and Advisers	4
Item 2.	Offer Statistics and Expected Timetable	4
Item 3.	Key Information	4
A.	Selected Financial Data	4
B.	Capitalization and Indebtedness	9
C.	Reasons for the Offer and Use of Proceeds	9
D.	Risk Factors	9
Item 4.	Information on the Company	29
A.	History and Development of the Company	29
B.	Business Overview	32
C.	Organizational Structure	80
D.	Property, Plants and Equipment	82
Item 4A.	Unresolved Staff Comments	82
Item 5.	Operating and Financial Review and Prospects	82
A.	Operating Results	98
B.	Liquidity and Capital Resources	113
C.	Research and Development, Patents and Licenses	116
D.	Trend Information	117
E.	Off-Balance Sheet Arrangements	117
F.	Tabular Disclosure of Contractual Obligations	117
Item 6.	Directors, Senior Management and Employees	117
A.	Directors and Senior Management	117
B.	Compensation	124
C.	Board Practices	126
D.	Employees	127
E.	Share Ownership	128
Item 7.	Major Shareholders and Related Party Transactions	128
A.	Major Shareholders	128
B.	Related Party Transactions	129
C.	Interests of Experts and Counsel	138
Item 8.	Financial Information	138
A.	Consolidated Financial Statements and Other Financial Information	138
B.	Significant Changes	140
C.	Embedded Value	140
Item 9.	The Offer and Listing	146
Item 10.	Additional Information	147
A.	Share Capital	147
B.	Articles of Association	147
C.	Material Contracts	162
D.	Exchange Controls	162
E.	Taxation	163

F.	Dividends and Paying Agents	171
G.	Statement by Experts	171
H.	Documents on Display	171
I.	Subsidiary Information	171
Item 11.	Quantitative and Qualitative Disclosures about Market Risk	171
Item 12.	Description of Securities Other Than Equity Securities	180
A.	Debt Securities	180
B.	Warrants and Rights	180
C.	Other Securities	180
D.	American Depositary Shares	180
PART II		181
Item 13.	Defaults, Dividend Arrearages and Delinquencies	181
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	181
A.	Material Modification To The Rights Of Security Holders	181
B.	Use of Proceeds	181
Item 15.	Controls and Procedures	182
Item 16A.	Audit Committee Financial Expert	183
Item 16B.	Code of Ethics	183
Item 16C.	Principal Accountant Fees and Services	183
Item 16D.	Exemptions from the Listing Standards for Audit Committees	183
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	183
Item 16F.	Change in Registrant’s Certifying Accountant	184
Item 16G.	Corporate Governance	185
Item 16H.	Mine Safety Disclosure	187
PART III		187
Item 17.	Financial Statements	187
Item 18.	Financial Statements	187
Item 19.	Exhibits	188

FORWARD-LOOKING STATEMENTS

This annual report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements state our intentions, beliefs, expectations or predictions for the future, in particular under “Item 4. Information on the Company”, “Item 5. Operating and Financial Review and Prospects” and “Item 8. Financial Information—Embedded Value”.

The forward-looking statements include, without limitation, statements relating to:

• future developments in the insurance industry in China;

• changes in interest rates and other economic and business conditions in China;

• the industry regulatory environment as well as the industry outlook generally;

• the amount and nature of, and potential for, future development of our business;

• the outcome of litigation and regulatory proceedings that we currently face or may face in the future;

• our business strategy and plan of operations;

• the prospective financial information regarding our business;

• our dividend policy; and

• information regarding our embedded value.

In some cases, we use words such as “believe”, “intend”, “anticipate”, “estimate”, “project”, “forecast”, “plan”, “potential”, “will”, “may”, “should” and “expect” and similar expressions to identify forward-looking statements. All statements other than statements of historical facts included in this annual report, including statements regarding our future financial position, strategy, projected costs and plans and objectives of management for future operations, are forward-looking statements. Although we believe that the expectations reflected in those forward-looking statements are reasonable, we can give no assurance that those expectations will prove to have been correct, and you are cautioned not to place undue reliance on such statements. Important factors that could cause actual results to differ materially from our expectations are disclosed under “Item 3. Key Information—Risk Factors” and elsewhere in this annual report, including in conjunction with the forward-looking statements included in this annual report. We undertake no obligation to publicly update or revise any forward-looking statements contained in this annual report, whether as a result of new information, future events or otherwise, except as required by law. All forward-looking statements contained in this annual report are qualified by reference to this cautionary statement.

1

CERTAIN TERMS AND CONVENTIONS

References in this annual report to “we”, “us”, “our”, the “Company” or “China Life” mean China Life Insurance Company Limited and, as the context may require, its subsidiaries. References to “CLIC” mean China Life Insurance (Group) Company and, as the context may require, its subsidiaries, other than China Life. References in this annual report to “AMC” mean China Life Asset Management Company Limited, the asset management company established by us with CLIC on November 23, 2003. References to “CLPCIC” mean China Life Property and Casualty Insurance Company Limited, the property and casualty company established by us with CLIC on December 30, 2006. References to “China Life Pension” mean China Life Pension Company Limited established by us, CLIC and AMC on January 15, 2007.

The statistical and market share information contained in this annual report has been derived from government sources, including the China Insurance Yearbook 2012, the China Insurance Yearbook 2013, the China Insurance Yearbook 2014 and other public sources. The information has not been verified by us independently. Unless otherwise indicated, market share information set forth in this annual report is based on premium information as reported by the CIRC. The reported information includes premium information that is not determined in accordance with HKFRS, U.S. GAAP or IFRS.

References to “A shares” mean the RMB ordinary shares which have been listed on the Shanghai Stock Exchange since January 9, 2007.

References to “China” or “PRC” mean the People’s Republic of China, excluding, for purposes of this annual report, Hong Kong, Macau and Taiwan. References to the “central government” mean the government of the PRC. References to “State Council” mean the State Council of the PRC. References to the “CIRC” mean the China Insurance Regulatory Commission. References to “MOF” or “Ministry of Finance” mean the Ministry of Finance of the PRC. References to “Ministry of Commerce” mean the Ministry of Commerce of the PRC. References to “CSRC” mean the China Securities Regulatory Commission. References to “CBRC” mean the China Banking Regulatory Commission. References to “PBOC” mean the People’s Bank of China. References to “SAFE” mean the State Administration of Foreign Exchange of the PRC. References to “SAIC” mean the State Administration for Industry and Commerce of the PRC.

References to “HKSE” or “Hong Kong Stock Exchange” mean The Stock Exchange of Hong Kong Limited. References to “NYSE” or “New York Stock Exchange” mean the New York Stock Exchange. References to “SSE” or “Shanghai Stock Exchange” mean the Shanghai Stock Exchange.

References to “IFRS” mean the International Financial Reporting Standards as issued by the International Accounting Standards Board, references to “U.S. GAAP” mean the generally accepted accounting principles in the United States, references to “HKFRS” mean the Hong Kong Financial Reporting Standards, issued by the Hong Kong Institute of Certified Public Accountants, and references to “PRC GAAP” mean the PRC Accounting Standards for Business Enterprises (2006) applicable to companies listed in the PRC. Unless otherwise indicated, our financial information presented in this annual report has been prepared in accordance with IFRS.

References to “Renminbi” or “RMB” in this annual report mean the currency of the PRC, references to “U.S. dollars” or “US$” mean the currency of the United States of America, and references to “Hong Kong dollars”, “H.K. dollars” or “HK$” mean the currency of the Hong Kong Special Administrative Region of the PRC.

2

Unless otherwise indicated, translations of RMB amounts into U.S. dollars for presentation only in this annual report have been made at the rate of US$1.00 to RMB 6.2046, the noon buying rate in the City of New York for cable transfers payable in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York on December 31, 2014. No representation is made that Renminbi amounts could have been, or could be, converted into U.S. dollars at that rate on December 31, 2014 or at all. Translations of foreign currency amounts into RMB amounts for the purpose of preparing our audited consolidated financial statements included elsewhere in this annual report or our previous annual reports have been made at the exchange rates published by the PBOC.

Any discrepancies in any table between totals and sums of the amounts listed are due to rounding.

If there is any discrepancy or inconsistency between the Chinese names of the PRC entities in this annual report and their English translations, the Chinese version shall prevail.

3

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.

Not applicable.

ITEM 3. KEY INFORMATION.

A. SELECTED FINANCIAL DATA

Selected Historical Consolidated Financial Data

The following tables set forth our selected consolidated financial information for the periods indicated. We have derived the consolidated financial information from our audited consolidated financial statements included elsewhere in this annual report or our previous annual reports.

We prepare our consolidated financial statements in accordance with IFRS as issued by the IASB.

You should read this information in conjunction with the rest of the annual report, including our audited consolidated financial statements and the accompanying notes, “Item 5. Operating and Financial Review and Prospects” included elsewhere in this annual report and the independent registered public accounting firm’s reports.

4

	For the year ended December 31,
	2010			2011			2012			2013			2014			2014
	RMB			RMB			RMB			RMB			RMB			US$
	(in millions except for per share data)
Consolidated Statement of Comprehensive Income
Revenues
Gross written premiums		318,229			318,252			322,742			326,290			331,010			53,349
Less: premiums ceded to reinsurers		(177	)		(232	)		(384	)		(556	)		(515	)		(83	)
Net written premiums		318,052			318,020			322,358			325,734			330,495			53,266
Net change in unearned premium reserves		36			256			(232	)		(921	)		(390	)		(63	)
Net premiums earned		318,088			318,276			322,126			324,813			330,105			53,203
Investment income		48,872			60,722			73,243			82,816			93,548			15,077
Net realised gains and impairment on financial assets		15,841			(11,208	)		(26,876	)		5,793			7,120			1,148
Net fair value gains/(losses) through profit or loss		280			337			(313	)		137			5,808			936
Other income		2,757			2,772			3,305			4,324			4,185			675
Total revenues		385,838			370,899			371,485			417,883			440,766			71,039
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits		(71,237	)		(101,349	)		(107,674	)		(193,671	)		(192,659	)		(31,051	)
Accident and health claims and claim adjustment expenses		(8,740	)		(7,789	)		(7,898	)		(11,263	)		(16,752	)		(2,700	)
Increase in insurance contract liabilities		(199,655	)		(181,579	)		(184,990	)		(107,354	)		(105,883	)		(17,065	)
Investment contract benefits		(1,950	)		(2,031	)		(2,032	)		(1,818	)		(1,958	)		(316	)
Policyholder dividends resulting from participation in profits		(13,224	)		(6,125	)		(3,435	)		(18,423	)		(24,866	)		(4,008	)
Underwriting and policy acquisition costs		(27,256	)		(27,434	)		(27,754	)		(25,690	)		(27,147	)		(4,375	)
Finance costs		(304	)		(873	)		(2,575	)		(4,032	)		(4,726	)		(762	)
Administrative expenses		(20,285	)		(21,549	)		(23,283	)		(24,805	)		(25,432	)		(4,099	)
Other expenses		(3,351	)		(3,275	)		(3,304	)		(3,864	)		(4,151	)		(668	)
Statutory insurance fund contribution		(599	)		(595	)		(609	)		(637	)		(701	)		(113	)
Total benefits, claims and expenses		(346,601	)		(352,599	)		(363,554	)		(391,557	)		(404,275	)		(65,157	)
Share of profit of associates and joint ventures		1,771			2,213			3,037			3,125			3,911			630
Profit before income tax		41,008			20,513			10,968			29,451			40,402			6,512
Income tax		(7,197	)		(2,022	)		304			(4,443	)		(7,888	)		(1,272	)
Net profit		33,811			18,491			11,272			25,008			32,514			5,240
Attributable to:
- Equity holders of the Company		33,626			18,331			11,061			24,765			32,211			5,191
- Non-controlling interests		185			160			211			243			303			49
Basic and diluted earnings per share(1)		1.19			0.65			0.39			0.88			1.14			0.18

⁽¹⁾  Numbers are based on the weighted average number of 28,264,705,000 shares in issue.

5

	For the year ended December 31,
	2010			2011			2012			2013			2014			2014
	RMB			RMB			RMB			RMB			RMB			US$
	(in millions except for per share data)
Other comprehensive income
Other comprehensive income that may be reclassified to profit or loss in subsequent periods:
Consolidated Statement of Comprehensive Income
Fair value gains/(losses) on available-for-sale securities		(13,666	)		(45,576	)		8,864			(25,135	)		70,342			11,339
Amount transferred to net profit from other comprehensive income		(15,763	)		11,054			26,876			(5,793	)		(7,120	)		(1,148	)
Portion of fair value changes on available-for-sale securities attributable to participating policyholders		7,983			2,521			(2,635	)		2,635			(11,035	)		(1,779	)
Share of other comprehensive income of associates and joint ventures under the equity method		(131	)		(201	)		167			(332	)		120			19
Others		(1	)		(1	)		—			—			—			—
Income tax relating to components of other comprehensive income		5,362			7,989			(8,265	)		7,050			(13,023	)		(2,099	)
Other comprehensive income that may be reclassified to profit or loss in subsequent periods		(16,216	)		(24,214	)		25,007			(21,575	)		39,284			6,332
Other comprehensive income that will not be reclassified to profit or loss in subsequent periods		—			—			—			—			—			—
Other comprehensive income for the year, net of tax		(16,216	)		(24,214	)		25,007			(21,575	)		39,284			6,332
Total comprehensive income for the year, net of tax		17,595			(5,723	)		36,279			3,433			71,798			11,572
Attributable to:
- Equity holders of the Company		17,423			(5,874	)		36,056			3,203			71,443			11,515
- Non-controlling interests		172			151			223			230			355			57

6

	As of December 31,
	2010		2011		2012		2013		2014		2014
	RMB		RMB		RMB		RMB		RMB		US$
	(in millions)
Consolidated Statement of Financial Position
Assets
Property, plant and equipment		18,946		20,231		22,335		23,393		25,348		4,085
Investment properties		—		—		—		1,329		1,283		207
Investments in associates and joint ventures		20,892		24,448		28,991		34,775		44,390		7,154
Held-to-maturity securities		246,227		261,933		452,389		503,075		517,283		83,371
Loans		36,543		61,104		80,419		118,626		166,453		26,827
Term deposits		441,585		520,793		641,080		664,174		690,156		111,233
Statutory deposits - restricted		6,153		6,153		6,153		6,153		6,153		992
Available-for-sale securities		548,121		562,948		506,416		491,527		607,531		97,916
Securities at fair value through profit or loss		9,762		23,683		34,035		34,172		53,052		8,550
Securities purchased under agreements to resell		—		2,370		894		8,295		11,925		1,922
Accrued investment income		18,193		22,946		28,926		34,717		44,350		7,148
Premiums receivable		7,274		8,253		8,738		9,876		11,166		1,800
Reinsurance assets		830		878		948		1,069		1,032		166
Other assets		8,199		12,182		18,140		20,430		19,411		3,129
Cash and cash equivalents		47,854		55,985		69,452		21,330		47,034		7,581
Total assets		1,410,579		1,583,907		1,898,916		1,972,941		2,246,567		362,081
Liabilities and equity
Liabilities
Insurance contracts		1,018,135		1,199,373		1,384,537		1,494,497		1,603,446		258,429
Investment contracts		70,171		69,797		66,639		65,087		72,275		11,649
Policyholder dividends payable		52,828		46,368		44,240		49,536		74,745		12,047
Interest-bearing loans and borrowings		—		—		—		—		2,623		423
Bonds payable		—		29,990		67,981		67,985		67,989		10,958
Financial liabilities at fair value through profit or loss		—		—		—		—		10,890		1,755
Securities sold under agreements to repurchase		23,065		13,000		68,499		20,426		46,089		7,428
Annuity and other insurance balances payable		8,275		11,954		16,890		23,179		25,617		4,129
Premiums received in advance		1,880		3,719		2,576		6,305		15,850		2,555
Other liabilities		13,746		13,968		16,435		18,233		20,062		3,232
Deferred tax liabilities		11,776		1,454		7,834		4,919		19,375		3,123
Current income tax liabilities		34		750		22		5		52		8
Statutory insurance fund		194		146		162		184		223		36
Total liabilities		1,200,104		1,390,519		1,675,815		1,750,356		1,959,236		315,772
Equity
Share capital		28,265		28,265		28,265		28,265		28,265		4,555
Reserves		100,537		83,424		112,509		97,029		145,919		23,518
Retained earnings		79,908		79,841		80,311		95,037		109,937		17,719
Attributable to equity holders of the Company		208,710		191,530		221,085		220,331		284,121		45,792
Non-controlling interests		1,765		1,858		2,016		2,254		3,210		517
Total equity		210,475		193,388		223,101		222,585		287,331		46,309
Total liabilities and equity		1,410,579		1,583,907		1,898,916		1,972,941		2,246,567		362,081

7

Exchange Rate Information

We prepare our consolidated financial statements in Renminbi. This annual report contains translations of Renminbi amounts into U.S. dollars, and U.S. dollars into Renminbi, at RMB 6.2046 to US$1.00, the noon buying rate on December 31, 2014 in the City of New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York. You should not assume that Renminbi amounts could actually be converted into U.S. dollars at these rates or at all. Translations of foreign currency amounts into RMB amounts for the purpose of preparing our audited consolidated financial statements included elsewhere in this annual report or our previous annual reports have been made at the exchange rates published by the PBOC.

Since July 21, 2005, the PRC government has followed a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. During this period, the PRC government has made, and may in the future make, further adjustments to the exchange rate system. The PBOC announces the closing price of a foreign currency traded against the Renminbi in the inter-bank foreign exchange market after the closing of the market on each working day, and makes it the central parity for the trading against the Renminbi on the following working day.

Although PRC governmental policies were introduced in 1996 to reduce restrictions on the convertibility of Renminbi into foreign currency for current account items, conversion of Renminbi into foreign exchange for capital account items, such as foreign direct investments, loans or securities, requires the approval of the SAFE and other relevant authorities. Although experimental policies were recently introduced in certain pilot areas such as the Shanghai free trade zone to reduce foreign exchange control, restrictions on the convertibility of Renminbi into foreign currency are still in force in most parts of China.

The Hong Kong dollar is freely convertible into other currencies, including the U.S. dollar. Since October 17, 1983, the Hong Kong dollar has been linked to the U.S. dollar at the rate of HK$7.80 to US$1.00. The central element in the arrangements which give effect to the link is that by agreement between the Hong Kong government and the three Hong Kong banknote issuing banks, The Hong Kong and Shanghai Banking Corporation Limited, Standard Chartered Bank and the Bank of China, certificates of debts, which are issued by the Hong Kong Government Exchange Fund to the banknote issuing banks to be held as cover for their banknote issues, are issued and redeemed only against payment in U.S. dollars, at the fixed exchange rate of HK$7.80 to US$1.00. When the banknotes are withdrawn from circulation, the banknote issuing banks surrender the certificates of debts to the Hong Kong Government Exchange Fund and are paid the equivalent U.S. dollars at the fixed rate.

The market exchange rate of the Hong Kong dollar against the U.S. dollar continues to be determined by the forces of supply and demand in the foreign exchange market. However, against the background of the fixed rate which applies to the issue of the Hong Kong currency in the form of banknotes, as described above, the market exchange rate has not deviated materially from the level of HK$7.80 to US$1.00 since the link was first established. The Hong Kong government has stated its intention to maintain the link at that rate, and it, acting through the Hong Kong Monetary Authority, has a number of means by which it may act to maintain exchange rate stability. Exchange rates between the Hong Kong dollar and other currencies are influenced by the linked rate between the U.S. dollar and the Hong Kong dollar.

8

The following tables set forth various information concerning exchange rates between Renminbi and U.S. dollars and between Hong Kong dollars and U.S. dollars for the periods indicated. These rates are provided solely for your convenience and are not necessarily the exchange rates we used in this annual report. The source of these rates is the H.10 statistical release of the Federal Reserve Board. On April 17, 2015, the exchange rates were US$ 1.00 to RMB 6.1976 and US$ 1.00 to HK$7.7510, respectively. The following table sets forth the high and low rates between Renminbi and U.S. dollars and between Hong Kong dollars and U.S. dollars for each of the periods shown:

	RMB per US$				HK$ per US$
	High		Low		High		Low
October 2014		6.1385		6.1107		7.7645		7.7541
November 2014		6.1429		6.1117		7.7572		7.7519
December 2014		6.2256		6.1490		7.7616		7.7509
January 2015		6.2535		6.1870		7.7563		7.7508
February 2015		6.2695		6.2399		7.7584		7.7517
March 2015		6.2741		6.1930		7.7686		7.7516
April 2015 (through April 17, 2015)		6.2152		6.1930		7.7525		7.7499

The following table sets forth the period-end rates and the average rates between Renminbi and U.S. dollars and between Hong Kong dollars and U.S. dollars for each of 2010, 2011, 2012, 2013, 2014 and 2015 (through April 17, 2015) (calculated by averaging the rates on the last day of each month of the periods shown):

	Period-end rate				Average rate
	RMB per US$		HK$ per US$		RMB per US$		HK$ per US$
2010		6.6000		7.7810		6.7603		7.7692
2011		6.2939		7.7663		6.4475		7.7793
2012		6.2301		7.7507		6.2990		7.7556
2013		6.0537		7.7539		6.1412		7.7565
2014		6.2046		7.7531		6.1704		7.7554
2015 (through April 17, 2015)		6.1976		7.7510		6.2289		7.7535

B. CAPITALIZATION AND INDEBTEDNESS

Not Applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not Applicable.

D. RISK FACTORS

Our business, financial condition and results of operations can be affected materially and adversely by any of the following risk factors.

9

Risks Relating to Our Business

Our growth is dependent on our ability to attract and retain productive agents.

A substantial portion of our business is conducted through our individual agents. Because of differences in productivity, a relatively small percentage of our sales agents is responsible for a disproportionately high percentage of our sales of individual products. If we are unable to retain and build on this core group of highly productive agents, our business could be materially and adversely affected. Increasing competition for agents from other insurance companies and business institutions and increasing labor costs in China may also force us to increase the compensation of our agents and sales representatives, which would increase our operating costs and reduce our profitability. In addition, on January 6, 2013, the CIRC issued the Regulatory Rules on Insurance Sales Personnel, or the Sales Personnel Rules, which became effective on July 1, 2013. Among other things, the Sales Personnel Rules provide that individual agents must have at least a college degree, instead of a junior high school degree as previously required by the CIRC. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Regulation of Insurance Agencies, Insurance Brokers and Other Intermediaries”. While detailed rules implementing the Sales Personnel Rules have not been issued and it is still unclear how such rules will be implemented by the CIRC at the national level, the CIRC has authorized its local branches to set the education degree requirements for individual agents by considering local conditions. As of the date of this annual report, the CIRC’s local branches maintain different requirements on education degrees of the individual agents who practice in their respective jurisdictions. For example, the CIRC’s Beijing branch has stipulated that since January 1, 2015, any new qualified individual agents that sell insurance products in Beijing must have at least a college degree. The CIRC’s Jiangsu branch has stipulated that the college degree requirement will be applicable to any new qualified individual agents who sell insurance products in Jiangsu province’s non-rural and rural areas since July 1, 2015 and July 1, 2018, respectively. The CIRC’s Hainan branch has stipulated that since July 1, 2013, any new qualified individual agents who sell insurance products in Hainan’s non-rural areas must have at least a high school degree. We believe that the market competition for qualified agents will be increased further if more CIRC branches were to impose the requirement of having a college degree or above on new qualified individual agents or if the CIRC were to strictly enforce such rules at the national level. We cannot guarantee that we will not have difficulty attracting and retaining productive agents in the future.

If we are unable to develop other distribution channels for our products, our growth may be materially and adversely affected.

Commercial banks and banking operations of post offices are rapidly emerging as some of the fastest growing distribution channels in China. Newly established domestic and foreign-invested life insurance companies have been focusing on commercial banks and banking operations of post offices as one of their main distribution channels. In addition, with the relaxation of the regulatory restrictions of ownership by commercial banks in insurance companies, the number of insurance companies owned or controlled by commercial banks is increasing. Each of the five largest Chinese stated-owned commercial banks has set up their own life insurance companies. These insurance companies are able to benefit from their holding relationships with these commercial banks to develop bancassurance as their main distribution channels. We do not have exclusive arrangements with any of the commercial banks and banking operations of post offices through which we sell insurance and annuity products, and thus our sales may be materially and adversely affected if one or more commercial banks or banking operations of post offices choose to favor our competitors’ products over our own. In addition, as the bancassurance market becomes increasingly competitive, commercial banks and banking operations of post offices may demand higher commission rates, which could increase our cost of sales and reduce our profitability. If we are unable to continue to develop our alternative distribution channels, our growth may be materially and adversely affected.

10

Agent and employee misconduct is difficult to detect and deter and could harm our reputation or lead to regulatory sanctions or litigation costs.

Agent or employee misconduct could result in violations of law by us, regulatory sanctions, litigation or serious reputational or financial harm. Misconduct could include:

• engaging in misrepresentation or fraudulent activities when marketing or selling insurance policies or annuity contracts to customers;

• hiding unauthorized or unsuccessful activities, resulting in unknown and unmanaged risks or losses; or

• otherwise not complying with laws or our control policies or procedures.

We cannot always deter agent or employee misconduct, and the precautions we take to prevent and detect these activities may not be effective in all cases. We have experienced agent and employee misconduct that has resulted in litigation and administrative actions against us and these agents and employees, and in some cases criminal proceedings and convictions against the agent or employee in question. None of these actions has resulted in material losses, damages, fines or other sanctions against us. We cannot assure you, however, that agent or employee misconduct will not lead to a material adverse effect on our business, results of operations, financial condition or prospects.

Our business is dependent on our ability to attract and retain key personnel, including senior management, underwriting personnel, actuaries, information technology specialists, investment managers and other professionals.

The success of our business is dependent to a large extent on our ability to attract and retain key personnel who have in-depth knowledge and understanding of the life insurance market in China, including members of our senior management, qualified underwriting personnel, actuaries, information technology specialists and experienced investment managers. As of the date of this annual report, we do not carry key personnel insurance for any of these personnel. We compete to attract and retain these key personnel with other life insurance companies and financial institutions, some of which may offer better compensation arrangements. Existing insurers are expanding their operations and the number of other financial institutions is growing. As the insurance and investment businesses continue to expand in China, we expect that competition for these personnel will increase in the future. Although we have not had difficulty in attracting and retaining qualified key personnel in the past, we cannot guarantee that this will continue to be the case. If we were unable to continue to attract and retain key personnel, our business and financial performance could be materially and adversely affected.

We are exposed to changes in interest rates.

Changes in interest rates may affect our profitability.

Our profitability is affected by changes in interest rates. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations, trade surpluses and deficits, regulatory requirements and other factors beyond our control. During 2012, the PBOC reduced the interest rates twice, from 3.50% to 3.00%. In November 2014, the interest rate on one-year term deposits was reduced from 3.00% to 2.75%, and in March 2015, the interest rate was further reduced from 2.75% to 2.50%. The Chinese government may further reduce interest rates, which may reduce the income we realize from our investments, affecting our profitability. In addition, as instruments in our investment portfolio mature, we might have to reinvest the funds we receive in investments bearing low interest rates. However, if interest rates were to increase in the future, surrenders and withdrawals of insurance and annuity policies and contracts may increase as policy holders may seek other investments with higher perceived returns. This process may result in cash outflows requiring that we sell investment assets at a time when the prices of those assets are adversely affected by the increase in market interest rates, which may result in realized investment losses.

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For many of our long-term life insurance and annuity products, we are obligated to pay a minimum interest or crediting rate to our policyholders or annuitants, which is established when the product is priced. These products expose us to the risk that changes in interest rates may reduce our “spread”, or the difference between the rates that we are required to pay under the policies and the rate of return we are able to earn on our investments intended to support our insurance obligations.

On June 10, 1999, the CIRC reduced to 2.50% the maximum guaranteed rate which life insurance companies could commit to pay on new policies and, in response, CLIC adopted new pricing policies which reduced the guaranteed rates on its products to a range of between 1.50% and 2.50%. As of December 31, 2014, the average guaranteed rate of return of the products we offered was 2.49%. We also have shifted our mix of products to emphasize products that lessen the impact from interest rate changes, including traditional policies that are not as sensitive to interest rates and participating policies under which our customers receive a portion of our distributable earnings from participating products, as well as products having shorter terms to better match the duration of our investment portfolio. Furthermore, we have made use of the relaxation of investment restrictions applicable to us to diversify our investments. We have not incurred negative spread on policies we have issued since our incorporation, as the average investment returns we have been able to generate have been higher than their guaranteed rates. However, if the rates of return on our investments were to fall below the minimum rates we guarantee, our profitability would be materially and adversely affected.

In August 2013 and February 2015, the CIRC published regulations that removed the cap fixed by it on the guaranteed rate which life insurance companies could commit to pay on traditional non-participating insurance policies and universal life insurance policies, which was 2.50%. The 2.50% cap on the guaranteed rate will still remain in effect for participating life insurance policies. We have not yet determined the impact of the new CIRC regulations, if any, on our business as a whole in the long term, although it is possible that it could affect the profitability of our products. We cannot assure you that the removal of the 2.50% cap will not lead to a material adverse effect on our business, results of operations or financial condition.

Because of the general lack of long-term fixed income securities in the Chinese capital markets, we are unable to match closely the duration of our assets and liabilities, which increases our exposure to interest rate risk.

Like other insurance companies, we seek to manage interest rate risk through managing, to the extent possible, the average duration of our investment assets and the insurance policy liabilities they support. Matching the duration of our assets to their related liabilities reduces our exposure to changes in interest rates, because the effect of the changes largely will be offset against each other. However, the limited availability of long-duration investment assets in the markets in which we invest, has resulted in, and in the future may result in, the duration of our assets being shorter than that of our liabilities, particularly with respect to liabilities with durations of more than 20 years. Furthermore, the Chinese financial markets currently do not provide adequate financial derivative products for us to hedge our interest rate risk. We believe that with the development of the Chinese capital markets and the gradual easing of the investment restrictions imposed on insurance companies in China, our ability to match the duration of our assets to that of our liabilities will improve. We also seek to manage the risk of duration mismatch by focusing on product offerings whose maturity profiles are in line with the duration of investments available to us in the prevailing investment environment. However, until we are able to match more closely the duration of our assets and liabilities, we will continue to be exposed to interest rate changes, which may materially and adversely affect our business and earnings.

12

Our investments are subject to risks.

We are exposed to potential investment losses if there is an economic downturn in China.

Until November 2006, we were only permitted to invest the premiums and other income we receive in investments in China. We obtained the approval to invest overseas with our foreign currency denominated funds in November 2006. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Regulation of investments”. However, we continued to make our investments mainly in China and, as of December 31, 2014, approximately 99.38% of our total investment assets were in China. In particular, as of December 31, 2014, approximately 44.83% of our total investment assets consisted of debt securities including Chinese government bonds, government agency bonds, corporate bonds, subordinated bonds and debt and other bonds and debts as approved by relevant government agencies; and 32.85% of our total investment assets consisted of term deposits with Chinese banks, and of these deposits, 67.82% were placed with the five largest Chinese state-owned commercial banks. A serious downturn in the Chinese economy may lead to investment losses, which would reduce our earnings.

The PRC securities markets are still emerging markets, which may expose us to risks of loss from our investments there.

As of December 31, 2014, we had RMB 236,030 million (US$38,041 million) invested in equity securities, among which RMB 225,248 million (US$36,303 million) were invested in PRC securities markets, including securities investment funds and shares traded on the securities markets in China. These securities investment funds are primarily invested in equity securities that are issued by Chinese companies and traded on China’s stock exchanges. Beginning in March 2005, we are also permitted to directly invest in shares traded on the securities markets in China. The PRC securities markets are still emerging markets and are characterized by evolving regulatory, accounting and disclosure requirements. This may from time to time result in significant price volatility, unexpected losses or lack of liquidity. These factors could cause us to incur losses on our publicly traded investments. In addition, the PRC securities markets have recently experienced, and may experience in the future, significant volatility. Also, as one of the largest institutional investors in China, we may from time to time hold significant positions in many securities in which we invest, and any decision to sell or any perception in the market that we are a major seller of a security could adversely affect the liquidity and market price of that security.

Defaults on our debt investments may materially and adversely affect our profitability.

Approximately 44.83% of our investment assets as of December 31, 2014 were comprised of debt securities. The issuers whose debt securities we hold may fail to pay or otherwise default on their obligations due to bankruptcy, a lack of liquidity, a downturn in the economy, operational failures or other reasons. Losses due to these defaults could reduce our profitability.

13

Investments in new investment channels may not lead to improvements in our rate of investment return or we may incur losses.

The CIRC has in recent years significantly broadened the investment channels of Chinese life insurance companies. We have considered these alternative methods when making investments. For example, we made our first domestic private equity fund investment in 2011. In 2012, we made a direct equity investment in COFCO Futures Co., Ltd. by acquiring a 35% equity interest in it. In 2013, we began making investments in commercial real estate properties. In 2014, we made our first overseas real property investment, first overseas private equity fund investment and first domestic preferred shares investment. However, our experience with these new investment channels, especially overseas channels, might be limited, and these new channels are still subject to evolving regulatory requirements, which may increase the risk exposure of our investments. For example, since January 2013, debt investment plans are no longer required to be filed with and reviewed by the CIRC, and in March 2014, the CIRC warned insurance companies of risks in debt investment plans. The CIRC noted, among other things, that issuers of some debt investment plans are not properly backed by their parent companies which are supposed to guarantee the payments if the plans face financial difficulties. Parent companies of some issuers do not engage in operating activities that can generate cash inflows and do not have effective control over their subsidiaries. As a result, the consolidated financial statements of these companies may not fully reflect their capacity to make payments when the plans face financial difficulties. In addition, the total amount of debt investment plans issued in recent years increased significantly, which caused concerns over the health of the debt investment plans market. As of December 31, 2014, the total amount of our investment in debt investment plans was RMB 59,897 million (US$9,654 million). These factors could cause us to incur losses for our investments in these new investment channels or limit our ability to improve our rate of investment return.

We may incur foreign exchange and other losses for our investments denominated in foreign currencies.

A portion of our investment assets are held in foreign currencies. We are authorized by the CIRC to invest our assets held in foreign currencies in the overseas financial markets as permitted by the CIRC. Thus, our investment results may be subject to foreign exchange risks, as well as the volatility and various other factors of overseas capital markets, including, among others, increase in interest rates. We recorded RMB 437 million in foreign exchange losses for the year ended December 31, 2013, resulting from our assets held in foreign currencies, which were affected by the appreciation of the Renminbi. In June 2014, to fund our overseas investments, we obtained a fixed-interest rate bank loan of 275 million British pounds sterling with a term of five years. We recorded RMB 268 million (US$43 million) in foreign exchange gains for the year ended December 31, 2014, resulting mainly from the depreciation of the British pound against the Renminbi. Future movements in the exchange rate of RMB against the U.S. dollar and other foreign currencies may adversely affect our results of operations and financial condition.

Under China’s existing foreign exchange control regulations, the conversion of foreign currencies into the Renminbi requires approval of relevant government agencies. We obtained an approval to settle a portion of our assets held in foreign currencies into the Renminbi in 2005, which partially reduced the foreign exchange risks we are exposed to. Except for the aforementioned approval obtained in 2005, we have not obtained any approval to settle any portion of our assets held in foreign currencies into the Renminbi, and there is no guarantee that we will be able to obtain any such approval in the future. If we do not obtain such approval, our ability to manage our foreign exchange risks may be limited. There are few financial products available in China to hedge foreign exchange risks, which substantially limits our ability to manage our foreign exchange risks.

Differences in future actual operating results from the assumptions used in pricing and establishing reserves for our insurance and annuity products may materially affect our earnings.

Our earnings depend significantly upon the extent to which our actual operating results are consistent with the relevant assumptions used in setting the prices for our products and establishing the reserves in our financial statements. Our assumptions include those for discount rate, mortality, morbidity, expenses and lapse rate, as well as certain macro-economic factors. To the extent that trends in actual experiences are less favorable than our underlying assumptions used in establishing these reserves, and these trends are expected to continue in the future, we could be required to increase our reserves. Any such increase could have a material adverse effect on our profitability and, if significant, our financial condition.

14

We establish the reserves for obligations of future policies based on the expected payout of benefits, calculated through the use of assumptions for discount rate, mortality, morbidity, expenses and lapse rate, as well as certain macro-economic factors. These assumptions are based on our previous experience and data published by other Chinese life insurers, as well as judgments made by the management. These assumptions may deviate from our actual experience, and, as a result, we cannot determine precisely the amounts which we will ultimately pay to settle these reserves or when these payments will need to be made. These amounts may vary from the estimated amounts, particularly when those payments may not occur until well into the future. The discount rate assumption is affected by certain factors, such as further macro-economy, monetary and exchange rate policies, capital market results and availability of investment channels to invest our insurance funds. We review and update the assumptions used to evaluate the reserves periodically, and establish the reserves for insurance policies based on such assumptions. Standards with respect to the calculation and presentation of reserves are still evolving, and any charges in the future may also impact our earnings and presentations of financial statements. We record changes in our reserves in the period the reserves are established or re-estimated. If the reserves originally established for future policy benefits prove inadequate, we must increase our reserves established for future policy benefits, which may have a material effect on our earnings and our financial condition.

We have data available for a shorter period of time than do insurance companies operating in some other countries and, as a result, less claims experience on which to base some of the assumptions used in establishing our reserves. For a discussion of how we establish our assumptions for mortality, morbidity and lapse rate, see “Item 5. Operating and Financial Review and Prospects—Critical Accounting Policies”. Given the limited nature of this experience, it is possible that our actual claims could vary significantly from the assumptions used.

Our risk management and internal reporting systems, policies and procedures may leave us exposed to unidentified or unanticipated risks, which could materially and adversely affect our businesses or result in losses.

Our policies and procedures to identify, monitor and manage risks may not be fully effective. Many of our methods of managing risk and exposures are based upon our use of observed historical market behavior or statistics based on historical models. As a result, these methods may not predict future exposures, which could be significantly greater than what the historical measures indicate. Other risk management methods depend upon the evaluation of information regarding markets, customers or other matters that is publicly available or otherwise accessible to us, which may not always be accurate, complete, up-to-date or properly evaluated. In addition, a significant portion of business information needs to be centralized from our many branch offices. Management of operational, legal and regulatory risks requires, among other things, policies and procedures to record properly and verify a large number of transactions and events, and these policies and procedures may not be fully effective. Failure or the ineffectiveness of these systems could materially and adversely affect our business or result in losses.

We are likely to offer a broader and more diverse range of insurance and investment products in the future as the insurance market in China continues to develop. At the same time, we anticipate that the relaxing of regulatory restraints will result in us being able to invest in a significantly broader range of asset classes. The combination of these factors will require us to continue to enhance our risk management capabilities and is likely to increase the importance of our risk management policies and procedures to our results of operations and financial condition. If we fail to adapt our risk management policies and procedures to our changing business, our business, results of operations and financial condition could be materially and adversely affected.

15

Catastrophes could materially reduce our earnings and cash flow.

We could in the future experience catastrophic losses that may have an adverse impact on the business, results of operations and financial condition of our insurance business. Catastrophes can be caused by various events, including terrorist attacks, earthquakes, hurricanes, floods, fires and epidemics, such as severe acute respiratory syndrome, or SARS. For example, the snow disaster in South China and earthquake in Wen Chuan in 2008 increased our current claims payments. In 2008, our claims payments for the snow disaster and for the earthquake were approximately RMB 12 million and RMB 153 million, respectively.

We establish liabilities for claims arising from a specific catastrophe after assessing the exposure and damages arising from the event. Although we have purchased catastrophe reinsurance in order to reduce our catastrophe exposure, we cannot assure you that any significant catastrophic event will not have a material adverse effect on us.

Current or future litigation, arbitration and regulatory proceedings could result in financial losses or harm our businesses.

We are involved in litigation and arbitration proceedings involving our insurance operations on an ongoing basis. In addition, the CIRC, as well as other PRC governmental agencies, including tax, commerce and industrial administration and audit bureaus, from time to time make inquiries and conduct examinations or investigations concerning our compliance with PRC laws and regulations. These litigation, arbitration and administrative proceedings have in the past resulted in payments of insurance benefits, damage awards, settlements or administrative sanctions, including fines, which have not been material to us. We currently have control procedures in place to monitor our litigation, arbitration and regulatory exposure and take appropriate actions. See “Item 8. Financial Information—Consolidated Financial Statements and Other Financial Information—Legal and Regulatory Proceedings”. While we cannot predict the outcome of any pending or future litigation, arbitration, examination or investigation, we do not believe that any pending legal matter will have a material adverse effect on our business, financial condition or results of operations. However, we cannot assure you that any future litigation, arbitration or regulatory proceeding will not have an adverse outcome, which could have a material adverse effect on our operating results or cash flows. See “Item 8. Financial Information—Consolidated Financial Statements and Other Financial Information—Legal and Regulatory Proceedings”.

The embedded value information we present in this annual report is based on several assumptions and may vary significantly as those assumptions are changed.

In order to provide investors with an additional tool to understand our economic value and business results, we have disclosed information regarding our embedded value, as discussed in the section entitled “Item 8. Financial Information—Embedded Value”. These measures are based on a discounted cash flow valuation determined using commonly applied actuarial methodologies. Standards with respect to the calculation of embedded value are still evolving, however, and there is no universal standard which defines the form, calculation method or presentation format of the embedded value of an insurance company. Assumptions used in embedded value calculations include discount rate, mortality, morbidity, expenses and surrender rate, as well as certain macro-economic factors. These assumptions may deviate significantly from our actual experience. Because of the technical complexity involved in embedded value calculations and the fact that embedded value estimates vary materially as key assumptions are changed, you should read the discussion under the section entitled “Item 8. Financial Information—Embedded Value” in its entirety. You should use special care when interpreting embedded value results and should not place undue reliance on them. See also “Forward-Looking Statements”.

16

A computer system failure, cyber-attacks or other security breaches may disrupt our business, damage our reputation and adversely affect our results of operations and financial condition.

We use computer systems to store, retrieve, evaluate and utilize customer and company data and information. Our business is highly dependent on our ability to access these systems to perform necessary business functions such as developing and selling insurance products, providing customer support, policy management, filing and paying claims, managing our investment portfolios and producing financial statements. Although we have designed and implemented a variety of security measures and backup plans to prevent or limit the effect of failure, our computer systems may be vulnerable to disruptions as a result of natural disasters, man-made disasters, criminal activities, pandemics or other events beyond our control. In addition, our computer systems may be subject to computer viruses or other malicious codes, unauthorized access, cyber-attacks or other computer-related penetrations. The failure of our computer systems for any reason could disrupt our operations and may adversely affect our business, results of operations and financial condition. Although we have not experienced such a computer system failure or security breach in the past, we cannot assure you that we will not encounter a failure or security breach in the future.

We retain confidential information on our computer systems, including customer information and proprietary business information. In addition, for business purposes, from time to time customer information is transmitted between our computer systems and those of third parties, such as third-party agents selling insurance products for us. Any compromise of the security or other errors of our computer systems or those arising during the information transmission process that result in the disclosure of personally identifiable customer information could damage our reputation, expose us to litigation, increase regulatory scrutiny and require us to incur significant technical, legal and other expenses.

United States Foreign Account Tax Compliance Act

The Foreign Account Tax Compliance Act, or FATCA, generally requires a foreign financial institution, or FFI, to enter into an FFI agreement under which it will agree to identify and provide the United States Internal Revenue Service, or IRS, with information regarding accounts, including certain insurance policies, held by U.S. persons and U.S.-owned foreign entities, or face 30% withholding tax on “withholdable payments,” which include among other items, payments of U.S.-source interest and dividends and gross proceeds from the sale or other disposition of property that may produce U.S.-source interest or dividends. In addition, an FFI that has entered into an FFI agreement may be required to withhold on certain “foreign passsthru payments” that it makes to FFIs that have not entered into their own FFI Agreements or to account holders who do not respond to requests to confirm their U.S. person status and/or do not agree to allow the FFI to report certain account related information to the IRS. Withholding on foreign passthru payments will begin no earlier than 2017. Since existing guidance reserves on the definition of “foreign passthru payment,” the scope of any withholding on foreign passthru payments is uncertain at this time.

The United States and the PRC have agreed in substance on the terms of an intergovernmental agreement, or IGA, that is intended to facilitate the type of information reporting required under FATCA. Under the agreed terms, instead of reporting directly to the IRS, Chinese FFIs are required to report specified account information directly to the PRC taxing authority, which will then pass that information to the IRS. While compliance with the IGA will not eliminate the risk of withholding described above, it is expected to reduce that risk for FFIs that are resident in China. Although the IGA has not yet been officially signed, the PRC and the United States have agreed to treat the IGA as in effect from June 26, 2014, provided that the PRC continues to demonstrate “firm resolve” to sign the IGA as soon as possible. If the United States and the PRC ultimately fail to reach a final agreement on the terms of the IGA, then the FATCA reporting and withholding regime described in the prior paragraph will apply to Chinese FFIs.

17

We will closely monitor developments regarding FATCA and the IGA. If we are required to comply with the terms of the IGA or FATCA, as applicable, we expect that our compliance costs will increase. If we do not comply with the terms of the IGA or FATCA, as applicable, then certain payments to us will be subject to withholding under FATCA. However, since the text of the IGA has not been released, and regulations and other guidance remain under development, the future impact of this law on us is uncertain.

The auditors’ reports included in this annual report are prepared by relying on audit work which is not inspected by the Public Company Accounting Oversight Board and, as such, investors may be deprived of the benefits of such inspection.

Auditors of companies that are registered with the SEC and traded publicly in the United States, including our independent registered public accounting firm, must be registered with the US Public Company Accounting Oversight Board (United States), or the PCAOB, and are required by the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States and professional standards. Because we have substantial operations within China, our auditor relied on its China affiliate to perform audits on our consolidated financial statements, and the PCAOB is currently unable to conduct inspections of the work of our auditor as it relates to those operations without the approval of the Chinese authorities, our auditor’s work related to our operations in China is not currently inspected by the PCAOB.

This lack of PCAOB inspection of audit work performed in China prevents the PCAOB from regularly evaluating the audit work of any auditor that was performed in China including those performed by our auditor. As a result, investors may be deprived of the full benefits of PCAOB inspections.

The inability of the PCAOB to conduct inspections of audit work performed in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures as compared to auditors in other jurisdictions that are subject to PCAOB inspections on all of their work. Investors may lose confidence in our reported financial information and procedures and the quality of our consolidated financial statements.

We may be adversely affected if additional remedial measures are imposed on the four China-based accounting firms which reached settlement with the SEC in the administrative proceedings brought by the SEC against them.

In December 2012, the SEC initiated administrative proceedings against five accounting firms in China, alleging that they refused to produce audit work papers and other documents related to certain China-based companies under investigation by the SEC for potential accounting fraud. In January 2014, an SEC administrative law judge ruled in favor of the SEC, issuing an initial decision which censured each of the five accounting firms for failure to provide their audit work papers to the SEC and ordered a six-month suspension of the China-based affiliates of four of the five accounting firms’ right to practice before the SEC. The accounting firms have appealed the decision of the administrative law judge to the SEC, and the decision will not come into force unless and until an order of finality is issued by the SEC. We are not subject to any SEC investigations, nor are we involved in the proceedings brought by the SEC against the accounting firms. However, the China affiliate of the independent registered public accounting firm that has issued the auditors’ reports included in our annual reports filed with the SEC for the fiscal years of 2011 and 2012 and the China affiliate of our independent registered public accounting firm for the fiscal years of 2013 and 2014 are two of the five accounting firms named in the SEC’s proceedings.

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In February 2015, four of the five accounting firms, including the China affiliate of the independent registered public accounting firm that has issued the auditors’ reports included in our annual reports filed with the SEC for the fiscal years of 2011 and 2012 and the China affiliate of our independent registered public accounting firm for the fiscal years of 2013 and 2014, each agreed to a censure and to pay a fine to the SEC to settle the dispute and avoid suspension of their ability to practice before the SEC. The settlement required the firms to follow detailed procedures and to seek to provide the SEC with access to audit documents of China-based companies via the CSRC. If future document productions fail to meet the specified criteria, the SEC retains authority to impose a variety of additional remedial measures on the firms depending on the nature of the failure, including an automatic six-month bar on the performance of certain audit work, commencement of a new proceeding or the resumption of the current proceeding by the SEC. While we cannot predict if the SEC will further review the four China-based accounting firms’ compliance with specified criteria or if the results of such a review would result in the SEC imposing penalties, if they are subject to additional remedial measures, we may be adversely affected, along with other U.S.-listed companies in China audited by these accounting firms because the independent registered public accounting firms that have issued the auditors’ reports included in our annual reports filed with the SEC have relied on their China affiliates to perform audits on our financial statements. If none of the China-based auditors are able to continue to perform audit work for China-based companies listed in the U.S., we will not be able to meet the reporting requirements under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which may ultimately result in our deregistration by the SEC and delisting of our ADSs from the NYSE.

Risks Relating to the PRC Life Insurance Industry

We expect competition in the Chinese insurance industry to increase, which may materially and adversely affect the growth of our business.

We face competitive pressures from both domestic and foreign-invested life insurance companies operating in China, as well as from property and casualty insurance companies, which may compete with our accident and short-term health insurance businesses, and other financial institutions that sell other financial investment products in competition with ours. In addition, the establishment of other professional health insurance companies and pension annuities companies may also lead to greater competition in the health insurance business and commercial pension insurance business. If we are not able to adapt to these increasingly competitive pressures in the future, our growth rate may decline, which could materially and adversely affect our earnings.

Competition among domestic life insurance companies is increasing.

Our closest competitors are Ping An Life Insurance Company of China, Ltd., or Ping An Life, New China Life Insurance Co., Ltd., or New China Life, and China Pacific Life Insurance Co., Ltd., or China Pacific Life. Together, Ping An Life, New China Life, China Pacific Life and we accounted for more than 64% of the life insurance premiums in China in 2013, the last year for which official market information is available. According to statistical and market share information derived from China Insurance Yearbook, our market share of the life insurance premiums in China decreased from 33% in 2012 to 31% in 2013. Each of Ping An Life, New China Life and China Pacific Life has operated in the Chinese insurance market for more than ten years, and each has a recognized brand name. In 2013, Ping An Life had a greater market share than we did in Beijing, Shanghai, Qingdao, Dalian, Shenzhen, Hainan and Xiamen and New China Life had a greater market share than we did in Beijing. We also face competition from insurance companies owned or controlled by commercial banks. Each of the five largest Chinese state-owned commercial banks has set up their own life insurance companies. These insurance companies are able to benefit from their holding relationships with these commercial banks to develop bancassurance as their main distribution channels. In addition, we also face competition from smaller insurance companies, which may develop strong positions in various regions in which we operate, and new entrants to the group life insurance market, including professional pension companies that are being established pursuant to a set of regulations promulgated by the Ministry of Human Resources and Social Security of the PRC, and new entrants to the health insurance industry, including newly approved and established professional health insurance companies, following the adoption by the Chinese government of policies that encourage the development of health insurance and improved health care in China.

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Competition from foreign-invested life insurance companies is increasing, as restrictions on their operations in China are relaxed.

Foreign-invested life insurance companies are insurance companies in which foreign entities hold at least a 25% interest. Foreign-invested insurers have been permitted to sell health, annuity and group life insurance products nationwide since December 2004. In Shanghai, Guangzhou, Shenzhen and Beijing, where foreign-invested insurers have been allowed to operate since 1992, 1995, 1999 and 2003, the foreign-invested insurers had respective life insurance market shares of approximately 19%, 22%, 11% and 20% in 2013. We believe that the relaxation of the restrictions on foreign-invested insurers will continue to increase the competitive pressures we are facing. Foreign-invested life insurance companies, through their Chinese and/or foreign shareholders, may have access to greater financial, technological or other resources than we do.

We are likely to face increasing competition from property and casualty insurance companies and other companies offering products that compete with our own.

In addition to competition from life insurance companies, we face competition from other companies that may offer products that compete with our own, including:

• Property and casualty companies. Beginning on January 1, 2003, property and casualty insurance companies have been permitted to sell accident and short-term health insurance products, but only with regulatory approval. There were 65 property and casualty insurers as of December 31, 2014. We believe property and casualty insurers have the competitive advantage of being able to bundle, or cross-sell, accident and short-term health products with the other non-life insurance products that they are currently selling to their existing and potential customers. We believe this will lead to greater competition in the accident and health insurance sectors, especially for the group accident and short-term health insurance products we offer. On December 30, 2006, we established a property and casualty company, CLPCIC, with CLIC. While this joint venture mainly focuses on property insurance business, it also develops accident and short-term health insurance business. Its operations may have a negative impact on sales of accident and short-term health insurance products by our wholly-owned businesses in the future.

• Mutual fund companies, commercial banks and other financial services providers. We face increasing competition from other financial services providers, primarily licensed mutual fund companies, commercial banks providing personal banking services and operating business of various financial products, trust companies and securities brokerage firms licensed to manage separate accounts. Recent changes in Chinese investment regulations relaxing rules on the formation of mutual funds and sales of securities have led to greater availability and variety of financial investment products. These products may prove to be attractive to the public and thereby adversely affect the sale of some products we offer, including participating life insurance policies and annuities.

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All of our individual agents are required to obtain qualification certificates and all of our institutional insurance agencies and brokers are required to obtain permits and be registered. If a substantial number of our individual agents, institutional insurance agencies and brokers fail to meet these qualification and registration requirements or this failure results in policyholders canceling their policies, our business may be materially and adversely affected.

Individual life insurance agents, representatives of institutional insurance agencies and insurance brokers are required to obtain a qualification certificate from the CIRC in order to conduct insurance agency business. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Regulation of Insurance Agencies, Insurance Brokers and Other Intermediaries”. Approximately 0.13% of our individual agents had not obtained such a certificate as of December 31, 2014. Under applicable CIRC regulations, insurance companies that retain individual agents without CIRC qualification certificates to engage in insurance sales activities will be warned and fined up to RMB 30,000, and such individual agents will also be warned and fined up to RMB 10,000. If a substantial number of our agents do not become qualified, or if a substantial number of our policyholders who bought insurance policies through our unqualified exclusive agents were to cancel the policies because of these regulations, our business may be materially and adversely affected. Moreover, we may be subject to fines and other administrative proceedings for the failure of our insurance agents to obtain the necessary CIRC qualification certificates. In addition, on January 6, 2013, the CIRC issued the Sales Personnel Rules, which became effective on July 1, 2013. Among other things, the Sales Personnel Rules provide that individual agents must have at least a college degree, instead of a junior high school degree previously required by the CIRC. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Regulation of Insurance Agencies, Insurance Brokers and Other Intermediaries”. While the detailed rules implementing the Sales Personnel Rules have not been issued and it is still unclear how such rules will be implemented by the CIRC at the national level, the CIRC has authorized its local branches to set the education degree requirements for individual agents by considering local conditions. As of the date of this annual report, the CIRC’s local branches maintain different requirements on education degrees of the individual agents who practice in their respective jurisdictions. For example, the CIRC’s Beijing branch has stipulated that since January 1, 2015, any new qualified individual agents who sell insurance products in Beijing must have at least a college degree. The CIRC’s Jiangsu branch has stipulated that the college degree requirement will be applicable to any new qualified individual agents who sell insurance products in Jiangsu province’s non-rural and rural areas since July 1, 2015 and July 1, 2018, respectively. The CIRC’s Hainan branch has stipulated that since July 1, 2013, any new qualified individual agents who sell insurance products in Hainan’s non-rural areas must have at least a high school degree. If more CIRC branches were to impose the requirement of having a college degree or above on new qualified individual agents or if the CIRC were to strictly enforce such rules at the national level, we may be subject to fines and other administrative proceedings if any of our individual agents fail to meet the requirements. Any such fines or administrative proceedings could materially and adversely affect our business, financial condition and results of operations.

Institutional insurance agents and insurance brokers are required under the PRC insurance law to register with the administration of industry and commerce, and obtain business licenses with the permits issued by the CIRC. It also requires non-dedicated institutional insurance agencies to obtain registrations with the administration of industry and commerce with the permits issued by the CIRC. We cannot assure you that all of our institutional agents would obtain such licenses. The enforcement of this requirement could adversely affect the composition and effectiveness of our distribution system, which could have a material adverse effect on our business.

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Further development of regulations in China may impose additional costs and restrictions on our activities.

We operate in a highly regulated industry. The CIRC supervises and administers the insurance industry in China. In exercising its authority, it is given certain discretion to administer the law. China’s insurance regulatory regime is undergoing significant changes toward a more transparent regulatory process and a convergent movement toward international standards. Some of these changes may result in additional costs or restrictions on our activities. For example, on January 6, 2013, the CIRC issued the Sales Personnel Rules, which became effective on July 1, 2013. Among other things, the Sales Personnel Rules provide that individual agents must have at least a college degree, instead of a junior high school degree as was previously required by the CIRC. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Regulation of Insurance Agencies, Insurance Brokers and Other Intermediaries”. Although the detailed rules implementing the Sales Personnel Rules have not been issued and it is still unclear how such rules will be implemented by the CIRC at the national level, we believe that the market competition for qualified agents may be increased further and therefore the cost of attracting and retaining qualified agents may increase. In addition, because the terms of our products are subject to regulations, changes in regulations may affect our profitability on the policies and contracts we issue. For instance, under guidelines issued by the CIRC, the dividends on our participating products must be no less than 70% of the distributable earnings from participating products in accordance with CIRC requirements. If this level were to be increased in the future, our profitability could be materially and adversely affected. Furthermore, in August 2013 and February 2015, the CIRC published regulations that removed the cap fixed by it on the guaranteed rate which life insurance companies could commit to pay on traditional non-participating insurance policies and universal life insurance policies, which was 2.50%. The 2.50% cap on the guaranteed rate will still remain in effect for participating life insurance policies. We have not yet determined the impact of the new CIRC regulations, if any, on our business as a whole in the long term, although it is possible that it could affect the profitability of our products. We cannot assure you that the removal of the 2.50% cap will not lead to a material adverse effect on our business, results of operations or financial condition.

Our ability to comply with minimum solvency requirements is affected by a number of factors, and our compliance may force us to raise additional capital, which could increase our financing costs or be dilutive to our existing investors, or to reduce our growth.

We are required by CIRC regulation to maintain our solvency at a level in excess of minimum solvency levels. The solvency ratio is calculated by dividing the actual capital of an insurance company by the minimum capital it is required to meet. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Solvency requirements”. Our minimum capital is affected primarily by the policy reserves we are required to maintain which, in turn, are affected by the volume of policies and contracts we sell and by regulations on the determination of minimum capital. Our solvency ratio is also affected by a number of other factors, including the profit margin of our products, returns on our investments, underwriting and acquisition costs and policyholder and shareholder dividends. Our solvency ratio as of December 31, 2014 was 294.48%. While our solvency ratio is currently above the required ratio of 100%, if we grow rapidly in the future, or if the required solvency level is raised in the future, we may need to raise additional capital to meet our solvency requirement, including through additional issuance of subordinated term debt, which would increase our financing costs, or through additional issuance of shares, which would be dilutive to our existing investors. If we are not able to raise additional capital, we may be forced to reduce the growth of our business.

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In February 2015, the CIRC issued the major technical standards for a new set of solvency regulations, the “China Risk Oriented Solvency System”, or Solvency II, with the aim of replacing the current solvency requirements on Chinese insurance companies. Solvency II adopts the internationally accepted “three-pillar” regulatory system which includes quantitative capital requirements, qualitative regulatory requirements and market discipline mechanisms while its regulatory concept, models, methods and parameters are based on Chinese insurance market conditions. As of the date of this annual report, Solvency II has not been officially implemented by the CIRC, and Chinese insurance companies are required to follow the current solvency regulatory regime while simultaneously submitting a solvency report prepared based on the requirements under Solvency II. Based on the testing results to be obtained by it during the transitional period, the CIRC will determine when the current solvency regulatory regime will be officially replaced by Solvency II. As Solvency II is still under preliminary testing by the CIRC and it is still unclear when it will be officially implemented, we are currently unable to assess the extent to which we will be affected if the complete set of Solvency II regulations are finalized and officially implemented.

Risks Relating to the Restructuring

CLIC has incurred substantial losses on the policies retained by it in the restructuring. If CLIC is unable to meet its obligations to its policyholders, it may seek to increase the level of dividends we pay, sell the China Life shares it owns or take other actions which may have a material adverse effect on the value of the shares our other existing investors own.

In connection with the restructuring, CLIC transferred to us (1) all long-term insurance policies (policies having a term of more than one year from the date of issuance) issued on or after June 10, 1999, having policy terms approved by or filed with the CIRC on or after June 10, 1999 and either (i) recorded as a long-term insurance policy as of June 30, 2003 in a database attached to the restructuring agreement as an annex or (ii) having policy terms for group supplemental medical insurance (fund type), (2) stand-alone short-term policies (policies having a term of one year or less from the date of issuance) issued on or after June 10, 1999, and (3) all riders supplemental to the policies described in clauses (1) and (2) above, together with the reinsurance contracts specified in an annex to the restructuring agreement. See “Item 4. Information on the Company—History and Development of the Company—Our Restructuring”. CLIC has incurred substantial losses on these non-transferred policies, primarily because the guaranteed rates it had committed to pay on these policies are higher than the investment return it was able to generate on its investment assets. This negative spread on non-transferred policies created substantial losses for CLIC and a resulting negative net worth. The amount of accumulated undistributed profits of CLIC itself is expected to remain negative in the short term.

In connection with the restructuring, CLIC has established, together with the MOF, a special purpose fund for the purpose of paying claims under the non-transferred policies. The special purpose fund will be funded by investment assets retained by CLIC; renewal premiums paid on the non-transferred policies over time; a portion of the tax payments made by CLIC, China Life and AMC; profits from the investments of the special purpose fund; shareholder dividends paid in cash to CLIC by China Life; proceeds from the disposition of China Life shares by CLIC over time; and funds injected by the MOF in the event of a deficiency in the special purpose fund, as described below. The fund is co-administered by CLIC and the MOF. The special purpose fund will be available to satisfy CLIC’s operating expenses, including the payment of benefits and claims obligations arising from the non-transferred policies, as well as expenses incurred in operating the special purpose fund, including third-party management fees and professional fees, and such other purposes as the management committee of the fund may agree. The special purpose fund will be dissolved when all claims and benefits under the non-transferred policies have been paid, or sooner if the management committee so agrees.

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The MOF’s approval of the special purpose fund issued to CLIC provides that in the event there is any deficiency in the special purpose fund for so long as the fund is in existence, as described above, to meet any payment obligation arising out of the non-transferred policies, the MOF will provide support through the injection of funds to ensure the payments of benefits and claims to the policyholders of the non-transferred policies. See “Item 4. Information on the Company—History and Development of the Company—Our Restructuring”. In connection with the restructuring, we were advised by our PRC legal counsel, King & Wood, that (1) the MOF has the authority to issue this approval regarding the special purpose fund, (2) the approval is valid and effective, and (3) it has no reason to believe that the MOF will revoke the approval. We cannot assure you, however, that a court would decide in a manner consistent with King & Wood’s conclusions.

We cannot predict the amount of funds that will be available to the special purpose fund from CLIC’s own operations to satisfy its obligations to its policyholders as they become due. CLIC’s cash requirements and available cash resources will be affected by several factors which are subject to uncertainty, including prevailing interest rates and the returns on investment generated by CLIC’s assets, as well as the claims, expenses and persistency experience with respect to CLIC’s insurance policies. The cash resources available to CLIC will also depend in part on our profitability, which will affect the amount of our tax payments and hence the amount of refund contributed to the fund, the timing and amount of our dividend payments and the market prices of our shares and ADSs, which will affect the proceeds to CLIC from dispositions of our shares. If it is unable to satisfy its obligations to its policyholders from other sources, CLIC may seek, subject to our articles of association and applicable laws, to increase the amount of dividends we pay in order to satisfy its cash flow requirements. Any such increase in our dividend payments would reduce the funds available for reinvestment in our business. In addition, if we are unable to pay dividends in amounts sufficient to satisfy these requirements, CLIC may seek to sell its shareholdings in us or take other actions in order to satisfy these needs. The sale of these holdings or even the market perception of such a sale may materially and adversely affect the price of our shares.

The transfer of policies to us by CLIC and/or the separation of assets between CLIC and us may be subject to challenge.

We have been advised by our PRC legal counsel, King & Wood, that (1) the transferred policies have been legally and validly transferred to China Life and (2) following the restructuring, we will not have any continuing obligations to holders of the non-transferred policies who remain policyholders of CLIC and that there is no legal basis on which holders of the non-transferred policies can make a claim against China Life. We also have been advised by King & Wood that, although there is no specific law applicable to restructurings, these conclusions are supported by, among other things, the approval of the restructuring and various related matters by the State Council, the MOF and the CIRC; the support provided by the MOF with respect to the non-transferred policies as described above; and contract and other law. We cannot assure you that policyholders of CLIC, holders of transferred policies or other parties will not seek to challenge the transfer of the transferred policies or the separation of assets occurring as a consequence of the restructuring, or that a court would decide in a manner consistent with King & Wood’s conclusions. If the transfer of policies to us or the separation of assets were challenged successfully, our financial condition and results of operations would likely be materially and adversely affected.

We do not hold exclusive rights to the trademarks in the “China Life” name (in English and Chinese), the “ball” logos and other business related slogans and logos, and CLIC, which owns these trademarks, may take actions that would impair the benefits we derive from their use.

We conduct our business under the “China Life” brand name, the “ball” logos and other business related slogans and logos. CLIC owns these trademarks and has registered them with the Trademark Office of the SAIC. CLIC has entered into a trademark license agreement with us, under which CLIC has agreed to grant us and our branches a royalty-free license to use these trademarks.

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Although CLIC has undertaken in a non-competition agreement with us not to compete with us in China, without our prior consent in writing, in any life, accident and health insurance and any other businesses in China which may compete with our insurance business, CLIC, its subsidiaries and affiliates are permitted to use the brand name and logo in their own businesses, including life insurance business outside China and any other businesses they may enter into in the future within China, including property and casualty (other than businesses that compete with our accident and health businesses) and asset management businesses. In addition, they are not precluded from taking actions that may impair the value of the brand name, which could harm our business. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Continuing Related Party Transactions with CLIC”. The China Life brand name and our reputation could be materially harmed if CLIC fails to make payments when due on outstanding policies retained by CLIC in the restructuring or new policies written by CLIC after the restructuring, if CLIC reduces the rates of return payable on policies retained by CLIC or if CLIC is placed into receivership.

As our controlling shareholder, CLIC will be able to exert influence on our affairs and could cause us to make decisions or enter into transactions that may not be in your best interests.

We are controlled by CLIC, whose interests may conflict with those of our other shareholders. As of the date of this annual report, CLIC holds approximately 68.37% of our share capital. As a result of these factors, CLIC, which is wholly-owned by the PRC government, will, so long as it holds the majority of our shares, effectively be able to control the composition of our board of directors and, through the board, exercise a significant influence over our management and policies. In addition, subject to our articles of association and applicable laws, CLIC may, so long as it holds the majority of our shares, effectively be able to determine the timing and amount of our dividend payments and approve increases or decreases of our share capital, the issuance of new securities, amendments of our articles of association, mergers and acquisitions and other major corporate transactions. CLIC may also be able to prevent us effectively from taking actions to enforce or exercise our rights under agreements to which we are a party, including the agreements we entered into with CLIC in connection with the restructuring. See “Item 7. Major Shareholders and Related Party Transactions”. As a majority shareholder, CLIC may be able to take these actions without your approval. In addition, CLIC’s control could have the effect of deterring takeovers or delaying or preventing changes in control or changes in management that might be desirable to other shareholders.

CLIC may direct business opportunities elsewhere.

CLIC has other business interests, including the run-off of the insurance policies retained by it in the restructuring. Notwithstanding a general undertaking pursuant to a non-competition agreement with us not to compete with us in our principal areas of business in China, CLIC is permitted to sell riders to these retained policies and enter into other businesses, including life insurance businesses outside of China and property and casualty (other than businesses that compete with our accident and health businesses) and asset management businesses, both inside and outside of China. In 2006, we formed a property and casualty company with CLIC, in connection with which we granted a waiver to CLIC allowing it to engage in accident and short-term health businesses indirectly through the property and casualty company.

CLIC also may engage in insurance business in other regions outside of China in the future. Although it is required under the non-competition agreement to give us a right of first refusal over any business opportunities it develops in these areas, we may not be in a position to take advantage of these opportunities at that time, which could harm our business. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Continuing Related Party Transactions with CLIC”.

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In addition, while we provide policy administration and other services to CLIC for the policies retained by CLIC in the restructuring, and provide investment management services to CLIC through our asset management subsidiary, these agreements can be terminated with notice or upon expiration. If CLIC were to terminate its policy administration and asset management arrangements with us and our asset management subsidiary, respectively, our loss of fees could materially and adversely affect us.

Risks Relating to the People’s Republic of China

China’s economic, political and social conditions, as well as government policies, could affect our business.

Substantially all of our assets are located in China and substantially all of our revenues are derived from our operations in China. Accordingly, our results of operations and prospects are subject, to a significant degree, to economic, political and legal developments in China. The economy of China differs from the economies of most developed countries in many respects, including, without limitation:

• the extent of government involvement;

• its level of development;

• its growth rate; and

• its control of foreign exchange.

The economy of China has been transitioning from a planned economy to a more market-oriented economy. Although in recent years the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the Chinese government. In addition, the Chinese government continues to play a significant role in regulating industrial development. It also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.

According to data released by the National Bureau of Statistics of China, China’s Gross Domestic Product, a key indicator of economic growth, was 7.4% in 2014, its slowest pace in 24 years. In an effort to bolster the economy, the Chinese government may take certain measures, including market-oriented financial reforms. Some of the measures taken by the Chinese government to improve China’s economic performance may have a negative effect on our business. For example, our operating results and financial condition could be materially and adversely affected by government monetary policies and changes in interest rate policies, tax regulations and policies and regulations affecting the capital markets and the asset management industry. A slowdown in Chinese growth rates could also adversely affect us by impacting sales of our products, reducing our investment returns, or otherwise.

The PRC legal system has inherent uncertainties that could limit the legal protections available to you.

We are organized under the laws of China and are governed by our articles of association. The Chinese legal system is based on written statutes. Prior court decisions may be cited for reference but are not binding on subsequent cases and have limited precedential value. Since 1979, the Chinese legislative bodies have promulgated laws and regulations dealing with such economic matters as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, and because of the limited volume of published decisions, the interpretation and enforcement of these laws and regulations involve uncertainties.

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Holders of H shares and ADSs generally are required to resolve disputes with us, our senior management and holders of our A shares only through arbitration in Hong Kong or China.

In accordance with the rules applicable to Chinese overseas listed companies, our articles of association provide that, with certain limited exceptions, all disputes or claims based on our articles of association, PRC company law or other relevant laws or administrative rules, and concerning matters between holders of H shares and ADSs and holders of A shares, us, or our directors, supervisors, president, vice presidents or other senior officers, must be submitted for arbitration at either the China International Economic and Trade Arbitration Commission or the Hong Kong International Arbitration Center. If an applicant chooses to have the dispute arbitrated at the Hong Kong International Arbitration Center, either party may request that the venue be changed to Shenzhen, a city in China near Hong Kong. The governing law for any such disputes or claims is Chinese law, unless Chinese law itself provides otherwise. Pursuant to an arrangement of mutual enforcement of arbitration awards between the PRC courts and the Hong Kong courts, Hong Kong arbitration awards are enforceable in China, subject to the satisfaction of certain legal requirements. However, due to the limited number of actions that have been brought in China by holders of shares issued by a Chinese company to enforce an arbitral award, we are uncertain as to the outcome of any action brought in China to enforce a Hong Kong arbitral award made in favor of holders of H shares and ADSs.

The laws in China differ from the laws in the United States and may afford less protection to our minority shareholders.

Although Chinese company law provides that shareholders of a Chinese company may, under certain circumstances, sue the company’s directors, supervisors and senior management in the interests of the company, no detailed implementation rules or court interpretations have been issued in this regard. Also, class action lawsuits are generally uncommon in China. In addition, PRC company law imposes limited obligations on a controlling shareholder with respect to protection of the interests of minority shareholders, although overseas listed joint stock companies, such as ourselves, are required to adopt certain provisions in their articles of association that are designed to protect minority shareholder rights. These mandatory provisions provide, among other things, that the rights of any class of shares, including H shares, may not be varied without a resolution approved by holders of shares in the affected class holding no less than two-thirds of the shares of the affected class entitled to vote, and provide that in connection with a merger or division involving our company, a dissenting shareholder may require us to purchase the dissenters’ shares at a fair price. Disputes arising from these protective provisions would likely have to be resolved by arbitration. See “—Holders of H shares and ADSs generally are required to resolve disputes with us, our senior management and holders of our A shares only through arbitration in Hong Kong or China”.

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You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in the PRC based on U.S. or other foreign laws against us, our management and some of the experts named in the annual report.

We are a company incorporated under the laws of China, and substantially all of our assets are located in China. In addition, most of our directors, supervisors, executive officers and some of the experts named in this annual report reside within China, and substantially all of the assets of these persons are located within China. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon our directors, supervisors or executive officers or some of the experts named in this annual report, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Our PRC legal counsel, King & Wood, has advised us that China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States, the United Kingdom, Japan or many other countries. Our Hong Kong legal adviser, Latham & Watkins, has also advised us that Hong Kong has no statutory arrangement for the reciprocal enforcement of judgments with the United States although it may be possible for a civil action to be brought in Hong Kong based on a monetary judgment of the courts of the United States. As a result, recognition and enforcement in China or Hong Kong of judgments of a court in the United States and any of the other jurisdictions mentioned above in relation to any matter may be difficult or impossible Furthermore, an original action may be brought in the PRC against us, our directors, supervisors, executive officers or the experts named in this annual report only if the actions are not required to be arbitrated by PRC law and our articles of association, and only if the facts alleged in the complaint give rise to a cause of action under PRC law. In connection with any such original action, a PRC court may award civil liability, including monetary damages.

Holders of H shares may be subject to PRC taxation.

Under current PRC tax laws, regulations and rulings, dividends paid by us to individual holders of H shares outside of the PRC are subject to PRC individual income tax at rates ranging from 5% to 20% (usually 10%), depending on the applicable tax treaties between the home country of the individual holder of H shares and the PRC. When paying dividends to non-resident enterprise holders of H shares outside of the PRC, such dividends are subject to an enterprise income tax, which is currently levied at a rate of 10%. Such non-resident enterprise holders of H shares may be entitled to tax reductions or exemptions according to applicable tax treaties. In addition, to date, relevant tax authorities have not collected capital gains tax on the gains realized by individuals upon the sale or other disposition of H shares. If relevant tax authorities promulgate implementation rules on the taxation of capital gains realized by individuals upon the sale or other disposition of H shares, individual holders of H shares may be required to pay capital gains tax. See “Item 10. Additional Information—Taxation—The People’s Republic of China”.

Government control of currency conversion and the fluctuation of the Renminbi may materially and adversely affect our operations and financial results.

We receive substantially all of our revenues in Renminbi, which currently is not a freely convertible currency. A portion of these revenues must be converted into other currencies to allow us to make payments on declared dividends, if any, on our H shares.

Under China’s existing foreign exchange regulations, we are able to pay dividends in foreign currencies without prior approval from the SAFE by complying with various procedural requirements. The Chinese government, however, may, at its discretion, restrict access in the future to foreign currencies for current account transactions. If this were to occur, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs.

The value of the Renminbi against the U.S. dollar and other currencies fluctuates and is affected by, among other things, changes in China’s political and economic conditions. On July 21, 2005, the PRC government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. Since then, the PRC government has made, and may in the future make, further adjustments to the exchange rate system. The PBOC announces the closing price of a foreign currency traded against the Renminbi in the inter-bank foreign exchange market after the closing of the market on each working day, and makes it the central parity for the trading against the Renminbi on the following working day. From July 21, 2005 to April 17, 2015, the Renminbi appreciated by approximately 24.45% against the U.S. dollar. In 2013, the Renminbi appreciated by approximately 2.83% against the U.S. dollar. In 2014, the Renminbi depreciated by approximately 2.55% against the U.S. dollar. In June 2014, to fund our overseas investments, we obtained a fixed-interest rate bank loan of 275 million British pounds sterling with a term of five years. We recorded RMB 268 million (US$43 million) in foreign exchange gains for the year ended December 31, 2014, resulting mainly from the depreciation of the British pound against the Renminbi. Any future devaluation of the Renminbi may materially and adversely affect the value of, and any dividends payable on, our H shares in foreign currency terms. Our financial condition and results of operations also may be affected by changes in the value of certain currencies other than the Renminbi.

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Payment of dividends is subject to restrictions under Chinese law.

Under Chinese 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. However, ordinarily we will not pay any dividends in a year in which we do not have any distributable profits.

Payment of dividends by us is also regulated by the PRC insurance law. See “Item 8. Financial Information—Consolidated Financial Statements and Other Financial Information—Policy on Dividend Distributions”.

ITEM 4. INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

We were formed as a joint stock company pursuant to the PRC company law on June 30, 2003 under the corporate name of in connection with the restructuring.

General Information

Our principal executive offices are located at 16 Financial Street, Xicheng District, Beijing 100033, China. Our telephone number is (86-10) 6363-3333. Our website address is www.e-chinalife.com. The information on our website is not a part of this annual report. We have appointed CT Corporation System at 111 Eighth Avenue, New York, New York 10011 as our agent for service of process in the United States.

Our Restructuring

Upon the approval of the State Council and the CIRC, we were formed on June 30, 2003 as a joint stock company in connection with the restructuring by CLIC, our controlling shareholder. The restructuring was effected through a plan of restructuring, which was approved by the CIRC on August 21, 2003, and a restructuring agreement we entered into with CLIC on September 30, 2003, with retroactive effect to June 30, 2003, which we refer to in this annual report as the effective date. Pursuant to PRC law and the restructuring agreement, we enjoyed the rights and benefits and assumed the obligations and liabilities arising from the restructuring from and after the effective date.

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In connection with the restructuring:

• CLIC transferred to us (1) all long-term insurance policies (policies having a term of more than one year from the date of issuance) issued on or after June 10, 1999, having policy terms approved by or filed with the CIRC on or after June 10, 1999 and either (i) recorded as a long-term insurance policy as of June 30, 2003 in a database attached to the restructuring agreement as an annex or (ii) having policy terms for group supplemental medical insurance (fund type), (2) stand-alone short-term policies (policies having a term of one year or less from the date of issuance) issued on or after June 10, 1999 and (3) all riders supplemental to the policies described in clauses (1) and (2) above, together with the applicable reinsurance contracts specified in an annex to the restructuring agreement. We refer to these policies in this annual report as the “transferred policies”. All other insurance policies were retained by CLIC. We refer to these policies as the “non-transferred policies”. We assumed all obligations and liabilities of CLIC under the transferred policies. CLIC continues to be responsible for its liabilities and obligations under the non-transferred policies following the effective date.

• Cash, specified investment assets and various other assets were also transferred to us.

• CLIC agreed not to, directly or indirectly through its subsidiaries and affiliates, participate, operate or engage in life, accident and health insurance businesses and any other business in China which may compete with our insurance business. CLIC also undertook (1) to refer to us any corporate business opportunity that falls within our business scope and which may directly or indirectly compete with our business and (2) to grant us a right of first refusal, on the same terms and conditions, to purchase any new business developed by CLIC. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Continuing Related Party Transactions with CLIC”.

• Substantially all of the management personnel and employees who were employed by CLIC in connection with the transferred assets and business were transferred to us. Some management and personnel remained with CLIC.

• CLIC retained the trademarks used in our business, including the “China Life” name in English and Chinese and the “ball” logos, and granted us and our branches a royalty-free license to use these trademarks. CLIC and its subsidiaries and affiliates will be entitled to use these trademarks, but CLIC may not license or transfer these trademarks to any other third parties. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Continuing Related Party Transactions with CLIC”.

• CLIC’s contracts with its agents and other intermediaries were transferred to us.

• We entered into various agreements under which we provide policy administration services to CLIC for the non-transferred policies, manage CLIC’s investment assets and lease office space from CLIC for our branch and field offices. See “Item 7. Major Shareholders and Related Party Transactions”.

In connection with the restructuring, CLIC established, together with the MOF, a special purpose fund for the purpose of paying claims under the non-transferred policies. The special purpose fund is funded by investment assets retained by CLIC; renewal premiums paid on the non-transferred policies over time; a portion of the tax payments made by CLIC, China Life and AMC under the tax rebate mechanism described below; profits from the investments of the special purpose fund; shareholder dividends paid in cash to CLIC by China Life; proceeds from the disposition of China Life shares by CLIC over time; and funds injected by the MOF in the event of a deficiency in the special purpose fund, as described below. The special purpose fund is co-administered by CLIC and the MOF. The special purpose fund will be available to satisfy CLIC’s operating expenses, including the payment of benefits and claims obligations arising from the non-transferred policies, as well as expenses incurred in operating the special purpose fund, including third-party management fees and professional fees, and such other purposes as the management committee of the fund may agree. A management committee comprised of three representatives from the MOF and three representatives from CLIC oversees the management of the fund, with specified material items subject to the approval of the MOF. The special purpose fund will be dissolved when all claims and benefits under the non-transferred policies have been paid, or sooner if the management committee so agrees.

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The MOF’s approval of the special purpose fund issued to CLIC provides that in the event there is any deficiency in the special purpose fund for so long as the fund is in existence as described above to meet any payment obligation arising out of the non-transferred policies, the MOF will provide support through the injection of funds to ensure the payments of benefits and claims to the policyholders of the non-transferred policies. We have been advised by our PRC legal counsel, King & Wood, that (1) the MOF has the authority to issue this approval regarding the special purpose fund, (2) the approval is valid and effective and (3) it has no reason to believe that the MOF will revoke the approval.

In accordance with generally applicable tax laws and regulations, CLIC, AMC and ourselves will file income tax returns and pay our respective income taxes as separate and independent taxpayers. In accordance with a circular issued by the MOF, a portion of the income tax payments made by CLIC and us during the period of January 1, 2003 to December 31, 2010 is required to be rebated to CLIC. All of the income tax payments made by AMC may also be rebated to CLIC, if the current shareholding structure of AMC remains unchanged. As of the date of this annual report, CLIC is in the process of applying for the extension of the period during which the income tax payments will be rebated.

We have been advised by our PRC legal counsel, King & Wood, that following the restructuring we would not have any continuing obligations to holders of the non-transferred policies and that there is no legal basis on which holders of the non-transferred policies can make a claim against China Life. King & Wood based its conclusion on, among other things, the following factors: (1) after the restructuring, China Life was established as a separate legal entity and China Life’s assets and liabilities should be regarded as distinct and separate from those of CLIC; (2) there is no contractual relationship, direct or indirect, between the holders of the non-transferred policies and China Life; (3) the restructuring (including the transfer of the transferred policies to China Life) has been approved by the CIRC and has been conducted without infringing upon the rights of the holders of non-transferred policies; (4) the arrangements made under the restructuring agreement, in particular the MOF’s support as described above, are expected to enable CLIC to satisfy its obligations under the non-transferred policies; and (5) PRC regulatory authorities have no legal power to direct China Life to assume CLIC’s obligations under the non-transferred policies or to indemnify the holders of the non-transferred policies.

See “Item 3. Key Information—Risk Factors—Risks Relating to the Restructuring”.

Developments After Restructuring

On November 23, 2003, we established an asset management company, AMC, with CLIC, in connection with the restructuring. AMC manages our investment assets and, separately, substantially all of those of CLIC. On December 30, 2006, we established a property and casualty company, CLPCIC, with CLIC. On January 15, 2007, we established a pension insurance company, China Life Pension, with CLIC and AMC. On September 3, 2013, we established a wholly owned subsidiary, China Life (Suzhou) Pension and Retirement Investment Company Limited, or Suzhou Pension Company. The registered capital of Suzhou Pension Company is RMB 300 million.

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In December 2003, we successfully completed our initial public offering of H shares, including H shares in the form of American depositary shares, or ADSs, and raised approximately RMB 24,707 million in aggregate net proceeds. Upon completion of our initial public offering, our H shares became listed on the Hong Kong Stock Exchange and ADSs each representing 40 of our H shares became listed on the New York Stock Exchange. The ratio of ADSs to H shares was reduced from 40 H shares to 15 H shares on December 29, 2006.

In December 2006, we issued 1,500,000,000 new ordinary domestic shares through public offering on the SSE at the offering price of RMB 18.88 per share, raising RMB 28,320 million in aggregate gross proceeds. The A shares have been listed on the SSE since January 9, 2007. Prior to the offering, CLIC held 19,323,530,000 ordinary domestic shares, or CLIC A shares, which have been registered with the China Securities Depository and Clearing Corporation Limited as circulative A shares with restrictive trading following the A share offering. CLIC has undertaken that for a period of 36 months commencing on January 9, 2007 it will not transfer or put on trust the CLIC A shares held by it or allow such CLIC A shares to be repurchased by China Life. On January 11, 2010, 19,323,530,000 CLIC A shares were released from trading restrictions. Of this amount, 150,000,000 shares had remained frozen in accordance with relevant Chinese regulations until December 2010.

We incurred capital expenditures of RMB 4,472 million (US$721 million), RMB 4,594 million and RMB 4,166 million in 2014, 2013 and 2012, respectively. These capital expenditures mainly comprised of the addition of properties for our own use and electronic equipment.

B. BUSINESS OVERVIEW

We had nearly 197 million individual and group life insurance policies, annuity contracts, health insurance and accident insurance policies in force as of December 31, 2014. As of December 31, 2014, the average guaranteed rate of return of the products we offered was 2.49%. For the financial year ended December 31, 2014, our lapse rate was approximately 5.46%. The policy persistency rate, which measures the ratio of the insurance policies that are still effective after a certain period, was 89% for 14 months after issuance and 86% for 26 months after issuance.

In response to favorable market opportunities for health insurance and accident insurance in recent years, we have increased our efforts in developing our health insurance and accident insurance businesses. As a result, our health insurance and accident insurance gross written premiums have increased gradually as a percentage of our total gross written premiums. Meanwhile, the gross written premiums derived from group life insurance and supplementary major medical insurance represented an insignificant percentage of our total gross written premiums. In order to better reflect the changes in our external environment and business structure, and the objectives of future development, as well as providing users of financial statements with more useful information, effective January 1, 2014, we realigned our previously reported individual life insurance, group life insurance, short term insurance, supplementary major medical insurance and other segments into four newly identified segments, namely life insurance, health insurance, accident insurance and other. Our management has conducted its analysis and evaluation of our operating results based on the new reporting segments. In connection with this realignment, segment operating results for the fiscal years ended December 31, 2013 and 2012 have been revised to conform to current year segment operating results presentation. For a detailed discussion, see our consolidated financial statements included elsewhere in this annual report.

The information below is organized in accordance with our newly identified segments.

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Life Insurance

We offer life insurance and annuity products to individuals and groups. We market our individual life insurance products primarily through a distribution force comprised of approximately 743,000 exclusive agents operating in approximately 17,367 field offices throughout China, as well as other non-dedicated agencies located at branch offices of banks, banking operations of post offices and other organizations. We offer group life insurance and annuity products to the employees of companies and institutions through approximately 19,000 direct sales representatives, as well as insurance agencies and insurance brokerage companies. Gross written premiums generated by our life insurance products, totaled RMB 285,619 million (US$46,033 million) for the year ended December 31, 2014, RMB 290,778 million for the year ended December 31, 2013 and RMB 294,405 million for the year ended December 31, 2012, constituting 86.29%, 89.12% and 91.22% of our total gross written premiums for those periods. The figure for 2014 represented a 1.77% decrease from 2013.

The following table sets forth selected financial and other data regarding our life insurance business as of the dates or for the periods indicated.

	As of or for the year ended December 31,								Compound annual growth rate
	2012		2013		2014		2014		(2012-2014)
	RMB		RMB		RMB		US$
	(in millions, except as otherwise indicated)
Gross written premiums		294,405		290,778		285,619		46,033		(1.50	)%
Liabilities of insurance contracts		1,359,879		1,461,121		1,558,714		251,219		7.06	%
Liabilities of investment contracts		60,447		57,991		63,710		10,268		2.66	%

Products

We offer a wide variety of life insurance and annuity products to individuals, providing a wide range of coverage for the whole length of a policyholder’s life. Our individual life insurance and annuity products consist of whole life and term life insurance, endowment insurance, annuities and universal life insurance. We also offer group annuity products and group whole life and term life insurance products to enterprises and institutions. We bundle these products to serve as part of our group customers’ overall employee benefit plans. We also market each group product as an independent product. We believe we are the market leader in the development of group annuity products.

We offer both non-participating and participating products. There were approximately 130 million non-participating policies and 60 million participating policies as of December 31, 2014, among which approximately 60 million non-participating policies and 40 million participating policies were sold to individuals.

The following table sets forth selected financial information regarding our life insurance and annuity products.

	For the year ended December 31,								Compound annual growth rate
	2012		2013		2014		2014		(2012-2014)
	RMB		RMB		RMB		US$
	(in millions, except as otherwise indicated)
Gross written premiums
Whole life and term life insurance		32,881		32,109		32,638		5,260		(0.37	)%
Endowment		223,660		209,034		217,662		35,081		(1.35	)%
Annuities		37,864		49,635		35,319		5,692		(3.42	)%

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Whole Life and Term Life Insurance

Non-participating whole life and term life insurance

We offer non-participating whole life and term life insurance products.

Non-participating whole life insurance products provide a guaranteed benefit, pre-determined by the contract, upon the death of the insured, in return for the periodic payment of fixed premiums over a pre-determined period. Premium payments may be required for the length of the contract period, to a specified age or for a specified period, and are typically level throughout the period.

Non-participating term life insurance products provide a guaranteed benefit upon the death of the insured within a specified time period in return for the periodic payment of fixed premiums. Specified coverage periods generally range from 5 to 30 years or expire at specified ages. Death benefits may be level over the period or increasing. Premiums are typically at a level amount for the coverage period. Term life insurance products are sometimes referred to as pure protection products, in that there are normally little or no savings or investment elements. Unlike endowment products, term life insurance policies expire without value at the end of the coverage period if the insured person is still alive.

Participating whole life insurance

We also offer participating whole life insurance products, which are traditional whole life insurance policies that also provide a participation feature in the form of dividends. The policyholder is entitled to share a portion of the distributable earnings from participating products, as determined by us based on formulas prescribed by the CIRC. Under guidelines issued by the CIRC, the dividends must be no less than 70% of the distributable earnings from participating products. Policyholders may receive dividends in cash or apply them to increase death benefits or cash values available upon surrender.

We offer participating whole life insurance products only to individual customers.

Endowment

Non-participating endowment products

Non-participating endowment products provide to the insured various guaranteed benefits if the insured survives specified maturity dates or periods stated in the policy, and provide to a beneficiary designated by the insured guaranteed benefits upon the death of the insured within the coverage period, in return for the periodic payment of premiums. Specified coverage periods generally range from 5 to 30 years or end at specified ages. Premiums are typically at a level amount for the coverage period.

Participating endowment products

We also offer participating endowment products, which are endowment policies that also provide a participation feature in the form of dividends. Policyholders are entitled to share a portion of the distributable earnings from participating products, as determined by us based on formulas prescribed by the CIRC. Under guidelines issued by the CIRC, the dividends must be no less than 70% of the distributable earnings from participating products. Policyholders may receive dividends in cash or apply them to increase death benefits or cash values available upon surrender. Participating endowment products are among the most popular individual life insurance products in China.

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Fu Lu Shuang Xi Participating Endowment and Fu Lu Xin Zun Participating Endowment generated the most income for participating endowment products in 2014. Fu Lu Shuang Xi Participating Endowment had RMB 29,749 million (US$4,795 million) of net premiums in 2014, representing 10.42% of the net premiums of our life insurance business. Fu Lu Xin Zun Participating Endowment had RMB 21,338 million (US$3,439 million) of net premiums in 2014, representing 7.47% of the net premiums of our life insurance business. The net premiums earned from our participating endowment products decreased by RMB 54,100 million, or 27.95%, to RMB 139,479 million (US$22,480 million) in 2014 from RMB 193,579 million in 2013.

We offer endowment products only to individual customers.

Annuities

Annuities are used for both asset accumulation and asset distribution needs. Annuitants pay premiums into our accounts, and receive guaranteed level payments during the payoff period specified in the contracts. We offer both non-participating and participating annuities. For non-participating annuity products, risks associated with the investments are borne entirely by us. A significant portion of our non-participating annuity products imposes charges upon an early surrender or withdrawal of the contract.

Participating annuity products are annuities that provide a participation feature in the form of dividends. The dividends are determined by us in the same manner as our life insurance policies. Annuitants may receive dividends in cash or apply them to increase annuity benefits or reduce the premiums or deposits required to maintain the contract in force. Like non-participating annuities, a significant portion of our participating annuity products imposes charges upon an early surrender or withdrawal of the contract.

In our non-participating group annuities, interest on an annuitant’s deposits is credited to each participating employee’s personal account.

We also offer participating group annuities. In our participating group annuities, interest on an annuitant’s deposits is either credited to the participating employee’s personal account or credited to the participating employee’s personal account as well as the employer’s group account. The annuitant is entitled to share a portion of our distributable earnings derived from our participating products, as determined by us based on formulas prescribed by the CIRC, in excess of the rate we guarantee to participating employees.

Universal Life Products

Universal life products are life insurance policies with flexible premium and benefit amounts. For each universal life policy, we establish a separate account and determine the interest credit rate, mortality and expense charges specifically for such account. The benefits of universal life products are linked to the account value of each separate account.

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Marketing and Distribution

Individual

We have historically sold most of our individual life insurance and annuity products to the mass market and will continue to actively serve this market. However, we believe our core individual customer base will evolve as China’s economy develops. We will seek to capitalize on the market opportunities in the growing affluent segment of China’s population by focusing our marketing efforts on large and medium-sized cities with an aim to attract more medium- and high-end customers, as we believe that the demand for life insurance and annuity products in these areas is greater. In addition, we have been implementing a customer segmentation sales approach which targets individuals of various income and education levels with different products. Under this sales approach, individuals in different periods of their lives are marketed with different life insurance and annuity products, with these products in many cases supplemented by our individual accident and health products.

We distribute our individual life and annuity products nationwide through multiple channels. Our primary distribution system is comprised of approximately 743,000 exclusive agents operating in approximately 17,367 field offices throughout China. In addition, we are implementing our customer-oriented market segmentation sales initiatives to all exclusive agents nationwide. While continuing to invest in our exclusive agent force, we have also expanded into other distribution channels, primarily non-dedicated agencies located in approximately 61,000 outlets of commercial banks and banking operations of post offices, to diversify our distribution channels and to achieve higher growth. See “—Distribution Channels”.

Group

We target our group life insurance and annuity products to large institutional customers in China, including branches of foreign companies, which we believe have a greater awareness of and need for group life insurance and annuity products. We have long-term customer relationships with many of China’s largest companies and institutions. We provide large group customers with products having flexible fee and dividend structures, as well as enhanced real-time customer service. While continuing to focus on large institutional clients, we also target small- to medium-sized companies in economically developed regions to supplement our growth and to increase our profits.

We market our group life insurance and annuity products primarily through our direct sales representatives. We also market our group life insurance and annuity products through commercial banks, banking operations of post offices, insurance agency companies and insurance brokerage companies. We believe our sales network has a geographic reach unmatached by any other life insurance company in China, serving almost every county in China. See “—Distribution Channels”.

Health Insurance

We offer a broad array of health insurance products and services to both individuals and groups, including disease-specific insurance, medical expense insurance and defined benefit insurance. Our health insurance gross written premiums totaled RMB 33,192 million (US$5,350 million) for the year ended December 31, 2014, RMB 24,713 million for the year ended December 31, 2013 and RMB 18,789 million for the year ended December 31, 2012, constituting 10.03%, 7.57% and 5.82% of our total gross written premiums for those periods. The figure for 2014 represented a 34.31% increase from 2013.

Our health insurance business shares our nationwide life insurance sales force and distribution network of exclusive agents. Our policy review and claim adjustment processes are facilitated through a team of supporting personnel with medical training.

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The following table sets forth selected financial and other data regarding our health insurance as of the dates or for the periods indicated. The financial results of both our long-term health insurance and short-term health insurance are reflected in the following table.

	As of or for the year ended December 31,								Compound annual growth rate
	2012		2013		2014		2014		(2012-2014)
	RMB		RMB		RMB		US$
	(in millions, except as otherwise indicated)
Gross written premiums		18,789		24,713		33,192		5,350		32.91	%
Liabilities of insurance contracts		20,497		28,229		38,872		6,265		37.71	%
Liabilities of investment contracts		6,157		7,096		8,565		1,380		17.94	%

Products

We offer health insurance products to both individuals and groups. We classify our health insurance products as short-term products, having policy terms of less than or up to one year, and long-term products, having policy terms longer than one year. We offer both short-term and long-term defined health benefit plans, medical expense reimbursement plans and disease-specific plans to individuals and groups.

Defined health benefit plans

These plans provide a fixed payment based on the number of days of hospitalization for specific diseases or surgical operation. Policyholders either pay premiums in a single payment or on a periodic basis.

Medical expense reimbursement plans

These plans provide for the reimbursement of a portion of the participant’s outpatient or hospitalization treatment fees and expenses. Policyholders either pay premiums in a single payment or on a periodic basis or, for certain group medical expense reimbursement plans, irregularly as determined by the policyholder.

We also commenced our supplementary major medical insurance business in 2013. As part of the Chinese government’s overall medical insurance scheme, supplementary major medical insurance reimburses policyholders for a specified percentage of their high medical expenses caused by major illnesses which are in excess of the maximum amounts covered by the basic social medical insurance and will otherwise be borne by the individuals. The Chinese government has launched pilot supplementary major medical insurance programs in various areas in China. Local governments in these pilot areas use a portion of the basic medical insurance funds to purchase supplementary major medical insurance service from qualified insurance companies through a government tender. Supplementary major medical insurance offers protection to all the policyholders covered by the basic social medical insurance in the pilot areas and policyholders do not need to pay any extra premium for the supplementary major medical insurance. In 2013, we won the bids for 76 supplementary major medical insurance projects in areas including Liaoning province and Jilin province. In 2014, we won the bids for 91 supplementary major medical insurance projects in areas including Henan province and Jiangxi province.

Disease-specific plans

These plans provide a fixed payment benefit for various diseases. Premium payments for disease-specific plans are paid either in a single payment or on a periodic basis.

Marketing and Distribution

We offer our health insurance products to both individuals and groups through the same distribution channels we use to market our life insurance products. We market our individual health insurance products through our exclusive agent sales force. We market our group health insurance products primarily through our direct sales representatives. See “—Distribution Channels”.

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We use our individual and group product distribution channels to market our health products either as primary products, as riders or as supplementary products packaged with our life, annuity or accident insurance products. We conduct extensive health insurance related training programs for our direct sales representatives and our exclusive agents.

Accident Insurance

We are the leading accident insurance provider in China. Our accident insurance gross written premiums totaled RMB 12,199 million (US$1,966 million) for the year ended December 31, 2014, RMB 10,799 million for the year ended December 31, 2013 and RMB 9,548 million for the year ended December 31, 2012, constituting 3.69%, 3.31% and 2.96% of our total gross written premiums for those periods. The figure for 2014 represented a 12.96% increase from 2013.

The following table sets forth selected financial and other data regarding our accident insurance as of the dates or for the periods indicated. The financial results of both our long-term accident insurance and short-term accident insurance are reflected in the following table.

	As of or for the year ended December 31,								Compound annual growth rate
	2012		2013		2014		2014		(2012-2014)
	RMB		RMB		RMB		US$
	(in millions, except as otherwise indicated)
Gross written premiums		9,548		10,799		12,199		1,966		13.03	%
Liabilities of insurance contracts		4,161		5,147		5,860		944		18.67	%
Liabilities of investment contracts		—		—		—		—		—

Products

We offer a broad array of accident insurance products to both individuals and groups.

Individual accident insurance

Individual accident insurance products provide a benefit in the event of death or disability of the insured as a result of an accident, or a reimbursement of medical expenses to the insured in connection with an accident. Typically, a death benefit is paid if the insured dies as a result of the accident within 180 days of the accident, and a disability benefit is paid if the insured is disabled, with the benefit depending on the extent of the disability. If the insured receives medical treatment at a medical institution approved by us as a result of an accident, individual accident insurance products also may provide coverage for medical expenses. We offer a broad array of individual accident insurance products, such as insurance for students and infants against death and disability resulting from accidental injury and comprehensive coverage against accidental injury. We also offer products to individuals requiring special protection, such as accidental death and disability insurance for commercial air travel passengers and automobile passengers and drivers.

Group accident insurance

We offer a number of group accident insurance products and services to businesses, government agencies and other organizations of various sizes. We also offer group accident products targeted at specific industry groups, such as construction worker related accident insurance to construction companies, and law enforcement personnel accident insurance to various law enforcement agencies.

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Marketing and Distribution

We market our individual accident insurance products through our direct sales force and our exclusive agent sales force, as well as intermediaries, such as non-dedicated agencies located at outlets of commercial banks, banking operations of post offices, savings cooperatives, travel agencies, hotels and airline sales counters and insurance agency and insurance brokerage companies. We market our group accident insurance products primarily through our direct sales representatives and the same intermediaries we use to sell our individual accident products. See “—Distribution Channels”.

We use our individual and group product distribution channels to market our accident products either as primary products, as riders or as supplementary products packaged with our life, annuity or health products. Our direct sales representatives market our individual accident products to employees of our institutional customers.

Product Development

In 2014, in line with our general development strategy, we developed and introduced 26 new products, including 20 long-term insurance products consisting of 12 life insurance products, five annuity products, two health insurance products and one accident insurance product; and six short-term insurance products consisting of three accident insurance products, two health insurance products and one life insurance product with a term of one year.

With respect to long-term insurance products, we developed and introduced, among others:

• for individual insurance distribution channels, the China Life Cancer Prevention illness insurance product package, which significantly boosted the sales of our major individual insurance products; several products such as China Life Xin Ru Yi Annuity Insurance (platinum edition); and the newly upgraded China Life Golden Account Endowment (universal), which includes survival benefits, annuity, maturity benefits and dividends in the accumulated appreciation of universal insurance, and thus optimizes wealth management for customers;

• for bancassurance distribution channels, the China Life Xin Yi Bao Annuity, the first product with regular premiums in the bancassurance distribution channels after the premium rate reform, which was well received by the market due to its features such as the combination of liabilities for annuity and supplementary accidental death insurance, combination of wealth planning and accident protection and inclusion of survival benefits into universal accounts for interest accumulation; and the China Life Xin Annuity; and

• for new channels including telephone and online distribution, an upgraded telephone distribution product, the 2014 edition of China Life An Xin insurance package, which was introduced as our first long-term accidental injury insurance adopting the new standard of disability benefits; and the first long-term universal insurance product of our online distribution channel, the China Life Ru E Endowment (Universal), which targets medium and high end customers across the Internet and is positioned for long-term savings.

With respect to short-term insurance products, we developed China Life An Xin Dai Accidental Injury Insurance for Borrowers (Type A) to satisfy the needs of our local branches for calculating premiums of credit businesses on a daily basis. To meet particular customer needs, we developed several featured short-term insurance products, such as China Life Compensatory Medical Insurance for In-flight Emergency Rescue Costs and China Life Comprehensive Accidental Injury Insurance for Chinese Residents Travelling in Taiwan. We also upgraded our travel insurance products.

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Distribution Channels

We believe we have the largest distribution force with the most extensive geographic reach compared with any of our competitors. Our distribution network reaches almost every county in China. Throughout China, we have approximately 743,000 exclusive agents operating in approximately 17,367 field offices for our individual products and approximately 19,000 direct sales representatives for group products. We have a multi-channel distribution network selling individual and group insurance products through intermediaries, primarily non-dedicated agencies located in approximately 61,000 outlets of commercial banks and banking operations of post offices as of the end of 2014. Commission rates vary by product, based on such factors as the payment terms and period over which the premiums are paid for the product, as well as CIRC regulations. We support our agents and representatives through training programs, sales materials and information technology systems.

Exclusive agent force

Our exclusive agent force of approximately 743,000 agents, including those who are not qualified, is the primary distribution channel for our individual life, health and accident insurance products.

The following table sets forth information relating to our exclusive agent force as of the dates indicated.

	As of December 31,
	2012		2013		2014
Number of exclusive agents (approximately)		693,000		653,000		743,000
Number of field offices		17,960		17,536		17,367

Our exclusive agent force is among our most valuable assets, allowing us to more effectively control our distribution and build and maintain long-term relationships with our individual customers. The number of our exclusive agents increased from 653,000 as of the end of 2013 to 743,000 as of the end of 2014. During 2014, we attracted more new qualified agents by expanding our recruitment program, making further efforts in training new qualified agents and strengthening sales support. At the same time, we have continued carrying out performance reviews in 2014, which have led to the departure of a number of exclusive agents with lower productivity. In addition, the market competition for qualified agents has increased due to the new Sales Personnel Rules issued by the CIRC. See “Item 3. Key Information—Risk Factors—Risks Relating to Our business—Our growth is dependent on our ability to attract and retain productive agents.” We believe that our customers and prospective customers prefer the personal approach of our exclusive agents and, therefore, we believe our exclusive agent force will continue to serve as our core distribution channel.

We also continued the development of a special sales force targeting “orphan policies” (policies which were serviced by former individual agents who have since left the company) to improve our service for these policies.

Individual insurance agents, representatives of insurance agencies and insurance brokers are required to obtain qualification certificates issued by the CIRC. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Regulation of Insurance Agencies, Insurance Brokers and Other Intermediaries”. Under applicable CIRC regulations, we may face sanctions if we retain individual agents without CIRC qualification certificates, and policyholders who bought insurance policies through our unqualified agents are allowed to cancel the policies, under some circumstances. As of December 31, 2014, approximately 99.87% of our individual agents had obtained such a certificate. Under applicable CIRC regulations, after expiration of an individual agent’s qualification certificate, the agent must apply for a renewal of the qualification certificate or pass the qualification examination again in order to continue to practice.

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We supervise and provide training to our exclusive agents through more than 2,480 full-time trainers and 35,900 part time trainers. We set product management and customer service standards, and have developed risk warning and credit rating systems, which we require all of our field offices and agents to meet, and conduct field tests with a view to ensuring quality. We also have an extensive training program.

We compensate our exclusive agent force through a system of commissions and bonuses to reward performance. Our agents are compensated based on a commission rate that generally decreases over the premium period. For short-term insurance products, our exclusive agents are generally compensated with fixed agent fees. We provide group annuities, group commercial supplemental pension insurance, group life and medical insurance for our exclusive agents. We motivate our agents by rewarding them with performance-based bonuses and by organizing sales-related competitions among different field offices and sales units. We also try to increase the loyalty of our exclusive agents through other methods, such as through participation in sales conferences.

We believe we have the largest exclusive agent sales force in China. We intend to improve the quality and productivity of our individual exclusive agent force and reduce the attrition rate of our agents by taking the following actions:

• improving the overall productivity of our exclusive agents by implementing our market segmentation sales approach, managing, supporting and incentivizing the exclusive agents through different levels, and providing standardized sales services to our customers;

• motivating our exclusive agents with an improved performance-based evaluation and compensation scheme;

• building a more professional exclusive agent force by improving our education and training programs and enhancing our training efforts and increasing the number of qualified exclusive agents;

• improving the quality of our exclusive agent force and reducing turnover by expanding our recruitment program and strengthening the cultivation, training and performance support for our new exclusive agents; and

• improving the efficiency of our exclusive agents by providing sales support, including establishing a customer service platform and improving and expanding the China Life E-Home sales support system nationwide to further enhance their marketing, time management and customer service capabilities.

Group distribution channel

Our group distribution channel is comprised of our direct sales force and intermediaries.

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Direct sales force

Our direct sales force, which consists of approximately 19,000 direct sales representatives, is our primary distribution system for our group life insurance and annuities, group accident insurance and group health insurance products, as well as our individual accident insurance and individual short-term health insurance products.

We believe our direct sales force allows us to more effectively control our distribution and build and maintain long-term relationships with our group customers and, therefore, will continue to serve as our primary distribution system for our group products. We believe maintaining our leading position in the group insurance market depends on a professional and qualified direct sales force, and we have devoted substantial resources to the training and supervision of our direct sales force in recent years. We set product management and customer service standards which we require all of our branch offices and direct sales representatives to meet, and conduct field tests to centralize quality control and management. We also have an extensive training program.

We motivate our direct sales representatives by rewarding them with performance-based bonuses and by organizing sales and services-related competitions among different branch offices and sales units.

Intermediaries

We also offer individual and group products through intermediaries.

We market group products through dedicated insurance agencies and insurance brokerage companies. Dedicated insurance agencies and insurance brokerage companies work with companies primarily to select group insurance providers and group products and services in return for commission fees. Currently, the market of dedicated insurance agencies and insurance brokerage companies in China generally remains underdeveloped. However, we expect that the dedicated insurance agencies and insurance brokerage companies will play a more important role in sales of our group products in the future.

We also sell short-term insurance products through other non-dedicated agencies. Currently, we have non-dedicated agencies operating at outlets of travel agencies, commercial banks, credit cooperatives, small loan companies and airline sales counters. We expect non-dedicated agencies to become an increasingly important distribution channel for individual products.

Bancassurance channel

We have bancassurance arrangements with major commercial banks and banking operations of post offices in China, and currently generate a significant portion of our total sales through bancassurance. Our distribution channels are primarily comprised of non-dedicated agencies located in approximately 61,000 outlets of commercial banks and banking operations of post offices. We will continue to dedicate substantial resources to develop our bancassurance business, with a focus on key cities. We have established strategic alliances with many banks. We intend to improve the attractiveness of our products by providing new products and all-around services to each major bank and providing training and integrated systems support to our banking partners.

Other distribution channels

We also sell individual products through other newly developed distribution channels including telephone sales and internet-based sales.

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The major products sold through our telephone sales channel are individual insurance and health insurance products. As a new sales channel developed in recent years, the sales generated by our telephone sales channel have been rapidly increasing and we believe that its growth will continue.

We sell short-term insurance products, including tourism, comprehensive accident, traffic, overseas travel, family, student and juvenile insurance products, through our website at www.e-chinalife.com. The number of customers and sales volume of our internet-based sales channel have been steadily increasing over the past several years due to the improvement of the process for internet-based sales business with respect to customer registration and inquiry, product purchase and information checks. We also sell products through the internet-based sales platforms of insurance brokerage companies, insurance agencies and other qualified third-party websites.

Gross written premiums attributable to each distribution channel

The following table sets forth gross written premiums attributable to each distribution channel, as of the dates indicated.

	For the year ended December 31
	2012		2013		2014		2014
	RMB		RMB		RMB		US$
	(in millions)
Exclusive agent force		179,761		197,698		205,417		33,107
First-year business of long-term insurance		32,197		31,815		34,455		5,553
Single		415		413		335		54
First-year regular		31,782		31,402		34,120		5,499
Renewal business		141,999		160,302		165,131		26,614
Short-term insurance business		5,565		5,581		5,831		940
Group distribution channel		13,562		17,658		17,440		2,811
First-year business of long-term insurance		2,165		4,720		2,989		482
Single		2,002		4,561		2,878		464
First-year regular		163		159		111		18
Renewal business		593		563		506		82
Short-term insurance business		10,804		12,375		13,945		2,247
Bancassurance channel		128,863		107,658		99,825		16,089
First-year business of long-term insurance		91,524		78,178		77,881		12,552
Single		78,151		69,695		65,918		10,624
First-year regular		13,373		8,483		11,963		1,928
Renewal business		37,283		29,387		21,815		3,516
Short-term insurance business		56		93		129		21
Other distribution channels		556		3,276		8,328		1,342
First-year business of long-term insurance		225		280		1,262		203
Single		8		18		889		143
First-year regular		217		262		373		60
Renewal business		324		475		638		103
Short-term insurance business		7		2,521		6,428		1,036
Total		322,742		326,290		331,010		53,349

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Competition

Our nearest competitors are Ping An Life, New China Life and China Pacific Life.

• In the life insurance market, Ping An Life, New China Life, China Pacific Life and we collectively represented 64% of total life insurance premiums in 2013. We primarily compete based on the nationwide reach of our sales network, the largest distribution force and the level of services we provide, as well as our strong brand name.

• In the accident insurance market, Ping An Life, New China Life, China Pacific Life and we collectively represented 71% of total accident premiums in 2013. We primarily compete based on the nationwide reach of our sales network and the level of services we provide and our strong brand name, as well as our cooperative arrangements with other companies and institutions.

• In the health insurance market, Ping An Life, New China Life, China Pacific Life and we collectively represented 67% of total health premiums in 2013. We primarily compete based on the nationwide reach of our sales network, the level of services we provide, our multi-layered managed care scheme and systems of policy review and claim management, as well as our strong brand name.

The following table sets forth market share information for the year ended December 31, 2013, the most recent year for which official market information for separate business segments is available, in all segments of the life insurance market in which we do business.

	Life premiums market share			Accident premiums market share			Health premiums market share			Total premiums market share
China Life		31	%		35	%		25	%		30	%
Ping An Life Insurance Company of China, Ltd. (1)		13	%		18	%		27	%		14	%
China Pacific Life Insurance Co. Ltd.		9	%		14	%		7	%		9	%
New China Life Insurance Co. Ltd.		11	%		4	%		8	%		10	%
Tai Kang Life Insurance Co. Ltd.		6	%		6	%		4	%		6	%
Others(2)		29	%		23	%		29	%		31	%
Total		100	%		100	%		100	%		100	%

(1) For purposes of this annual report, the statistics for Ping An Life Insurance Company of China, Ltd. also include those of Ping An Health Insurance Company of China, Ltd. and Ping An Annuity Insurance Company of China, Ltd.

(2) Others include: PICC Life Insurance Co., Ltd., PICC Health Insurance Co., Ltd., Taiping Life Insurance Co. Ltd., Taiping Pension Co. Ltd., Minsheng Life Insurance Co., Ltd., Sunshine Life Insurance Corporation Limited, Huatai Life Insurance Co., Ltd., Tianan Life Insurance Co. Ltd., Sino Life Insurance Co., Ltd., An Bang Life Insurance CO., Ltd., Union Life Insurance Co., Ltd., Greatwall Life Insurance Co., Ltd., ABC Life Insurance Co., Ltd., Kunlun Health Insurance Co., Ltd., Hexie Health Insurance Co., Ltd., Dragon Life Insurance Co., Ltd., Huaxia Life Insurance Co., Ltd., Sinatay Life Insurance Co., Ltd., Yingda Taihe Life Insurance Co., Ltd., Guohua Life Insurance Co., Ltd., Happy Life Insurance Co., Ltd., Aeon Life Insurance Co., Ltd., China Post Life Insurance Co., Ltd., Zhongrong Life Insurance Co., Ltd., Lian Life Insurance Co., Ltd., Sino-Conflux Insurance Company, , Qian Hai Life Insurance Co., Ltd., Soochow Life Insurance Co., Ltd., Hongkang Life Insurance Co., Ltd., Pearl River Life Insurance Co., Ltd., Jixiang Life Insurance Company Limited, Manulife-Sinochem Life Insurance Co. Ltd., CCB Life Insurance Co. Ltd., Allianz China Life Insurance Co., Ltd., ICBC-AXA Assurance Co., LTD., BoComm Life Insurance Co., Ltd., Citic-Prudential Life Insurance Co., Ltd., Generali China Life Insurance Co. Ltd., Sun Life Everbright Life Insurance Co. Ltd., ING-BOB Life Insurance Co., Ltd., Founder Meiji Yasuda Life Insurance Co., Ltd., Aviva-COFCO Life Insurance Co., Ltd., AEGON-CNOOC Life Insurance Co., Ltd., CIGNA – CMC Life Insurance Co., Ltd., Nissay-Greatwall Life Insurance Co., Ltd, Heng An Standard Life Insurance Co., Ltd., Skandia-BSM Life Insurance Co., Ltd., Sino-US United MetLife Insurance Company Ltd., Cathay Life Insurance Co., Ltd., Samsung Air China life Insurance Co., Ltd., Sino-French Life Insurance Co., Ltd., Zhongxin Grand Oriental Person’s Life Insurance Co., Ltd., King Dragon Life Insurance Co., Ltd., HSBC Life Insurance Co., Ltd., Shin Kong – HNA Life Insurance Co., Ltd., Pramerica Fosun Life Insurance Co., Ltd., Sino-korea Life Insurance Co., Ltd., ERGO China Life Insurance Co., Ltd. and American International Assurance Co., Ltd. (China).

Source: China Insurance Yearbook 2014

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We face competition not only from domestic life insurance companies, but also from non-life insurance companies and foreign-invested life insurers. There were 67 licensed life insurance companies in China as of December 31, 2012, 71 as of December 31, 2013 and 77 as of December 31, 2014. Property and casualty insurers were allowed to sell accident and short-term health insurance products with regulatory approval starting from January 2003, which we believe will lead to greater competition in the accident and health insurance sectors, especially in the group accident and group health insurance products. In addition, we believe that elimination of geographic limitations on foreign-invested insurance companies will further increase competition in China’s life insurance market.

See “Item 3. Key Information—Risk Factors—Risks Relating to the PRC Life Insurance Industry—We expect competition in the Chinese insurance industry to increase, which may materially and adversely affect the growth of our business”.

We also face increasing competition from other financial services providers, primarily licensed mutual fund companies, commercial banks providing personal banking services and operating business of various financial products, trust companies and brokerage houses licensed to manage separate accounts. These financial services providers may be permitted to manage employer-sponsored defined contribution pension plans, which we believe will compete directly with our group annuity products. We also face competition in the sale of our individual participating policies and annuities from financial institutions which offer investment products to the public.

Business Management

Customer Support Management

We seek to provide quality services to our customers and potential customers and to be responsive to their needs, both before and after a sale, through an extensive customer support network. Our customer service network is managed by specialized customer service departments, which are responsible for setting uniform standards and procedures for providing policy-related services to customers, handling inquiries and complaints from customers and training customer services personnel.

We deliver customer services primarily through customer service units operating in our branch offices and in field offices throughout China and a sophisticated telephone call center network. We take advantage of alternative customer services channels, such as cell phone messages and the Internet, complementing the customer services provided by our customer service units and the call center network.

Customer service units

We provide customer support through approximately 2,700 customer service units nationwide. We provide several types of policy-related services to our customers, which include collecting regular premiums, renewing policies, purchasing supplemental policies, reinstating lapsed policies, processing surrenders, increasing insured amounts, processing policy loans, paying benefits and updating information regarding holders and beneficiaries of policies. We require our customer service units to provide these policy-related services in accordance with procedures and standards that we implement on a nationwide basis, helping to ensure the quality of the services we provide. We also have uniform service standards for customer service units nationwide. We also have a specialized customer service department to further refine our customer services. The customer service department’s role is to provide service to our customers and supervise the quality of service provided by our customer service units.

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Telephone call service center

Our telephone call service centers allow customers to make product and service inquiries, file complaints, report claims and losses, make appointments and update the contact information regarding holders of policies. They also provide call-back, greeting message and reminder call services to customers. With our dedicated, nationwide inquiry line, “95519”, our customers can reach us on a “24 hours/7 days” basis.

We believe our call centers have become popular with our customers because of the quality of services we provide. From 2004 to 2014, for 11 consecutive years, we received the “Best Call Centers in China Award” from the Professional Committee for the Promotion and Alliance of Customer Relationship Management of Information under the Ministry of Industry and Information Technology. We have also obtained the authentication of Chinese national call center operating performance standards. We will continue to ensure that we have a sufficient number of lines and staff to service the increasing use of our call centers.

We have established system-wide standards for our call centers, which we monitor periodically through regular call quality monitoring and customer satisfaction surveys on the call centers.

Cell phone message services

We utilize wireless telephone services to make instant contact with our customers and sales people. We may send short messages to our customers all over China, conveying such information as birthday and holiday greetings, premium payment notices and premium payment confirmations.

Internet-based services

Our customers can utilize our Internet-based services for inquiries, complaints and service requests through our website (www.e-chinalife.com). We also use emails to send messages to our customers all over China, conveying such information as birthday and holiday greetings, premium payment notices and premium payment confirmations.

Supplementary services

To allow our customers to benefit from superior service and enhance their service experience, we provide several types of supplementary services while continuing to provide quality basic insurance services.

Our service brand “China Life 1+N” covers all areas of services we provide to our customers, including several types of basic policy-related services and supplementary services (including Health Good Helper, China Life Insurance Information Hub, China Life Lecture Hall, China Life Preferential Value and Featured Customer Service Activities). We have also successfully held the “China Life Customer Festival” and “Hand in Hand” customer service activities for eight consecutive years.

Underwriting and Pricing

Our individual and group insurance underwriting involves the evaluation of applications for life, accident and health insurance products by a professional staff of underwriters and actuaries, who determine the type and the amount of risk that we are willing to accept. We have established qualification requirements and review procedures for our underwriting professionals. We employ detailed underwriting policies, guidelines and procedures designed to assist our underwriters to assess and quantify risks before issuing a policy to qualified applicants.

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We generally evaluate the risk characteristics of each prospective insured. Requests for coverage are reviewed on their merits, and a policy is not issued unless the particular risk or group has been examined and approved for underwriting.

We have different authorization limits and procedures depending on the amount of the claim. We also have authorization limits for personnel depending on their level of qualifications.

In order to maintain high standards of underwriting quality and consistency, we engage in periodic internal underwriting audits.

Individual and group product pricing reflects our insurance underwriting standards. Product pricing on insurance products is based on the expected payout of benefits, calculated through the use of mortality table, morbidity, expenses and investment returns. Those assumptions and other assumptions for calculating the margin for expected profitability are based on our own experience, third party consultation, the experience of reinsurance companies and published data from other institutions. For more information on regulation of insurance products, see “—Regulatory and Related Matters—Insurance Company Regulation”.

We primarily offer products denominated in Renminbi.

Claims Management

We manage the claims from policyholders through our claims verification staff at our headquarters and branch offices. Typically, upon receiving a claim, a staff person will verify preliminarily if all materials supporting the claim have been submitted; if so, the claim and its materials will be forwarded to the liability department to confirm liability and to determine whether a claim investigation is needed. Upon confirming the validity of the claim and insurance liability, the amount payable to the policyholder will be calculated, and the claim will be paid upon completion of approval procedure.

We manage claims management risk through organizational controls and computer systems controls. Our organizational controls include specific limits on authorization for branches at different levels; periodic case inspection and special inspections in particular situations by risk management bodies at all levels of our organization; expense mechanisms linking payout ratios of short-term insurance policies and expense ratios of branches. Except for some health insurance claims below a certain amount, verification of claims by two staff members is also required. We also periodically provide training to our claims verification personnel and conduct appraisals of their performance. Our claims management is strictly processed with computers to streamline claims verification and handling.

Reinsurance

We have entered into various reinsurance agreements with China Life Reinsurance Company Limited, or China Life Re, formerly known as China Reinsurance Company, for the reinsurance of individual risks and group risks. In general, individual risks are primarily reinsured either on a surplus basis, whereby we are reinsured for risks above a specified amount, or on a percentage basis. Under our reinsurance policy, the specified amount above which the risks are reinsured varies among different types of insurance products. Our group risks are generally reinsured either on a surplus basis or on a percentage basis. In general, our reinsurance agreements with China Life Re do not have a definite term, but may be terminated with respect to new business thereunder by either party on a date agreed by both parties with three to six months notice.

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We have also entered into reinsurance agreements separately with the Beijing branch of Munich Reinsurance Company, Mapfre Re, the Shanghai branch of General Re Corporation, the Shanghai branch of Hannover Re and Aetna Life & Casualty (Bermuda) Ltd.

In May 2014, we renewed our catastrophe reinsurance protection in order to reduce our catastrophe exposure.

These reinsurance agreements spread the risk and reduce the effect on us of potential losses. Under the terms of the reinsurance agreements, the reinsurer agrees to assume liabilities for the insured, or ceded, amount in the event the claim is paid. However, we remain liable to our policyholders if the reinsurer fails to meet the obligations assumed by it.

We also accept external auditing of the reinsurance business by our reinsurers.

Reserves of Insurance Contracts

For all of our insurance contracts, we establish, and carry as liabilities, actuarially determined amounts that are calculated to meet our obligations to policyholders under our insurance contracts.

Financial statement reserves

Our reserves for financial reporting purposes are calculated based on the best estimated amounts required to be paid by us to fulfill the relevant obligations under insurance contracts. We have considered margin and time value on the reserve calculation for insurance contracts. We expect these reserve amounts, along with future premiums to be received on insurance contracts and investment earnings on these amounts, to be sufficient to meet our obligations to policyholders under our insurance contracts.

We establish the liabilities to meet our obligations under our insurance contracts based on the present value of reasonable estimates of future cash outflows less future cash inflows. We have considered margin in the establishment of such liabilities. Our assumptions for calculating reserve amounts include assumptions for mortality, morbidity, lapse rate, expenses and discount rate. These assumptions may deviate from our actual experiences and, as a result, we cannot determine precisely the amounts which we will ultimately pay to settle these liabilities or when these payments will need to be made. These amounts may vary from the estimated amounts, particularly when those payments may not occur until well into the future. The discount rate assumption is affected by certain factors, such as future macro-economy, monetary and exchange rate policies, capital market results and availability of investment channels to invest our insurance funds. We review these assumptions periodically, based on analysis of historical experiences and expectations of future developments. We evaluate our liabilities based on reviewed assumptions. To the extent that actual experiences deviate significantly from our assumptions used to establish these liabilities, and these deviations are expected to continue in the foreseeable future, we may be required to increase or decrease our liabilities. This increase or decrease could have a material effect on our profitability and, if significant, our financial condition.

Statutory reserves

We are required under China’s insurance law to report insurance reserves for regulatory purposes in the solvency reports. The minimum levels of these reserves are based on methodologies and assumptions mandated by the CIRC. We also maintain assets in excess of policy reserves to meet the solvency requirements under CIRC regulations.

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See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—Differences in future actual operating results from the assumptions used in pricing and establishing reserves for our insurance and annuity products may materially and adversely affect our earnings”.

Investments

As of December 31, 2014, we had RMB 2,100,870 million (US$338,599 million) of investment assets. As provided by China’s insurance laws and regulations, we may invest insurance premiums and other insurance funds in five categories of investment assets, including liquidity assets, fixed income assets, equity assets, real properties and other financial assets, all as defined by the CIRC and subject to various limitations. See “—Regulatory and Related Matters—Insurance Company Regulation—Regulation of investments”. As of December 31, 2014, we have invested our insurance premiums and other insurance funds in term deposits, debt securities, loans, securities investment funds, stocks, resale agreements, investment properties, equity interests of non-listed enterprises and related financial products and other financial products.

We direct and monitor our investment activities through the application of investment management guidelines and investment plans. Our investment management guidelines and investment plans include: (1) performance goals for the investment fund; (2) specified asset allocations and investment scope based on regulatory provisions, level of indebtedness and market forecasts; (3) specified goals for investment duration and asset-liability matching requirements based on asset-liability matching strategies; (4) specified authorization levels required for approval of significant investment projects; and (5) specified risk management policies and prohibitions. The investment management guidelines and investment plans are reviewed and approved by the board of directors annually.

Investment proposals typically originate from our investment management department, which is in charge of all of our investment assets except for investment in real properties used by us, which is separately managed by our own-use real property investment management department. Investment proposals are reviewed by our risk management department for risk assessment and submitted to the investment decision committee for final approval.

AMC, the asset management company that we established with CLIC, manages a substantial part of our Renminbi investments following the restructuring and, separately, substantially all of the investments retained by CLIC. See “—Asset Management Business”. IHC, a wholly owned subsidiary of CLIC, also manages our investments in unlisted equity interests, real property and related financial products and securitization financial products. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Continuing Related Party Transactions with IHC”. In August, 2014, we engaged 15 domestic investment managers to manage RMB 20,000 million (US$3,223 million) for investment in Chinese capital markets; and in January 2015, we engaged eight investment managers to manage US$ 800 million for investment in overseas capital markets.

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The following table summarizes information concerning our investment assets as of December 31, 2012, 2013 and 2014.

	As of December 31,
	2012					2013					2014
	Carrying value		% of total			Carrying value		% of total			Carrying value		% of total
	(RMB in millions, except as otherwise indicated)
Cash and cash equivalents		69,452		3.9	%		21,330		1.2	%		47,034		2.2	%
Term deposits		641,080		35.8	%		664,174		35.9	%		690,156		32.9	%
Statutory deposits—restricted		6,153		0.3	%		6,153		0.3	%		6,153		0.3	%
Debt securities, held-to-maturity		452,389		25.3	%		503,075		27.2	%		517,283		24.6	%
Debt securities, available-for-sale		349,590		19.5	%		339,986		18.4	%		395,341		18.8	%
Debt securities, securities at fair value through profit or loss		26,119		1.5	%		30,756		1.7	%		29,212		1.4	%
Debt securities		828,098		46.3	%		873,817		47.3	%		941,836		44.8	%
Loans		80,419		4.5	%		118,626		6.4	%		166,453		7.9	%
Equity securities, available for sale		156,826		8.8	%		151,541		8.2	%		212,190		10.1	%
Equity securities, securities at fair value through profit or loss		7,916		0.4	%		3,416		0.2	%		23,840		1.1	%
Equity securities		164,742		9.2	%		154,957		8.4	%		236,030		11.2	%
Resale agreements		894		—			8,295		0.4	%		11,925		0.6	%
Investment properties		—		—			1,329		0.1	%		1,283		0.1	%
Total investment assets		1,790,838		100	%		1,848,681		100	%		2,100,870		100	%
Average investment assets balance		1,642,904					1,819,760					1,974,776

Risk management

Our primary investment objective is to pursue optimal investment yields while considering macroeconomic factors, risk control and regulatory requirements. We are exposed to five primary sources of investment risk:

• interest rate risk, relating to the market price and cash flow variability associated with changes in interest rates;

• credit risk, relating to the uncertainty associated with the continued ability of a given obligor to make timely payments of principal and interest;

• market valuation risk, relating to the changes in market value for our investments, particularly our securities investment fund holdings and shares listed on the Chinese securities exchanges, which are denominated and traded in Renminbi;

• liquidity risk, relating to the lack of liquidity in many of the debt securities markets we invest in, due to contractual restrictions on transfer or the size of our investments in relation to the overall market; and

• currency exchange risk, relating to the impact of changes in the value of the Renminbi against the U.S. dollar and other currencies on the value of our investments.

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Our investment assets are principally comprised of fixed income securities and term deposits, and therefore changes in interest rates have a significant impact on the rate of our investment return. We manage interest rate risk through adjustments to our portfolio mix and terms, and by managing, to the extent possible, the average duration and maturity of our assets and liabilities. However, because of the general lack of long-term fixed income securities in the Chinese financial markets, the duration of some of our assets is lower than our liabilities. We believe that with the development of China’s financial markets and the gradual easing of our investment restrictions, our ability to match our assets to our liabilities will improve. Although we have been approved to enter into interest rate swaps, it is still not an effective means for us to hedge our interest rate risk as the Chinese interest rate swap market is still in the early stages of development.

We believe we have a relatively low credit risk, because we are limited in the types of investments we may make. We monitor our credit risk through in-house fundamental analysis of the Chinese economy and the underlying obligors and transaction structures.

We are subject to market valuation risk, particularly because of the relative lack of stability of China’s bond and stock markets. We manage valuation risk through industry and issuer diversification and asset allocation.

Since substantially all of our investments are made in China, we are exposed to the effect of changes in the Chinese economy and other factors which affect the Chinese banking industry and securities markets.

We are also subject to market liquidity risk for many of the debt securities investments we make, due to the size of our investments in relation to the overall market. We manage liquidity risk through selection of liquid assets and through asset diversification. In addition, we view fundraising through repurchase agreements as a way of managing our short-term liquidity risk.

Our ability to manage our investment risks is limited by the investment restrictions placed on us and the lack of sophisticated investment vehicles for risk management in China’s capital markets. The CIRC allows insurance companies to invest in financial derivative products with the aim to hedge and reduce investment risks. We are considering these alternative ways of investing to further improve our risk management.

Our assets held in foreign currencies are subject to foreign exchange risks resulting from the fluctuations of the value of the Renminbi against the U.S. dollar and other foreign currencies. We are seeking methods to reduce our foreign exchange risks.

Under China’s existing foreign exchange control regulations, the conversion of foreign currencies into the Renminbi requires approval of relevant government agencies. We obtained an approval to settle a portion of our assets held in foreign currencies into the Renminbi in 2005, which partially reduced the foreign exchange risks we are exposed to. Except for the aforementioned approval obtained in 2005, we have not obtained any approval to settle any portion of our assets held in foreign currencies into the Renminbi and there is no guarantee that we will be able to obtain any such approval in the future. If we do not obtain such approval, our ability to manage our foreign exchange risks may be limited. There are few financial products available in China to hedge foreign exchange risks, which substantially limits our ability to manage our foreign exchange risks.

As we are approved by the CIRC to invest our assets held in foreign currencies in overseas financial markets, the return from overseas investments could, to certain extent, reduce the foreign exchange risks we are exposed to.

For further information on our management of interest rate risk and market valuation risk, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk”.

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Investment results

Our investment yields for the years ended December 31, 2014, 2013 and 2012 were 5.36%, 4.86% and 2.79%, respectively.

The following table sets forth the yields on average assets for each major component of our investment portfolios for the periods indicated.

	As of or for the years ended December 31,
	2012						2013						2014
	Yield (1)			Amount			Yield (1)			Amount			Yield (1)			Amount
	(RMB in millions, except as otherwise indicated)
Cash, cash equivalents, statutory deposits and term deposits:
Investment income		4.7	%		30,512			4.6	%		32,667			4.9	%		34,934
Ending assets: cash and cash equivalents					69,452						21,330						47,034
Ending assets: statutory deposits—restricted					6,153						6,153						6,153
Ending assets: term deposits					641,080						664,174						690,156
Ending assets					716,685						691,657						743,343
Debt securities:
Investment income					32,324						39,739						45,499
Net realised gains and impairment on financial assets					1,243						385						142
Net fair value gains/(losses) through profit or loss					47						(239	)					2,272
Total		4.5	%		33,614			4.7	%		39,885			5.3	%		47,913
Ending assets					828,098						873,817						941,836
Loans:
Investment income		6.1	%		4,339			5.8	%		5,773			5.7	%		8,138
Ending assets					80,419						118,626						166,453
Equity securities:
Investment income					5,429						3,987						4,564
Net realised gains and impairment on financial assets					(28,119	)					5,408						6,978
Net fair value gains/(losses) through profit or loss					(88	)					305						4,977
Total		(13.1	)%		(22,778	)		6.1	%		9,700			8.4	%		16,519
Ending assets					164,742						154,957						236,030
Resale agreements:
Investment income		38.8	%		633			12.1	%		556			3.0	%		299
Ending assets					894						8,295						11,925
Investments properties:
Investment income		—			—			2.1	%		14			3.8	%		50
Ending assets					—						1,329						1,283
Total investments:
Investment income					73,243						82,816						93,548
Net realised gains and impairment on financial assets					(26,876	)					5,793						7,120
Net fair value gains/(losses) through profit or loss					(313	)					137						5,808
Income of Investments properties					—						14						50
Business tax and extra charges for investment					(224	)					(230	)					(652	)
Total		2.79	%		45,830			4.86	%		88,530			5.36	%		105,874
Ending assets					1,790,838						1,848,681						2,100,870

(1) Yields for 2014, 2013 and 2012 are calculated by dividing the investment income for that year by the average of the ending balances of that year and the previous year.

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Term deposits

Term deposits consist principally of term deposits with Chinese commercial banking institutions and represented 32.9% of our total investment assets as of December 31, 2014, 35.9% of our total investment assets as of December 31, 2013 and 35.8% of our total investment assets as of December 31, 2012.

We generally make term deposits with state-owned commercial banks and large joint stock commercial banks. The terms of the term deposits vary. They typically allow us to renegotiate terms with the banks upon prepayment, including the methods for the calculation of accrued interest, if any. We make large term deposits to obtain higher yields than can ordinarily be obtained with regular deposits.

The following table sets forth term deposits by contractual maturity dates, as of the dates indicated.

	As of December 31,
	2012		2013		2014
	Amortized cost		Amortized cost		Amortized cost
	(RMB in millions)
Due in one year or less		92,045		74,932		200,214
Due after one year and through five years		548,435		579,242		463,442
Due after five years and through ten years		600		10,000		26,500
Total term deposits		641,080		664,174		690,156

The following table sets forth term deposits outstanding to Chinese banking institutions as of the dates indicated.

	As of December 31,
	2012		2013		2014
	Amortized cost		Amortized cost		Amortized cost
	(RMB in millions)
Industrial & Commercial Bank of China		13,409		19,644		20,821
Agriculture Bank of China		109,666		135,504		144,856
Bank of China		141,867		145,492		150,735
China Construction Bank		34,750		18,518		19,337
Bank of Communications		99,687		103,292		132,336
Other banks		241,701		241,724		222,071
Total term deposits		641,080		664,174		690,156

Debt securities

Debt securities in which we are permitted to invest mainly consist of the following categories:

• Chinese government bonds;

• government agency bonds (including local government bonds issued and repaid by the MOF as agent, central bank notes, financial bonds issued by state-owned policy banks of the Chinese government, and RMB-denominated bonds issued by international development institutions);

• corporate bonds (including financial bonds issued by commercial banks, corporate bonds, convertible corporate bonds, short-term financing bonds and medium-term notes); and

• subordinated bonds and debt (including subordinated bonds issued by state-owned policy banks of the Chinese government, subordinated bonds issued by commercial banks, subordinated debt with fixed terms issued by commercial banks and subordinated debt with fixed terms issued by insurance companies).

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Debt securities represented 44.8% of our total investment assets as of December 31, 2014, 47.3% of our total investment assets as of December 31, 2013 and 46.2% of our total investment assets as of December 31, 2012.

Based on estimated fair value, Chinese government bonds, Chinese government agency bonds, corporate bonds, subordinated bonds and debt and other debt securities comprised 6.7%, 35.0%, 52.2%, 5.8% and 0.3% of our total available-for-sale debt securities as of December 31, 2014, 9.3%, 35.2%, 48.5%, 6.9% and 0.1% of our total available-for-sale debt securities as of December 31, 2013 and 12.3%, 38.9%, 39.8%, 9.0% and 0% of our total available-for-sale debt securities as of December 31, 2012. Except for a small number of debt securities, which collectively had a carrying value of RMB 819 million (US$132 million) as of December 31, 2014, most of our debt securities are traded on stock exchanges or in the unlisted interbank market in China.

We mainly invest in secured bonds and unsecured bonds rated AA or above by the rating agencies recognized by the CIRC, such as China Chengxin International Credit Rating Co., Ltd, or Chengxin International, and Dagong Global Credit Rating Agency, or Dagong. We also invest in short-term financing bonds rated A-1.

Chengxin International is a member of Moody’s Investors Service Inc., with Moody’s owning 49% equity interest in Chengxin International. Chengxin International created its own rating structures by making reference to the rating structures and experience of Moody’s and Fitch Ratings. AAA is the highest rating. Other approved rating agencies, such as Dagong, have similar rating structures. Ratings given by these entities are not directly comparable to ratings given by U.S. rating agencies.

The following table sets forth the amortized cost and estimated fair value of debt securities, as of the dates indicated.

	As of December 31,
	2012										2013										2014
	Amortized cost		% of total			Estimated fair value		% of total			Amortized cost		% of total			Estimated fair value		% of total			Amortized cost		% of total			Estimated fair value		% of total
	(RMB in millions)
Debt securities, available-for-sale:
Government bonds		42,004		5.0	%		42,946		5.2	%		33,519		3.7	%		31,435		3.8	%		25,885		2.8	%		26,328		2.8	%
Government agency bonds		139,861		16.8	%		135,870		16.4	%		136,466		15.1	%		119,739		14.4	%		137,303		14.7	%		138,487		14.6	%
Corporate bonds		142,401		17.1	%		139,286		16.9	%		175,396		19.4	%		165,001		19.7	%		206,232		22.0	%		206,511		21.7	%
Subordinated bonds/debt		30,821		3.7	%		31,488		3.8	%		24,664		2.7	%		23,579		2.8	%		22,304		2.4	%		22,798		2.4	%
Others		—		—			—		—			238		—			232		—			1,221		0.1	%		1,217		0.1	%
Total debt securities, available-for-sale		355,087		42.6	%		349,590		42.3	%		370,283		40.9	%		339,986		40.7	%		392,945		42.0	%		395,341		41.6	%
Debt securities, held to maturity:
Government bonds		96,097		11.5	%		97,794		11.8	%		97,702		10.8	%		91,220		10.9	%		88,843		9.5	%		91,000		9.6	%
Government agency bonds		111,759		13.4	%		108,166		13.1	%		113,618		12.6	%		99,122		11.9	%		126,140		13.5	%		127,659		13.4	%
Corporate bonds		83,084		10.0	%		82,557		10.0	%		131,022		14.5	%		124,201		14.9	%		146,595		15.7	%		148,699		15.6	%
Subordinated bonds/debt		161,449		19.4	%		162,348		19.6	%		160,733		17.7	%		150,453		17.9	%		155,705		16.6	%		159,168		16.7	%
Total debt securities, held to maturity		452,389		54.3	%		450,865		54.5	%		503,075		55.6	%		464,996		55.6	%		517,283		55.3	%		526,526		55.3	%
Debt securities, securities at fair value through profit or loss
Government bonds		1,703		0.2	%		1,697		0.2	%		1,551		0.2	%		1,489		0.2	%		254		—			254		—
Government agency bonds		6,347		0.8	%		6,291		0.8	%		4,883		0.5	%		4,659		0.6	%		3,995		0.4	%		4,085		0.5	%
Corporate bonds		18,126		2.2	%		18,131		2.2	%		24,777		2.8	%		24,608		2.9	%		21,590		2.3	%		24,873		2.6	%
Total debt securities, securities at fair value through profit or loss		26,176		3.2	%		26,119		3.2	%		31,211		3.5	%		30,756		3.7	%		25,839		2.7	%		29,212		3.1	%
Total debt securities		833,652		100	%		826,574		100	%		904,569		100	%		835,738		100	%		936,067		100.0	%		951,079		100.0	%

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The following table shows the amortized cost and estimated fair value of debt securities excluding securities at fair value through profit or loss by contractual maturity dates, as of the dates indicated.

	As of December 31,
	2012				2013				2014
	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
	(RMB in millions)
Due in one year or less		7,857		7,863		20,921		20,961		25,761		25,814
Due after one year and through five years		125,670		127,103		184,017		178,451		208,995		211,032
Due after five years and through ten years		229,469		229,995		235,299		222,004		268,882		275,236
Due after ten years		444,480		435,494		433,121		383,566		406,590		409,785
Total debt securities, excluding those at fair value through profit or loss		807,476		800,455		873,358		804,982		910,228		921,867

Our investments in debt securities are subject to strict restrictions under relevant Chinese regulation. See “—Regulatory and Related Matters—Regulation of investments”. We diversify our corporate bonds by industry and issuer. Our corporate bond portfolio does not have significant exposure to a single industry or issuer.

Loans

We offer interest-bearing policy loans to our policyholders, who may borrow from us at total amounts up to 80% of the cash surrender values of their policies. In general, the loans are secured by the policyholders’ rights under the policies. As of December 31, 2014, the total amount of our policy loans was RMB 73,654 million (US$11,871 million), and represented 3.51% of our total investment assets as of that date.

In addition to policy loans, our other loans mainly consist of our investment in debt investment plans and trust schemes. During the year of 2012, we made investments in 15 debt investment plans with a total investment amount of RMB 9,456 million. We also increased our investment amount in the South-to-North Water Diversion (Phase II) debt investment plan, in which we made investments in 2011, from RMB 213 million to RMB 2,500 million. As of December 31, 2013, the total amount of our investment in debt investment plans was RMB 55,107 million. As of and for the year ended December 31, 2014, the total amount of our investment in debt investment plans was RMB 59,897 million (US$9,654 million), and we had a total investment proceeds from such plans of approximately RMB 3,471 million (US$559 million). We started to invest in trust schemes in 2013. As of December 31, 2013, the total amount of our investment in trust schemes was RMB 2,649 million. As of and for the year ended December 31, 2014, the total amount of our investment in trust schemes was RMB 27,257 million (US$4,393 million), and we had a total investment proceeds from such plans of approximately RMB 586 million (US$94 million).

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Securities investment funds

Securities investment funds consist of Chinese domestic investment funds that primarily invest in securities that are issued by Chinese companies and traded on China’s securities exchanges. As of December 31, 2014, our investment in securities investment funds was RMB 83,620 million (US$13,477 million) and represented 3.98% of our total investment assets as of that date.

We invest in both “closed-end” securities investment funds, in which the number of shares is fixed and the share value depends on the trading value, and “open-end” securities investment funds, in which the number of shares issued by the fund fluctuates and the share value is set by the value of the assets held by the fund. Our investments in securities investment funds are subject to strict restrictions under relevant Chinese regulations. See “—Regulatory and Related Matters—Insurance Company Regulation—Regulation of investments”. Our holdings in securities investment funds comply with those restrictions.

The following table presents the carrying values of investments in open-end and closed-end securities investment funds as of the dates indicated.

	As of December 31,
	2012					2013					2014
	Carrying value		% of total			Carrying value		% of total			Carrying value		% of total
	(RMB in millions, except as otherwise indicated)
Open-end		54,104		91.4	%		54,109		91.7	%		82,611		98.8	%
Closed-end		5,103		8.6	%		4,882		8.3	%		1,009		1.2	%
Total		59,207		100	%		58,991		100	%		83,620		100	%

Stocks

Investments in stocks consist of investment in publicly offered and listed equity securities that are denominated and traded in Renminbi and investment in stocks listed on specified overseas stock exchanges that are permitted by the CIRC. Our investments in stocks are subject to strict restrictions under relevant Chinese regulations. See “—Regulatory and Related Matters—Insurance Company Regulation—Regulation of investments”. As of December 31, 2014, the total amount of our investment in common stocks was RMB 94,933 million (US$15,300 million), and represented 4.5% of our total investment assets as of that date. As of December 31, 2013, the total amount of our investment in common stocks was RMB 79,727 million, and represented 4.3% of our total investment assets as of that date. As of December 31, 2012, the total amount of our investment in common stocks was RMB 102,089 million, and represented 5.7% of our total investment assets as of that date.

Resale agreements

We enter into resale agreements, which consist of securities resell activities in resell markets.

The securities purchased under agreements to resell were RMB 11,925 million (US$1,922 million) as of December 31, 2014, RMB 8,295 million as of December 31, 2013 and RMB 894 million as of December 31, 2012.

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Equity interests in non-listed enterprises and related financial products

Insurance companies are allowed to invest, directly or indirectly, in equity interests in non-listed enterprises. These investments are categorized either as “direct investments”, for investments by an insurance company in its name, or as “indirect investments”, for investments through equity investment funds and other related financial products sponsored and established by an investment management institution. Our investments in equity interests in non-listed enterprises and related financial products are subject to strict restrictions under relevant Chinese regulations. See “—Regulatory and Related Matters—Insurance Company Regulation—Regulation of investments”.

We started to make investments in equity interests in non-listed enterprises in 2006. The following table presents the carrying values of our investments in equity interests in non-listed enterprises as of the dates indicated.

	As of December 31,
	2012					2013					2014
	Carrying value		% of total			Carrying value		% of total			Carrying value		% of total
	(RMB in millions, except as otherwise indicated)
China Life Property and Casualty Insurance Company Limited		2,947		13.7	%		3,267		13.0	%		6,757		20.0	%
China Guangfa Bank Co., Ltd.		15,752		73.5	%		17,704		70.6	%		20,535		60.9	%
Bank of Hangzhou		650		3.0	%		571		2.3	%		2,204		6.5	%
China UnionPay		300		1.4	%		718		2.9	%		1,219		3.6	%
Bohai Industrial Investment Fund Management Co., Ltd		5		—			5		—			5		—
China Life Yuantong Property Company Limited		475		2.2	%		538		2.1	%		573		1.7	%
COFCO Futures Co., Ltd.		1,340		6.2	%		1,401		5.6	%		1,434		4.3	%
Beijing Longxilijing Real Estate Development Co., Ltd.		—		—			52		0.2	%		51		0.2	%
Shanghai Poly Jianhao Commercial Investment Co., Ltd.		—		—			835		3.3	%		932		2.8	%
Total		21,469		100	%		25,091		100	%		33,710		100	%

Since 2011, we have been permitted to make private equity investments without the CIRC approval for each investment as long as the total amount of our investments are below specified cap approved by the CIRC. We made our first private equity fund investment in 2011 in the second Renminbi fund sponsored by Hony Capital, a leading Chinese private equity firm, with a capital commitment of RMB 1.5 billion. In 2012, we made our second private equity fund investment in CITIC Private Equity Fund III sponsored by CITIC Private Equity Funds Management Co., Ltd., with a capital commitment of RMB 2 billion. In 2013, we invested in China Life (Suzhou) Urban Development Industry Investment Enterprise with a capital commitment of RMB 5 billion and China Life (Shanghai Jiading) Urban Development Industry Investment Enterprise with a capital commitment of RMB 1 billion. In 2014, we invested in China Life (Wuxi) Urban Development Industry Investment Enterprise, China Life (Guangzhou) Urban Development Industry Investment Enterprise, Ningbo China Life Cinda Investment Enterprise and a U.S. dollar-denominated logistics industry investment fund sponsored by Hopu Fund, with a capital commitment of RMB 5.5 billion, RMB 12.5 billion, RMB 2 billion and US$ 402 million, respectively.

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Asset Management Business

On November 23, 2003, we established an asset management company, AMC, with CLIC, in connection with the restructuring for the purpose of operating the asset management business more professionally in a separate entity and to better attract and retain qualified investment management professionals. AMC manages our investment assets and, separately, substantially all of those of CLIC. For a description of our investment assets, see “—Investments”.

We own 60% and CLIC owns 40% of AMC. Directors of AMC are appointed by the shareholders at a general meeting. As the controlling shareholder, we effectively control the composition of AMC’s board of directors. In 2014, the registered capital of AMC was increased from RMB 3 billion to RMB 4 billion. The proportionate shareholding between CLIC and us remains unchanged.

As of and for the year ended December 31, 2014, AMC had total assets of RMB 6,819 million (US$1,099 million), net assets of RMB 5,898 million (US$951 million) and net profit of RMB 779 million (US$126 million).

Property and Casualty Business

In December 2006 we and CLIC established a property and casualty company, CLPCIC, with us owning 40% and CLIC owning the remaining 60%. In 2014, the registered capital of CLPCIC was increased from RMB 8 billion to RMB 15 billion, with us and CLIC contributing RMB 2.8 billion and 4.2 billion, respectively. The proportionate shareholding between CLIC and us remains unchanged.

As of and for the year ended December 31, 2014, CLPCIC had total assets of RMB 52,769 million (US$8,505 million), net assets of RMB 16,893 million (US$2,723 million) and net profit of RMB 1,407 million (US$227 million).

Pension Insurance Business

In January 2007 we, CLIC and AMC established a pension insurance company, China Life Pension, with us owning 55%, CLIC owning 25% and AMC owning the remaining 20%. In January 2015, the registered capital of China Life Pension was increased from RMB 2.5 billion to RMB 3.4 billion. China Life Pension is currently held 70.74%, 4.41%, 3.53%, 1.33%, and 19.99% by us, CLIC, AMC, China Credit Trust Company Limited and AMP Life Limited, respectively.

China Life Pension has obtained qualifications to serve as investment manager, trustee and account manager of enterprise annuity funds.

As of and for the year ended December 31, 2014, China Life Pension had total assets of RMB 3,208 million (US$517million), net assets of RMB 2,811 million (US$453 million) and net loss of RMB 161 million (US$26 million).

Information Technology

Our computer systems provide support for many aspects of our businesses, including product development, sales and marketing, business management, cost control and risk control. We have approximately 1,691 experienced engineers, technicians and specialists providing professional and flexible support for our business operations in various aspects, including the design, research and development and operation of our computer systems.

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In 2014, we continued to increase our investment in information technology development. To provide better service to our customers, we developed and promoted applications including an intelligent platform for claims application, our official WeChat and “E BaoZhang”, a comprehensive electronic customer self-service platform.

In 2014, our data center in Shanghai was successfully launched for use. We continued the construction of our new research and development center in Beijing.

Trademarks

We conduct our business under the “China Life” brand name (in English and Chinese), the “ball” logos and other business related slogans and logos. CLIC owns these trademarks and has registered them with the Trademark Office of the SAIC. CLIC has entered into a trademark license agreement with us, under which CLIC has agreed to grant us a royalty-free license to use these trademarks. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Continuing Related Party Transactions with CLIC”.

Regulatory and Related Matters

Overview

The insurance industry is heavily regulated in the PRC. The applicable laws and regulations governing insurance activities undertaken within the territories of the PRC consist principally of the PRC Insurance Law and rules and regulations promulgated under that law. The CIRC is the authority authorized by the PRC State Council to regulate and supervise the insurance industry in the PRC.

The PRC Insurance Law, which provided the initial framework for regulating the PRC insurance industry, was enacted in 1995, and significantly amended on October 28, 2002, February 28, 2009 and August 31, 2014. Among other things, the major provisions of the PRC Insurance Law include: (1) licensing of insurance companies and insurance intermediaries, such as agents and brokers; (2) separation of property and casualty business and life insurance business; (3) regulation of market conduct by participants; (4) substantive regulation of insurance products; (5) regulation of the financial condition and performance of insurance companies; and (6) supervisory and enforcement powers of the CIRC.

The CIRC was established in 1998. It has extensive supervisory authority over the PRC insurance industry, including: (1) promulgation of regulations applicable to the insurance industry; (2) examination of insurance companies; (3) establishment of investment regulations; (4) approving the policy terms and premium rates for certain insurance products; (5) setting standards for measuring the financial soundness of insurance companies; (6) requiring insurance companies to submit reports concerning their business operations and condition of assets; and (7) ordering the suspension of all or part of an insurance company’s business. Since its establishment, the CIRC has promulgated a series of regulations indicating a gradual shift in the regulatory approach to a more transparent regulatory process and a convergent movement toward international standards.

Insurance Company Regulation

Licensing requirements

An insurance company is required to obtain a license from the CIRC in order to engage in an insurance business. In general, a license will be granted only if the company can meet prescribed registered capital requirements and other specified requirements, including requirements relating to its form of organization, the qualifications of its senior management and actuarial staff, the adequacy of its information systems and specifications relating to the insurance products to be offered.

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The CIRC may grant a life insurer a license to offer all or part of the following products: accident insurance, term life insurance, whole life insurance, annuities, short-term and long-term health insurance, endowment insurance (for individuals only) and other personal insurance approved by the CIRC, as well as reinsurance relating to any of the foregoing.

An insurance company may seek approval for establishing branch offices to meet its business needs so long as it meets minimum capital and other requirements. Our headquarters and all of our branch offices have obtained the requisite insurance licenses.

Minimum capital requirements

The minimum paid-in capital for an insurance company is RMB 200 million. For an insurance company whose registered capital is RMB 200 million, the minimum incremental capital for each first branch office in a province other than the province where its headquarter is located is RMB 20 million. No additional capital will be required when the paid-in capital has reached RMB 500 million, and the insurer’s solvency is sound.

Restriction of ownership in joint stock insurance companies

Any acquisition of shares which results in the acquirer owning 5% or more of the registered capital of a joint stock insurance company, whether or not listed, requires the approval of the CIRC. A filing with the CIRC is required with respect to a change of equity interest of less than 5% in an insurance company, unless it is a listed insurance company. Unless otherwise approved by the CIRC, equity interests held by a single shareholder (including its related parties) must not exceed 20% of the total equity of a single insurance company; however, subject to the fulfillment of certain conditions and with the approval of the CIRC, the shareholding ratio of a single shareholder (including its related parties) in a single insurance company may be more than 20% but may never exceed 51%. The combined equity interests held by foreign investors may not exceed 50% of the total equity of a single life insurance company.

Fundamental changes

Prior approval must be obtained from the CIRC before specified fundamental changes relating to a Chinese insurance company may occur. These include: a change of company name, organizational form, registered capital or address of registered office or executive offices; an expansion of business scope; an amendment to articles of association; a merger or spin-off; a change in a shareholder whose capital contribution accounts for 5% or more of the total capital of the company or a shareholder holding 5% or more of the shares of the company; and a termination of a branch office. In addition, certain other changes relating to the insurance company must be reviewed by or filed with the CIRC.

Regulation of products

Regulation of ordinary personal insurance products. An ordinary personal insurance product is one whose insurance premiums and policy benefits are definite upon issuance of the insurance policy. Beginning from August 5, 2013, the CIRC removed the original 2.50% cap on the guaranteed rates of return of ordinary personal insurance products, and such guaranteed rates of return can be decided by insurance companies at their discretion in accordance with the principle of prudence. Meanwhile, the statutory valuation rates of ordinary personal insurance policies issued on and after August 5, 2013 have been increased from 2.50% to 3.50%. In addition, beginning from August 5, 2013, if the guaranteed rate of return of an ordinary personal insurance product developed by an insurance company is not higher than the maximum valuation rate set by the CIRC which varies depending on product, the insurance company must file the relevant information of the product with the CIRC. If such rate is higher than the maximum valuation rate set by the CIRC, the insurance company is required to obtain the CIRC’s approval on the product in advance, and during the approval process, the insurance company is not allowed to submit new insurance clauses and premium rates to the CIRC for approval.

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Regulation of participating products. A participating product is one which the policyholder or annuitant is entitled to share in the distributable earnings of the insurer through “policy dividends”. The participation dividend may be in the form of a cash payment or an increase in the insured amount. At least 70% of the distributable earnings is required to be distributed as dividends. Participating products may not be sold or modified without the prior approval of the CIRC, and CIRC regulations govern disclosures that may be made regarding participating products. Insurance companies offering participating products are required to file an annual report with the CIRC. The insurance company is also required to provide a performance report to the holders of its participating products at least once a year, setting forth specified financial and other information regarding the products. Under the relevant requirements of the CIRC, the assumed interest rate of a participating product may not exceed 2.50%.

Regulation of universal products. A universal product is one which offers the typical protection of life insurance with investment accounts providing a minimum yield. The premium payments and coverage of universal products are flexible, usually with a minimum guaranteed interest rate, and the investment yields are settled periodically. Beginning from February 16, 2015, the CIRC removed the original 2.50% cap on the minimum guaranteed interest rate of universal products, with the guaranteed interest rate to be decided by insurance companies at their discretion in accordance with the principle of prudence. Meanwhile, the maximum valuation rate of a universal product has been increased from a compound annual rate of 2.5% to a compound annual rate of 3.5%. If the minimum guaranteed interest rate of a universal product developed by an insurance company is not higher than the maximum valuation rate set by the CIRC (i.e. a compound annual rate of 3.5%), the insurance company must file specified information relating to the product with the CIRC. If such rate is higher than the maximum valuation rate set by the CIRC, the insurance company is required to obtain the CIRC’s approval of the product. Any amendment to the insurance clauses, premium rates, insurance liabilities, types of insurance or pricing methods of universal products must be filed with or approved by the CIRC.

Regulation of investment-linked products. An investment-linked product is one which insures the policyholder or annuitant against one or more separate risks and at the same time gives the policyholder or annuitant an interest in one or more separate investment accounts. Investment-linked products may not be sold or amended without the prior approval of the CIRC. The establishment of separate investment accounts is subject to the CIRC’s approval. Transactions between a separate investment account and any other account of the insurance company, other than a transfer of cash to pay for operating expenses of the separate investment account, are prohibited. Other CIRC regulations govern the sale and disclosure terms of investment-linked products.

Regulation of variable annuity insurance. Variable annuity insurance is a type of insurance where the policy benefits are associated with the price of the investment unit in the linked investment account, and a minimum amount of policy benefits is guaranteed as stipulated in the insurance agreement. Under variable annuity insurance, the insurance company is obliged to pay an annuity or offer an option for the conversion of the insurance proceeds to be annuitized upon maturity. Variable annuity products may not be sold or amended without the prior approval of the CIRC. Variable annuity products must be sold and disclosed in accordance with the requirements of the CIRC.

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Regulation of pension insurance. A life insurance company or a pension insurance company, as approved by the CIRC, may engage in individual and group pension insurance business. The pension insurance terms and premium rates determined by an insurance company must be filed with or approved by the CIRC in accordance with its regulatory provisions. Other CIRC regulations govern the sale and disclosure terms of pension insurance.

Regulation of enterprise annuity funds. Subject to the approval of the PRC Ministry of Human Resources and Social Security, insurance companies may serve as the trustee, account manager and investment manager for enterprise annuity funds. China Life Pension has obtained qualifications to serve as investment manager, trustee and account manager of enterprise annuity fund.

Regulation of health insurance. Subject to approval by the CIRC, life insurance companies may engage in health insurance business. Other insurance companies may, subject to approval by the CIRC, engage in short-term health insurance business. Insurance companies engaged in health insurance business are required to submit an actuarial report or reserves assessment report for the preceding year in accordance with the relevant provisions of the CIRC. Insurance companies must also submit a pricing review report to the CIRC before March 15 of each year regarding the short-term health insurance products.

Regulation of accidental injury insurance. Accidental injury insurance is a type of insurance that uses death or disability caused by accidents or physical injuries stipulated in the insurance agreement as a condition for paying insurance proceeds. Accidental injury insurance products must be developed and managed by the headquarters of the insurance company and filed with the CIRC. Insurance companies must also submit a pricing review report to the CIRC before March 15 of each year regarding the short-term accident insurance products they offer.

Regulation of foreign exchange denominated insurance. Insurance companies may seek approval from the CIRC and the SAFE to engage in foreign exchange denominated insurance and reinsurance businesses, allowing them to offer products to non-Chinese policyholders or for non-Chinese beneficiaries, as well as policies covering accidents and illnesses which occur outside China, together with related reinsurance.

Regulation of supplementary major medical insurance. As part of the Chinese government’s overall medical insurance scheme, supplementary major medical insurance reimburses policyholders for a specified percentage of their medical expenses which are in excess of the maximum amounts covered by the basic social medical insurance as long as such medical expenses are caused by the diseases covered by the basic social medical insurance. The Chinese government has launched pilot supplementary major medical insurance programs in specified areas in China. Local governments in these pilot areas use a portion of the basic medical insurance funds to purchase supplementary major medical insurance service from qualified insurance companies through a government tender. Insurance companies are required to apply to the CIRC for the qualification to engage in such business. Supplementary major medical insurance products must be filed with the CIRC.

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Regulation of investments

Permitted investments. As a Chinese life insurance company, we are subject to restrictions under the PRC Insurance Law and other related rules and regulations on the asset categories and percentages in which we are permitted to invest. On January 23, 2014, the CIRC issued a notice classifying the assets that insurance companies may invest in five broad categories: current assets, fixed-income assets, equity assets, property assets and other financial assets. The notice further specifies the amounts in percentages that may be invested in each asset category, the percentages that correspond to concentration risks for investing in a single item and counter-party, and risk monitoring requirements and early warning mechanisms with respect to liquidity, financing scale and asset classes.

Asset categories, investment and concentration risk regulatory percentages. Currently, Chinese life insurance companies are allowed to invest their funds in the following asset categories, subject to the satisfaction of conditions prescribed for each form of investment.

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			Regulatory Percentage(1)
Asset Category	Definition	Specific Items Included	Investment Regulatory Percentage	Concentration Risk Regulatory Percentage
Current assets	Current assets refer to cash reserves, deposits payable on demand, and highly-liquid assets with shorter terms and less risk of changes in value that can be readily converted into a definite amount of cash.	Domestic items mainly include cash, current deposits, bank call deposits, insurance asset management products on the monetary market, and government bonds, quasi-government bonds and reverse repurchase agreements with residual maturities of one year or less. Overseas items mainly include bank current deposits, monetary market funds, overnight lending, commercial bills, bank bills, negotiable certificates of deposit, reverse repurchase agreements, short-term government bonds, government-backed bonds, bonds of international financial organizations, corporate bonds and convertible bonds with residual maturities of one year or less, as well as other tools or products recognized by the CIRC in this category.	None.	The total outstanding investments by an insurance company in a single legal person(2) must not exceed 20% of the total assets(3) of the insurance company as at the end of the last quarter (excluding, among others, investments in domestic central government bonds, quasi-government bonds, and equity investments in insurance enterprises with proprietary funds).
Fixed-income assets	Fixed-income assets refer to assets characterized by a definite maturity date and payments of interest and principal according to pre-determined interest rates and payment methods, as well as other assets whose main value is dependent on the changes in the value of the aforesaid assets.	Domestic items mainly include term deposits, negotiated deposits, bond funds, fixed-income insurance asset management products, financial institution (company) bonds, non-financial institution (company) bonds and government bonds and quasi-government bonds with residual maturities of more than one year. Overseas items mainly include term deposits, structured deposits with bank guaranteed commitments, securities investment funds with fixed-income commitments, government bonds, government-backed bonds, bonds of international financial organizations, corporate bonds and convertible bonds with residual maturities of more than one year, as well as other tools or products recognized by the CIRC in this category.	None.	The book balance of investment by an insurance company in a single fixed-income asset(4) must not exceed 5% of the total assets of the insurance company as at the end of the last quarter, excluding investments in domestic central government bonds, quasi-government bonds and bank deposits. The total outstanding investment by an insurance company in a single legal person must not exceed 20% of the total assets of the insurance company as at the end of the last quarter (excluding, among others, investments in domestic central government bonds, quasi-government bonds and equity investments in insurance enterprises with proprietary funds).

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			Regulatory Percentage(1)
Asset Category	Definition	Specific Items Included	Investment Regulatory Percentage	Concentration Risk Regulatory Percentage
Equity assets	Equity assets include both listed and unlisted equity assets. Listed equity assets refer to the ownership certificate representing the equity or other residual income rights of enterprises that are publicly listed and traded on stock exchanges or financial asset markets, as well as other assets whose main value depends on the changes in the value of the aforesaid assets. Unlisted equity assets refer to the equity or other residual income rights of enterprises that are established and registered but are not publicly listed on exchanges, as well as other assets whose main value depends on the changes in the value of the aforesaid assets.	Domestic items of listed equity assets mainly include shares, equity funds, hybrid funds and equity insurance asset management products. Overseas items of listed equity assets mainly include ordinary shares, preferred shares, global depositary receipts, American depositary receipts and equity securities investment funds, as well as other tools or products recognized by the CIRC in this category. Domestic and overseas items of unlisted equity assets mainly include equities of unlisted companies, equity investment funds (including venture capital funds) and other related financial products, as well as other tools or products recognized by the CIRC in this category.	The total book balance of investments by an insurance company in equity assets must not exceed 30% of the total assets of the insurance company as at the end of the last quarter, and the book balance of significant equity investments must not be higher than the net assets of the insurance company as at the end of the last quarter. The book balance does not include the equity of any insurance enterprise as invested by the insurance company with its proprietary funds.	The book balance of investments by an insurance company in a single equity asset must not exceed 5% of the total assets of the insurance company as at the end of the last quarter, excluding significant equity investments and investments in the equity of any insurance enterprises by the insurance company with its proprietary funds. The total outstanding investments by an insurance company in a single legal person must not exceed 20% of the total assets of the insurance company as at the end of the last quarter (excluding, among others, investments in domestic central government bonds, quasi-government bonds, and equity investments in insurance enterprises with proprietary funds).

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			Regulatory Percentage(1)
Asset Category	Definition	Specific Items Included	Investment Regulatory Percentage	Concentration Risk Regulatory Percentage
Property assets	Property assets refer to purchased or invested land, structures and other land attachments, as well as other assets whose main value depends on the changes in the value of the aforesaid assets.	Domestic items mainly include real estate, infrastructure investment schemes, property investment schemes, property insurance asset management products and other property related financial products. Overseas items mainly include commercial properties, office properties and real estate investment trusts (REITs), as well as other tools or products recognized by the CIRC in this category.	The total book balance of investments by an insurance company in property assets must not exceed 30% of the total assets of the insurance company as at the end of the last quarter. The book balance does not include the properties purchased by the insurance company for its own use. The book balance of the properties purchased by an insurance company for its own use must not exceed 50% of the net assets of the insurance company as at the end of the last quarter.	The book balance of investments by an insurance company in a single property asset must not exceed 5% of the total assets of the insurance company as at the end of the last quarter, excluding properties purchased for its own use. The total outstanding investments by an insurance company in a single legal person must not exceed 20% of the total assets of the insurance company as at the end of the last quarter (excluding, among others, investments in domestic central government bonds, quasi-government bonds and equity investments in insurance enterprises with proprietary funds).

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			Regulatory Percentage(1)
Asset Category	Definition	Specific Items Included	Investment Regulatory Percentage	Concentration Risk Regulatory Percentage
Other financial assets	Other financial assets refer to other kinds of assets that are distinctively different from all the foregoing categories of assets, including in terms of risk-return characteristics, liquidity and other characteristics, and cannot be classified into any of the foregoing categories.	Domestic items mainly include financial products by commercial banks, asset-backed securities offered by banking financial institutions, trust schemes of collective funds offered by trust companies, special asset management schemes offered by securities companies, project asset-backed schemes offered by insurance asset management companies and other insurance asset management products. Overseas items mainly include structured deposits without bank guaranteed commitments, as well as other tools or products recognized by the CIRC in this category.	The total book balance of investments by an insurance company in other financial assets must not exceed 25% of the total assets of the insurance company as at the end of the last quarter.	The book balance of investments by an insurance company in a single other financial asset must not exceed 5% of the total assets of the insurance company as at the end of the last quarter, excluding purchase of insurance asset management products within its group. The total outstanding investments by an insurance company in a single legal person must not exceed 20% of the total assets of the insurance company as at the end of the last quarter (excluding, among others, investments in domestic central government bonds, quasi-government bonds, and equity investments in insurance enterprises with proprietary funds).
Overseas investment	An insurance company is allowed to participate in overseas investments in 25 developed markets and 20 emerging markets in accordance with the relevant requirements of the CIRC.	As referred to in the investable overseas items listed in each of the above asset categories.	The total outstanding overseas investments by an insurance company must not exceed 15% of the total assets of the insurance company as at the end of the last quarter.	The total outstanding investments by an insurance company in a single legal person must not exceed 20% of the total assets of the insurance company as at the end of the last quarter (excluding, among others, equity investments in insurance enterprises with proprietary funds).

(1) When calculating the regulatory percentages for each asset category, an insurance company is required to combine its domestic and overseas investments in assets of the category on a consolidated basis.

(2) A single legal person refers to a single fund-raising party with legal person status that establishes a direct creditor-debtor or shareholder relationship with an insurance company due to the latter’s investment therein.

(3) Total assets exclude the balance of the funds raised from bond repurchases and the amount of assets under independent accounts (including investment-linked life insurance products, variable annuity products, health care entrusted management products, pension insurance entrusted management products and investment-oriented non-life insurance products without pre-agreed returns).

(4) Single asset investments refer to the investments in a single specific item under any category of investment assets. Where an investment product is issued in several phases, the book balance of the investment in a single asset is the sum of the investments in each phase.

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Investment risk monitoring percentages. To alleviate the risks associated with liquidity and high volatility of assets, an insurance company that experiences any of the following circumstances is required to report to the CIRC in a timely manner, and the CIRC will closely monitor the operation of the insurance company and disclose the related information to the public when necessary:

• Liquidity monitoring. The total book balance of investments by an insurance company in current assets and government bonds and quasi-government bonds with residual maturities of one year or longer is lower than 5% of the total assets of the insurance company as at the end of the last quarter.

• Financing leverage monitoring. The total outstanding borrowings (including inter-industry lending and bond repurchases) of an insurance company exceed 20% of the total assets of the insurance company as at the end of the last quarter.

• Monitoring of different categories of assets. The total book balance of investments by an insurance company in domestic bonds with a long-term credit rating of AA or lower as rated by domestic credit rating agencies exceeds 10% of the total assets of the insurance company as at the end of the last quarter, or the total book balance of investments in equity assets exceeds 20% of the total assets of the insurance company as at the end of the last quarter, or the total book balance of investments in property assets exceeds 20% of the total assets of the insurance company as at the end of the last quarter, or the total book balance of investments in other financial assets exceeds 15% of the total assets of the insurance company as at the end of the last quarter, or the total book balance of outstanding overseas investments exceeds 10% of the total assets of the insurance company as at the end of the last quarter.

• The book balance of a single inter-group insurance asset management product purchased by an insurance company exceeds 5% of the total assets of such insurance company as at the end of the last quarter.

Risk Classification of Insurance Assets. An insurance company must evaluate, at least once every half year, the quality of its insurance assets falling within the categories of fixed-income assets, equity assets and property assets, and divide such assets into five categories based on risk, namely “pass”, “special mention”, “substandard”, “doubtful” and “loss”, with the last three categories collectively referred to as “non-performing assets”. Insurance assets that require risk classification include assets invested by the insurance company other than those subject to fair value measurement and changes to these assets are counted as gains or losses for the period in question or owners’ equity. An insurance company must establish and improve risk classification systems and working processes for its assets and file reports on such systems and processes with the CIRC. In addition, an insurance company is required to semiannually report to the CIRC the relevant information on the classification of its assets. An insurance company must also establish feasible plans for annual asset loss provisions and write-offs, as well as plans for the disposal of non-performing assets based on its actual operations and the quality of its assets. These plans must be approved by its board of directors and be filed with the CIRC.

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Financial derivative products. Apart from the regulations on the five asset categories described above, the CIRC has separately issued a series of rules governing the operation of domestic and overseas trading of derivative products by an insurance company. Financial derivative products are financial contracts whose value is determined by one or more types of underlying assets, indices or certain events. Typical financial derivative products include forwards, futures, options and swaps.

Insurance companies may participate in derivatives transactions only for the purpose of hedging or averting risks, and not for the purpose of speculation. Legitimate purposes include hedging or averting risks of current assets and liabilities, or the company as a whole, and hedging the risk of assets scheduled to be bought within the next month, or locking in future transaction prices.

“Assets scheduled to be bought”, as used above, refers to assets that an insurance institution has decided to buy after going through its investment decision-making process. If the assets are not bought within one month of the decision date, or the plan was aborted within the aforementioned period, the insurance institution must terminate, liquidate or unwind the relevant derivative upon the expiration of the prescribed period or within five trading days of such decision.

For an insurer carrying out interest rate swaps, the notional principal may not exceed 10% of its fixed-income assets (including bank deposits, bonds and other debt instruments) as of the end of the previous quarter. The notional principal swapped with the same counterparty may not exceed 3% of such counterparty’s fixed-income assets as of the end of the previous quarter.

Solvency requirements

In March 2003, the CIRC introduced a new standard, the solvency ratio, to measure the financial soundness of life insurance companies to provide better policyholder protection under a system of corrective regulatory action. The standard for calculation of solvency ratio was further revised by the CIRC in September 2008. The solvency ratio of an insurance company is a measure of capital adequacy, which is calculated by dividing the actual capital of the company (which is its admissible assets less admissible liabilities, determined in accordance with relevant CIRC rules) by the minimum capital it is required to meet.

The minimum capital of a life insurance company is the sum of its minimum capital for its short-term business (policies having a term of one year or less from the date of issuance) and the minimum capital for its long-term business (policies having a term of more than one year from the date of issuance). The standard for calculation of the minimum capital was further revised by the CIRC in January 2010. In January 2013, the CIRC issued the standard for calculation of the minimum capital for supplementary major medical insurance. In August 2013, the standard for calculation of the minimum capital with respect to the total sums at risk under long term life insurance policies was revised by the CIRC. In April 2014, the CIRC issued the standard for calculation of the minimum capital for high cash value products.

The minimum capital for a life insurance company’s short-term business is the sum of the minimum capital for supplementary major medical insurance and the higher of:

• 18% of the portion of net premiums received in the most recent fiscal year net of business tax and other surcharges which is not in excess of RMB 100 million, plus 16% of the portion which is in excess of RMB 100 million; and

• 26% of the portion of the average annual claims payments during the most recent three fiscal years which is not in excess of RMB 70 million, plus 23% of the portion which is in excess of RMB 70 million.

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The minimum capital for its long-term business is the sum of:

• 4% of the period-end reserves for insurance risks after unbundling of mixed insurance contracts;

• 4% (if the annual premium revenue from high cash value products is not more than the base amount) or 6% (if the annual premium revenue from high cash value products is more than the base amount) of the period-end reserves for insurance contracts of high cash value products;

• 4% of the period-end reserves for other insurance contracts;

• 1% of the liabilities for other risks after unbundling of investment-linked insurance contracts and variable annuity insurance contracts;

• 4% (if the annual premium revenue from high cash value products is not more than the base amount) or 6% (if the annual premium revenue from high cash value products is more than the base amount) of the liabilities for other risks after unbundling of hybrid insurance contracts for high cash value products;

• 4% of the liabilities for other risks after unbundling of other mixed insurance contracts;

• 4% of the liabilities for insurance policies which do not pass the tests for significant insurance risks;

• 0.15% of the total sums at risk under life insurance contracts;

• 0.24% of the total sums at risk under health insurance contracts;

• 0.06% of the total sums at risk under accident insurance contracts; and

• 0.3% of the total sums at risk under other insurance contracts.

An insurance company with a solvency ratio below 100% may be subject to a range of regulatory actions by the CIRC. The CIRC may in such situations require the insurance company to, among other things, raise additional share capital, limit paying dividends on its shares, limit the remuneration and expense accounts of its directors and senior management, restrict its advertising activities, restrict the establishment of branch offices and business operations, cease any new business development, transfer its insurance business to others or seek reinsurance of its insurance obligations, sell its assets or restrict the acquisition of fixed assets, limit the channels for using its capital, change its management team or put the insurer into receivership.

If the solvency ratio is between 100% and 150%, the CIRC may require an insurance company to submit and implement a plan on the prevention of inadequate solvency. Where there is any significant insolvency risk in an insurance company with a solvency ratio between 100% and 150% or higher than 150%, the CIRC may require the insurance company to take corrective actions or take other regulatory actions as the CIRC deems necessary.

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Insurance companies are required to calculate and report annually and quarterly to the CIRC their solvency level. In addition, an insurance company must submit a report to the CIRC within five business days after becoming aware of the inadequacy of its solvency ratio, and must formulate a solvency ratio compliance program, take measures to return its solvency ratio to an adequate level, and submit the compliance program to the CIRC.

As of December 31, 2014, our solvency ratio was approximately 294.48%.

In February 2015, the CIRC issued the major technical standards for a new set of solvency regulations, the “China Risk Oriented Solvency System”, or Solvency II, with the aim of replacing the current solvency requirements on Chinese insurance companies. Solvency II adopts the internationally accepted “three-pillar” regulatory system which includes quantitative capital requirements, qualitative regulatory requirements and market discipline mechanisms while its regulatory concept, models, methods and parameters are based on Chinese insurance market conditions. As of the date of this annual report, Solvency II has not been officially implemented by the CIRC, and Chinese insurance companies are required to follow the current solvency regulatory regime while simultaneously submitting a solvency report prepared based on the requirements under Solvency II. Based on the testing results to be obtained by it during the transitional period, the CIRC will determine when the current solvency regulatory regime will be officially replaced by Solvency II. As Solvency II is still under preliminary testing by the CIRC and it is still unclear when it will be officially implemented, we are currently unable to assess the extent to which we will be affected if the complete set of Solvency II regulations are finalized and officially implemented.

Statutory deposits

Insurance companies in China are required to deposit an amount equal to 20% of their registered capital with at least two qualified commercial banks, each of which must, among other things, have net assets of no less than RMB 20 billion as of the end of the previous year and have no affiliated relationship with the insurance company. These funds may not be used for any purpose other than to pay off debts during a liquidation proceeding.

Statutory insurance fund

Chinese life insurance companies are required to contribute to a statutory insurance fund 0.15% of the business income for life insurance with guaranteed earnings and 0.05% of the business income for life insurance without guaranteed benefits; 0.8% of insurance premiums for short-term health insurance and 0.15% of insurance premiums for long-term health insurance; 0.8% of premiums for non-investment accident insurance, 0.08% of the business income for investment accident insurance with guaranteed benefits, and 0.05% of the business income for investment accident insurance without guaranteed benefits. Contributions are not required once the balance of the statutory insurance fund of a life insurance company reaches 1% of the company’s total assets.

Statutory reserves

In addition to the statutory deposit and the statutory insurance fund, insurance companies are required to provide for the statutory reserves in accordance with regulations established by the CIRC. These reserves are recorded as liabilities for purposes of determining an insurance company’s actual solvency in accordance with regulatory rules.

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Statutory reinsurance

Insurance companies are required to reinsure, for any single risk, the excess of the maximum potential liability over an amount equal to 10% of the sum of paid-in capital and capital reserves.

Actuaries

Insurance companies are required to employ actuarial professionals and establish a system for actuarial reporting.

Regulation of corporate governance

Directors and senior management qualification and remuneration management requirements. Directors, supervisors and senior management of an insurance company are subject to qualification requirements implemented by the CIRC. In addition, the cash benefits, subsidies and allowances that an insurance company pays to its directors, supervisors and senior management annually must not exceed 10% of their respective base remuneration. Where an insurance company has inadequate solvency, the CIRC will place restrictions on the remuneration of its directors, supervisors and senior management in accordance with relevant regulatory rules on solvency. The senior management of an insurance company receive in-office audits once every three years. If any member of the senior management leaves due to a job change, promotion or any other reasons, a departure audit must be conducted.

Risk management. Insurance companies must establish and adopt procedures, organizational structures, systems and measures to identify, evaluate and control the risks involved in its insurance operation. Insurance companies must report to the CIRC in a timely manner any major risks, and include in its annual report an annual risk evaluation report reviewed by the board of directors. In addition, as required by the CIRC, an insurance company that conducts certain activities, such as direct share investments, equity investments, real estate investments, investments in unsecured bonds, development of infrastructure investment schemes and real estate investment schemes and use of derivatives, must have at least two qualified risk officers. Where an insurance company decides to change a risk officer, impose disciplinary sanctions on a risk officer, dismiss a risk officer or terminate the employment of a risk officer, the insurance company must replace such risk officer within 10 business days from the date of the decision, and report to the CIRC the reasons for such replacement.

Compliance management. Insurance companies must prevent, identify, evaluate, report and manage compliance risks by taking measures such as setting up a compliance department, formulating and implementing compliance policies (which are required to be filed with the CIRC), exercising compliance monitoring and providing compliance trainings, so as to ensure compliance by the company, its staff and sales agents with the relevant laws and regulations, rules of regulatory authorities, industrial self-regulatory rules, internal management systems and codes of ethics. An annual compliance report must be submitted to the CIRC by April 30 each year. Each insurance company is required by the CIRC to appoint a compliance officer and establish a compliance management department in its head office. As of the date of this annual report, we have set up a compliance management department, established compliance standards and appointed a compliance officer whose qualification has been approved by the CIRC.

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Related party transactions. According to applicable CIRC regulations, related party transactions between an insurance company and any of its related parties are classified as either “material related party transactions” or “ordinary related party transactions”. The term “material related party transactions” refers to any single transaction between an insurance company and a related party in which the trading volume accounts for 1% or more of the insurance company’s net assets as of the end of the previous year and has a value of more than RMB 5 million, or transactions between an insurance company and a related party in which the accumulative trading volume within one fiscal year accounts for 10% or more of the insurance company’s net assets as of the end of the previous year and has a value of more than RMB 50 million. The term “ordinary related party transactions” refers to all related party transactions other than “material related party transactions”. A material related party transaction is subject to approval by the insurer’s board of directors or shareholders, while an ordinary related party transaction must be reviewed in accordance with the internal authorization process of the insurance company. An insurance company is required to maintain a system to manage related party transactions and file them with the CIRC. Companies must take effective measures to prevent their shareholders, directors, supervisors, senior management and other related parties from taking advantage of their positions and acting against the interests of the company or the insured through related party transactions. In addition, where an insurance company places bank deposits (excluding current deposits) with any of its related parties, or invests in the equity, real estate and other assets of any related parties, the financial products issued by any related parties or any financial products whose underlying assets include the assets of any related parties, the insurance company is required, within 10 business days after the conclusion of the transaction agreements (or within 10 business days from the occurrence of the relevant event if no transaction agreement is concluded), to publish an information disclosure announcement on its website and the website of the Insurance Association of China. In respect of any information that could not be publicly disclosed as it invovles state secrets or commercial secrets or due to other relevant reasons, the insurance company must, at least five business days prior to the prescribed date of information disclosure, report this fact to the CIRC and refrain from disclosing such information as required by law.

Internal audit. Insurance companies are required to establish an independent department for internal audit purposes, staffed with sufficient internal audit personnel (the number of full-time internal audit personnel generally must not be less than 5‰ of the total number of the company’s employees), establish an audit committee, and designate an audit controller whose appointment and replacement must be filed with the CIRC. An internal audit report must be submitted to the CIRC by April 30 of each year and any major risk identified during the internal audit process must be reported to the CIRC in a timely manner.

Reporting and disclosure requirements. An insurance company must submit to the CIRC an operating report, an actuarial report, its financial statements, a solvency report and a compliance report, each prepared in accordance with applicable rules. By April 30 of each year, an insurance company must disclose on its website and a newspaper designated by the CIRC an annual report including, among other things, financial statements and solvency data for the previous year. In addition, within 10 business days after the occurrence of a material related party transaction or other material events, an insurance company must disclose information about such transactions and events on its website.

Internal control assessment. In January 2006, the CIRC issued tentative rules on internal control assessment of life insurance companies to facilitate and supervise the companies and improve their awareness of, and strengthen their controls over, matters such as corporate governance in management, internal controls and regulatory compliance in operations and risk management. Life insurance companies are required to submit to the CIRC an internal control assessment form and an annual internal control assessment report each year. The CIRC assesses the internal control of life insurance companies at least every three years, covering at least one third of all life insurance companies each year. In August 2010, the CIRC issued new rules governing internal control of insurance companies. Under the new rules, an insurance company must establish an internal control evaluation system, and by April 30 of each year, submit to the CIRC an evaluation report on its internal control.

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Custody of insurance assets. In October 2014, the CIRC and CBRC jointly issued a notice on regulating the insurance assets custody business. Under this notice, insurance companies are required to establish and improve mechanisms for the custody of insurance assets, select qualified commercial banks and other professional institutions, place various assets generated by the investment of insurance funds under third-party custody and oversight, and ensure that the revenue and expenditure concerning the use of insurance funds (except for expenditure of daily expenses) are primarily processed through the custody fund accounts. Insurance companies are required to submit implementing plans relating to the custody of their insurance assets to the CIRC.

Market conduct

Insurance companies are required to take steps to ensure that sales promotional materials used by their sales representatives and agents are objective, true and correct, with no material omissions or misleading information, contain no forecasts of benefits that are not guaranteed under the insurance or annuity product and do not exaggerate the benefits provided under the insurance or annuity product. The sales promotional materials must also highlight in an appropriate fashion any exclusions of coverage or liability in their products, as well as terms providing for policy or annuity surrenders and return of premiums. If any insurance policy or consulting service is provided through telephone sales, requisite office space, staff, facilities and adequate supervising must be furnished. In addition, the telephone sale must be conducted directly by the insurance company, and the terms and rates of the premiums of the insurance policy and geographic business area must be submitted to the CIRC for approval.

Insurance companies are subject to extensive regulation against any anti-competitive behavior or unfair dealing conduct. They may not pay insurance agents, the insured or the beneficiary any rebates or other illegal payments, nor may they pay their agents commissions over and above the industry norm.

Insurance companies are required to establish internal rules and procedures to protect the personal data of policyholders and insureds. Insurance companies are prohibited from illegal obtaining, using or selling of the personal data of policyholders and insureds.

Insurance companies are also required to comply with anti-money laundering regulations and establish internal operational procedures and anti-money laundering control systems. No insurance activity can be conducted for the purpose of illegal fundraising.

Regulation of issuance of subordinated debt

Beginning in September 2004, insurance companies that meet a series of qualification tests and are approved by the CIRC may issue subordinated debt with a fixed term of at least five years to certain qualified Chinese legal persons and foreign investors. The audited net asset value of the issuer must be at least RMB 500 million as of the end of the prior year and the total amount of unpaid debt at any given point after the issuance, including both principal and interest, must not exceed the issuer’s net asset value as of the end of the prior year. Proceeds from the issuance of subordinated debt may be recorded as supplementary capital of an issuance company, provided that the total amount that has been recorded as supplementary capital may not exceed 50% of the net assets of an insurance company. Proceeds from the issuance of subordinated debt may not be used to offset daily operating losses of an insurance company. The issuer must comply with certain disclosure obligations both at the time of the issuance and during the term of the debt. The issuer may repay the debt only if its solvency ratio would remain at least 100% after the repayment of both principal and the interest. Since March 15, 2013, a qualified insurance group (or holding) company is also allowed to issue subordinated debt in accordance with the relevant requirements of the CIRC.

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Beginning in May 2012, publicly listed insurance companies that meet a series of qualification tests and are approved by the CIRC may issue subordinated convertible bonds. Subordinated convertible bonds refer to bonds issued by an insurance company in accordance with statutory procedures that satisfy the following conditions: the bonds have a maturity of five years or longer; the principal and interest of the bonds shall be repaid and paid after insurance policy liabilities and other general liabilities in the event of bankruptcy liquidation; and the bonds can be converted into shares of the insurance company in accordance with the agreed conditions within a certain period of time. An insurance company must submit an issuance application to the relevant securities regulatory authority within six months after the CIRC has approved the issuance of subordinated convertible bonds. An issuer must report the issuance information to the CIRC within ten working days after completion of the issuance of subordinated convertible bonds.

Regulation of merger and acquisition of insurance companies

An insurance company may apply to the CIRC for approval of the acquisition of control of another insurance company through the acquisition of equity or shares of the other insurance company. Except under special circumstances, such as a transfer between affiliated parties under common control, the acquiring party is not allowed to transfer the acquired equity or shares in the target insurance company within three years from the completion of the acquisition. Upon approval by the CIRC, the acquiring party may control two insurance companies engaging in the same type of business after the completion of acquisition. In addition, an insurance company may apply to the CIRC for approval for the merger with other insurance companies by absorption or establishing a new insurance company. The business scope of the insurance company subsequent to the merger is subject to the re-approval by the CIRC. An insurance company must, during the twelve-month period after the completion of merger or acquisition, report the following information in writing to the CIRC within the first 30 days of each quarter: making investments in and purchases or sales of material assets, related party transactions, business transfers, notifications to insurance consumers, public announcements, changes of senior management personnel and employee placements.

Regulation of establishment and management of non-insurance subsidiaries

An insurance company may apply to the CIRC for approval for the direct or indirect establishment of domestic or overseas non-insurance subsidiaries (excluding insurance companies, insurance asset management institutions, dedicated insurance agencies, insurance brokerage institutions and insurance assessment institutions), primarily including: (1) financial institutions that engage in non-insurance financial services; (2) service firms that provide various supporting services to insurance companies; (3) investment platform companies with a strong connection with an insurance business, project companies established for managing the investment of insurance funds in real properties, and companies formed as a result of the investment of insurance funds in the upstream and downstream industry chain of an insurance business; and (4) other types of companies without connection with an insurance business. Unless otherwise prescribed by laws, administrative regulations and the CIRC, an insurance company is not allowed to guarantee the debts of its non-insurance subsidiaries, or lend funds to its non-insurance subsidiaries. An insurance company must build firewalls between its non-insurance subsidiaries in terms of personnel, capital, business and information to prevent risks spreading from its non-insurance subsidiaries. An insurance company must also cause its non-insurance subsidiaries to establish and improve their respective information disclosure systems, and submit to the CIRC an annual report on its non-insurance subsidiaries by April 30 of each year.

Regulation of establishment of overseas insurance institutions

An insurance company may apply to the CIRC for approval for the establishment of overseas branches, overseas insurance companies and overseas insurance intermediaries, or the acquisition of overseas insurance companies or intermediaries. In order to submit such an application, an insurance company must have an operating history of no less than two years, total assets of no less than RMB 5 billion as at the end of the prior year and foreign exchange funds of no less than US$ 15 million or its equivalent in other freely convertible currencies as at the end of the preceding year. The applicant insurance company must also comply with applicable solvency, risk management and other requirements as stipulated by the CIRC.

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Compliance with regulatory requirements

Our management confirms that we have complied in all material respects with all applicable regulatory requirements set out above.

Regulation of Foreign-Invested Insurance Companies

China acceded to the WTO on December 11, 2001. As a result of China’s commitments in connection with the accession, the Chinese insurance market is gradually opening up to foreign insurers and insurance-related service providers. A foreign life insurer with total assets of no less than US$5,000 million and 30 years of industry experience in any WTO member country, and which has had a representative office for two years in China, is permitted to form a life insurance joint venture with a domestic partner of its choice. Foreign life insurers may own up to one-half of the joint venture. In addition, the geographic limitation on foreign life insurers, which were permitted to operate only in specified cities, has been lifted since December 11, 2004. Accordingly, foreign life insurers have been permitted to provide group life insurance, health insurance and annuity and other pension-like products since December 11, 2004. In addition, since December 11, 2006, foreign insurance brokers have been permitted to set up wholly owned subsidiaries in China.

Foreign-invested insurance companies, including Sino-foreign equity joint ventures, wholly foreign-owned insurance companies and branches of foreign insurance companies, are generally regulated in the same manner as domestic insurance companies. Foreign-invested insurance companies may not, without the approval of the CIRC, engage in transactions with their affiliates, including reinsurance transactions and purchases and sales of assets. In addition, where the foreign-invested insurance company is a branch of a foreign insurance company, it is required to notify the CIRC of fundamental events relating to the foreign insurance company within ten days following the occurrence of the event. Reportable events include: (1) a change of name, senior management or jurisdiction of incorporation of the foreign insurance company, (2) a change in the foreign insurance company’s share capital, (3) a change in any person beneficially owning 10% or more of the foreign insurance company’s shares, (4) a change in business scope, (5) the imposition of administrative sanctions by any applicable regulatory authority, (6) a material loss incurred by the foreign insurance company, (7) a spin-off, merger, dissolution, revocation of corporate franchise or bankruptcy involving the foreign insurance company and (8) other events specified by the CIRC. If the foreign insurance company is dissolved, or its corporate franchise is revoked or it is declared bankrupt, the Chinese branch of the foreign insurance company will be prohibited from conducting any new business.

Beginning in June 2012, the CIRC has delegated certain authorities with respect to foreign-invested insurance companies to its provincial and local branch offices: approving the change of place of business of branches and subsidiaries of foreign-invested insurance companies; approving the establishment of subsidiary agencies of foreign-invested insurance companies below the branch-office level; approving the opening of subsidiary agencies of foreign-invested insurance companies below the branch-office level; and approving the qualification of senior management personnel of subsidiary agencies of foreign-invested insurance companies below the branch-office level.

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Regulation of Insurance Asset Management Companies

An insurance asset management company is a limited liability company or joint stock company that manages insurance funds on behalf of others. Insurance asset management companies are regulated by the CIRC.

Minimum capital requirements

The registered capital of an insurance asset management company may not be lower than RMB 100 million or the equivalent amount of other freely convertible currencies.

Business operations

An insurance asset management company may conduct the following businesses: (1) managing funds in Renminbi or other foreign currencies entrusted to it, including insurance funds, funds of pension, annuity and housing provident institutions, as well as funds of other qualified investors that are capable of identifying and undertaking corresponding risks; (2) managing and operating its own insurance funds in Renminbi or foreign currencies; (3) as trustee, carrying out asset management business appointed by and on behalf of the trustor, or developing asset management products for the interest of the beneficiary or for specific purposes and carrying out asset management business; (4) applying to relevant financial regulatory authorities to carry out publicly-raised asset management business in accordance with the law, provided that relevant conditions are met; (5) as approved by the CIRC, issuing relevant asset management products to domestic insurance groups or holding companies, insurance companies, insurance asset management companies and other qualified investors capable of identifying and bearing the applicable risk; and (6) other businesses approved by the CIRC or other departments of the State Council.

The investments of the insurance funds by insurance asset management companies are subject to the same requirements and limitations applicable to the investments by the insurance companies themselves. With the regulatory expansion of insurance company investment powers, the investment powers of insurance asset management companies over their own funds have been expanded as well to cover subordinated bonds issued by banks and insurance companies and bank subordinated bonds.

In connection with the funds being managed by an insurance asset management company, a custodian is required to be appointed. The custodian must be an independent commercial bank or financial institution satisfying applicable CIRC requirements.

Shareholding restrictions

At least 75% of the shares of an insurance asset management company must be owned by domestic insurance companies, and at least one of the shareholders of an insurance asset management company must be an insurance company or insurance holding company satisfying specified requirements.

Investment risk control

Both insurance companies and asset management companies must establish structures, arrangements and measures to recognize, assess, manage and control investment risks. Members of senior management may not be responsible for the management of departments in charge of investment decisions, investment transactions and risk controls at the same time. Branches of insurance companies may not manage insurance funds. Insurance asset management companies must arrange for separate investment managers to manage their own funds and the insurance funds from other insurance companies, as well as insurance funds from an insurance company that are of a different nature.

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Major emergency response management

An insurance asset management company is required to establish a monitoring and precaution mechanism for major emergencies.

Regulation of Insurance Agencies, Insurance Brokers and Other Intermediaries

Insurance agents are business entities or individuals which or who act on behalf of an insurance company in respect of insurance matters. An insurance company is prohibited from using any agent not licensed by the CIRC to market its insurance products, and is responsible for the acts of its agents when the acts are within the scope of their agency. Licensed insurance agencies fall into three groups: dedicated agencies, non-dedicated agencies and individual agents.

A dedicated agency is a company organized under the PRC company law whose principal business is to act as an agent of insurance companies. Dedicated agencies are subject to minimum capital and other requirements, and their business is generally limited to insurance-related activities.

A non-dedicated agency is a business entity whose principal business is other than as an insurance agency. To receive a license, the agency business must have a direct relationship with its principal business, which the CIRC has interpreted as permitting commercial banks and banking operations of post offices to act as non-dedicated insurance agencies. Only employees of commercial banks who hold CIRC qualification certificates are permitted to sell insurance products at the outlets of commercial banks or banking operations of post offices. Sales representatives of insurance companies are prohibited from selling insurance products at the outlets of commercial banks or banking operations of post offices.

An individual agent is an individual selling insurance products as agent for an insurer. Individual agents are required to meet the qualification requirements prescribed by the CIRC and obtain a qualification certificate from the CIRC and a practicing license from the employing insurance company or agency before practicing.

Approximately 99.87% of our individual agents hold a CIRC qualification certificate and a practicing license from us. On January 6, 2013, the CIRC issued the Regulatory Rules on Insurance Sales Personnel, effective from July 1, 2013. Under these regulations, insurance companies are prohibited from retaining individual agents without CIRC qualification certificates or practice certificates as agents. In addition, qualification requirements for individual agents were further enhanced, including raising the minimum degree requirement from junior high school to college. Insurance companies are required to assume management responsibilities for their individual agents. Insurance companies that retain individual agents without CIRC qualification certificates to engage in insurance sales activities will be subject to an order to correct their misconduct, warned and fined up to RMB 30,000, and the responsible individual agents will also be warned by the CIRC and fined up to RMB 10,000.

All insurance agencies and agents are required to enter into agency agreements that specify the duration of the agency; the amount of the agency fee and the method of payment; the scope of the agency, including the insurance products to be marketed; and other relevant matters. Absent specific CIRC approval, insurance agents are prohibited from signing insurance and annuity products on behalf of the insurance companies they represent. None of our agents is authorized to sign insurance policies or annuity contracts for us.

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Insurance agencies are required to open special accounts for the handling of funds that they hold or collect for the insurance companies they represent. They may not engage in the following activities: dealing with unauthorized insurers or insurance intermediaries, engaging in activities beyond their authorized business scope or geographical area, causing injury to the rights of the insurance companies they represent, spreading rumors or otherwise injuring the reputation of others in the insurance industry, misappropriating the funds of the insurance companies they represent, defrauding insurance customers through false or misleading representations or material omissions, using undue influence to induce insurance customers to purchase insurance, or defrauding the insurance companies they represent through collusion with the insured or the insurance beneficiary. In addition, dedicated insurance agencies are subject to various reporting requirements, including submission of annual financial reports, and are subject to supervision and examination by the CIRC.

Insurance brokers who represent individuals and companies purchasing insurance and other intermediaries are subject to similar regulatory requirements regarding their activities. Among other things, they are subject to supervision and examination by the CIRC, and fundamental corporate changes must be approved by the CIRC. Only companies organized under the PRC company law and meeting requirements set by the CIRC are authorized to act as insurance brokers. Insurance brokers are required to comply with qualification standards prescribed by the CIRC, and must have obtained a qualification certificate issued by the CIRC and a practicing license from the employing insurance brokerage before practicing.

No.2 Interpretation of Accounting Standard for Business Enterprises

On August 7, 2008, the MOF issued the No.2 Interpretation of Accounting Standard for Business Enterprises, requiring listed companies which issue both H shares and A shares to adopt consistent accounting policies to recognize, calculate and report a particular transaction in their H share financial statements and A share financial statements, except for certain differences in relation to the reversal of impairment losses of long-term assets and disclosures in relation to related party transactions.

On January 5, 2009, the CIRC issued the Notification on the Implementation of the No.2 Interpretation of Accounting Standards for Business Enterprises in the Insurance Sector (No.1 [2009] of CIRC), which requires insurance companies to make appropriate changes to their accounting policies that cause differences between onshore and offshore financial statements when preparing their 2009 annual financial statements, such that the same accounting policies and estimates will apply to a particular transaction.

On December 22, 2009, the MOF issued the Notification on the Promulgation of the Regulations regarding the Accounting Treatment of Insurance Contracts, which regulates issues relating to, among other things, the unbundling of mixed insurance contracts, tests for significant insurance risks and the calculation of reserves for insurance contracts, and requires insurance companies to comply with these requirements beginning with the preparation of their financial statements for the year ended December 31, 2009. The accounting treatment of any transaction item adopted in previous year which differs from those set out in the MOF’s regulations must be retrospectively adjusted, unless any such adjustment is not practicable under the circumstances.

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C. ORGANIZATIONAL STRUCTURE

(1) Wholly owned by CLIC

(2) Formerly known as China Life Asset Management (Hong Kong) Company Limited

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List of Significant Subsidiaries

Name of Subsidiary	Jurisdiction of Incorporation	Proportion of Ownership Interest Owned by China Life
China Life Asset Management Company Limited	The People’s Republic of China	60% (directly)
China Life Franklin Asset Management Company Limited (1)	Hong Kong	50%(2) (indirectly through affiliate)
China Life Pension Company Limited	The People’s Republic of China	74.27%(3) (directly and indirectly through affiliate)
China Life AMP Asset Management Co., Ltd.	The People’s Republic of China	85.03%(4) (indirectly through affiliate)
China Life (Suzhou) Pension and Retirement Investment Company Limited	The People’s Republic of China	100% (directly)

(1) Formerly known as China Life Asset Management (Hong Kong) Company Limited

(2) AMC, which is 60% owned by us, owns 50%

(3) We own 70.74% and AMC, which is 60% owned by us, owns 3.53%

(4) AMC, which is 60% owned by us, owns 85.03%

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D. PROPERTY, PLANTS AND EQUIPMENT

As of December 31, 2014, we owned and leased 3,935 and 12,842 properties, respectively, and had 94 properties under construction. Among the 3,935 properties owned by us, 1,918 properties are leased to third parties (including partial leasing) while the remaining properties are mainly occupied by us as office premises. Eight properties are recognized as investment properties.

On December 31, 2014, we entered into a new property leasing agreement with China Life Investment Holding Company Limited. Under this property leasing agreement, which will expire on December 31, 2017, China Life Investment Holding Company Limited agreed to lease to us 1,807 properties owned by it. The annual rent is determined by reference to market rent or, where there is no available comparison, by reference to the costs incurred by China Life Investment Holding Company Limited in holding and maintaining the properties, plus a margin of approximately 5%.

ITEM 4A. UNRESOLVED STAFF COMMENTS.

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.

You should read the following discussion and analysis in conjunction with the audited consolidated financial statements and accompanying notes included elsewhere in this annual report.

Overview of Our Business

We are the leading life insurance company in China. We provide a broad range of insurance products, including individual and group life insurance, health insurance and accident insurance products. We had nearly 197 million individual and group life insurance policies, annuity contracts, health insurance and accident insurance policies in force as of December 31, 2014.

In response to favorable market opportunities for health insurance and accident insurance in recent years, we have increased our efforts in developing our health insurance and accident insurance businesses. As a result, our health insurance and accident insurance gross written premiums have increased gradually as a percentage of our total gross written premiums. Meanwhile, the gross written premiums derived from group life insurance and supplementary major medical insurance represented an insignificant percentage of our total gross written premiums. In order to better reflect the changes in our external environment and business structure, and the objectives of future development, as well as providing users of financial statements with more useful information, effective January 1, 2014, we realigned our previously reported individual life insurance, group life insurance, short term insurance, supplementary major medical insurance and other segments into four newly identified segments, namely life insurance, health insurance, accident insurance and other. Our management has conducted its analysis and evaluation of our operating results based on the new reporting segments. In connection with this realignment, segment operating results for the fiscal years ended December 31, 2013 and 2012 have been revised to conform to current year segment operating results presentation. For a detailed discussion, see our consolidated financial statements included elsewhere in this annual report.

We report our financial results according to the following three principal business segments:

• Life insurance, which offers participating and non-participating life insurance and annuities to individuals and groups.

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• Health insurance, which offers short-term and long-term health insurance to individuals and groups. The financial results of our supplementary major medical insurance are also reflected in our health insurance business segment.

• Accident insurance, which offers short-term and long-term accident insurance to individuals and groups.

In addition, we have an “other” reporting segment, in which we primarily report the results of the insurance policy management services that we provided to CLIC and the sales agency services that we provided to CLPCIC, as well as the results of our associates, joint ventures and subsidiaries. See Note 5 to our consolidated financial statements included elsewhere in this annual report.

Financial Overview of Our Business

We had total gross written premiums of RMB 331,010 million (US$53,349 million) and net profit of RMB 32,514 million (US$5,240 million) for the year ended December 31, 2014. Our principal business segments had the following results:

• Life insurance had total gross written premiums of RMB 285,619 million (US$46,033 million) in 2014.

• Health insurance had total gross written premiums of RMB 33,192 million (US$5,350 million) in 2014.

• Accident insurance had total gross written premiums of RMB 12,199 million (US$1,966 million) in 2014.

Our business has been characterized by growth of premium income over the past several years, together with a move towards an improved business structure which has been evidenced by an increase in first-year regular premiums and an increase in the percentage of first-year regular premiums for products with regular premiums of ten years or more in first-year regular premiums. At the same time, our business has also been affected by certain unfavorable factors, including the increasing cross-industry competition from companies in other financial industries, and the rapid development of the insurance companies owned or controlled by commercial banks and banking operations of post offices and some other small and medium-sized insurance companies, which have secured an increasing market share by offering products with relatively high interest rates.

Factors Affecting Our Results of Operations

Revenues, Expenses and Profitability

We earn our revenues primarily from:

• insurance premiums from the sale of life insurance policies and annuity contracts, including participating and non-participating policies and annuity contracts with life contingencies, as well as accident and health insurance products. Net premiums earned accounted for 74.9% of total revenues in 2014.

• investment income and realized and, in some cases, unrealized gains and losses from our investment assets. Investment income and realized and unrealized gains and losses accounted for 22.8% of total revenues in 2014.

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In addition, following the restructuring, we receive service fees for policy management services we provide to CLIC. AMC also receives asset management fees for asset management services provided to CLIC. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions”.

Our operating expenses primarily include:

• insurance benefits provided to our policyholders, accident and health claims and claim adjustment expenses;

• increase in insurance contracts liabilities;

• investment contract benefits;

• policyholder dividends resulting from participation in profits;

• underwriting and policy acquisition costs; and

• administrative and other expenses.

In addition, we pay rent to China Life Investment Holding Company Limited on the properties we lease from it.

Our profitability depends principally on our ability to price and manage risk on insurance and annuity products, our ability to maximize the return on investment assets, our ability to attract and retain customers, and our ability to manage expenses. In particular, factors affecting our profitability include:

• our ability to design and distribute products and services and to introduce new products which gain market acceptance on a timely basis;

• our ability to price our insurance and investment products at levels that enable us to earn a margin over the costs of providing benefits and the expense of acquiring customers and administering those products;

• our returns on investment assets;

• our mortality and morbidity experience, which affects our insurance reserves;

• our lapse experience, which affects our ability to recover the cost of acquiring new business over the lives of the contracts;

• our cost of administering insurance contracts and providing customer services;

• our ability to manage liquidity, price and credit risk in our investment portfolio and to manage duration risk in our asset and policy portfolios through asset-liability management; and

• changes in regulations.

In addition, other factors, such as competition, securities market conditions, taxes and general economic conditions, affect our profitability.

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Interest Rates

For many of our long-term life insurance and annuity products, we are obligated to pay a minimum interest or crediting rate to our policyholders or annuitants. These products expose us to the risk that changes in interest rates may reduce our “spread”, or the difference between the rate of return we are able to earn on our investments intended to support our insurance obligations and the amounts that we are required to pay under the policies. The minimum rate we pay is established when the product is priced, subject to a cap set by the CIRC and which may be adjusted from time to time. Currently, the CIRC cap for participating life insurance products is 2.50%, and the 2.50% cap has been removed for non-participating life insurance policies and universal life insurance policies issued on or after August 5, 2013 and February 16, 2015, respectively. If the rates of return on our investments fall below the minimum rates we guarantee, our profitability would be adversely affected. During 2012, the PBOC reduced the interest rates twice, from 3.50% to 3.00%. In November 2014, the interest rate on one-year term deposits was reduced from 3.00% to 2.75%, and in March 2015, the interest rate was further reduced from 2.75% to 2.50%. If economic conditions change in the future, the Chinese government may adjust the interest rates accordingly. If the interest rates were to be increased, but we did not raise the cap on the rate we may pay on our products, sales of some of our products, including our non-participating products, could be adversely impacted. An increase in guaranteed rates caused by a rise in the CIRC cap may lead to an increase in surrenders and withdrawals of our existing products which offer rates lower than the new rates.

Interest rates also affect our returns on investment assets, a large proportion of which is held in negotiated bank deposits and debt securities. In a declining interest rate environment, interest rate changes expose us to reinvestment risks. In a rising interest rate environment, higher rates may yield greater interest income but also may generate unrealized capital losses for debt securities designated as trading, causing us to incur realized capital losses for securities we reinvest or requiring us to take an impairment if the market value of debt securities declines for an extended period.

Sustained levels of high or low interest rates also may affect the relative popularity of our various products. For example, the popularity of our participating endowment products is partially driven by the protracted comparatively low interest rate environment in China during the past several years and the 2.50% cap set by the CIRC on the guaranteed rates of return we may apply before August 5, 2013. The investment nature of the product, including the enhanced yield by means of dividends, has proven to be attractive to China’s insurance buyers.

For further information on our exposure to interest rate risk, see “Item 11 Quantitative and Qualitative Disclosure about Market Risk—Interest Rate Risk” and Note 4 to our consolidated financial statements included elsewhere in this annual report.

Investments

As an insurance company, we have been permitted to invest in five categories of investment assets, including liquidity assets, fixed income assets, equity assets, real properties and other financial assets. However, we are limited by Chinese law and regulations in the maximum amount that we may invest in each type of assets. See “Item 4. Information on the Company—Business Overview—Investments” and “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Regulation of investments”. Our material concentration risks relate to our investments in bank deposits and Chinese government securities.

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The limitations on the maximum amount that we may invest in each type of asset affects the investment returns we are able to generate and subjects us to various risks that we would not, or to a lesser extent, be subject to if we were not subject to those limitations. In particular, the limited availability of long-duration investment assets in the markets in which we invest has resulted in the duration of our assets being shorter than that of our liabilities. We believe that with development of China’s financial markets and the gradual easing of the investment restrictions imposed on insurance companies in China, such as the increase of the maximum amount that we may invest in equity interests and real properties, our ability to match the duration of our assets to that of our liabilities will improve. We also seek to reduce the risk of duration mismatch by focusing on product offerings whose maturity profiles are in line with the duration of investments available to us in the prevailing investment environment.

Our results can be materially affected by investment impairments. The following table sets forth impairment charges and reversal of impairment charges, which are included in net realised gains and impairment on financial assets, for the years ended December 31, 2012, 2013 and 2014.

Impairment (charge)/reversal	For the year ended December 31,
	2012			2013			2014			2014
	(RMB in millions)									US$
Debt securities		51			—			—			—
Equity securities		(31,094	)		(3,803	)		(1,149	)		(185	)
Total		(31,043	)		(3,803	)		(1,149	)		(185	)

During the year ended December 31, 2014, we recognized an impairment expense of RMB 1,149 million (US$185 million) for available-for-sale equity securities for which we determined that objective evidence of impairment existed. During the year ended December 31, 2013, we recognized an impairment expense of RMB 3,803 million for available-for-sale equity securities for which we determined that objective evidence of impairment existed. During the year ended December 31, 2012, we recognized an impairment expense of RMB 31,094 million for available-for-sale equity securities for which we determined that objective evidence of impairment existed. Our rationale for the impairment is based on a severe or prolonged decline in value. These securities were not impaired due to company-specific events such as bankruptcies.

During the years ended December 31, 2014 and 2013, no previously recognized impairment losses in debt securities were reversed. During the year ended December 31, 2012, RMB 51 million of previously recognized impairment losses in debt securities was reversed.

Available-for-sale securities comprised of the following asset classes as of December 31, 2014, 2013 and 2012.

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	As of December 31,
	2012				2013				2014
	Cost or amortized cost		Estimated fair value		Cost or amortized cost		Estimated fair value		Cost or amortized cost		Estimated fair value
	(RMB in millions)
Debt securities
Government bonds		42,004		42,946		33,519		31,435		25,885		26,328
Government agency bonds		139,861		135,870		136,466		119,739		137,303		138,487
Corporate bonds		142,401		139,286		175,396		165,001		206,232		206,511
Subordinated bonds/debt		30,821		31,488		24,664		23,579		22,304		22,798
Other		—		—		238		232		1,222		1,217
Subtotal		355,087		349,590		370,283		339,986		392,946		395,341
Equity securities
Funds		65,864		57,019		57,760		58,052		74,532		83,121
Common stocks		95,429		96,361		72,770		77,250		44,197		71,592
Other		3,614		3,446		16,026		16,239		55,271		57,477
Subtotal		164,907		156,826		146,556		151,541		174,000		212,190
Total		519,994		506,416		516,839		491,527		566,946		607,531

We had gross unrealized gains of RMB 47,673 million (US$7,683 million) and gross unrealized losses of RMB 5,581 million (US$899 million) as of December 31, 2014. We had gross unrealized gains of RMB 14,041 million and gross unrealized losses of RMB 35,170 million as of December 31, 2013. We had gross unrealized gains of RMB 21,859 million and gross unrealized losses of RMB 12,061 million as of December 31, 2012. The unrealized losses as of December 31, 2014 related primarily to the unrealized losses of available-for-sale bonds.

The following tables set forth the length of time that each class of available-for-sale securities has continuously been in an unrealized loss position as of December 31, 2014, 2013 and 2012.

As of December 31, 2014	0-6 months			7-12 months			More than 12 months			Total
	(RMB in millions)
Debt securities
Unrealized losses		503			94			4,358			4,955
Carrying amounts		52,214			1,310			82,408			135,932
Unrealized losses as a percentage of carrying amounts		0.96	%		7.18	%		5.29	%		3.65	%
Equity securities
Unrealized losses		595			31			—			626
Carrying amounts		11,666			129			—			11,795
Unrealized losses as a percentage of carrying amounts		5.10	%		24.03	%		—			5.31	%
Total
Total unrealized losses		1,098			125			4,358			5,581
Total carrying amounts		63,880			1,439			82,408			147,727
Unrealized losses as a percentage of carrying amounts		1.72	%		8.69	%		5.29	%		3.78	%

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As of December 31, 2013	0-6 months			7-12 months			More than 12 months			Total
	(RMB in millions)
Debt securities
Unrealized losses		8,777			4,444			17,301			30,522
Carrying amounts		161,296			38,911			112,752			312,959
Unrealized losses as a percentage of carrying amounts		5.44	%		11.42	%		15.34	%		9.75	%
Equity securities
Unrealized losses		3,681			967			—			4,648
Carrying amounts		54,306			4,023			—			58,329
Unrealized losses as a percentage of carrying amounts		6.78	%		24.05	%		—			7.97	%
Total
Total unrealized losses		12,458			5,411			17,301			35,170
Total carrying amounts		215,602			42,934			112,752			371,288
Unrealized losses as a percentage of carrying amounts		5.78	%		12.60	%		15.34	%		9.47	%

As of December 31, 2012	0-6 months			7-12 months			More than 12 months			Total
	(RMB in millions)
Debt securities
Unrealized losses		2,150			644			7,002			9,796
Carrying amounts		128,425			17,930			83,477			229,832
Unrealized losses as a percentage of carrying amounts		1.67	%		3.59	%		8.39	%		4.26	%
Equity securities
Unrealized losses		1,751			514			—			2,265
Carrying amounts		12,738			9,165			—			21,903
Unrealized losses as a percentage of carrying amounts		13.74	%		5.61	%		—			10.34	%
Total
Total unrealized losses		3,901			1,158			7,002			12,061
Total carrying amounts		141,163			27,095			83,477			251,735
Unrealized losses as a percentage of carrying amounts		2.76	%		4.28	%		8.39	%		4.79	%

Financial assets other than those accounted for as at fair value through profit or loss are adjusted for impairments, where these are declines in value that are considered to be other than temporary.

Our rationale for an other-than-temporary impairment is based on a severe or prolonged decline in value. We determine a severe or prolonged decline after considering both quantitative and qualitative factors.

The qualitative factors include specific information on the financial status and performance of the investee, including but not limited to:

• loss of major contracts;

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• breach of debt covenants; and

• bankruptcy.

The quantitative factors include the following:

• The market price of the equity securities was more than 50% below its cost at the balance sheet date;

• The market price of the equity securities was more than 20% below its cost for a period of at least six months at the balance sheet date; and

• The market price of the equity securities was below its cost for a period of more than one year.

When the decline in value is considered an 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, and available-for-sale debt securities and equity securities are written down to their fair value, and the change is recorded in net realised gains and impairment on financial assets in the period the impairment is recognized. The impairment loss is reversed through the 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 recognized through net profit. The impairment losses recognized in net profit on equity investments are not reversed. See “—Critical Accounting Policies”.

As of December 31, 2014, our total investment assets were RMB 2,100,870 million (US$338,599 million) and the investment yield for the year ended December 31, 2014 was 5.36%. The investment yield primarily reflected the increase in spread income, interest income and fair value gains/(losses), as well as the decrease in impairment losses of assets. As of December 31, 2013, our total investment assets were RMB 1,848,681 million and the investment yield for the year ended December 31, 2013 was 4.86%. The investment yield primarily reflected the increase in interest income and spread income, and the decrease in impairment losses. In response to this market weakness, we made adjustments to the investment portfolio by decreasing the proportion of investments in equity securities and increasing the proportion of fixed-income assets. As of December 31, 2012, our total investment assets were RMB 1,790,838 million and the investment yield for the year ended December 31, 2012 was 2.79%. The investment yield primarily reflected the increase in impairment losses resulting from the continued weakness of the Chinese capital markets. In response to this market weakness, we made adjustments to the investment portfolio by decreasing the proportion of investments in equity securities and increasing the proportion of fixed-income assets.

We calculate the investment yields for a given year by dividing the investment income for that year by the average of the ending balance of investment assets of that year and the previous year.

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Mix of Products

The following table sets forth premium information as of or for the years ended December 31, 2014, 2013 and 2012 by type of product in our life insurance business, health insurance business and accident insurance business.

	As of or for the year ended December 31,								Compound annual growth rate
	2012		2013		2014		2014		(2012-2014)
	RMB		RMB		RMB		US$
Life insurance business
Whole life and term life insurance:
Gross written premiums		32,881		32,109		32,638		5,260		(0.37	)%
Endowment:
Gross written premiums		223,660		209,034		217,662		35,081		(1.35	)%
Annuities:
Gross written premiums		37,864		49,635		35,319		5,692		(3.42	)%
Health insurance business(1)
Gross written insurance premiums		18,789		24,713		33,192		5,350		32.91	%
Accident insurance business(2)
Gross written insurance premiums		9,548		10,799		12,199		1,966		13.03	%

(1) Including long-term and short-term health products.

(2) Including long-term and short-term accident products.

Pursuant to guidelines issued by the CIRC, we are required to pay to our participating policyholders dividends which are no less than 70% of the distributable investment earnings and mortality gains on participating products. Participating products tend to present us with less market risk, since we have more flexibility to set the level of dividends and because participating products are subject to guaranteed rates which are generally lower than those of non-participating products. In addition, changes in interest rates have less of an impact on their lapse rates than on those of non-participating policies. Conversely, participating products tend to be less profitable for us than non-participating products, largely because the terms of these contracts effectively commit us to sharing a portion of our earnings from participating products with our policyholders. However, participating products still provide us with attractive profit contributions given the growing level of sales volume they produce.

Products classified as investment contracts also affect our revenues, since only a portion of the payments we received under such products are recorded in our consolidated income statement as policy fees, and the majority of such payments are recorded as investment contracts under financial liabilities on our balance sheet.

Another factor affecting our revenue is the fact that a substantial amount of the premiums we receive on many individual and group life insurance products are made in single payments, rather than over the course of the policy. We believe that the popularity of single premium products is in line with purchasing patterns and demand in China. We have, however, adjusted our premium structure to focus more on sales of products with regular premiums, especially products with regular premiums for ten years or more, which has reduced the proportion of single written premiums of our total first-year gross written premiums. We believe that this strategy could contribute to a more steady development of our business and enhance the retention rate of our customers and sales agent force.

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Regulation

We operate in a highly regulated industry. Changes in regulation can have a significant impact on our revenues, expenses and profitability. China’s insurance regulatory regime is undergoing significant changes toward a more transparent regulatory process and a convergent movement toward international standards. Among other things, recent changes to permitted investment channels for insurance companies have impacted our investment portfolio and returns. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters”.

Critical Accounting Policies

We prepared the consolidated financial statements under the historical cost convention, except for financial assets and financial liabilities at fair value through profit or loss, available-for-sale financial assets, insurance contract liabilities and certain property, plant and equipment at deemed cost during restructuring process. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires our management to exercise its judgment in the process of applying our accounting policies. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to our businesses and operations. The following sections discuss the accounting policies applied in preparing our financial statements that we believe are most dependent on the application of these judgments and estimates. However, uncertainty about these judgments and estimates could result in outcomes that require a material adjustment to the carrying amounts of assets and liabilities in the future periods.

Reserves for Long-term Insurance Contracts

Long-term insurance contracts include whole life and term life insurance, endowment insurance and annuities policies with significant life contingency risk. Premiums are recognized as revenue when due from policyholders.

We use the discounted cash flow method to estimate the reserves for 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 contracts liabilities are calculated using various assumptions, including assumptions on mortality rates, morbidity rates, lapse rates, discount rates and expenses assumptions, and based on the following principles:

• 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 fulfill contractual obligations, consisting of the following:

(i) The guaranteed benefits based on contractual terms, including payments for deaths, disabilities, diseases, survivals, maturities and surrenders;

(ii) Additional non-guaranteed benefits, such as policyholder dividends; and

(iii) 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 expense. Expenses are determined based on expense analysis with consideration of future inflation and our expense management.

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On each reporting date, we review the assumptions for reasonable estimates of liability and risk margins, with consideration of all available information, and taking into account our historical experience and expectation of future events. Changes in assumptions are recognized in net profit. Assumptions for the amortization of residual margin are locked in at policy issuance and are not adjusted at each reporting date. We consider the potential impact of future risk factors on our operating results and incorporates such potential impact in the determination of assumptions. The sensitivity analysis disclosed in the Note 4.1.3 on page F-35 of this annual report provides a detailed analysis of impact of assumption changes on our operating results.

• Margin has been taken into consideration while computing the reserve of insurance contracts, measured separately and recognized in the net profit in each period over the life of the contracts. At the inception of the contracts, we do not recognize Day 1 gain, whereas on the other hand, Day 1 loss is recognized in net profit immediately.

Margin comprises of risk margin and a 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 acquisition costs by us representing Day 1 gain and will be amortized over the life of contracts. For insurance contracts in which future returns are affected by investment yields of corresponding investment portfolios, their related residual margins are amortized based on estimated future participating dividends payable to the policyholders. For insurance contracts in which future returns are not affected by investment yields of corresponding investment portfolios, their related residual margins are amortized based on sum assured of outstanding policies. The subsequent measurement of 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 residual margin.

• We have considered the impact of time value on the reserve calculation for insurance contracts.

We establish liabilities for long-term traditional insurance contracts based on the following assumptions:

• For the insurance contracts of which future returns are affected by the investment yields of corresponding investment portfolios, investment return assumptions are applied as discount rates to assess the time value impacts on reserve computation. In developing discount rate assumptions, we consider investment experience, current investment portfolio and trend of the yield curve. The discount rate reflects the future economic outlook as well as our investment strategy. The assumed discount rate with risk margin ranged from 4.80% to 5.00% as at December 31, 2012, from 4.80% to 5.00% as at December 31, 2013 and from 4.80% to 5.00% as at December 31, 2014, respectively.

For the insurance contracts of which the future returns are not affected by the investment yields of the corresponding investment portfolios, we use a discount rate assumption to assess the time value impacts based on the “yield curve of reserve computation benchmark for insurance contracts”, published on “China Bond” website, with consideration including liquidity spreads, taxation impacts and other relevant factors.

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The assumed discount rate with risk margin ranged from 3.12% to 5.61% as at December 31, 2012, from 3.47% to 5.74% as at December 31, 2013 and from 3.52% to 5.96% as at December 31, 2014, respectively.

The discount rate assumption is affected by certain factors, such as future macro-economy, fiscal policies, capital market and availability of investment channels of our insurance funds. We determine the discount rate assumption based on the information obtained at the end of each reporting period, including consideration of risk margin.

• The mortality and morbidity assumptions are based on the historical mortality and morbidity experience. The assumed mortality rates and morbidity rates vary by age of the insured and contract type.

We base our mortality assumptions on China Life Insurance Mortality Table (2000-2003), adjusted where appropriate to reflect our long-term 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 liability. Similarly, improvements in longevity due to continuing advancements in medical care and social conditions could expose us to longevity risk.

We base our morbidity assumptions for critical illness products on analysis of historical experience and expectations of future developments. There are two main sources of uncertainty. First, wide-ranging lifestyle changes could result in future deterioration in morbidity experience. Second, future development of medical technologies and improved coverage of medical facilities available to policyholders may bring forward the timing of diagnosing critical illness, which demands earlier payment of the critical illness benefits. Both could ultimately result in an inadequate reserving of liability if current morbidity assumptions do not properly reflect such secular trends.

Risk margin is considered in our mortality and morbidity assumptions.

• The expense assumptions are based on expected unit costs with the consideration of previous expenses study and future trends. Our expense assumptions are affected by certain factors, such as further inflation and market competition which bring uncertainty to these assumptions. We consider risk margin for expense assumptions based on the current information obtained at the end of each balance sheet date. Components of expense assumptions include cost per policy and percentage of premium. We have estimated the percentage of premiums costs to be 0.85% to 0.90% of premiums for individual life products and 0.90% for group life products as at December 31, 2012, 0.85% to 0.90% of premiums for individual life products and 0.90% for group life products as at December 31, 2013 and 0.85% to 0.90% of premiums for individual life products and 0.90% for group life products as at December 31, 2014, respectively, in each case plus a fixed per-policy expense.

• The lapse rates and other assumptions are affected by certain factors, such as future macro-economic factors, availability of financial substitutions and market competition, which bring uncertainty to lapse rates and other assumptions. The lapse rates and other assumptions are determined with reference to creditable past experience, current conditions, future expectations and other information obtained at the end of each reporting period.

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The method used to determine risk margin has been consistently applied. We consider risk margin for each of the discount rate, mortality and morbidity and expense assumptions to compensate for the uncertain amount and timing of future cash flow. When determining risk margin, we consider historical experience, future expectations and other factors. Risk margin is determined by us and does not include any elements imposed by regulators.

We adopted a consistent process to determine assumptions for the insurance contracts, which are detailed in Note 14 to our consolidated financial statements included elsewhere in this annual report.

Universal Life Contracts and Unit-linked Contracts

Universal life contracts and unit-linked contracts are unbundled into the following components:

• Insurance components; and

• Non-insurance components.

The insurance components are accounted for as insurance contracts and follow the existing reserves calculation methodology as allowed under IFRS 4 Insurance Contracts for insurance contracts, and the non-insurance components are accounted for as investment contracts, which are recognized in the investment contracts.

Investment Contracts

Revenue from investment contracts with or without discretionary participating features is recognized as policy fee income, which consists of various fee income including, among others, policy fees, handling fees and management fees, during the period. Policy fee income net of certain acquisition cost are deferred as unearned revenue and amortized 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 with or without discretionary participating features are carried at amortized cost.

Valuation of Investments

Debt securities that we have the ability and positive intent to hold to maturity are classified as held-to-maturity. These investments are carried at amortized cost. Debt securities and equity securities that we purchase with the intention to resell in the short term are classified as securities at fair value through profit or loss. Debt securities and equity securities other than those classified as held-to-maturity or securities at fair value through profit or loss are classified as available-for-sale securities. We regularly review the carrying value of our investments. If there is objective evidence of impairment, the carrying value is reduced through a charge to income statement. The following are the policies used:

Securities at fair value through profit or loss. This category has two sub-categories: securities held for trading and those designated at fair value through profit or loss at inception. Securities are classified as held for trading at inception if acquired principally for the purpose of selling in the short-term or if they form part of a portfolio of financial assets in which there is evidence of short term profit-taking. Other financial assets are classified as at fair value through profit or loss if they meet certain criteria and designated as such at inception by us.

Held-to-maturity securities. Held-to-maturity securities are non-derivative financial assets with fixed or determinable payments and fixed maturities that we have 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.

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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 we intend 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.

Available-for-sale securities. Available-for-sale securities are non-derivative financial assets that are either designated in this category or not classified in either of the other categories.

Securities other than those accounted for as at fair value through profit or loss are adjusted for impairments, where there are declines in value that are considered to be an impairment. In evaluating whether a decline in value is an impairment for debt securities and equity securities, we consider 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 bankruptcy or other financial reorganization; 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, we also consider the extent or the duration of the decline. 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 and impairment on financial assets” in the period the impairment is recognized. The impairment loss is reversed through the 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 recognized through the net profit. The impairment losses recognized in net profit on equity instruments are not reversed through the net profit.

As of December 31, 2014, debt securities of RMB 201,719 million (US$32,511 million) contain guarantees issued by third parties and, of those, 75.18% were guaranteed by either the Chinese government or a Chinese government controlled financial institution. Of the guarantees issued by government or government controlled financial institutions, 81.15% relates to a guarantee issued by a Chinese government ministry for debt securities issued by a government railway infrastructure entity. We monitor the credit worthiness of the third parties which have issued these guarantees using local Chinese credit ratings which are generally only utilized within China.

The fair value of the financial assets and liabilities is determined as follows:

Debt securities. The fair values of debt securities are generally based on 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.

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Equity securities. The fair values of equity securities are generally based on 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 model. Equity securities, for which fair values cannot be measured reliably, are recognized at cost less impairment.

Term deposits, loans and securities purchased or sold under agreements to resell or repurchase. The carrying amounts of these assets in the consolidated statements of financial position approximate fair values.

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, analyze and interpret information related to market transactions and other key valuation model inputs from multiple sources, and, through the use of widely accepted valuation models, provide a theoretical quote on various securities.

We utilize one pricing service for all of our debt securities. This pricing service provider is the only publicly-recognized pricing service provider in China, and its pricing information is used by the mutual fund industry and almost all companies in China. The prices obtained from the pricing service are non-binding. Our review and testing have shown the prices obtained from our pricing service to be appropriate. As such, during the year ended December 31, 2014, we did not consider it necessary to adjust the prices obtained from our pricing service.

As at December 31, 2014, RMB 247,321 million of RMB 254,831million debt securities with prices obtained from our pricing service were issued by the Chinese government and government controlled organizations. This pricing service utilized a discounted cash flow valuation model using market observable inputs, mainly interest rates, to determine a fair value. There are no other significant market inputs. As such, we have classified these debt securities as Level 2 in the fair value hierarchy.

Management subjects the fair values provided by valuation service providers to a number of validation procedures. These procedures include a review of the valuation models utilized, as well as our own test recalculation of the prices obtained from the pricing service at each reporting date.

We consider a combination of many factors in determining whether we believe a market for a financial instrument is active or inactive. Among these factors include:

• whether there has been any trades within past 30 days of the reporting date;

• the volume of the trades within this 30 day period; and

• the degree which the implied yields for a debt security for observed transactions differs from our understanding of the current relevant market rates and information.

Revenue Recognition

Premiums. Premiums from long-term life insurance contracts are recognized as revenue when due from the policyholders.

Premiums from the sale of short-term accident and health insurance contracts are recorded when written and are accreted to earnings on a pro-rata basis over the term of the related policy coverage.

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Policy fee income. Revenue from investment contracts is recognized as policy fee income, which consists of various fee income (including policy fees, handling fees and management fees) over the period during which service is provided. Excess fee income over certain acquisition costs is deferred as unearned revenue and amortized over the expected life of the contracts. Policy fee income is presented as other income.

Investment income. Investment income is comprised of 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 recognized when the right to receive a dividend payment is established.

Deferred taxation

Deferred income tax is recognized, 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 assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be recognized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Recently Issued Accounting Standards

The following standards and amendments are mandatory for the first time for the financial year beginning on January 1, 2014.

Standards/Amendments	Content	Effective for annual period beginning on or after
IAS 32 Amendment	Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities	January 1, 2014
IAS 36 Amendment	Recoverable Amount Disclosures for Non-Financial Assets	January 1, 2014
IAS 39 Amendment	Novation of Derivatives and Continuing of Hedge Accounting	January 1, 2014
IFRS 10, IFRS 12 and IAS 27 (Revised) Amendments	Investment Entities	January 1, 2014
IFRS 2 Amendment (i)	Definition of Vesting Condition	July 1, 2014
IFRS 3 Amendment (i)	Accounting for Contingent Consideration in a Business Combination	July 1, 2014
IFRS 13 Amendment (i)	Short-term Receivables and Payables	January 1, 2014
IFRS 1 Amendment (ii)	Meaning of Effective IFRSs	January 1, 2014

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(i) These three amendments are included in Annual Improvements 2010-2012 Cycle.

(ii) The amendment is included in Annual Improvements 2011-2013 Cycle.

The following standards and amendments are not yet effective and have not been early adopted by us for the financial year beginning on January 1, 2014.

Standards/Amendments	Content	Effective for annual period beginning on or after
IAS 27Amendment	Equity Method in Separate Financial Statements		January 1, 2016
IFRS 10 and IAS 28 Amendments	Sale or Contribution of Assets between an Investor and its Associate or Joint Venture		January 1, 2016
IFRS 11 Amendment	Accounting for Acquisition of Interests in Joint Operations		January 1, 2016
IFRS 15	Revenue from Contracts with Customers		January 1, 2017
IFRS 9	Financial Instruments		January 1, 2018

For a detailed discussion of the recently issued accounting standards, see Note 2.1.1 to our consolidated financial statements included elsewhere in this annual report.

Inflation

According to the National Statistics Bureau of China, China’s overall national inflation rates, as represented by the general consumer price index, were approximately 2.0%, 2.6%, 2.6%, 5.4% and 3.3% in 2014, 2013, 2012, 2011 and 2010, respectively. Inflation has not had a significant effect on our business during the past three years.

Foreign Currency Fluctuation

See “Item 3. Key Information—Risk Factors—Risks Relating to the People’s Republic of China—Government control of currency conversion and the fluctuation of the Renminbi may materially and adversely affect our operations and financial results” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Exchange Risk”.

A. OPERATING RESULTS

Year Ended December 31, 2014 Compared with Year Ended December 31, 2013

Total Revenues	For the year ended December 31,
	2013		2014
	RMB		RMB
	(in millions)
Net premiums earned		324,813		330,105
Life insurance business		290,738		285,574
Health insurance business		24,180		32,624
Accident insurance business		9,895		11,907
Investment income		82,816		93,548
Investment income from securities at fair value through profit or loss		1,542		1,677
Investment income from available-for-sale securities		19,596		23,029
Investment income from held-to-maturity securities		22,588		25,357
Investment income from bank deposits		32,667		34,934
Investment income from loans		5,773		8,138
Other investment income		650		413
Net realised gains and impairment on financial assets		5,793		7,120
Net fair value gains/(losses) through profit or loss		137		5,808
Other income		4,324		4,185
Total		417,883		440,766

98

Net Premiums Earned

Net premiums earned increased by RMB 5,292 million, or 1.6%, to RMB 330,105 million in 2014 from RMB 324,813 million in 2013.

Life Insurance Business

Net premiums earned from life insurance business decreased by RMB 5,164 million, or 1.8%, to RMB 285,574 million in 2014 from RMB 290,738 million in 2013. This was primarily due to our proactive control of the volume of single premiums policies and a decrease in the renewal premiums earned.

Health Insurance Business

Net premiums earned from health insurance business increased by RMB 8,444 million, or 34.9%, to RMB 32,624 million in 2014 from RMB 24,180 million in 2013. This was primarily due to our enhanced efforts in developing our health insurance business.

Accident Insurance Business

Net premiums earned from accident insurance business increased by RMB 2,012 million, or 20.3%, to RMB 11,907 million in 2014 from RMB 9,895 million in 2013. This was primarily due to our enhanced efforts in adjusting our business structure, implementing active financial policies, strengthening team building and motivating local branches in implementing initiatives in business expansion.

Investment Income

Investment income increased by RMB 10,732 million, or 13.0%, to RMB 93,548 million in 2014 from RMB 82,816 million in 2013.

Investment Income from Securities at Fair Value through Profit or Loss

Investment income from securities at fair value through profit or loss increased by RMB 135 million, or 8.8%, to RMB 1,677 million in 2014 from RMB 1,542 million in 2013. This was primarily due to an increase in interest income from debt securities at fair value through profit or loss.

Investment Income from Available-for-Sale Securities

Investment income from available-for-sale securities increased by RMB 3,433 million, or 17.5%, to RMB 23,029 million in 2014 from RMB 19,596 million in 2013. This was primarily due to an increase in dividend income from available-for-sale funds and interest income from available-for-sale debt securities.

99

Investment Income from Held-to-Maturity Securities

Investment income from held-to-maturity securities increased by RMB 2,769 million, or 12.3%, to RMB 25,357 million in 2014 from RMB 22,588 million in 2013. This was primarily due to an increase in interest income resulting from our increased allocation in high-grade credit bonds and financial bonds in light of market conditions.

Investment Income from Bank Deposits

Investment income from bank deposits increased by RMB 2,267 million, or 6.9%, to RMB 34,934 million in 2014 from RMB 32,667 million in 2013. This was primarily due to a slight increase in our allocation in ordinary term deposits.

Investment Income from Loans

Investment income from loans increased by RMB 2,365 million, or 41.0%, to RMB 8,138 million in 2014 from RMB 5,773 million in 2013. This was primarily due to an increase in the volume of policy loans and our increased allocation in diversified investments such as the debt investment plans and trust schemes.

Net Realised Gains and Impairment on Financial Assets

Net realised gains and impairment on financial assets increased by RMB 1,327 million, to gains of RMB 7,120 million in 2014 from gains of RMB 5,793 million in 2013. This was primarily due to a decrease in impairment losses of available-for-sale stocks and an increase in spread income from trading funds.

Net Fair Value Gains/(Losses) through Profit or Loss

Net fair value gains/(losses) through profit or loss increased by RMB 5,671 million to gains of RMB 5,808 million in 2014 from gains of RMB 137 million in 2013. This was primarily due to a significant increase in the allocation of securities at fair value through profit or loss and an increase in the market value of these securities.

Other Income

Other income decreased by RMB 139 million, or 3.2%, to RMB 4,185 million in 2014 from RMB 4,324 million in 2013, remaining stable.

100

Benefits, Claims and Expenses	For the year ended December 31,
	2013		2014
	RMB		RMB
	(in millions)
Insurance benefits and claims expenses
Life insurance death and other benefits		193,671		192,659
Accident and health claims and claim adjustment expenses		11,263		16,752
Increase in insurance contracts liabilities		107,354		105,883
Investment contracts benefits		1,818		1,958
Policyholder dividends resulting from participation in profits		18,423		24,866
Underwriting and policy acquisition costs		25,690		27,147
Finance costs		4,032		4,726
Administrative expenses		24,805		25,432
Other expenses		3,864		4,151
Statutory insurance fund contribution		637		701
Total		391,557		404,275
Segment information of insurance benefits and claims expenses
Life insurance business		293,932		288,868
Health insurance business		15,055		22,434
Accident insurance business		3,301		3,992
Total		312,288		315,294

Insurance Benefits and Claims Expenses

Insurance benefits and claims, net of amounts ceded through reinsurance, increased by RMB 3,006 million, or 1.0%, to RMB 315,294 million in 2014 from RMB 312,288 million in 2013.

Life insurance death and other benefits payouts decreased by RMB 1,012 million, or 0.5%, to RMB 192,659 million in 2014 from RMB 193,671 million in 2013. This was primarily due to a decrease in maturities payable of life insurance business. Accident and health claims and claim adjustment expenses increased by RMB 5,489 million, or 48.7%, to RMB 16,752 million in 2014 from RMB 11,263 million in 2013. This was primarily due to an increase in the volume of short-term health insurance and accident insurance business. Increase in insurance contracts liabilities decreased by RMB 1,471 million, or 1.4%, to RMB 105,883 million in 2014 from RMB 107,354 million in 2013, remaining basically stable.

Life Insurance Business

Insurance benefits and claims expenses attributable to life insurance business decreased by RMB 5,064 million, or 1.7%, to RMB 288,868 million in 2014 from 293,932 million in 2013. This was primarily due to a decrease in maturities payable of life insurance business.

Health Insurance Business

Insurance benefits and claims expenses attributable to health insurance business increased by RMB 7,379 million, or 49.0%, to RMB 22,434 million in 2014 from RMB 15,055 million in 2013. This was primarily due to an increase in the volume of health insurance business.

Accident Insurance Business

Insurance benefits and claims expenses attributable to accident insurance business increased by RMB 691 million, or 20.9%, to RMB 3,992 million in 2014 from RMB 3,301 million in 2013. This was primarily due to an increase in the volume of accident insurance business.

Investment Contract Benefits

Investment contract benefits increased by RMB 140 million, or 7.7%, to RMB 1,958 million in 2014 from RMB 1,818 million in 2013. This was primarily due to an increase in the volume of certain investment contracts.

Policyholder Dividends Resulting from Participation in Profits

Policyholder dividends resulting from participation in profits increased by RMB 6,443 million, or 35.0%, to RMB 24,866 million in 2014 from RMB 18,423 million in 2013. This was primarily due to an increase in investment yields for participating products.

101

Underwriting and Policy Acquisition Costs

Underwriting and policy acquisition costs increased by RMB 1,457 million, or 5.7%, to RMB 27,147 million in 2014 from RMB 25,690 million in 2013. This was primarily due to an increase in underwriting costs for first-year regular premium business resulting from an improvement in our business structure.

Finance Costs

Finance costs increased by RMB 694 million, or 17.2%, to RMB 4,726 million in 2014 from RMB 4,032 million in 2013. This was primarily due to an increase in interest payments for securities sold under agreements to repurchase.

Administrative Expenses

Administrative expenses include employees’ remuneration and other administrative expenses. Administrative expenses increased by RMB 627 million, or 2.5%, to RMB 25,432 million in 2014 from RMB 24,805 million in 2013. This was primarily due to an effective curb on the growth of administrative expenses resulting from our enhanced efforts in cost control.

Other Expenses

Other expenses increased by RMB 287 million, or 7.4%, to RMB 4,151 million in 2014 from RMB 3,864 million in 2013. This was primarily due to an increase in business taxes and surcharges expenses resulting from an increase in taxable income from investment.

Profit	For the year ended December 31,
	2013		2014
	RMB		RMB
	(in millions)
Profit before income tax		29,451		40,402
Life insurance business		22,038		30,651
Health insurance business		2,739		3,252
Accident insurance business		608		1,546
Other businesses		4,066		4,953
Income tax		4,443		7,888
Net profit attributable to equity holders of the company		24,765		32,211

Profit before Income Tax

Our profit before income tax increased by RMB 10,951 million, or 37.2%, to RMB 40,402 million in 2014 from RMB 29,451 million in 2013.

Life Insurance Business

Profit before income tax in the life insurance business increased by RMB 8,613 million, or 39.1%, to RMB 30,651 million in 2014 from RMB 22,038 million in 2013. This was primarily due to an increase in investment yield.

102

Health Insurance Business

Profit before income tax in the health insurance business increased by RMB 513 million, or 18.7%, to RMB 3,252 million in 2014 from RMB 2,739 million in 2013. This was primarily due to an increase in business volume and investment yield.

Accident Insurance Business

Profit before income tax in the accident insurance business increased by RMB 938 million, or 154.3%, to RMB 1,546 million in 2014 from RMB 608 million in 2013. This was primarily due to an increase in business volume and an improvement in business quality.

Income Tax

We pay income tax according to applicable Chinese enterprise income tax regulations and rules. Income tax increased by RMB 3,445 million, to RMB 7,888 million in 2014 from RMB 4,443 million in 2013. This was primarily due to the combined effect of taxable income and deferred tax.

Net Profit Attributable to Equity Holders of the Company

For the reasons set forth above, net profit attributable to equity holders of the Company increased by RMB 7,446 million, or 30.1%, to RMB 32,211 million in 2014 from RMB 24,765 million in 2013. This was primarily due to the increase in investment yield and the change of discount rate assumption of reserves of traditional insurance contracts.

Major Assets	As of December 31,
	2013		2014
	RMB		RMB
	(in millions)
Investment assets		1,848,681		2,100,870
Term deposits		664,174		690,156
Held-to-maturity securities		503,075		517,283
Available-for-sale securities		491,527		607,531
Securities at fair value through profit or loss		34,172		53,052
Securities purchased under agreements to resell		8,295		11,925
Cash and cash equivalents		21,330		47,034
Loans		118,626		166,453
Statutory deposits—restricted		6,153		6,153
Investment properties		1,329		1,283
Other assets		124,260		145,697
Total		1,972,941		2,246,567

Investment Assets

Our total investment assets increased by RMB 252,189 million, or 13.6%, to RMB 2,100,870 million in 2014 from RMB 1,848,681 million in 2013.

Term Deposits

Term deposits increased by RMB 25,982 million, or 3.9%, to RMB 690,156 million in 2014 from RMB 664,174 million in 2013. This was primarily due to our increased allocation in ordinary term deposits.

103

Held-to-Maturity Securities

Held-to-maturity securities increased by RMB 14,208 million, or 2.8%, to RMB 517,283 million in 2014 from RMB 503,075 million in 2013. This was primarily due to our increased allocation in high-grade credit bonds and financial bonds in light of market conditions.

Available-for-Sale Securities

Available-for-sale securities increased by RMB 116,004 million, or 23.6%, to RMB 607,531 million in 2014 from RMB 491,527 million in 2013. This was primarily due to our increased allocation in high-grade credit bonds and funds in light of market conditions.

Securities at Fair Value Through Profit or Loss

Securities at fair value through profit or loss increased by RMB 18,880 million, or 55.2%, to RMB 53,052 million in 2014 from RMB 34,172 million in 2013. This was primarily due to our increased allocation in common stocks at fair value through profit or loss.

Cash and Cash Equivalents

Cash and cash equivalents increased by RMB 25,704 million, or 120.5%, to RMB 47,034 million in 2014 from RMB 21,330 million in 2013. This was primarily due to the demand for liquidity management.

Loans

Loans increased by RMB 47,827 million, or 40.3%, to RMB 166,453 million in 2014 from RMB 118,626 million in 2013. This was primarily due to an increase in the volume of policy loans, as well as our increased allocation in diversified investments such as debt investment plans and trust schemes.

Investment Properties

Investment properties decreased by RMB 46 million, or 3.5%, to RMB 1,283 million in 2014 from RMB 1,329 million in 2013. This was primarily due to depreciation of investment properties.

Major Liabilities	As of December 31,
	2013		2014
	RMB		RMB
	(in millions)
Liabilities
Insurance contracts		1,494,497		1,603,446
Investment contracts		65,087		72,275
Securities sold under agreements to repurchase		20,426		46,089
Policyholder dividends payable		49,536		74,745
Annuity and other insurance balances payable		23,179		25,617
Interest-bearing loans and borrowings		—		2,623
Bonds payable		67,985		67,989
Deferred tax liabilities		4,919		19,375
Other liabilities		24,727		47,077
Total		1,750,356		1,959,236

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Liabilities

Our total liabilities increased by RMB 208,880 million, or 11.9%, to RMB 1,959,236 million in 2014 from RMB 1,750,356 million in 2013.

Insurance Contracts

Liabilities of insurance contracts increased by RMB 108,949 million, or 7.3%, to RMB 1,603,446 million in 2014 from RMB 1,494,497 million in 2013. This was primarily due to the accumulation of insurance liabilities from new insurance business and renewal business. As at the balance sheet date, our insurance contracts reserves passed liability adequacy testing.

Investment Contracts

The account balance of investment contracts increased by RMB 7,188 million, or 11.0%, to RMB 72,275 million in 2014 from RMB 65,087 million in 2013. This was primarily due to an increase in the volume of certain investment contracts.

Securities Sold under Agreements to Repurchase

Securities sold under agreements to repurchase increased by RMB 25,663 million, or 125.6%, to RMB 46,089 million in 2014 from RMB 20,426 million in 2013. This was primarily due to the demand for liquidity management.

Policyholder Dividends Payable

Policyholder dividends payable increased by RMB 25,209 million, or 50.9%, to RMB 74,745 million in 2014 from RMB 49,536 million in 2013. This was primarily due to an increase in investment yields for participating products.

Annuity and Other Insurance Balances Payable

Annuity and other insurance balances payable increased by RMB 2,438 million, or 10.5%, to RMB 25,617 million in 2014 from RMB 23,179 million in 2013. This was primarily due to an increase in maturities payable.

Interest-bearing Loans and Borrowings

In June 2014, to meet the needs of our overseas investment, we obtained a fixed-interest rate bank loan of 275 million British pounds sterling with a term of five years. As at December 31, 2014, the loan balance was RMB 2,623 million.

Bonds Payable

Bonds payable increased by RMB 4 million, to RMB 67,989 million in 2014 from 67,985 million in 2013, remaining basically stable. This was primarily due to the fact that no subordinated debt were issued by us in 2014.

105

Deferred Tax Liabilities

Deferred tax liabilities increased by RMB 14,456 million, or 293.9%, to RMB 19,375 million in 2014 from RMB 4,919 million in 2013. This was primarily due to an increase in the fair value of available-for-sale financial assets.

Equity Attributable to Equity Holders of the Company

As of December 31, 2014, equity attributable to equity holders of the Company was RMB 284,121 million and increased by RMB 63,790 million, or 29.0%, from RMB 220,331 million as of December 31, 2013. This was primarily due to the combined effect of an increase in the fair value of available-for-sale financial assets and the profit gained during the fiscal year.

Year Ended December 31, 2013 Compared with Year Ended December 31, 2012

Total Revenues	For the year ended December 31,
	2012			2013
	RMB			RMB
	(in millions)
Net premiums earned		322,126			324,813
Life insurance business		294,374			290,738
Health insurance business		18,565			24,180
Accident insurance business		9,187			9,895
Investment income		73,243			82,816
Investment income from securities at fair value through profit or loss		1,567			1,542
Investment income from available-for-sale securities		20,992			19,596
Investment income from held-to-maturity securities		15,194			22,588
Investment income from bank deposits		30,512			32,667
Investment income from loans		4,339			5,773
Other investment income		639			650
Net realised gains and impairment on financial assets		(26,876	)		5,793
Net fair value gains/(losses) through profit or loss		(313	)		137
Other income		3,305			4,324
Total		371,485			417,883

Net Premiums Earned

Net premiums earned increased by RMB 2,687 million, or 0.8%, to RMB 324,813 million in 2013 from RMB 322,126 million in 2012.

Life Insurance Business

Net premiums earned from life insurance business decreased by RMB 3,636 million, or 1.2%, to RMB 290,738 million in 2013 from RMB 294,374 million in 2012. This was primarily due to the adjustment of the bancassurance business structure.

Health Insurance Business

Net premiums earned from health insurance business increased by RMB 5,615 million, or 30.2%, to RMB 24,180 million in 2013 from RMB 18,565 million in 2012. This was primarily due to our efforts on developing health insurance business.

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Accident Insurance Business

Net premiums earned from accident insurance business increased by RMB 708 million, or 7.7%, to RMB 9,895 million in 2013 from RMB 9,187 million in 2012. This was primarily due to our efforts on making adjustments to the business structure and motivating local branches in acquiring new business.

Investment Income

Investment income increased by RMB 9,573 million, or 13.1%, to RMB 82,816 million in 2013 from RMB 73,243 million in 2012.

Investment Income from Securities at Fair Value through Profit or Loss

Investment income from securities at fair value through profit or loss decreased by RMB 25 million, or 1.6%, to RMB 1,542 million in 2013 from RMB 1,567 million in 2012. This was primarily due to a decrease in dividend income from equity assets at fair value through profit or loss.

Investment Income from Available-for-Sale Securities

Investment income from available-for-sale securities decreased by RMB 1,396 million, or 6.7%, to RMB 19,596 million in 2013 from RMB 20,992 million in 2012. This was primarily due to a decrease in dividend income from available-for-sale equity assets.

Investment Income from Held-to-Maturity Securities

Investment income from held-to-maturity securities increased by RMB 7,394 million, or 48.7%, to RMB 22,588 million in 2013 from RMB 15,194 million in 2012. This was primarily due to an increase in interest income resulting from our increased allocation in held-to-maturity securities and in high grade credit debt securities.

Investment Income from Bank Deposits

Investment income from bank deposits increased by RMB 2,155 million, or 7.1%, to RMB 32,667 million in 2013 from RMB 30,512 million in 2012. This was primarily due to an increase in the volume of bank deposits and market interest rates.

Investment Income from Loans

Investment income from loans increased by RMB 1,434 million, or 33.0%, to RMB 5,773 million in 2013 from RMB 4,339 million in 2012. This was primarily due to an increase in the volume of policy loans and debt investment plans.

Net Realised Gains and Impairment on Financial Assets

Net realised gains and impairment on financial assets increased by RMB 32,669 million, to gains of RMB 5,793 million in 2013 from losses of RMB 26,876 million in 2012. This was primarily due to a decrease in impairment losses of available-for-sale equity assets.

107

Net Fair Value Gains/(Losses) through Profit or Loss

Net fair value gains/(losses) through profit or loss increased by RMB 450 million to gains of RMB 137 million in 2013 from losses of RMB 313 million in 2012. This was primarily due to an increase in spread income from equity assets at fair value through profit or loss.

Other Income

Other income increased by RMB 1,019 million, or 30.8%, to RMB 4,324 million in 2013 from RMB 3,305 million in 2012. This was primarily due to an increase in commission fees earned from CLPCIC.

Benefits, Claims and Expenses	For the year ended December 31,
	2012		2013
	RMB		RMB
	(in millions)
Insurance benefits and claims expenses
Life insurance death and other benefits		107,674		193,671
Accident and health claims and claim adjustment expenses		7,898		11,263
Increase in insurance contracts liabilities		184,990		107,354
Investment contracts benefits		2,032		1,818
Policyholder dividends resulting from participation in profits		3,435		18,423
Underwriting and policy acquisition costs		27,754		25,690
Finance costs		2,575		4,032
Administrative expenses		23,283		24,805
Other expenses		3,304		3,864
Statutory insurance fund contribution		609		637
Total		363,554		391,557
Segment information of insurance benefits and claims expenses
Life insurance business		287,550		293,932
Health insurance business		10,073		15,055
Accident insurance business		2,939		3,301
Total		300,562		312,288

Insurance Benefits and Claims Expenses

Insurance benefits and claims, net of amounts ceded through reinsurance, increased by RMB 11,726 million, or 3.9%, to RMB 312,288 million in 2013 from RMB 300,562 million in 2012.

Life insurance death and other benefits payouts increased by RMB 85,997 million, or 79.9%, to RMB 193,671 million in 2013 from RMB 107,674 million in 2012. This was primarily due to an increase in maturity payments and lapses. Accident and health claims and claim adjustment expenses increased by RMB 3,365 million, or 42.6%, to RMB 11,263 million in 2013 from RMB 7,898 million in 2012. This was primarily due to an increase in claims payment and reserves for short-term insurance and supplementary major medical insurance, resulting from the increase in business volume. Increase in insurance contracts liabilities decreased by RMB 77,636 million, or 42.0%, to RMB 107,354 million in 2013 from RMB 184,990 million in 2012. This was primarily the result of the release of reserves due to maturity payments and lapses.

108

Life Insurance Business

Insurance benefits and claims expenses attributable to life insurance business increased by RMB 6,382 million, or 2.2%, to 293,932 million in 2013 from RMB 287,550 million in 2012, remaining basically stable.

Health Insurance Business

Insurance benefits and claims expenses attributable to health insurance business increased by RMB 4,982 million, or 49.5%, to RMB 15,055 million in 2013 from RMB 10,073 million in 2012. This was primarily due to an increase in business volume.

Accident Insurance Business

Insurance benefits and claims expenses attributable to accident insurance business increased by RMB 362 million, or 12.3%, to RMB 3,301 million in 2013 from RMB 2,939 million in 2012. This was primarily due to an increase in business volume.

Investment Contract Benefits

Investment contract benefits decreased by RMB 214 million, or 10.5%, to RMB 1,818 million in 2013 from RMB 2,032 million in 2012. This was primarily due to the decreased volume of investment contracts and adjustment to settlement interest rates of certain products.

Policyholder Dividends Resulting from Participation in Profits

Policyholder dividends resulting from participation in profits increased by RMB 14,988 million, or 436.3%, to RMB 18,423 million in 2013 from RMB 3,435 million in 2012. This was primarily due to an increase in investment yields for participating products.

Underwriting and Policy Acquisition Costs

Underwriting and policy acquisition costs decreased by RMB 2,064 million, or 7.4%, to RMB 25,690 million in 2013 from RMB 27,754 million in 2012. This was primarily due to a decrease in commission fees resulting from the decrease in first-year premiums.

Finance Costs

Finance costs increased by RMB 1,457 million, or 56.6%, to RMB 4,032 million in 2013 from RMB 2,575 million in 2012. This was primarily due to an increase in interest payments for subordinated term debt.

Administrative Expenses

Administrative expenses include employees’ remuneration and other administrative expenses. Administrative expenses increased by RMB 1,522 million, or 6.5%, to RMB 24,805 million in 2013 from RMB 23,283 million in 2012. This was primarily due to an increase in compensation paid to the employees.

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Other Expenses

Other expenses increased by RMB 560 million, or 16.9%, to RMB 3,864 million in 2013 from RMB 3,304 million in 2012. This was primarily due to an increase in foreign exchange losses.

Profit	For the year ended December 31,
	2012			2013
	RMB			RMB
	(in millions)
Profit before income tax		10,968			29,451
Life insurance business		5,764			22,038
Health insurance business		971			2,739
Accident insurance business		690			608
Other businesses		3,543			4,066
Income tax		(304	)		4,443
Net profit attributable to equity holders of the company		11,061			24,765

Profit before Income Tax

Our profit before income tax increased by RMB 18,483 million, or 168.5%, to RMB 29,451 million in 2013 from RMB 10,968 million in 2012.

Life Insurance Business

Profit before income tax in the life insurance business increased by RMB 16,274 million, or 282.3%, to RMB 22,038 million in 2013 from RMB 5,764 million in 2012. This was primarily due to an increase in investment yield of the life insurance business segment.

Health Insurance Business

Profit before income tax in the health insurance business increased by RMB 1,768 million, or 182.1%, to RMB 2,739 million in 2013 from RMB 971 million in 2012. This was primarily due to an increase in business volume and investment yield of the health insurance business segment.

Accident Insurance Business

Profit before income tax in the accident insurance business decreased by RMB 82 million, or 11.9%, to RMB 608 million in 2013 from RMB 690 million in 2012. This was primarily due to normal business fluctuations.

Income Tax

We pay income tax according to applicable Chinese enterprise income tax regulations and rules. Income tax increased by RMB 4,747 million, to RMB 4,443 million in 2013 from benefit of RMB 304 million in 2012. This was primarily due to the combined effect of taxable income and deferred tax.

Net Profit Attributable to Equity Holders of the Company

For the reasons set forth above, net profit attributable to equity holders of the Company increased by RMB 13,704 million, or 123.9%, to RMB 24,765 million in 2013 from RMB 11,061 million in 2012. This was primarily due to the increase in investment income and the relatively low base recorded in 2012.

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Major Assets	As of December 31,
	2012		2013
	RMB		RMB
	(in millions)
Investment assets		1,790,838		1,848,681
Term deposits		641,080		664,174
Held-to-maturity securities		452,389		503,075
Available-for-sale securities		506,416		491,527
Securities at fair value through profit or loss		34,035		34,172
Securities purchased under agreements to resell		894		8,295
Cash and cash equivalents		69,452		21,330
Loans		80,419		118,626
Statutory deposits—restricted		6,153		6,153
Investment properties		—		1,329
Other assets		108,078		124,260
Total		1,898,916		1,972,941

Investment Assets

Our total investment assets increased by RMB 57,843 million, or 3.2%, to RMB 1,848,681 million in 2013 from RMB 1,790,838 million in 2012.

Term Deposits

Term deposits increased by RMB 23,094 million, or 3.6%, to RMB 664,174 million in 2013 from RMB 641,080 million in 2012. This was primarily due to our increased allocation in ordinary term deposits.

Held-to-Maturity Securities

Held-to-maturity securities increased by RMB 50,686 million, or 11.2%, to RMB 503,075 million in 2013 from RMB 452,389 million in 2012. This was primarily due to our increased allocation in held-to-maturity assets in light of market conditions.

Available-for-Sale Securities

Available-for-sale securities decreased by RMB 14,889 million, or 2.9%, to RMB 491,527 million in 2013 from RMB 506,416 million in 2012. This was primarily due to our decreased allocation in debt assets in light of market conditions.

Securities at Fair Value Through Profit or Loss

Securities at fair value through profit or loss increased by RMB 137 million, or 0.4%, to RMB 34,172 million in 2013 from RMB 34,035 million in 2012, with the overall size remaining stable.

Cash and Cash Equivalents

Cash and cash equivalents decreased by RMB 48,122 million, or 69.3%, to RMB 21,330 million in 2013 from RMB 69,452 million in 2012. This was primarily due to the demand for liquidity management.

Loans

Loans increased by RMB 38,207 million, or 47.5%, to RMB 118,626 million in 2013 from RMB 80,419 million in 2012. This was primarily due to an increase in the volume of policy loans, as well as our increased allocation in debt investment plans.

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Investment Properties

We began to make investment in investment properties in 2013.

Major Liabilities	As of December 31,
	2012		2013
	RMB		RMB
	(in millions)
Liabilities
Insurance contracts		1,384,537		1,494,497
Investment contracts		66,639		65,087
Securities sold under agreements to repurchase		68,499		20,426
Policyholder dividends payable		44,240		49,536
Annuity and other insurance balances payable		16,890		23,179
Bonds payable		67,981		67,985
Deferred tax liabilities		7,834		4,919
Other liabilities		19,195		24,727
Total		1,675,815		1,750,356

Liabilities

Our total liabilities increased by RMB 74,541 million, or 4.4%, to RMB 1,750,356 million in 2013 from RMB 1,675,815 million in 2012.

Insurance Contracts

Liabilities of insurance contracts increased by RMB 109,960 million, or 7.9%, to RMB 1,494,497 million in 2013 from RMB 1,384,537 million in 2012. This was primarily due to the acquisition of new insurance business and the accumulation of insurance liabilities from renewal business. As at the balance sheet date, our insurance contracts reserves passed liability adequacy testing.

Investment Contracts

The account balance of investment contracts decreased by RMB 1,552 million, or 2.3%, to RMB 65,087 million in 2013 from RMB 66,639 million in 2012. This was primarily due to a decrease in the account volume of certain investment contracts.

Securities Sold under Agreements to Repurchase

Securities sold under agreements to repurchase decreased by RMB 48,073 million, or 70.2%, to RMB 20,426 million in 2013 from RMB 68,499 million in 2012. This was primarily due to the demand for liquidity management.

Policyholder Dividends Payable

Policyholder dividends payable increased by RMB 5,296 million, or 12.0%, to RMB 49,536 million in 2013 from RMB 44,240 million in 2012. This was primarily due to an increase in investment yields for participating products.

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Annuity and Other Insurance Balances Payable

Annuity and other insurance balances payable increased by RMB 6,289 million, or 37.2%, to RMB 23,179 million in 2013 from RMB 16,890 million in 2012. This was primarily due to an increase in maturities payable.

Bonds Payable

Bonds payable increased by RMB 4 million, to RMB 67,985 million in 2013 from 67,981 million in 2012, remaining basically stable. This was primarily due to the fact that no subordinated term debt were issued by us in 2013.

Deferred Tax Liabilities

Deferred tax liabilities decreased by RMB 2,915 million, or 37.2%, to RMB 4,919 million in 2013 from RMB 7,834 million in 2012. This was primarily due to a decrease in the fair value of available-for-sale securities.

Equity Attributable to Equity Holders of the Company

As of December 31, 2013, equity attributable to equity holders of the Company was RMB 220,331 million and decreased by RMB 754 million, or 0.3%, from RMB 221,085 million as of December 31, 2012. This was primarily due to the combined effect of the decrease of comprehensive income during the fiscal year 2013 and the dividend distribution in the previous year.

B. LIQUIDITY AND CAPITAL RESOURCES

Liquidity Sources

Our principal cash inflows come from insurance premiums, deposits from investment contracts, proceeds from sales and maturity of financial assets and investment income. The primary liquidity concerns with respect to these cash inflows are the risks of early withdrawals by contract holders and policyholders, as well as the risks of default by debtors, interest rate changes and other market volatilities. We closely monitor and manage these risks. See “Item 4. Information on the Company—Business Overview—Investments”.

Our cash and bank deposits provide us with a source of liquidity to meet normal cash outflows. As of December 31, 2014, the amount of cash and cash equivalents was RMB 47,034 million. In addition, substantially all of our term deposits with banks allow us to withdraw funds on deposit, subject to a penalty interest charge. As of December 31, 2014, the amount of term deposits was RMB 690,156 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. From time to time, some of our holdings of investment securities may be large enough to have an influence on the market value. These factors may limit our ability to sell these investments at an adequate price, or at all.

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Liquidity Uses

Our principal cash outflows primarily relate to the liabilities associated with our various life insurance, annuity and accident and health insurance products, dividends and interest payments on our insurance policies and annuity contracts, operating expenses, income taxes and dividends that may be declared and payable to our shareholders. Cash outflows arising from our insurance activities primarily relate to benefit payments under these insurance products, as well as payments for policy surrenders, policy withdrawals and policy loans.

We believe that our sources of liquidity are sufficient to meet our current cash requirements.

Consolidated Cash Flows

We have established a cash flow testing system and conduct regular tests to monitor the cash inflows and outflows under various changing circumstances and adjust accordingly the asset portfolio to ensure sufficient sources of liquidity.

Net cash inflow from operating activities was RMB 78,247 million in 2014, an increase of RMB 9,955 million, or 14.6%, from RMB 68,292 million in 2013. This increase was primarily due to an increase in cash flows from policyholders’ investment.

Net cash outflow from investing activities was RMB 69,257 million in 2014, an increase of RMB 9,024 million, or 15.0%, from RMB 60,233 million in 2013. This increase was primarily due to the demand of investment management.

Net cash inflow from financing activities was RMB 16,704 million in 2014, an increase of RMB 72,809 million from net cash outflow of 56,105 million in 2013. This increase was primarily due to the demand of liquidity management.

Our global share offering in December 2003 provided cash proceeds of approximately RMB 24,707 million (US$3,062 million). As of the date of this annual report, a part of the cash proceeds from our global offering was held in bank deposit accounts denominated in foreign currencies in China, part of the cash proceeds was invested in securities listed on overseas stock exchanges, and part of the cash proceeds was invested in debt securities denominated in foreign currencies. We gradually converted approximately US$300 million of the cash proceeds into Renminbi to reduce foreign exchange risks. We invested approximately US$433 million, in addition to RMB 2,282 million, in Guangdong Development Bank in December 2006. We used a total of approximately HK$ 12 billion for investments in Sino-Ocean Land Holdings Limited in 2009, 2010 and 2013. In January 2015, we engaged eight investment managers to invest, operate and manage US$ 800 million entrusted to them by us for investment in overseas capital markets.

Our A share offering in December 2006 provided cash proceeds of approximately RMB 27,810 million. As at the end of 2014, the cash proceeds from our A share offering were used to increase our share capital.

Our issuance of subordinated term debt in June and November 2012 provided cash proceeds of approximately RMB 37,990 million. As at the end of 2014, cash proceeds from the issuance of subordinated term debt were used to replenish our supplementary capital and raise our solvency ratio in accordance with applicable laws and approvals by regulatory authorities.

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Ratio of Assets and Liabilities

Our ratio of assets and liabilities (total liabilities divided by total assets) as at December 31, 2014, December 31, 2013 and December 31, 2012 are as follows:

	As at December 31, 2012			As at December 31, 2013			As at December 31, 2014
Ratio of assets and liabilities		88.25	%		88.72	%		87.21	%

Insurance Solvency Requirements

The solvency ratio of an insurance company is a measure of capital adequacy, which is calculated by dividing the actual capital of the company (which is its admissible assets less admissible liabilities, determined in accordance with relevant CIRC rules) by the minimum capital it is required to meet. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Solvency requirements”. The following table shows our solvency ratio as of December 31, 2012, 2013 and 2014:

	As of December 31, 2012			As of December 31, 2013			As of December 31, 2014
	(RMB in millions, except percentage data)
Actual capital		176,024			168,501			236,151
Minimum capital		74,718			74,485			80,193
Solvency ratio		235.58	%		226.22	%		294.48	%

Our solvency ratio increased in 2014, which was primarily due to a significant increase in the comprehensive income during 2014.

We issued subordinated term debt of RMB 28 billion and RMB 10 billion in June and November 2012, respectively, by taking advantage of favorable market opportunities, which effectively improved our solvency ratio. The subordinated term debt was issued to qualified investors who meet applicable regulatory requirements, with a maturity term of ten years. With respect to the subordinated term debt of RMB 28 billion issued in June 2012, the coupon rate per annum for the first five years is 4.70%. We have the right to redeem at par value at the end of the fifth year. If we do not exercise the redemption right, the coupon rate per annum will be 6.70% for the second five years. With respect to the subordinated term debt of RMB 10 billion issued in November 2012, the coupon rate per annum for the first five years is 4.58%. We have the right to redeem at par value at the end of the fifth year. If we do not exercise the redemption right, the coupon rate per annum will be 6.58% for the second five years.

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Contractual Obligations and Commitments

The following table sets out our contractual obligations and commitments as of December 31, 2014.

As of December 31, 2014	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		Later than 5 years		Total
	(RMB in millions)
Securities sold under agreements to repurchase		46,089		—		—		—		46,089
Bonds payable		3,424		73,198		—		—		76,622
Annuity and other insurance balances payable		25,617		—		—		—		25,617
Insurance contracts		60,896		118,434		22,634		2,463,567		2,665,531
Investment contracts		14,703		15,192		9,827		84,013		123,735
Off balance sheet operating leases		549		622		131		10		1,312
Capital commitments		24,537		3,898		445		5,023		33,903
Total		175,815		211,344		33,037		2,552,613		2,972,809

Capital commitments mainly represent our commitments with respect to the acquisition of property, plant and equipment, and our investments.

The amounts set forth in the table above for insurance contracts and investment contracts in each column are the cash flows representing expected future benefit payments on policies in force as at December 31, 2014, relating to premiums received through December 31, 2014. No consideration is given to future premiums payments and the cash flows resulting therefrom, even though in the case for traditional insurance policies and certain investment contracts, the receipt of such premiums is necessary for the policies to remain in full force. The estimate is affected by numerous assumptions (depending on the product type), including assumptions related to mortality, morbidity, lapses, withdrawals, credited rates, loss ratio, claim adjustment expenses and other assumptions which affect our estimates of future payments. Many of these assumptions are inherently uncertain and outside our control. Accordingly, the actual experience may differ from our estimates.

Furthermore, as the benefit payments reported in the table above are not discounted from the date of payment back to December 31, 2014 and do not reflect the impact of future premiums, the sum of these payment amounts are different from the amount of corresponding liabilities in our consolidated balance sheet as of December 31, 2014. Policyholder dividends will not become a contractual obligation until the applicable policy anniversary is reached and the dividend amount is credited to the policy benefit liability or paid to the policyholder, and hence are not included in the table above. Reinsurance recoveries have not been taken into account.

Other than as set forth under capital commitments, we had no material, individually or in the aggregate, purchase obligations as of December 31, 2014.

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

None.

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D. TREND INFORMATION

Please refer to our discussion in each section under “—Overview of Our Business”, “—Factors Affecting Our Results of Operations”, “—Critical Accounting Policies” and “—Operating Results”.

We review assumptions used in establishing reserves for long term insurance contracts and the impact of changes in these assumptions on our net profit. Changes in these assumptions might have a significant impact on our operating results. The changes in these assumptions resulted in an increase of RMB 4,179 million in profit before income tax in 2014, a decrease of RMB 1,493 million in profit before income tax in 2013 and an increase of RMB 318 million in profit before income tax in 2012. The sensitivity analysis of these assumptions is as follows:

• holding all other variables constant, if mortality rates and morbidity rates increase or decrease from current best estimates by 10%, pre-tax profit for the year would have been RMB 12,971 million or RMB 13,554 million lower or higher.

• holding all other variables constant, if lapse rates increase or decrease from current best estimates by 10%, pre-tax profit for the year would have been RMB 5,191 million or RMB 5,478 million lower or higher.

• holding all other variables constant, if the discount rates are 50 basis points higher or lower than current best estimates, pre-tax profit for the year would have been RMB 41,300 million or RMB 46,868 million higher or lower.

See also Note 4.1.3 and Note 14 to our consolidated financial statements included elsewhere in this annual report.

E. OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2014, there were no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

See “—Liquidity and Capital Resources—Contractual Obligations and Commitments”.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

The following table sets forth information regarding our current directors and executive officers. Unless otherwise indicated, their business address is c/o China Life Insurance Company Limited, 16 Financial Street, Xicheng District, Beijing 100033, China.

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Name	Age	Position
Yang Mingsheng	59	Chairman of the board of directors and executive director
Lin Dairen	56	Executive director and president
Su Hengxuan	52	Executive director and vice president
Miao Ping	56	Executive director and vice president
Miao Jianmin	50	Non-executive director
Zhang Xiangxian	59	Non-executive director
Wang Sidong	53	Non-executive director
Bruce Douglas Moore	65	Independent director
Anthony Francis Neoh	68	Independent director
Chang Tso Tung	66	Independent director
Huang Yiping	51	Independent director
Liu Anlin	51	Vice President
Xu Hengping	56	Vice president
Xu Haifeng	55	Vice president
Li Mingguang	45	Vice president and chief actuary
Yang Zheng	44	Vice president and Chief Financial Officer
Zheng Yong	52	Board secretary
Huang Xiumei	47	Financial controller

Directors

Yang Mingsheng has been our chairman and executive director since May 2012. He has been the chairman of CLIC and CLPCIC since March 2012, the chairman of China Life Insurance (Overseas) Company Limited since January 2013, and the chairman of AMC since December 2013. Mr. Yang has many years of experience in the financial industry. He served as a vice chairman of the CIRC from 2007 to 2012, and worked for the Agricultural Bank of China from 1980 to 2007, where he held various positions such as vice president of the Shenyang branch, head of the industrial credit department and president of the Tianjin branch. He was appointed as vice president of the Agricultural Bank of China in 1997 and was then promoted to president of the Agricultural Bank of China in 2003. Mr. Yang, a senior economist, graduated from the faculty of finance of Nankai University with a master’s degree in economics, majoring in monetary banking.

Lin Dairen has been our president since April 2014 and our executive director since October 2008. Mr. Lin also acts as the non-executive director of CLPCIC and China Life Pension. Mr. Lin served as the vice president of our company from 2003 to March 2014, and served as the executive director and president of China Life Pension from November 2006 to March 2014. Mr. Lin graduated in 1982 with a bachelor’s degree in medicine from Shandong Province Changwei Medical Institute. Mr. Lin, who is a senior economist and was awarded special allowance by the State Council, has worked in the life insurance industry for over 33 years and has accumulated extensive experience in operation and management. He is currently the chairman of the China Life Foundation, vice chairman of the Insurance Institute of China and the Insurance Association of China, and the director of the Life Insurance Committee of the Insurance Association of China.

Su Hengxuan has been an executive director of our company since July 2014, and a vice president of our company since August 2008. Mr. Su served as the assistant to president of our company from January 2006 to July 2008. Mr. Su has acted as a director of CLPCIC since November 2006, a director of Insurance Professional College since December 2006 and a director of AMC since May 2014. He was the general manager of our individual life insurance business department from 2003 to 2006. Mr. Su graduated from Banking School, Henan Province in 1983, graduated from the department of finance and insurance of the school of economics of Wuhan University in 1998 with a bachelor’s degree in economics, majoring in insurance, and graduated from the school of management of University of Science and Technology of China in July 2011 with a Ph.D in management, majoring in management science and engineering. Mr. Su, a senior economist, has over 30 years of experience in the Chinese life insurance industry and insurance management. He is currently the chairman of the insurance marketing committee, the vice chairman of the education and training committee, and an executive member of the human resources development committee of the Insurance Association of China, and a member of China Advisory Panel of the Financial Planning Standards Board.

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Miao Ping has been an executive director of our company since July 2014, and a vice president of our company since December 2009. He served as the general manager of our Jiangsu branch since September 2006. Mr. Miao has served as the general manager of our Jiangxi branch from September 2004 to September 2006, and has been a deputy general manager of our Jiangsu branch from April 2002 to September 2004. Mr. Miao graduated from the Correspondence College of Yangzhou University in 1996, majoring in economics and management. Mr. Miao, a senior economist, has over 31 years of experience in the operation of life insurance business and the management of insurance business.

Miao Jianmin has been a non-executive director of our company since October, 2008. Mr. Miao is the vice chairman and president of CLIC. Currently he also serves as a director of AMC, the chairman of China Insurance Plaza Company Limited, and a director of China World Trade Center Co., Ltd. Mr. Miao also serves as the executive director of China Finance 40 Forum. He was awarded special allowance by the State Council. In 2009, he was named one of the “State-level Candidate for the New Century Talents Project” and one of the “60 People in China Insurance Industry in the 60-year History of New China”. Mr. Miao graduated from Central University of Finance and Economics with a doctor’s degree in finance. Before that, Mr. Miao graduated from the post-graduate division of the People’s Bank of China with a master’s degree in money and banking and the Central University of Finance and Economics with a bachelor’s degree in insurance. He is a senior economist.

Zhang Xiangxian has been a non-executive director of our company since July 2012. He became the secretary of commission for disciplinary inspection of CLIC in October 2006. He also served as the vice president of CLIC from August 2008. Mr. Zhang has many years of experience in the insurance industry and held various positions from 1993 to 2006, including, the director of the promotion division of the general office and deputy general manager of the general office of the People’s Insurance Company of China, the office director of the CIRC, the deputy office director (in charge) of the Shenzhen office of the CIRC, and the director of the administrative department of representative agencies of the CIRC. Mr. Zhang is a senior editor and obtained a master’s degree in business administration for senior management from Zhongnan University of Economics and Law.

Wang Sidong has been a non-executive director of our company since July 2012. He became the vice president of CLIC, the chairman of IHC and a director of China Life Pension in June 2004. Mr. Wang worked for the Ministry of Foreign Economic Relations and Trade, the Xinhua News Agency Hong Kong branch, and the Hong Kong Chinese Enterprises Association. He served as deputy director of the general office of China Life Insurance Company, deputy general manager of its Zhejiang branch and deputy director of the shares reform office of China Life Insurance Company from 2000. Mr. Wang was the director of the general office of CLIC in 2003. Mr. Wang graduated from Shandong University with a bachelor’s degree of arts, majoring in Chinese language and literature.

Bruce Douglas Moore has been an independent director of our company since May 2009. From 2002 to 2007, Mr. Moore was partner-in-charge of Asian actuarial services for Ernst & Young, based in Beijing. Previously , he served in actuarial leadership roles with Ernst & Young in New York and Tokyo. From 1995 to 2000, he was the head of international actuarial services in New York with Ernst & Young. In 2000, Mr. Moore worked at Ernst & Young’s Beijing office where he was in charge of the business in Asian markets (including Japan). In 2001, he worked at Ernst & Young’s Tokyo office responsible for the actuarial services in Japan. Since 2002, Mr. Moore worked at Ernst & Young’s Beijing office overseeing the actuarial services in Asian markets (excluding Japan). From 1982 to 1995, Mr. Moore worked in various senior financial management positions at Prudential Life Insurance (U.S.). Mr. Moore graduated from Brown University in 1971, majoring in applied mathematics. Mr. Moore has obtained FSA, FCAS, MAAA and CFA qualifications. Mr. Moore has over 36 years of experience serving the insurance industry as an executive and a consultant.

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Anthony Francis Neoh has been an independent director of our company since June 2010. Mr. Neoh currently serves as a member of the international consultation committee of the CSRC. Prior to that, he served as a chief advisor to the CSRC, a member of the basic law committee of the Hong Kong Special Administrative Region under the Standing Committee of the National People’s Congress of China and chairman of the Hong Kong Securities and Futures Commission. From 1996 to 1998, he was the chairman of the technical committee of the International Organization of Securities Commissions. He was appointed as Queen’s Counsel (now known as Senior Counsel) in Hong Kong in 1990. Mr. Neoh graduated from the University of London with a degree in law in 1976. He is a barrister of England and Wales and admitted to the State Bar of California. In 2003, he was conferred the degree of Doctor of Laws, honoris causa by the Chinese University of Hong Kong. He was elected as honorary fellow of the Hong Kong Securities Institute and Academician of the International Euro-Asian Academy of Sciences in 2009. Mr. Neoh was a non-executive director of Global Digital Creations Holdings Limited from November 2002 to December 2005, and an independent non-executive director of the Link Management Limited, manager of the Link Real Estate Investment Trust, from September 2004 to March 2006. He served as an independent non-executive director of Bank of China Limited from August 2004 to September 2013. Since December 2014, he has been an independent non-executive director of CITIC Limited.

Chang Tso Tung has been an independent director of our company since 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., a company listed on the HKSE and the SSE. 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 Hong Kong Stock Exchange. Mr. Chang has been practicing as a certified public accountant in Hong Kong for approximately 30 years and has extensive experience in accounting, auditing and financial management. Mr. Chang holds a bachelor of science degree from the University of London, and is a fellow member of the Institute of Chartered Accountants in England and Wales.

Huang Yiping has been an independent director of our company since October 2014. He is currently a professor of Economics and the deputy dean of the national school of development at Peking University. From August 2011 to June 2013, he was the managing director and chief economist of Emerging Asian Market of Barclays Capital. From May 2000 to February 2009, he held various positions at Citigroup including the vice president of the Asia Pacific region and economist of the Greater China region, as well as the managing director and chief economist of the Asia Pacific region. From August 1993 to April 2000, he held various positions including researcher and senior lecturer of the Asia-pacific economics and management college and director of the China Economy Program at the Australian National University. Mr. Huang received his master of economics from Renmin University of China and PhD in economics from the Australian National University.

Supervisors

The following table sets forth information regarding our current supervisors.

Name	Age	Position
Xia Zhihua	60	Chairperson of the board of supervisors
Shi Xiangming	55	Supervisor
Yang Cuilian	50	Employee representative supervisor
Li Xuejun	44	Employee representative supervisor
Xiong Junhong	46	Supervisor

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Xia Zhihua has been the chairperson of our board of supervisors since March 2006. She was a deputy director of National Debt Bureau of the Ministry of Finance from July 1997 to June 1998, and a deputy director of National Debt and Finance Bureau of the Ministry of Finance from July 1998 to June 2000. Ms. Xia served as the State Council’s representative in the supervisory committee of important state-owned financial institutions, designated supervisor of assistant bureau-level official from July 2000 to October 2001, and the State Council’s representative in the board of supervisors of important state-owned financial institutions, designated supervisor of bureau-level official from November 2001 to December 2005. Ms. Xia graduated from Xiamen University, majoring in politics and economics at the department of economics, and majoring in world economics at the college of economics from February 1978 to November 1984, and received a bachelor’s degree and a master’s degree in economics respectively. Currently, Ms. Xia is an executive director of both the China Institution of Internal Audit and the Insurance Institute of China, and the vice chairman of supervisory board committee of China Association for Public Companies. Ms. Xia, a senior economist, has obtained the qualification of Certified Internal Auditor (CIA) and was awarded special allowance by the State Council.

Shi Xiangming has been a supervisor of our company since May 2009 and the general manager of the supervisory department of our company since September 2008. Mr. Shi served as the deputy general manager of the human resources department and the office director of our 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 Beijing University, and received a bachelor’s degree in science.

Yang Cuilian has been a supervisor of our company since July 2012, and has been the general manager of the brand promotion department of our company since October 2014. Ms. Yang served as the general manager of the group business department of our company from January 2011 to September 2014. Ms. Yang joined our company in July 1984. She successively served as deputy general manager of the Jiangxi branch, general manager of the Pingxiang branch, manager of the group sales department of Jiangxi branch, and manager of the business management department of the Jiangxi branch. Ms. Yang, a senior economist, graduated from Party School of the Central Committee of C.P.C., majoring in economic management with a bachelor’s degree.

Li Xuejun has been a supervisor of our company since July 2012, and has been the general manager of the strategy and marketing department of our company since July 2014. Mr. Li served as the general manager of the education and training department of our company from January 2011 to June 2014. Mr. Li joined our company in November 1997. He successively served as deputy general manager of the education and training department of our company (in charge), assistant general manager of the Shanghai branch, general manager of the Shanghai Songjiang sub-branch, and general manager of the human resources department of the Shanghai branch. Mr. Li worked for Shanghai Finance College (now known as Shanghai Finance University) from July 1994 to October 1997. Mr. Li, a senior economist, graduated from the department of insurance at Central Finance College (now known as Central University of Finance and Economics) in 1994, majoring in international insurance with a bachelor’s degree in economics.

Xiong Junhong has been a supervisor of our company since October 2014. She is a senior economist with a PhD in finance from Nankai University. From July 1993 to August 2003, Ms. Xiong worked at the banking department and trust department of China People’s Insurance Trust and Investment Company, and at the assets management department of China Life Insurance Company. Ms. Xiong served as the director of the assets management department of CLIC from September 2003, the senior manager of the strategic planning department of CLIC from August 2006, the assistant to the general manager of the strategic planning department of CLIC from September 2008, the assistant to the general manager (equivalent to the level of departmental deputy general manager of CLIC) of the Hebei branch of our company from December 2010, and the deputy general manager of the strategic planning department of CLIC since June 2013. Ms. Xiong has many years of experience in strategic management and investment study, and has extensive experience in assets preservation, risk management, management of retained assets, investment study and strategic planning.

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Senior Management

Lin Dairen, see “—Directors and Senior Management—Directors” for his profile.

Su Hengxuan see “—Directors and Senior Management—Directors” for his profile.

Miao Ping see “—Directors and Senior Management—Directors” for his profile.

Liu Anlin has been a vice president of our company since March 2013. He has been a member of the party committee of our company since February 2013, and also served as the party secretary and general manager of our Beijing branch from February 2013 to November 2014. From December 2012 to February 2013, Mr. Liu was the person-in-charge (with equivalent level as assistant to the president of the Company) of our Beijing branch. From 2009 to 2012, he was the party secretary and general manager (with equivalent level as assistant to the president of the Company) of our Jiangsu branch. From 2006 to 2009, Mr. Liu was our chief information technology officer (with equivalent level as assistant to the president of the Company), and was also the party secretary and general manager of our Beijing research and development center in 2008. From 2003 to 2006, Mr. Liu was the general manager of our information technology department. Prior to that, Mr. Liu had assumed various positions as person-in-charge of our information technology department, deputy general manager of our human resources department, and assistant to the general manager and deputy head of the computer department (in charge of work) of our Gansu branch. Mr. Liu graduated from the Mathematics and Mechanics Department of Lanzhou University, majoring in computer mathematics, and obtained a bachelor’s degree in Science in 1985. He also obtained a master’s degree in business administration from Tsinghua University in 2006. Mr. Liu has over 25 years of experience in operation and management of life insurance business and in insurance administration, during which he gained extensive experience in operation and management. Mr. Liu was awarded special allowance by the State Council and is a senior engineer.

Xu Hengping has been a vice president of our company since November 2014. He has been the chief operating officer of our company since August 2010. Mr. Xu had been the general manager of our Fujian branch since April 2007, deputy general manager of our Fujian branch from December 2002, assistant to the general manager of our Fujian branch from September 1998, and director of personal insurance division of our Fujian branch since July 1996. Mr. Xu once served as general manager of sales department and 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 34 years of experience in the operation of life insurance businesses and insurance management.

Xu Haifeng has been a vice president of our company since November 2014. He has been the business controller of our company and general manager of our Hebei branch concurrently since February 2014. Mr. Xu served as the general manager of our Beijing branch and the general manager of our Hebei branch from 2006 to 2014. Prior to that, Mr. Xu served as the deputy general manager and general manager of our Linyi branch in Shandong Province and the general manager of the business management department in our Shandong branch, the general manager of our Jinan branch and the deputy general manager of our Beijing branch. 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 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 businesses and insurance management.

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Li Mingguang has been a vice president of our company since November 2014, and our chief actuary since March 2012. Mr. Li joined our company in 1996 and subsequently served as deputy director, director, assistant to the general manager of product development department, responsible actuary of our company and general manager of our actuarial department. Mr. Li graduated from Shanghai Jiao Tong University in computer science with a bachelor’s degree in 1991, Central University of Finance and Economics in actuarial science with a master’s degree in 1996 and Tsinghua University with an EMBA in 2010, and also studied at the 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 Work Committee and the secretary-general of the first and the second session of the China Association of Actuaries. He is currently the executive director of the China Association of Actuaries and a special executive of the board of directors of the Insurance Institute of China.

Yang Zheng has been a vice president of our company since November 2014, and our chief financial officer since April 2013. He served as the qualified accountant of our company since 2006, and as assistant to the general manager, deputy general manager and general manager of the finance department of our company since 2005. Mr. Yang has been a director of AMC since 2009, a director of Sino-Ocean Land Holdings Limited since 2011 and a director of China Life Franklin Asset Management Company Limited since 2014. From 2000 to 2005, Mr. Yang was a senior financial analyst of MOLEX in the United States. Mr. Yang graduated from Beijing University of Technology in 1993 with a bachelor’s degree in engineering. He obtained an MBA from Northeastern University in the United States in 2000. Mr. Yang is a member of the American Institute of Certified Public Accountants (AICPA) and the Association of Chartered Certified Accountants (ACCA). He is currently a director of the eighth session of the board of the Accounting Society of China, a member of the National Accounting Informatization and Standardization Technical Committee, a member of the China Insurance Solvency Regulatory Standard Committee, and a member of the China Accounting Standards Committee of the Ministry of Finance of the PRC, respectively.

Zheng Yong has been the board secretary of our company since June 2013. He previously held positions as department head at the Ministry of Justice of the PRC, a practicing lawyer at Beijing Long An Law Firm, China Legal Service Ltd. (Hong Kong), and Beijing De Heng Law Offices, the deputy general manager of our department of legal affairs, company secretary, and general manager of our legal and compliance department, and an executive director and deputy president of China Guangfa Bank Co., Ltd. Mr. Zheng received his LL.B. degree from Peking University, and LL.M. degrees from the China University of Political Science and Law and University of Essex (UK). Mr. Zheng was a visiting researcher at Harvard Law School and Harvard Kennedy School of Government in the United States from August 1996 to October 1997. Mr. Zheng currently serves as an arbitrator of the China International Economic and Trade Arbitration Commission, and is a senior economist.

Huang Xiumei has been the financial controller of our company since December 2014. She has been the general manager of our Fujian branch since October 2011. From 2005 to 2011, she held various positions at our Fujian branch, including assistant to the general manager, deputy general manager and deputy general manager (responsible for daily operations). From 1999 to 2005, she held various positions at our Fujian branch, including as deputy director and manager of the financial and accounting department and manager of the financial department. Ms. Huang was also the deputy general manager of our Fuzhou branch from 2004 to 2005. Ms. Huang graduated from Fujian Banking School in 1985, majoring in insurance, and graduated from Fuzhou University in 2005, majoring in accounting. Ms. Huang is a senior certified public accountant.

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B. COMPENSATION

Compensation of Directors, Supervisors and Officers

Our directors, supervisors and executive officers receive compensation in the form of salaries, bonuses and other benefits-in-kind, including our contribution to the pension plan on behalf of our directors, supervisors and executive officers. As required by PRC regulations, we participate in various defined contribution retirement plans organized by provincial and municipal governments for our employees, including employees who are directors, supervisors and executive officers.

The following table sets forth the amounts of compensation paid to each of our directors and supervisors for the fiscal year ended December 31, 2014. The total compensation package for our chairman of the board of directors, executive directors and chairman of the board of supervisors for the year ended December 31, 2014 has not yet been finalized in accordance with regulations of the relevant PRC authorities. The amount of the compensation not provided for is not expected to have a significant impact on our financial statements for the year ended December 31, 2014. We will make further disclosure of the amount of the final compensation when it is determined.

Name	Salaries/Fees		Inducement Fees		Other (1) Benefits		Compensation for loss of office as director		Total
	RMB in ten thousands
Yang Mingsheng		44.55		—		40.29		—		84.84
Wan Feng(2)		10.03		—		9.37		—		19.40
Lin Dairen(3)		39.99		—		37.09		—		77.08
Su Hengxuan(4)		39.65		—		37.15		—		76.80
Miao Ping(5)		39.65		—		37.07		—		76.72
Liu Yingqi(6)		9.91		—		9.31		—		19.22
Miao Jianmin		—		—		—		—		—
Zhang Xiangxian		—		—		—		—		—
Wang Sidong		—		—		—		—		—
Sun Changji(7)		—		—		—		—		—
Bruce Douglas Moore		32.00		—		—		—		32.00
Anthony Francais Neoh		30.00		—		—		—		30.00
Tang Jianbang(8)		—		—		—		—		—
Chang Tso Tung(9)		8.00		—		—		—		8.00
Huang Yiping(10)		8.00		—		—		—		8.00
Xia Zhihua		39.65		—		37.15		—		76.80
Shi Xiangming		61.55		—		37.89		—		99.44
Luo Zhongmin(11)		6.25		—		—		—		6.25
Yang Cuilian		61.55		—		38.14		—		99.69
Li Xuejun		58.98		—		37.40		—		96.38
Xiong Junhong(12)		—		—		—		—		—
Total		489.76		—		320.86		—		810.62

⁽¹⁾  Include benefits-in-kind, social insurance, housing fund and enterprise annuity to be paid by the employer.

⁽²⁾  Resigned as president on March 25, 2014 and resigned as non-executive director on August 5, 2014.

⁽³⁾  Appointed as president on April 29 2014.

⁽⁴⁾ Appointed as executive director on July 1, 2014.

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⁽⁵⁾ Appointed as executive director on July 1, 2014.

⁽⁶⁾ Resigned as vice president and executive director on March 25, 2014.

⁽⁷⁾ Resigned as independent director on October 20, 2014.

⁽⁸⁾ Resigned as independent director on October 20, 2014.

⁽⁹⁾ Appointed as independent director on October 20, 2014.

⁽¹⁰⁾ Appointed as independent director on October 20, 2014.

⁽¹¹⁾ Resigned as supervisor on May 29, 2014.

⁽¹²⁾ Appointed as supervisor in October 20, 2014.

The following table sets forth the amounts of compensation paid to each of our executive officers other than those disclosed in the table above, including vice presidents who are not our directors and our chief operating officer, chief actuary, chief financial officer and board secretary, for the year ended December 31, 2014. The total compensation package for our executive officers for the year ended December 31, 2014 has not yet been finalized in accordance with regulations of the relevant PRC authorities. The amount of the compensation not provided for is not expected to have a significant impact on our financial statements for the year ended December 31, 2014. We will make further disclosure of the amount of the final compensation when it is determined.

Name	Total
	RMB in ten thousands
Liu Jiade(1)		19.32
Zhou Ying(2)		26.15
Liu Anlin		80.71
Xu Hengping		73.29
Xu Haifeng(3)		12.79
Li Mingguang(4)		71.68
Yang Zheng(5)		71.18
Zheng Yong		86.12
Huang Xiumei(6)		5.82
Total		447.06

⁽¹⁾  Resigned as our vice president on March 25, 2014.

⁽²⁾ Resigned as our vice president on April 3 2014.

⁽³⁾  Appointed as our vice president on November 5, 2014.

⁽⁴⁾ Appointed as our vice president on November 5, 2014.

⁽⁵⁾ Appointed as our vice president on November 5, 2014.

⁽⁶⁾ Appointed as our financial controller on December 19, 2014.

The aggregate amount of compensation we paid to our five highest paid individual employees, including one director, one board secretary and three supervisors during the year ended December 31, 2014, was approximately RMB 4.66 million (US$0.75 million). The amount of compensation we paid to our highest paid individual employee, during the year ended December 31, 2014 was approximately RMB 1 million (US$0.16 million).

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Senior Management Compensation

Our senior management’s compensation consists of four components, including basic salaries, performance-based salaries, fringe benefits and mid to long-term incentive compensation.

We have set up a comprehensive performance management system. A performance appraisal method for our officers is used to appraise the performance of the officers annually. Measures for such appraisal include a business performance index based on our budget and targets as approved by our board of directors; as well as a management performance index based on the duties and functions of the office position, establishing a connection between the achievement of our major business targets and the office performance appraisal.

In accordance with relevant policies of the PRC government, no stock appreciation rights of our company were granted or exercised in 2014. For other details of the stock appreciation rights which were previously granted by us, please refer to Note 30 to our consolidated financial statements included elsewhere in this annual report.

C. BOARD PRACTICES

General

Our board of directors consists of eleven members. Our directors are elected to serve a term of three years, which is renewable upon re-election. Our directors are elected at meetings of our shareholders, and, unless they resign at an earlier date, are deceased or removed, will serve three-year terms. The current term for our board of directors began in July 2012. Our directors are not currently entitled to severance benefits other than benefits provided by law upon termination of employment. In the event our Company is acquired, including an acquisition of control by another person, and a director leaves employment or retires following the acquisition, the director may receive severance and other payments upon approval by the shareholders in general meeting.

We have identified various board members as being “independent”, in accordance with Hong Kong laws and regulations. These requirements vary in certain respects from independence requirements under U.S. law. The members of our audit committee are independent as defined by the rules of the Securities and Exchange Act and the New York Stock Exchange which are applicable to us.

The PRC company law requires a joint stock company with limited liability to establish a board of supervisors. Our board of supervisors is responsible for monitoring our financial matters and supervising the actions of our board of directors and our management personnel. Our board of supervisors consists of five members. One-third of our board of supervisors must be elected by our employees. The remaining members must be elected by our shareholders in a general meeting. One member of our board of supervisors is designated as the chairman. Members of our board of supervisors may not serve as director or member of senior management. The term of office for our supervisors is three years, which is renewable upon re-election. The current term for our board of supervisors began in July 2012.

Board Committees

We have established standing audit, nomination and remuneration, risk management and strategy and investment decision committees.

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The primary duties of the audit committee are to review and supervise the financial reporting process, to assess the effectiveness of our internal control system, to supervise our internal audit system and its implementation and to implement and recommend the engagement or replacement of external auditors. Our audit committee is also responsible for communications between our internal and external auditors and our internal reporting system. Our audit committee is currently comprised of Bruce Douglas Moore, Chang Tso Tung and Huang Yiping. Mr. Bruce Douglas Moore serves as the chairman.

The primary duties of the nomination and remuneration committee are to review the structure and components of our board of directors, to formulate the appointment and successors to our board of directors and senior management, to review and recommend the nomination of our directors and senior officers, as well as to propose to our board of directors the remuneration policy for our directors, supervisors and senior management. Our nomination and remuneration committee is currently comprised of Chang Tso Tung, Bruce Douglas Moore and Miao Jianmin. Mr. Chang Tso Tung serves as the chairman.

The primary duties of the risk management committee are to formulate our risk control benchmark system, to assist the management in establishing and improving our internal control system, to formulate our operational risk management policy, to review the assessment reports with respect to our operational risks and internal control, and to coordinate and handle sudden and significant risks or crises. Our risk management committee is currently comprised of Anthony Francis Neoh , Zhang Xiangxian and Miao Ping. Mr. Anthony Francis Neoh serves as the chairman.

The primary duties of the strategy and investment decision committee are to formulate our long-term development strategies and significant investment and financing plans, to propose significant projects of capital operation and assets management, and to conduct research and make recommendations on other important matters that affect our development. Our strategy and investment decision committee is currently comprised of Huang Yiping, Lin Dairen, Su Hengxuan, Wang Sidong and Anthony Francis Neoh. Mr. Huang Yiping serves as the chairman.

D. EMPLOYEES

As of December 31, 2012, 2013 and 2014 we had approximately 99,271, 99,230 and 101,972 employees, respectively. The following table sets forth the number of our employees by their functions as of December 31, 2012, 2013 and 2014.

	As of December 31
	2012					2013					2014
	Number of employees		% of total			Number of employees		% of total			Number of employees		% of total
Management and administrative staff		23,444		23.62	%		21,689		21.86	%		22,304		21.63	%
Financial and auditing staff		7,034		7.09	%		6,852		6.91	%		6,287		6.10	%
Sales and marketing staff(1)		31,115		31.34	%		31,204		31.45	%		34,783		33.73	%
Underwriters, claim specialists and customer service staff		32,511		32.75	%		31,080		31.32	%		31,291		30.34	%
Other professional and technical staff(2)		3,747		3.77	%		3,607		3.63	%		3,838		3.72	%
Other		1,420		1.43	%		4,798		4.84	%		4,620		4.48	%
Total		99,271		100	%		99,230		100	%		103,123		100	%

(1) Includes direct sales representatives.

(2) Includes actuaries, product development personnel, investment management personnel and information technology specialists.

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As of December 31, 2012, 2013 and 2014, we had approximately 693,000, 653,000 and 743,000 exclusive agents, respectively. During 2014, we attracted more new qualified agents by expanding our recruitment program, making further efforts in training new qualified agents and strengthening sales support. At the same time, we have continued carrying out performance reviews in 2014, which have led to the departure of a number of exclusive agents with lower productivity. In addition, the market competition for qualified agents has increased due to the new Sales Personnel Rules issued by the CIRC. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—Our growth is dependent on our ability to attract and retain productive agents”.

None of our employees is subject to collective bargaining agreements governing employment with us. We believe that our employee relations are satisfactory.

E. SHARE OWNERSHIP

As of the date of this annual report, none of our directors, supervisors or senior managers is a legal or beneficial owner of any shares of our share capital.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

A. MAJOR SHAREHOLDERS

The table below sets forth information regarding the ownership of our share capital as of April 10, 2015 by all persons who are known to us to be the beneficial owners of 5% or more of each class of our share capital.

Title of Class	Identity of Person or Group	Amount Owned	Percentage of Class			Percentage of Total Share Capital
A Shares	China Life Insurance (Group) Company	19,323,530,000 (Long position)		92.80	%		68.37	%
H Shares	BlackRock, Inc(1)	528,306,529 (Long position)		7.10	%		1.87	%
H Shares	JPMorgan Chase & Co. (2)	448,698,262 (Long position) 36,726,613 (Short position) 325,782,986 (Lending pool)		6.02 0.49 4.37	%  %  %		1.59 0.13 1.15	%  %  %

Note (1): BlackRock, Inc. was interested in a total of 528,306,529 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, N.A., 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) Ltd, BlackRock Asset Management Deutschland AG, BlackRock Fund Managers Ltd and BlackRock Life Limited were interested in 3,897,305 H shares, 2,181,000 H shares, 111,509,051 H shares, 175,799,000 H shares, 2,056,000 H shares, 7,117,352 H shares, 2,115,180 H shares, 3,217,000 H shares, 46,102,052 H shares, 3,140,000 H shares, 71,679,705 H shares, 4,446,700 H shares, 54,876,186 H shares, 22,907,000 H shares, 12,083,998 H shares, 704,000 H shares, 4,357,000 H shares and 118,000 H shares respectively. All of these entities are either controlled or indirectly controlled subsidiaries of BlackRock, Inc.

Note (2): JPMorgan Chase & Co. was interested in a total of 448,698,262 H shares in accordance with the provisions of Part XV of the SFO. Of these shares, J.P. Morgan Securities LLC, J.P. Morgan Clearing Corp, JF Asset Management Limited, J.P. Morgan Investment Management Inc., J.P. Morgan Trust Company of Delaware, J.P. Morgan Whitefriars Inc., J.P. Morgan Securities plc, JPMorgan Chase Bank, N.A. and JPMorgan Asset Management (UK) Limited were interested in 3,630 H shares, 2,353,139 H shares, 6,916,000 H shares, 401,000 H shares, 1,860 H shares, 90,678,761 H shares, 22,279,366 H shares, 325,788,506 H shares and 276,000 H shares respectively. All of these entities are either controlled or indirectly controlled subsidiaries of JPMorgan Chase & Co.

Included in the 448,698,262 H shares are 325,782,986 H shares (4.37%) which are held in the “lending pool”, as defined under Section 5(4) of the Securities and Futures (Disclosure of Interests – Securities Borrowing and Lending) Rules.

JPMorgan Chase & Co. held by way of attribution a short position as defined under Part XV of the SFO in 36,726,613 H shares (0.49%).

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Our A shares and H shares generally vote together as a single class, including in the election of directors. Each A share and each H share is entitled to one vote. In addition, in certain matters which affect the rights of the holders of H shares or A shares, the H shares or A shares, as the case may be, are entitled to vote as a separate class.

CLIC converted and sold 676,470,000 domestic shares in the form of H shares or ADSs in connection with our global offering in December 2003.

Based on the information provided by Deutsche Bank Trust Company Americas, our depositary bank, as of December 31, 2014 and April 10, 2015, there were, respectively, 9,346,784 ADRs representing 140,201,760 H shares, with 67 registered holders, and 9,453,934 ADRs representing 141,809,010 H shares, with 67 registered holders. Since certain of the ADSs are held by nominees, the above number may not be representative of the actual number of U.S. beneficial holders of ADSs or number of ADSs beneficially held by U.S. persons.

CLIC, our controlling shareholder, is a wholly state-owned enterprise controlled by the PRC government. See “Item 4. Information on the Company—History and Development of the Company”. None of our major shareholders has voting rights that differ from the voting rights of other shareholders, except that in certain matters which affect the rights of the holders of H shares or A shares, holders of H shares or A shares, as the case may be, are entitled to vote as a separate class. We are not aware of any arrangement which may at a subsequent date result in a change of control of our company.

B. RELATED PARTY TRANSACTIONS

As at the date of this annual report, CLIC owns approximately 68.37% of our issued share capital, a 40% equity interest in AMC, a direct approximately 4.41% equity interest in China Life Pension and an indirect approximately 3.53% equity interest in China Life Pension through AMC, a 60% equity interest in CLPCIC and a 100% equity interest in China Life Investment Holding Company Limited, or IHC. CLIC, AMC, China Life Pension, CLPCIC and IHC are therefore considered as our connected persons under the HKSE Listing Rules. AMC owns approximately 85.03% equity interest in China Life AMP Asset Management Co., Ltd., or AMP. AMP is therefore also considered as our connected person under the HKSE Listing Rules. Each of AMC and AMP is also a subsidiary of the Company. During the reporting period, we engaged in the following related party transactions with these companies:

• On December 29, 2014, we entered into a new policy management agreement with CLIC;

• On December 31, 2014, CLIC and AMC entered into a new asset management agreement;

• On December 31, 2014, we entered into a new asset management agreement with IHC;

• On May 30, September 4, May 30 and June 6, 2014, we, China Life Pension, CLIC and CLPCIC each entered into a framework agreement in relation to subscription and redemption of fund products, sales agency services and other daily transactions with AMP, respectively;

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• On October 28, 2014, our board of directors approved the subscription for, together with CLIC and CLPCIC and through AMC, the trust units under a trust scheme established by Shanghai International Trust Co., Ltd., or Shanghai Trust;

• On June 9, 2014, we entered into a capital injection agreement with CLIC and CLPCIC in relation to a capital increase of CLPCIC;

• On March 8, 2015, we entered into a new insurance sales framework agreement with CLPCIC;

• On October 30, 2014, we entered into a capital injection agreement with AMP Life Limited and China Life Pension in relation to a capital increase of China Life Pension;

• On March 22, 2014, we, CLIC and AMC entered into a new agreement for the entrustment of enterprise annuity funds and account management with China Life Pension; and

• On December 31, 2014, we entered into a new property leasing agreement with IHC.

We also continued to carry out certain other continuing related party transactions with CLIC, AMC, China Life Pension, CLPCIC and IHC in the reporting period. These transactions constitute connected transactions for us under the HKSE Listing Rules. Details of these transactions are set forth below.

As at the date of this annual report, we own a 20% equity interest in China Guangfa Bank, or CGB, which was previously known as Guangdong Development Bank. Our former vice president, Mr. Liu Jiade, serves as a director of CGB, and our former vice chairman and non-executive director, Mr. Wan Feng, served as a director of CGB during the 12 months prior to March 25, 2014. CGB is therefore considered as our related party under applicable PRC laws and regulations. On July 25, 2014, we entered into a new related party transaction framework agreement with CGB. We also continued to carry out continuing related party transactions with CGB in the reporting period. These transactions are not regarded as connected transactions for us under the HKSE Listing Rules. Details of these transactions are set forth below.

Continuing Related Party Transactions with CLIC

During the reporting period, we engaged in continuing related party transactions with CLIC. These transactions are governed by several agreements between CLIC and us, including a restructuring agreement, a policy management agreement, a trademark license agreement and a non-competition agreement. A detailed discussion of these agreements is set forth in Note 32 to our consolidated financial statements included elsewhere in this annual report and under the heading “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions” in our annual report on Form 20-F filed with the Securities and Exchange Commission on April 28, 2009.

Our policy management agreement with CLIC expired on December 31, 2014. On December 29, 2014, we and CLIC entered into a new policy management agreement for a term of three years ending on December 31, 2017. Subject to compliance with HKSE Listing Rules, this new agreement will be automatically renewed for a successive term of three years unless terminated by either party by giving to the other party not less than 180 days’ prior written notice upon expiration of the then current term. Pursuant to the new policy management agreement, we continued to accept CLIC’s entrustment to provide policy administration services relating to non-transferred policies, and CLIC will pay a service fee to us in cash on a semi-annual basis, which, for each semi-annual payment period, equals the sum of (1) the number of non-transferred policies in force as of the last day of the period, multiplied by RMB 8.00; and (2) 2.5% of the actual premiums in respect of the non-transferred policies collected during the period. The service fees paid by CLIC to us under policy management agreement for the year ended on December 31, 2014 was RMB 987 million (US$159 million). The annual cap in respect of the service fees to be paid by CLIC to us under the new policy management agreement for each of the three years ending on December 31, 2017 is RMB 1,037 million.

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Continuing Related Party Transactions with AMC

During the reporting period, we engaged in continuing related party transactions with AMC under an asset management agreement between AMC and us. The asset management agreement expired on December 31, 2014. It has been automatically renewed for one more year ending on December 31, 2015 in accordance with its terms. A detailed discussion of the material terms of the asset management agreement between AMC and us is set forth in Note 32 to our consolidated financial statements included elsewhere in this annual report and under the heading “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions” in our annual report on Form 20-F filed with the Securities and Exchange Commission on April 28, 2009. The service fees paid by us to AMC under the asset management agreement for the year ended December 31, 2014 was RMB 886 million (US$143 million). The annual cap in respect of the service fees to be paid by us to AMC under the asset management agreement for the year ending on December 31, 2015 is RMB 1,200 million. The annual cap has been determined by reference to historical figures, the size and composition of the assets managed and to be managed by AMC, and the inherent volatility of the capital markets.

During the reporting period, CLIC engaged in continuing related party transactions with AMC under an asset management agreement between AMC and CLIC, which expired on December 31, 2014. A detailed discussion of this agreement is set forth in Note 32 to our consolidated financial statements included elsewhere in this annual report and under the heading “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions” in our annual report on Form 20-F filed with the Securities and Exchange Commission on April 28, 2009. On December 31, 2014, AMC and CLIC entered into a new asset management agreement expiring on December 31, 2015. Under this new agreement, AMC continued to invest and manage assets entrusted to it by CLIC, which is subject to the investment guidelines and instructions given by CLIC, and CLIC will pay AMC a base service fee in cash at the rate of 0.05% of the investments under management per annum. The service fee for investment in debt investment plans, equity investment plans, project asset-backed plan and customized non-standard products will be determined separately by the parties. The service fees paid by CLIC to AMC under the asset management agreement for the year ended on December 31, 2014 was RMB 128 million (US$21 million). The annual cap in respect of the service fees to be paid by CLIC to AMC under the new asset management agreement for the year ending on December 31, 2015 is RMB 320 million.

Continuing Related Party Transactions with IHC

Property Leasing Agreement with IHC

During the reporting period, we engaged in continuing related party transactions with IHC under a property leasing agreement between IHC and us. The property leasing agreement expired on December 31, 2014. A detailed discussion of the terms of this agreement is set forth in Note 32 to our consolidated financial statements included elsewhere in this annual report and under the heading “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions” in our annual report on Form 20-F filed with the Securities and Exchange Commission on April 28, 2009. On December 31, 2014, we entered into a new property leasing agreement with IHC under substantially the same terms for a three-year term expiring on December 31, 2017. Under the new property leasing agreement, IHC agreed to lease to us 1,807 properties owned by it. The annual rent is determined by reference to market rent or, where there is no available comparison, by reference to the costs incurred by IHC in holding and maintaining the properties, plus a margin of approximately 5%. The rent paid by us to IHC under the property leasing agreement for the year ended December 31, 2014 was RMB 86 million (US$14 million).

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Property Transfer Agreement with IHC

On June 27, 2012, we entered into a property transfer framework agreement with IHC for a term of three years. Pursuant to the framework agreement, we proposed to acquire from IHC certain properties for use by our branches as office premises, which consist of 1,198 properties with a total gross floor area of approximately 803,424.09 square meters. The properties will be transferred in batches pursuant to the standalone agreement to be entered into for each transfer. The purchase price for each property will be valued and determined by qualified intermediaries agreed upon by the parties with reference to prevailing market prices. The total consideration for the properties purchased is expected to be no more than RMB1,700 million. The parties are obligated to cooperate with each other to complete the transfer of title and deliver the properties if the standalone property transfer agreements in respect of such properties are signed prior to the expiration of the framework agreement. The parties cannot transfer any properties under the framework agreement if the standalone property transfer agreements in respect of the properties are not signed prior to the expiration of the framework agreement.

Asset Management Agreement with IHC

During the reporting period, we engaged in continuing related party transactions with IHC under an asset management agreement between IHC and us, which expired on December 31, 2014. A detailed discussion of this agreement is set forth in Note 32 to our consolidated financial statements included elsewhere in this annual report and under the heading “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions” in our annual report on Form 20-F filed with the Securities and Exchange Commission on April 25, 2014. The basic service fee paid by us to IHC under this agreement for the year ended December 31, 2014 was RMB 89 million (US$14 million).

On December 31, 2014, we entered into a new asset management agreement with IHC for a term of one year starting from January 1, 2015. Pursuant to the new asset management agreement, IHC continued to invest, operate and manage the assets entrusted to it by us for investment in real property, equity interests of unlisted companies, related financial products and securitization financial products on a discretionary basis, subject to the investment guidelines and instructions given by us.

In consideration of the services provided by IHC under the new asset management agreement, we agreed to pay IHC fees based on fixed return projects and non-fixed return projects, respectively. With respect to the fixed return projects, we agreed to pay IHC a basic service fee. With respect to the non-fixed return projects, we agreed to pay IHC a basic service fee and a performance fee. The basic service fee is paid on a quarterly basis, calculated by reference to the total annual amount of assets invested and the applicable management fee rate which is linked to the investment return rates (the management fee rate ranges from 0.05% to 0.6% for the fixed return projects; and the management fee rate is 0.3% for the non-fixed return projects). The performance fee is calculated and confirmed by both parties annually, and then paid by us to IHC upon confirmation. The basic service fee and performance fee payable by us to IHC will not exceed RMB 500 million during the one-year term of this agreement, and the contractual amount of assets entrusted by us to IHC for investment and management will not exceed RMB 150 billion as at the expiry of this agreement.

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Each of CLIC and CLPCIC has also entrusted IHC to invest and manage its assets, which may result in CLIC, CLPCIC and us investing in the same project. Pursuant to the new asset management agreement, the targeted assets for co-investments to be made by IHC and on behalf of us, CLIC and CLPCIC are limited to newly launched related financial products and securitization financial products, excluding any products acquired from the secondary market. The contractual amount of the co-investment by us to be entrusted during the term of this agreement will not exceed RMB 40 billion.

Continuing Related Party Transaction with China Life Pension

On July 27, 2009, we, CLIC and AMC entered into an agreement for the entrustment of enterprise annuity funds and account management with China Life Pension. The agreement expired on December 1, 2012. On February 26, 2013, we, CLIC and AMC entered into a memorandum of understanding, which became effective retroactively on December 2, 2012, with China Life Pension to renew the agreement for a successive one-year term ended on December 1, 2013. On March 22, 2014, we, CLIC and AMC entered into a new agreement for the entrustment of enterprise annuity funds and account management with China Life Pension, which became effective retroactively to December 2, 2013, for a fixed term ending on December 31, 2016.

Under the new agreement, China Life Pension was entrusted to serve as the trustee and account manager and to provide entrusted management services and account management services for the enterprise annuity funds of the Company, CLIC and AMC. China Life Pension was further entrusted to serve as the investment manager and to provide investment management service for the enterprise annuity funds of the Company, CLIC and AMC. In consideration of the services provided by China Life Pension, we, CLIC and AMC agreed to pay China Life Pension entrusted management fees, account management fees and investment management fees.

Continuing Related Party Transactions with CLPCIC

On March 8, 2012, we entered into an insurance sales framework agreement with CLPCIC for a three-year term which ended on March 7, 2015. On March 8, 2015, we entered into a new insurance sales framework agreement with CLPCIC for a term of two years ending on March 7, 2017, and this new agreement will be automatically renewed for one more year after its expiration unless terminated by either party by giving to the other party a written notice within 30 days prior to its expiration. Pursuant to the new insurance sales framework agreement, CLPCIC continued to entrust us to act as its agent to sell certain specified insurance products within authorized regions, and agreed to pay us service fees in cash on a monthly basis in consideration of the services provided. The service fees will be determined by reference to the cost incurred by us plus a marginal profit amount and market practice. The service fees paid to us under the insurance sales framework agreement for the year ended December 31, 2014 was RMB 1,013 million (US$163 million). The annual caps in respect of the service fees to be paid by CLPCIC to us for the three years ending December 31, 2017 are RMB 1,386 million, RMB 1,738 million and RMB 2,222 million, respectively.

Framework Agreements with AMP

Framework Agreement between AMP and Us

On May 30, 2014, we entered into a framework agreement with AMP for the subscription and redemption of fund products, sale of funds, asset management and other daily transactions. The agreement became effective upon signing by the parties and will expire on December 31, 2016. Under the agreement, we will enter into certain daily transactions with AMP, 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 will be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending December 31, 2016, the annual caps on the subscription price and corresponding subscription fee for the subscription of fund products are RMB 30,000 million, RMB 66,000 million and RMB 72,600 million, respectively; the annual caps on the redemption price and corresponding redemption fee for the redemption of fund products are RMB 30,000 million, RMB 66,000 million and RMB 72,600 million, respectively; the annual caps on the sales commission fee and client maintenance fee payable by AMP are RMB 100 million, RMB 300 million and RMB 400 million, respectively; the annual caps on the management fee payable by us for the asset management for specific clients are RMB 10 million, RMB 20 million and RMB 20 million, respectively; and the annual caps on the fees for other daily transactions are RMB 50 million, RMB 100 million and RMB 100 million, respectively.

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For the year ended December 31, 2014, the subscription price and corresponding subscription fee for the subscription of fund products was RMB 11,460 million (US$1,847 million), the redemption price and corresponding redemption fee for the redemption of fund products was RMB 4,415 million (US$712 million), the sales commission fee and client maintenance fee paid by AMP was zero, the management fee paid by us for the asset management for specific clients was zero, and the fees for other daily transactions was RMB 0.47million (US$0.08 million).

Framework Agreement between AMP and China Life Pension

On September 4, 2014, China Life Pension and AMP entered into a framework agreement for the subscription and redemption of fund products, sales of funds and other daily transactions. The agreement became effective upon signing by the parties and will expire on December 31, 2016. Under the agreement, China Life Pension and AMP will enter into certain daily transactions, including subscription and redemption of fund products, sales agency services and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending on December 31, 2016, the annual caps on the subscription price and corresponding subscription fee for the subscription of fund products are RMB 5,000 million, RMB 10,000 million and RMB 10,000 million, respectively; the annual caps on the redemption price and corresponding redemption fee for the redemption of fund products are RMB 5,000 million, RMB 10,000 million and RMB 10,000 million, respectively; the annual caps on the sales commission fee and client maintenance fee payable by AMP are RMB 50 million, RMB 100 million and RMB 100 million, respectively; and the annual caps on the fees for other daily transactions are RMB 50 million, RMB 100 million and RMB 100 million, respectively.

For the year ended December 31, 2014, the subscription price and corresponding subscription fee for the subscription of fund products, the redemption price and corresponding redemption fee for the redemption of fund products, the sales commission fee and client maintenance fee paid by AMP and the fees for other daily transactions were each zero.

Framework Agreement between AMP and CLIC

On May 30, 2014, CLIC and AMP entered into a framework agreement for the subscription and redemption of fund products. The agreement became effective upon signing by the parties and will expire on December 31, 2016. Under the agreement, CLIC and AMP will enter into transactions for the subscription and redemption of fund products. Pricing of the transactions under the agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending December 31, 2016, the annual caps on the subscription price and corresponding subscription fee for the subscription of fund products are RMB 5,000 million, RMB 10,000 million and RMB 10,000 million, respectively; and the annual caps on the redemption price and corresponding redemption fee for the redemption of fund products are RMB 5,000 million, RMB 10,000 million and RMB 10,000 million, respectively.

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For the year ended December 31, 2014, the subscription price and corresponding subscription fee for the subscription of fund products was RMB 4,380 million (US$706 million), and the redemption price and corresponding redemption fee for the redemption of fund products was RMB 3,927 million (US$633 million).

Framework Agreement between AMP and CLPCIC

On June 6, 2014, CLPCIC and AMP entered into a cooperation framework agreement. The agreement became effective upon signing by the parties and will end on December 31, 2016. Under the agreement, CLPCIC and AMP will enter into certain daily transactions, including subscription and redemption of fund products, sales agency services and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement will be determined by the parties through arm’s length negotiations with reference to the industry practices. For the three years ending December 31, 2016, the annual caps on the subscription price for the fund products are RMB 5,000 million, RMB 10,000 million and RMB 10,000 million, respectively; the annual caps on the redemption price for the fund products are RMB 5,000 million, RMB 10,000 million and RMB 10,000 million, respectively; the annual caps on the subscription fee for the fund products are RMB 50 million, RMB 100 million and RMB 100 million, respectively; the annual caps on the redemption fee for the fund products are RMB 50 million, RMB 100 million and RMB 100 million, respectively; the annual caps on the sales commission fee and client maintenance fee payable by AMP are RMB 50 million, RMB 100 million and RMB 100 million, respectively; and the annual caps on the fees for other daily transactions are RMB 50 million, RMB 100 million and RMB 100 million, respectively.

For the year ended December 31, 2014, the subscription price for the fund products was RMB 720 million (US$116 million), the redemption price for the fund products was RMB 726 million (US$117 million), the subscription fee for the fund products was zero, the redemption fee for the fund products was zero, the sales commission fee and client maintenance fee paid by AMP was zero, and the fees for other daily transactions was RMB 0.02 million (US$0.003 million).

Subscription for Trust Scheme

On October 28, 2014, our board of directors approved the subscription for, together with CLIC and CLPCIC and through AMC, the trust units under the trust scheme established by Shanghai Trust. CLIC and CLPCIC agreed to subscribe for 3 billion and 1 billion trust units of RMB 1 each issued by Shanghai Trust under Phase I of the trust scheme at a price of RMB 3 billion and RMB 1 billion, respectively, while we agreed to subscribe for the trust units of RMB 1 each issued by Shanghai Trust under Phase II of the trust scheme at a price of not more than RMB 6 billion. As of December 31, 2014, we had made our subscription through AMC by installments for a total amount of RMB 5.96 billion.

The trust funds under the trust scheme will not be more than RMB 10 billion. The trust funds will be used for the provision of loans to China Huarong Asset Management Co., Ltd., or Huarong Asset, and such loans will only be applied to Huarong Asset’s non-performing assets business that is operated within the business scope of Huarong Asset and in compliance with applicable laws and regulations. Idle funds will only be deposited into banks.

Shanghai Trust will distribute trust benefits to the beneficiaries out of the trust assets after deduction of trust costs and other liabilities. The trust benefits to be distributed by Shanghai Trust are mainly derived from the principal of the loan and any interest accrued thereon to be repaid by Huarong Asset.

The trust scheme is expected to have a term of not more than 72 months.

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Continuing Related Party Transactions with CGB

During the reporting period, we engaged in continuing related party transactions with CGB pursuant to several negotiated deposit agreements between CGB and us. A detailed discussion of these agreements is set forth in Note 32 to our consolidated financial statements included elsewhere in this annual report and under the heading “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions” in our annual reports on Form 20-F filed with the Securities and Exchange Commission on April 26, 2011, April 26, 2012 and April 26, 2013, respectively.

On July 20, 2012, we entered into a strategic cooperation agreement with CGB, pursuant to which we agreed to cooperate with CGB in various areas, including, among others, insurance business, bank cards business, deposit and funds, assets custody, e-commerce, client resources sharing, information technology, product development and brand promotion. With regard to cooperation in the insurance business, CGB undertook to provide bancassurance and corporate group insurance business services on our behalf. Subject to relevant laws and regulations, we undertook to offer our insurance products to CGB under certain preferential terms, while CGB agreed to purchase our products in priority under the same terms and conditions. The term of this agreement is three years.

On April 19, 2012, we entered into an insurance products cooperation agreement with CGB, pursuant to which CGB will sell our individual insurance products suitable for sale through banks, as jointly selected by CGB and us. Under this agreement, CGB will act as an intermediary to sell such products and will also act on our behalf to receive premiums and pay insurance benefits. In return, we will pay CGB a commission fee for each such product sold by it, calculated and paid on a monthly basis, by multiplying (a) total new premiums received in such month minus the premiums for the policies cancelled during the cooling-off period in such month and (b) a fixed commission rate, which ranges from 1.8% to 25%. This agreement has a term of three years. Upon expiration of the three-year term, this agreement will be automatically renewed for successive one-year terms, provided that CGB and we have respectively obtained any required internal approvals.

On June 14, 2013, we entered into a related party transaction framework agreement with CGB. Under this agreement, which has a term of three years ending on December 31, 2015, we and CGB will carry out various deposit and non-deposit related party transactions. On July 25, 2014, we entered into a revised agreement with CGB to further

• increase the daily cap of deposits in respect of all the deposit transactions;

• increase the annual cap in respect of all the non-deposit related party transactions;

• expand the scope of non-deposit transactions; and

• extend the term of this agreement to December 31, 2016.

A detailed discussion of this related party transaction framework agreement is set forth in Note 32 to our consolidated financial statements included elsewhere in this annual report and under the heading “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions” in our annual report on Form 20-F filed with the Securities and Exchange Commission on April 25, 2014.

As at December 31, 2014, the total amount of our deposits at CGB was RMB 16,287 million (US$2,625 million). The total amount of non-deposit related party transactions between CGB and us for the year ended December 31, 2014 was RMB 854 million (US$138 million).

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Capital Injection to CLPCIC

On June 9, 2014, we entered into a capital injection agreement with CLIC and CLPCIC, pursuant to which we injected RMB 2,800 million (US$451 million) and CLIC injected RMB 4,200 million into CLPCIC. Prior to the capital injection, the registered capital of CLPCIC was RMB 8,000 million and was held 40% by us and 60% by CLIC. Upon completion of the capital injection, CLPCIC’s registered capital was increased to RMB 15,000 million and the shareholding proportion between CLIC and us remained unchanged. On July 7, 2014, the capital injection was approved by the CIRC.

Capital Injection to China Life Pension

On October 30, 2014, we entered into a capital injection agreement with AMP Life Limited and China Life Pension, pursuant to which we injected approximately RMB 441 million (US$71 million) and AMP Life Limited injected approximately RMB 1,359 million into China Life Pension. Prior to the capital injection, the registered capital of China Life Pension was RMB 2.5 billion and was held 87.4%, 6%, 4.8% and 1.8% by us, CLIC, AMC and China Credit Trust Co., Ltd., or CCT, respectively. Upon completion of the capital injection, China Life Pension’s registered capital was increased to RMB 3.4 billion and was held 70.74%, 4.41%, 3.53%, 1.33% and 19.99% by us, CLIC, AMC, CCT and AMP Life Limited, respectively. On December 31, 2014, the capital injection was approved by the CIRC.

Compliance with HKSE Listing Rules

The policy management agreement between CLIC and us, the asset management agreement between AMC and us and the insurance sales framework agreement between CLPCIC and us are only subject to reporting, announcement and annual review requirements under the HKSE Listing Rules and are exempt from independent shareholders’ approval requirements. In compliance with applicable HKSE Listing Rules requirements, we made announcements disclosing these transactions on December 15, 2011, December 27, 2012, March 8, 2012, January 4, 2013 and December 19, 2014, respectively.

The property purchase framework agreement between IHC and us is subject to reporting and announcement requirements only under the HKSE Listing Rules and is exempt from independent shareholders’ approval. In compliance with applicable HKSE Listing Rules requirements, we made an announcement disclosing this transaction on June 27, 2012.

The subscription by CLIC, CLPCIC and us for the trust units under the trust scheme established by Shanghai Trust is subject to reporting and announcement requirements only under the HKSE Listing Rules and is exempt from independent shareholders’ approval. In compliance with applicable HKSE Listing Rules requirements, we made an announcement disclosing this transaction on October 28, 2014.

The capital injection by us into CLPCIC is subject to reporting and announcement requirements only and is exempt from independent shareholders’ approval under the HKSE Listing Rules. However, the transaction is subject to approval by the shareholders’ general meeting of our company under the SSE Listing Rules. We made an announcement disclosing this transaction on March 25, 2014 and obtained the approval of the shareholders’ general meeting of our company on May 29, 2014.

The new asset management agreement entered into between IHC and us on December 31, 2014 is subject to reporting, announcement and annual review requirements only and is exempt from independent shareholders’ approval under the HKSE Listing Rules. However, the transaction is subject to approval by the shareholders’ general meeting of our company under the SSE Listing Rules. We made an announcement disclosing this transaction on October 28, 2014 and obtained the approval of the shareholders’ general meeting of our company on December 29, 2014.

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The framework agreements entered into by AMP with us, China Life Pension, CLIC and CLPCIC, respectively, are subject to reporting, announcement, annual review and independent shareholders’ approval requirements under the HKSE Listing Rules. In compliance with applicable HKSE Listing Rules requirements, we made an announcement disclosing these transactions on April 25, 2014 and obtained the approval of the shareholders’ general meeting of our company on May 29, 2014.

The remaining related party transactions discussed above, other than the transactions with CGB, are exempt from reporting, announcement and independent shareholders’ approval requirements under the HKSE Listing Rules. The related party transactions with CGB are not regarded as connected transactions for us under the HKSE Listing Rules.

Confirmation of Independent Non-executive Directors:

Our independent non-executive directors have reviewed the policy management agreement between CLIC and us, the asset management agreement between AMC and us, the insurance sales framework agreement between CLPCIC and us and the framework agreements between AMP and each of us, China Life Pension, CLIC and CLPCIC, which were subject to reporting, announcement, annual review and/or independent shareholders’ approval requirements under the HKSE Listing Rules and confirmed that:

1) the transactions were entered into in the ordinary and usual course of our business;

2) the transactions were conducted either on normal commercial terms or on terms that are fair and reasonable so far as our independent shareholders are concerned;

3) the transactions were entered into in accordance with the agreements governing those transactions; and

4) the amounts of the transactions had not exceeded the relevant annual caps as announced by us.

C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

ITEM 8. FINANCIAL INFORMATION.

A. CONSOLIDATED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION

Our audited consolidated financial statements are set forth beginning on page F-1.

Legal and Regulatory Proceedings

We are involved in litigation and arbitration proceedings involving our insurance operations on an ongoing basis. In addition, the CIRC, as well as other PRC governmental agencies, including tax, commerce and industrial administration and audit bureaus, from time to time make inquiries and conduct examinations, audits or investigations concerning our compliance with PRC laws and regulations. These litigation, arbitration and administrative proceedings have in the past resulted in damage awards, settlements or administrative sanctions, including fines, which have not been material to us. While we cannot predict the outcome of any pending or future litigation, arbitration, examination or investigation, we do not believe that any pending legal matter will have a material adverse effect on our business, financial condition or results of operations. However, we cannot assure you that any future litigation, arbitration or regulatory proceeding will not have an adverse outcome, which could have a material adverse effect on our operating results or cash flows.

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We currently have control procedures in place to monitor our litigation, arbitration and regulatory exposure. We have established a systematic prevention system whereby our management at each corporate level is responsible for compliance with laws, regulations and internal codes of conduct within their individual territories or departments. Our branches at the provincial level are required to report material litigation, arbitration and regulatory matters to our corporate headquarters on a timely basis. We plan to continue to improve our control and compliance policies in the future.

We may penalize our employees or individual agents who commit misconduct or fraud, breach the terms of their employment or agency agreements, exceed their authorization limits or fail to follow prescribed procedures in delivering insurance policies and premium payments, in each case having regard to the severity of the offense. Employees or individual agents are required to reimburse us for any losses suffered by us resulting from their misconduct or fraud. In serious cases, we may terminate their employment or agency agreements. We report criminal offenses to the PRC authorities and may also bring concurrent civil actions against employees or individual agents. We have experienced agent and employee misconduct that has resulted in litigation, arbitration and administrative actions against us and these agents and employees, and in some cases criminal proceedings and convictions against the agent or employee in question. None of these actions has resulted in material losses, damages, fines or other sanctions against us. We cannot assure you, however, that agent or employee misconduct will not lead to a material adverse effect on our business, results of operations or financial condition.

Policy on Dividend Distributions

Our board of directors has passed a resolution on March 24, 2015 to propose for approval at the annual general meeting of the declaration of final dividends of RMB 0.40 per share, totaling approximately RMB 11,306 million (US$1,822 million), for the year ended December 31, 2014. The proposed dividends have not been provided in our consolidated financial statements for the year ended December 31, 2014.

The payment of any dividend by us must be approved by shareholders in a shareholders’ meeting. Our board of directors intends to make its recommendations regarding the declaration of cash dividends to the shareholders in general meeting. The decision to make a recommendation for the payment of any dividend and the amount of the dividend will depend on:

• our results of operations and cash flows;

• our financial position;

• statutory solvency requirements as determined under PRC GAAP with reference to CIRC rules;

• our shareholders’ interests;

• general business conditions;

• our future prospects;

• statutory and regulatory restrictions on the payment of dividends by us; and

• other factors that our board of directors deems relevant.

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We will pay dividends out of our after-tax profits only after we have made the following allowances and allocations:

• recovery of accumulated losses, if any;

• allocations to the statutory common reserve fund equivalent to 10% of our after-tax income, as determined under PRC GAAP; and

• allocations to a discretionary common reserve fund as approved by the shareholders in a shareholders’ meeting.

When the statutory common reserve fund reaches and is maintained at or above 50% of our registered capital, as determined under PRC GAAP, no further allocations to this fund will be required.

Under Chinese 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. However, ordinarily we will not pay any dividends in a year in which we do not have any distributable profits.

Payment of dividends by us is also regulated by the PRC insurance law. If we do not meet the minimum solvency margin required by the CIRC, we may be prohibited from paying dividends. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Solvency requirements”.

We paid dividends of RMB 0.14 per share in respect of 2006, RMB 0.42 per share in respect of 2007, RMB 0.23 per share in respect of 2008, RMB 0.70 per share in respect 2009, RMB 0.40 per share in respect of 2010, RMB 0.23 per share in respect of 2011, RMB 0.14 per share in respect of 2012 and RMB 0.30 per share in respect of 2013. Our board of directors has recommended the declaration of final dividends of RMB0.40 per share in respect of 2014. We expect to continue to pay dividends in line with our financial performance thereafter. We will declare dividends, if any, in Renminbi with respect to the H shares on a per share basis and will pay such dividends in Hong Kong dollars.

B. SIGNIFICANT CHANGES

We are not aware of any significant changes since the date of the consolidated financial statements included in this annual report.

C. EMBEDDED VALUE

Background

China Life 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.

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China Life believes that reporting our embedded value and value of one year’s sales provides useful information to investors in two respects. First, the value of our in-force business represents the total amount of 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 China Life and CLIC, IHC, AMC, China Life Pension, CLPCIC, and etc.

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 capital supporting a company’s desired solvency margin.

“Adjusted net worth” is equal to the sum of:

• Net assets, defined as assets less PRC solvency policy reserves and other liabilities; 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 after-tax distributable profits for existing in-force business at the valuation date and for one year’s sales in the 12 months immediately preceding the valuation date. Distributable profits arise after allowance for PRC solvency reserves and solvency margins at the required regulatory minimum level.

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.

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Preparation and Review

The embedded value and the value of one year’s sales were prepared by China Life in accordance with “Life Insurance Embedded Value Reporting Guidelines” issued by the CIRC. Towers Watson, an international firm of consultants, performed a review of China Life’s embedded value. The review statement from Towers Watson is contained in the “Towers Watson’s review opinion report on embedded value” section.

On 15 May 2012, the MOF and SAT issued the “Notice on Corporate Income Tax Deduction of Reserves for Insurance Companies” (Cai Shui [2012] No. 45), requiring the taxation basis to be based on accounting profits. Based on the above regulation, in preparing the 2014 embedded value report, the adjusted net worth has reflected the tax treatment in accordance with accounting profits. When calculating the value of in-force business and value of one year’s sales, as there is uncertainty in the accounting liability assumptions in future valuation periods (such as valuation interest rates), correspondingly, numerous scenarios could be possible as to future accounting profits. Consequently, we have adopted the profits based on the solvency liability in projecting future tax payable in the base scenario. We also disclose the value of in-force business and value of one year’s sales calculated using tax payable based on the accounting profits in accordance to the “Provisions on the Accounting Treatment Related to Insurance Contracts” under one possible scenario in the table 4 of “Sensitivity Results”.

Assumptions

Economic assumptions:

The calculations are based upon assumed corporate tax rate of 25% for all years. The investment returns are assumed to be grading from 5.1% to 5.5% by 0.1% every year (remaining level thereafter). 12% grading to 17% by 1% every year (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 our strategic asset mix and expected future returns. The risk-adjusted discount rate used is 11%.

Other operating assumptions such as mortality, morbidity, lapses and expenses are based on our recent operating experience and expected future outlook.

Summary of Results

The embedded value as at 31 December 2014 and the value of one year’s sales for the 12 months to 31 December 2014, and their corresponding results as at 31 December 2013 are shown below:

Table 1

Components of Embedded Value and Value of One Year’s Sales		RMB million
ITEM		December 31, 2014			December 31, 2013
A	Adjusted Net Worth		194,236			107,522
B	Value of In-Force Business before Cost of Solvency Margin		300,712			271,837
C	Cost of Solvency Margin		(40,042	)		(37,135	)
D	Value of In-Force Business after Cost of Solvency Margin (B+C)		260,670			234,702
E	Embedded Value (A + D)		454,906			342,224
F	Value of One Year’s Sales before Cost of Solvency Margin		26,633			24,421
G	Cost of Solvency Margin		(3,380	)		(3,120	)
H	Value of One Year’s Sales after Cost of Solvency Margin (F + G)		23,253			21,300

Notes:

1) Numbers may not be additive due to rounding.

2) Taxable incomes in embedded value and the value of one year’s sales are based on earnings calculated using solvency reserves.

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Value of One Year’s Sales by Channel

The value of one year’s sales by channel is shown below:

Table 2

Value of One Year’s Sales by Channel

	RMB million
	Value of One Year’s Sales
Channel	2014		2013
Exclusive Individual Agent Channel		21,740		19,639
Group Insurance Channel		464		532
Bancassurance Channel		1,048		1,129
Total		23,253		21,300

Notes:

1) Numbers may not be additive due to rounding.

2) Taxable income is based on earnings calculated using solvency reserves.

Movement Analysis

The following analysis tracks the movement of the embedded value from the start to the end of 2014.

Table 3

Analysis of Embedded Value Movement in 2014

ITEM		RMB million
A	Embedded Value at Start of Year		342,224
B	Expected Return on Embedded Value		37,516
C	Value of New Business in the Period		23,253
D	Operating Experience Variance		563
E	Investment Experience Variance		39,338
F	Methodology, Model and Assumption Changes		(3,209	)
G	Market Value and Other Adjustments		24,458
H	Exchange Gains or Losses		26
I	Shareholder Dividend Distribution		(8,479	)
J	Other		(783	)
K	Embedded Value as at 31 December 2014 (sum A through J)		454,906

Notes:

1) Numbers may not be additive due to rounding.

2) Items B through J are explained below:

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B Reflects expected impact of covered business, and the expected return on investments supporting the 2014 opening net worth.

C Value of new business sales in 2014.

D Reflects the difference between actual operating experience in 2014 (including mortality, morbidity, lapse, and expenses etc.) and the assumptions.

E Compares actual with expected investment returns during 2014.

F Reflects the effect of projection method, model enhancements and assumption changes.

G Change in the market value adjustment from the beginning of year 2014 to 31 December 2014 and other related adjustments.

H Reflects the gains or losses due to changes in exchange rate.

I Reflects dividends distributed to shareholders during 2014.

J Other miscellaneous items.

Sensitivity Results

Sensitivity testing was performed using a range of alternative assumptions. In each of the sensitivity tests, only the assumption referred to was changed, with all other assumptions remaining unchanged. The results are summarized below:

Table 4

Sensitivity Results

		RMB million
		Value of in-force business after cost of solvency margin		Value of one year’s sales after cost of solvency margin
	Base case scenario		260,670		23,253
1.	Risk discount rate of 11.5%		248,363		21,962
2.	Risk discount rate of 10.5%		273,875		24,640
3.	10% increase in investment return		301,993		26,555
4.	10% decrease in investment return		219,647		19,971
5.	10% increase in expenses		257,909		21,435
6.	10% decrease in expenses		263,431		25,070
7.	10% increase in mortality rate for non-annuity products and 10% decrease in mortality rate for annuity products		258,517		23,128
8.	10% decrease in mortality rate for non-annuity products and 10% increase in mortality rate for annuity products		262,860		23,378
9.	10% increase in lapse rates		259,675		22,863
10.	10% decrease in lapse rates		261,613		23,585
11.	10% increase in morbidity rates		258,351		23,118
12.	10% decrease in morbidity rates		263,013		23,388
13.	10% increase in claim ratio of short term business		260,316		22,045
14.	10% decrease in claim ratio of short term business		261,024		24,460
15.	Solvency margin at 150% of statutory minimum		241,056		21,519
16.	Using 2013 EV assumptions		263,638		23,274
17.	Taxable income based on the accounting profit in accordance to the Provisions on the Accounting Treatment Related to Insurance Contracts under one possible scenario		262,577		22,894

Note: Taxable income is based on earnings calculated using solvency reserves for Scenarios 1 to 16.

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Towers Wastson’s Review Opinion Report on Embedded Value

To The Directors of China Life Insurance Company Limited

China Life Insurance Company Limited (“China Life”) has prepared embedded value results for the financial year ended 31 December 2014 (“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 (“Towers Watson”) to review its EV Results. This report is addressed solely to China Life in accordance with the terms of our engagement letter, and sets out the scope of our work and our conclusions. To the fullest extent permitted by applicable law, we do not accept or assume any responsibility, duty of care or liability to anyone other than China Life for or in connection with our review work, the opinions we have formed, or for any statement set forth in this report.

Scope of work

Our scope of work covered:

• a review of the methodology used to develop the embedded value and value of one year’s sales as at 31 December 2014, in the light of the requirements of the “Life Insurance Embedded Value Reporting Guidelines” issued by the China Insurance Regulatory Commission (“CIRC”) in September 2005;

• 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 2014;

• 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 consistent with the requirements of the “Life Insurance Embedded Value Reporting Guidelines” issued by the CIRC. The methodology applied by China Life is a common methodology used to determine embedded values of life insurance companies in China at the current time;

• 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;

• no changes have been assumed to the treatment of tax, but some sensitivity results relating to tax have been shown by China Life; and

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• 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 Towers Watson

Michael Freeman Wesley Cui

24th March 2015

ITEM 9. THE OFFER AND LISTING.

In connection with our initial public offering, our American depositary shares, or ADSs, each representing 40 H shares, were listed and commenced trading on New York Stock Exchange on December 17, 2003 under the symbol “LFC”. Our H shares were listed and commenced trading on the Hong Kong Stock Exchange on December 18, 2003 under the stock code “2628”. Prior to these listings, there was no public market for our equity securities. The New York Stock Exchange and the Hong Kong Stock Exchange are the principal trading markets for our ADSs and H shares, which are not listed on any other exchanges in or outside the United States.

On December 29, 2006, the ratio of ADSs to H shares was reduced from 40 H shares to 15 H shares. Our A shares were listed and commenced trading on the Shanghai Stock Exchange on January 9, 2007 under the stock code “601628”.

The high and low closing sale prices of the H shares on the HKSE, the ADSs on the NYSE and the A shares on the SSE for the periods indicated are as follows⁽¹⁾:

	Price per H Share (HK$)				Price per ADS (2) (US$)				Price per A share (RMB)
	High		Low		High		Low		High		Low
Annual
2010		39.3000		29.7000		76.14		57.36		31.4200		20.9000
2011		32.6000		17.2400		62.93		33.52		22.3200		14.8100
2012		25.3000		17.0600		49.69		33.47		21.4000		15.8700
2013		27.2000		17.5000		52.62		34.27		21.9200		12.9100
2014		30.5000		19.7800		58.84		38.59		34.1500		13.0700
Quarterly
First Quarter, 2013		27.2000		20.1000		52.62		39.42		21.9200		17.0400
Second Quarter, 2013		22.3000		17.7200		43.56		34.54		17.6700		13.4200
Third Quarter, 2013		21.4500		17.5000		41.42		34.27		15.0100		12.9100
Fourth Quarter, 2013		25.7000		19.6200		49.50		38.06		16.4600		13.4300
First Quarter, 2014		24.2500		20.1500		45.37		39.00		15.1300		13.0700
Second Quarter, 2014		22.7500		19.7800		43.63		38.59		14.8100		13.4200
Third Quarter, 2014		23.9500		20.2500		46.95		39.38		15.9100		13.6200
Fourth Quarter, 2014		30.5000		21.2500		58.84		40.92		34.1500		14.8400
First Quarter, 2015		34.0500		29.6000		67.24		56.60		40.6300		31.9800
Monthly
October 2014		23.2000		21.2500		44.75		40.92		16.1600		14.8400
November 2014		27.0000		22.6500		52.39		43.86		22.6000		15.7800
December 2014		30.5000		25.6500		58.84		49.49		34.1500		21.7900
January 2015		32.5500		29.6000		63.51		56.60		40.6300		31.9800
February 2015		33.2500		29.9000		64.28		58.40		38.7600		33.6800
March 2015		34.0500		30.4000		67.24		58.52		38.4500		34.9200
April 2015 (through April 22, 2015)		40.0000		34.7500		78.53		68.14		41.1900		37.4800

(1) Source: Yahoo! Finance (http://finance.yahoo.com).

(2) Each ADS represents 15 H shares.

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ITEM 10. ADDITIONAL INFORMATION.

A. SHARE CAPITAL

Not applicable.

B. ARTICLES OF ASSOCIATION

The following is a brief summary of certain provisions of our current articles of association, the PRC company law and certain other laws and regulations applicable to us. Such summary is not purported to be complete. For further information, you should refer to the full text of our articles of association and to the texts of applicable laws and regulations.

Objects and Purposes

We are organized under the PRC company law as a joint stock company. We are registered with the SAIC in Beijing, China and our business license carries the registration number 100000000037965.

Our business scope, set forth in Article 10 of our articles of association, is to engage in life, accident and health insurance businesses; reinsurance business relating to the foregoing; fund investment businesses authorized by laws, regulations or the State Council; agency business, consulting business and provision of services, in each case relating to life insurance; and other business as approved by the insurance regulatory authority of the PRC.

Sources of Shareholders’ Rights

The primary sources of shareholders’ rights are the PRC company law, our articles of association, Special Rules applicable to overseas listed joint stock companies promulgated by the State Council, or Special Rules, relevant CSRC regulations, the Shanghai Stock Exchange Listing Rules, and the Hong Kong Stock Exchange Listing Rules that, among other things, impose certain standards of conduct, fairness and disclosure on us, our directors and CLIC, our controlling shareholder. The PRC company law was enacted in December 1993 and serves as the primary body of law regulating corporate actions of companies organized in the PRC and its directors and shareholders.

Our articles of association have incorporated the provisions set forth in the Mandatory Provisions for the Articles of Association of Companies Listed Overseas, or the Mandatory Provisions, adopted in 1994 pursuant to the requirements of the CSRC and the provisions set forth in the Guidelines on the Articles of Association of Listed Companies, or the Guidelines, as amended in 2006 by the CSRC. Any amendment to the relevant mandatory provisions will only become effective after approval by the relevant governmental departments authorized by the State Council and the CSRC. The Hong Kong Stock Exchange Listing Rules require a number of provisions in addition to the Mandatory Provisions to be included in our articles of association.

According to the HKSE Listing Rules, we may not amend certain provisions of our articles of association that have been mandated by the Hong Kong Stock Exchange. These provisions include, among others:

• varying the rights of existing classes of shares;

• voting rights;

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• our power to purchase our own shares;

• rights of minority shareholders; and

• liquidation procedures.

In addition, upon the listing of the H shares and for so long as the H shares are listed on the Hong Kong Stock Exchange, we are subject to the relevant ordinances, rules and regulations applicable to companies listed on the Hong Kong Stock Exchange, including, among other things, the Hong Kong Stock Exchange Listing Rules, the Securities and Futures Ordinance and the Hong Kong Codes on Takeovers and Mergers and Share Repurchases.

Unless otherwise specified, all rights, obligations and protections discussed below are derived from our articles of association and the PRC company law.

Enforceability of Shareholders’ Rights

Enforceability of our shareholders’ rights may be limited.

In accordance with the rules applicable to Chinese overseas listed companies, our articles of association provide that, with certain limited exceptions, all disputes or claims based on our articles of association, the PRC company law or other relevant laws or administrative rules, and concerning matters between holders of H shares and holders of A shares, us, or our directors, supervisors, president, vice presidents or other senior officers, must be submitted for arbitration at either the China International Economic and Trade Arbitration Commission or the Hong Kong International Arbitration Center. If an applicant chooses to have the dispute arbitrated at the Hong Kong International Arbitration Center, either party may request that venue be changed to Shenzhen, a city in mainland China near Hong Kong. The governing law for the above-mentioned disputes or claims is Chinese law unless otherwise provided by Chinese law. Any such arbitration will be final and conclusive.

In June 1999, an arrangement was made between the People’s Courts of the PRC and the courts of Hong Kong for mutual enforcement of arbitration rewards rendered in the PRC and Hong Kong according to their respective laws. This arrangement was approved by the Supreme Court of the PRC and the Hong Kong Legislative Council and became effective on February 1, 2000.

There has not been any published report of judicial enforcement in the PRC by H shareholders of their rights under charter documents of PRC joint stock companies or the PRC company law or in the application or interpretation of the PRC or Hong Kong regulatory provisions applicable to PRC joint stock companies.

The PRC company law allows shareholders to sue, on behalf of the corporation, against persons, including corporate officers, directors, who have allegedly wronged the corporation, where the corporation itself has failed to enforce such claim against such persons directly. Class action lawsuits based on violations of securities laws are generally not available.

We are subject to the Hong Kong Exchange Listing Rules, the Hong Kong Securities and Futures Ordinance, or Securities and Futures Ordinance, and the Hong Kong Codes on Takeovers and Mergers and Share Repurchases. However, holders of H shares will not be able to bring actions on the basis of violations of the Hong Kong Stock Exchange Listing Rules and must instead rely on the Hong Kong Stock Exchange to enforce its rules. The Hong Kong Codes on Takeovers and Mergers and Share Repurchases do not have the force of law and are only standards of commercial conduct considered acceptable for takeover and merger transactions and share repurchases in Hong Kong as established by the Securities and Futures Commission of Hong Kong and the securities and futures industry in Hong Kong. The Securities and Futures Ordinance establishes various obligations in relation to disclosure of shareholders’ interests in Hong Kong listed companies, the violation of which is subject to prosecution by the Securities and Futures Commission of Hong Kong.

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See “Item 3. Key Information—Risk Factors—Risks Relating to the People’s Republic of China—The laws in China differ from the laws in the United States and may afford less protection to our minority shareholders” and “Item 3. Key Information—Risk Factors—Risks Relating to the People’s Republic of China—You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in the PRC based on U.S. or other foreign laws against us, our management and some of the experts named in the annual report”.

Dividends

Our board of directors may propose dividend distributions. A distribution of dividends for any fiscal year is subject to shareholders’ approval. Dividends may be distributed in the form of cash or shares or a combination of both. The H shares rank equally with A shares with regard to dividend rights. A distribution of shares must be approved by special resolution of the shareholders’ meeting.

We may only distribute dividends after allowance has been made for:

• recovery of accumulated losses, if any;

• allocations to the statutory common reserve fund equivalent to 10% of our after-tax income; and

• allocations to a discretionary common reserve fund as approved by the shareholders in a shareholders’ meeting.

Under Chinese 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. However, we will ordinarily not pay any dividends in a year when we do not have any distributable profits.

Payment of dividends by us is also regulated by the PRC insurance law. If we do not meet the solvency margin required by the CIRC, we will be prohibited from paying dividends. See “Item 4. Information on the Company—Business Overview—Regulation and Related Matters—Insurance Company Regulation—Solvency requirements”.

Our articles of association require us to appoint, on behalf of the holders of H shares, a receiving agent that is registered as a trust corporation under the Trustee Ordinance of Hong Kong to receive dividends declared by us in respect of the H shares on behalf of such shareholders. Our articles of association require that cash dividends in respect of H shares be declared in Renminbi and paid by us in Hong Kong dollars. The depositary will convert these proceeds into U.S. dollars and will remit the converted proceeds to holders of our ADSs.

Subject to the requirements under applicable PRC laws and rules of the securities regulatory authorities of the PRC, Hong Kong and United States, we may exercise the power to forfeit unclaimed dividends, provided that such power cannot be exercised until after the expiration of applicable limitation period.

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We anticipate that our controlling shareholder, CLIC, may incur future operating losses arising in part from the runoff of policies retained by it in connection with the restructuring. Dividends received from us may become one of CLIC’s principal means of funding these losses. Although we believe that the reserves held by CLIC and other financial resources available to it will fund substantially all of any future operating shortfalls arising out of these policies, which should reduce CLIC’s reliance on dividends from us, subject to the relevant provisions of the PRC company law and our articles of association as described above and in “Item 8. Financial Information—Consolidated Financial Statements and Other Financial Information—Policy on Dividend Distributions”, CLIC may seek to increase the amount of dividends we pay in order to satisfy its cash flow requirements. See “Item 3. Key Information—Risk Factors—Risks Relating to the Restructuring”.

Dividend payments may be subject to Chinese withholding tax. See “—Taxation—The People’s Republic of China—Taxation of Dividends”.

Voting Rights and Shareholders’ Meetings

Our board of directors will convene a shareholders’ annual general meeting once every year within six months from the end of the preceding fiscal year. Our board of directors must convene an interim meeting within two months of the occurrence of any of the following events:

• where the number of directors is less than the number stipulated in the PRC company law or two-thirds of the number specified in our articles of association;

• where our unrecovered losses reach one-third of the total amount of our share capital;

• where shareholders, individually or jointly, holding 10% or more of our issued and outstanding voting shares so request in writing;

• whenever our board of directors deems necessary, or more than half of directors (including at least two independent directors) or our board of supervisors so requests; or

• any other event as maybe provided by applicable laws, rules, regulations or our articles of association.

All shareholders’ meetings must be convened by our board of directors by written notice given to shareholders no less than 45 days before the meeting. Shareholders holding at least one-half of our total voting shares will constitute a quorum for a shareholders’ meeting. If a quorum is not reached, we are required to notify our shareholders within five days by public announcement of the agenda, the date and the venue of the adjourned meeting. After the notice, we may conduct the shareholders’ meeting. The accidental omission by us to give notice of a meeting to, or the non-receipt of notice of a meeting by, a shareholder will not invalidate the proceedings at that shareholders’ meeting.

Shareholders at meetings have the power, among other matters, to approve or reject our profit distribution plans, annual budget, financial statements, increases or decreases in share capital, issuances of debentures, mergers, liquidation, any equity-based incentive plan and any amendment to our articles of association. In addition, the rights of a class of shareholders may not be modified or abrogated, unless approved by a special resolution of shareholders at a general shareholders’ meeting and by a special resolution of shareholders of that class of shares at a separate meeting. Our articles of association enumerate various amendments which would be deemed to be a modification or abrogation of the rights of a class of shareholders, including, among others, increasing or decreasing the number of shares of a class disproportionate to increases or decreases of other classes of shares, removing or reducing rights to receive dividends in a particular currency or creating shares with voting or equity rights superior to those of shares of that class. There are no restrictions under PRC law or our articles of association on the ability of investors that are not Chinese residents to hold H shares and exercise voting rights, except that holders of H shares are unable to vote online and the prior approval of the CIRC is required in respect of any acquisition which results in the acquirer holding more than 5% of the outstanding share capital of our company and the other restrictions set out under “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Restriction of ownership in joint stock insurance companies”.

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Each of our ordinary shares, whether it be an A share or an H share, is entitled to one vote on all matters submitted for vote at all shareholders’ meetings, except for meetings of a special class of shareholders where only holders of shares of the affected class are entitled to vote on the basis of one vote per share of the affected class.

Shareholders are entitled to attend and vote at meetings either in person or by proxy. Proxies must be in writing and deposited at our legal address or such other place as is specified in the meeting notice, no less than 24 hours before the time for holding the meeting at which the proxy proposes to vote or the time appointed for the passing of the relevant resolution.

Resolutions on any of the following matters must be approved by more than two-thirds of the voting rights held by shareholders who are present in person or by proxy:

• an increase or decrease in our share capital or the issuance of shares, warrants, debentures and other similar securities;

• our division, merger, dissolution or liquidation (shareholders who object to a proposed merger are entitled to demand that either we or the shareholders who approved the merger purchase their shares at a fair price);

• amendments to our articles of association;

• purchase or sale within any single year of any material assets exceeding 30% of our latest audited total assets;

• any equity-based incentive plan; and

• any other matters as provided under applicable laws or regulations or determined by a majority of shareholders at a general meeting to have a material impact on us and should be approved by two-thirds of the voting rights.

An amendment of shareholders’ rights of any class of shares must be approved by more than two-thirds of the voting rights held by holders of shares in the affected class who are present in person or by proxy.

All other actions taken by the shareholders will be approved by a majority of the voting rights held by shareholders who are present in person or by proxy at the shareholders’ meeting.

Any shareholder resolution that is in violation of any laws or regulations of China or the articles of association will be null and void.

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Liquidation Rights

We are organized as a joint stock company with limited liability of indefinite duration, but must pass the annual inspection with the SAIC. In the event of our liquidation, the H shares will rank equally with the A shares, and payment of debts out of our remaining assets is required to be made in the order of priority prescribed by applicable laws and regulations or, if no such standards exist, in accordance with such procedures as the liquidation committee that has been appointed either by us or the People’s Courts of China may consider to be fair and reasonable. After payment of debts, we are required to distribute the remaining property to shareholders in proportion to the number of shares they hold.

Information Rights

Our shareholders may, subject to reasonable fees and costs, obtain a copy of our articles of association and inspect and copy all parts of our register of shareholders, personal particulars of the directors, supervisors, president and other senior officers, reports on the state of our share capital, reports showing the aggregate par value, highest and lowest price paid in respect of each class of shares repurchased by us since the end of the last accounting year and the aggregate amount paid by us for this purpose, minutes of shareholders’ general meetings, and counterfoils of company debt securities, resolutions of board meetings, resolutions of board of supervisors.

Our fiscal year is the calendar year ending December 31. We must send to holders of H shares, no more than four months after the end of the relevant financial year, our annual report (including our annual accounts, together with a copy of the auditors’ report thereon). Further, we must publish a preliminary results announcement no later than three months after the end of the relevant fiscal year. The results announcement in respect of the relevant financial year is required to be published on the HKSE’s website no later than the time that is 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session on the next business day after approval by or on behalf of our board of directors. These and any interim financial statements must be prepared in accordance with HKFRS, IFRS or PRC GAAP in the case of a PRC issuer that has adopted PRC GAAP for the preparation of its annual financial statements. The annual financial statements must be approved by a majority of our shareholders who are present in person or by proxy at the annual general meeting.

The HKSE Listing Rules also require us to send to holders of H shares an interim report no later than three months after the end of the first six months of each fiscal year. Further, we must publish a preliminary results announcement no later than two months after the end of the six-month period. The results announcement in respect of the relevant six-month period is required to be published on the HKSE’s website no later than the time that is 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session on the next business day after approval by or on behalf of our board of directors.

According to the HKSE Listing Rules, where in the view of the HKSE there is or there is likely to be a false market in our securities, we must, as soon as reasonably practicable after consultation with the HKSE, announce the information necessary to avoid a false market in our securities. In addition, according to the provisions of inside information under the Securities and Futures Ordinance of Hong Kong, we must, as soon as reasonably practicable after any inside information has come to our knowledge, disclose the information to the public. Inside information, in relation to a listed corporation, means specific information that—

• is about the corporation, a shareholder or officer of the corporation, or the listed securities of the corporation or their derivatives; and

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• is not generally known to the persons who are accustomed or would be likely to deal in the listed securities of the corporation but would if generally known to them be likely to materially affect the price of the listed securities. Depending on the size of the transaction, we may also be required to disclose to our shareholders details of various acquisitions or disposals of assets and other transactions (including transactions with controlling shareholders).

Restrictions on Transferability and the Share Register

Unless otherwise permitted by relevant PRC rules or regulations or approved by relevant PRC authorities, H shares may be traded only among investors who are legal or natural persons resident outside of China, and may not be sold to investors resident within the PRC. There are no restrictions under PRC law or our articles of association on the ability of investors who are not PRC residents to hold H shares. However, under relevant PRC law, a legal person resident outside of China is only allowed to hold not more than 20% of our issued share capital and legal persons resident outside of China are only allowed to hold in aggregate not more than 25% of our issued share capital, unless otherwise approved by competent authorities.

We are required to keep a register of our shareholders comprised of various parts, including one part which is to be maintained in Hong Kong in relation to holders of H shares. Shareholders have the right to inspect and, for a reasonable charge, to copy the share register. No transfers of ordinary shares will be recorded in our share register within thirty days prior to the date of a shareholders’ general meeting or within five days prior to the record date established for the purpose of distributing a dividend.

We have appointed Computershare Hong Kong Investor Services Limited to act as the registrar of our H shares. This registrar maintains our register of holders of H shares and enters transfers of H shares in such register upon the presentation of the documents described above.

Increases in Share Capital

Under our articles of association, issuance of new securities, including ordinary shares, securities convertible into ordinary shares, options, warrants or similar rights to subscribe for any ordinary shares or convertible securities, must be approved by at least two-thirds of the shareholders who attend the shareholders meeting in person or by proxy. In addition, the issuance of A shares or H shares must be approved by two-thirds of the class of domestic shares or H shares, as the case may be, unless the number of shares to be issued shall not exceed 20% of the number of shares of the same class then outstanding in any 12-month period.

A special resolution was passed at the shareholders’ annual general meeting held on May 29, 2014 to authorize our board of directors to issue additional shares, and amend the articles of association accordingly, in a nominal amount of no more than 20% of each of the aggregate nominal amount of our domestic shares and H shares in issue as at the date of such resolution, by the conclusion of next shareholders’ annual general meeting, or the expiration of the 12-month period following the passing of this resolution, or the date on which the resolution is otherwise revised or revoked by a special resolution of our shareholders, whichever is the earliest.

Shareholders are not liable to make any further contribution to the share capital other than according to the terms that were agreed upon by the subscriber of the relevant shares at the time of subscription. New issues of shares must also be approved by relevant Chinese authorities.

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Decreases in Share Capital and Repurchases

We may reduce our registered share capital only upon obtaining the approval of at least two-thirds of the shareholders who attend the shareholders meeting in person or by proxy and, in certain circumstances, of relevant Chinese authorities. The number of H shares that may be repurchased is subject to the Hong Kong Codes on Takeovers and Mergers and Share Repurchases.

Restrictions on Ownership

No individual legal entity or other organization (including any associated party thereof) that invests in an insurance company, other than an insurance holding company or an insurance company approved by the CIRC, may hold in excess of 20% of the shares in the insurance company. See “Item 4. Information on the Company—Business Overview—Regulation and Related Matters—Insurance Company Regulation—Restriction of ownership in joint stock insurance companies”.

Restrictions on Large or Controlling Shareholders

Our articles of association define a controlling shareholder as any person who acting alone or in concert with others:

• is in a position to elect more than one-half of the board of directors;

• has the power to exercise, or to control the exercise of, 30% or more of our voting rights;

• holds 30% or more of our issued and outstanding shares; or

• has de facto control of us in any other way.

As of the date of this annual report, CLIC, a wholly state-owned enterprise, is our only controlling shareholder.

Our articles of association provide that, in addition to any obligation imposed by laws and administrative regulations or required by the Hong Kong Stock Exchange Listing Rules, a controlling shareholder shall not exercise its voting rights in a manner prejudicial to the interests of other shareholders:

• to relieve a director or supervisor from his or her duty to act honestly in our best interests;

• to approve the appropriation by a director or supervisor, for his or her own benefit or for the benefit of any other person, of our assets in any way, including without limitation opportunities which may be advantageous to us; or

• to approve the appropriation by a director or supervisor, for his or her own benefit or for the benefit of another person, of the individual rights of other shareholders, including without limitation rights to distributions and voting rights (except in accordance with a restructuring of our company which has been approved by the shareholders at a general meeting in accordance with our articles of association).

Our articles of association also provide that a controlling shareholder or an actual controlling person shall not exploit its affiliated relation in a manner prejudicial to the interest of our company, and shall be liable for any losses suffered by us as a result thereof. The controlling shareholder or actual controlling person shall have fiduciary duties to both our company and our public shareholders. The controlling shareholder shall exercise its rights as a capital contributor of our company in strict compliance with the law. The controlling shareholder shall not cause any damage to the lawful rights and interest of our company and our public shareholders through, among others, any connected transactions, profit distribution, asset restructuring, external investment, fund appropriation and loan guarantee, or impair the interest of our company and our public shareholders through its controlling position.

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Board of Directors

Our non-employee directors are elected by our shareholders at shareholders’ general meetings, and employee directors are elected by our employees or other democratic means at the employee representative conference. Directors are elected for a term of three years and may serve consecutive terms if re-elected.

Article 23 of Special Regulations on the Overseas Offering and Listing of Shares by Joint Stock Limited Companies provides that directors, supervisors, and senior officers of a company owe duties of honesty, care and diligence to their company.

Our articles of association provide that, in exercising their duties and powers, our directors, supervisors and senior officers will act with the care, diligence and skills that are expected of a reasonable person under similar circumstances, observe fiduciary principles and not place themselves in a situation where their interests conflict with the duties they are charged with performing. In addition to these fiduciary duties to our company, each director, supervisor and officer is obligated to each shareholder:

• to act honestly in our company’s best interests;

• not to exploit corporate assets for personal gains; and

• not to expropriate the rights of our shareholders.

If directors, supervisors or officers are found to have misappropriated our company’s assets or misused their position for personal gain, the PRC company law provides that any misappropriated or misused property be returned and any illegal proceeds received by such director, supervisor or officer be confiscated, and allows us to impose punishment on them. In serious cases, criminal liability may also be imposed. According to our articles of association, our shareholders may bring a derivative suit against any director, supervisor or officer who has breached his fiduciary duties. Most disputes between H shareholders and directors, supervisors and officers are required to be resolved by final and binding arbitration.

Moreover, our articles of association provide that our directors, supervisors and senior officers must not enter into transactions or contracts with us or agree to make corporate loans to any persons or provide guarantees for loans of any shareholder or any other person with corporate assets. In particular, our directors, supervisors and senior officers have obligations to disclose to the board of directors any direct or indirect material interest they may have in any contracts or transactions with us. They may not vote on any contracts, transactions or arrangements in which they have any material interest. Further, we may not make loans or provide guarantees to directors, supervisors or senior officers, unless such loans or guarantees are approved at a shareholders’ meeting or made in the ordinary course of business and to the extent permitted by applicable laws. All decisions relating to the compensation of directors are made at shareholders’ meetings.

There are no provisions under our articles of association or PRC law which relate to:

• the retirement or non-retirement of directors under any age limit requirement;

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• directors’ borrowing power; or

• number of shares required for directors’ qualification.

Subject to all relevant laws and administrative regulations, the shareholders may remove any director before the expiration of his or her term of office by a majority vote of the shareholders present in person or by proxy at shareholders’ general meetings. A director, supervisor, president, vice president or other senior officer may be relieved of liability for a specific breach of his or her duties by the consent of shareholders so long as specified conditions are met.

Board of Supervisors

Our board of supervisors consists of five supervisors. At least one-third of our board of supervisors must be employee representatives elected by our employees. The remaining members must be elected by our shareholders in a general meeting. One member of our board of supervisors is designated as the chairman. Members of the board of supervisors may not serve as director, president, vice president or other senior management of our company. The term of office for our supervisors is three years, which is renewable upon re-election.

The primary duty of the board of supervisors is to monitor our financial matters and management. The board of supervisors’ powers are generally limited to carrying out investigations and reporting to shareholders, the China Securities Regulatory Commission and other relevant governmental authorities having jurisdiction over our affairs and to convening shareholders’ interim meetings. Reasonable expenses incurred by the board of supervisors in carrying out its duties will be paid by us.

Our supervisors owe fiduciary duties to our company and our shareholders. Please see the discussion of the duties and the nature of recourse our shareholders may have against supervisors in breach of these duties in the subsection entitled “—Board of Directors”.

The board of supervisors is accountable, and will report, to the shareholders at the shareholders’ general meetings.

Certain Differences Between PRC Company Law and Delaware Corporate Law

The PRC company law and other laws applicable to us differ in a number of respects from laws generally applicable to United States corporations and their shareholders. The description set forth below includes a summary of certain provisions of the PRC company law, Special Rules, Mandatory Provisions and the Guidelines applicable to companies listed both in the PRC and overseas, such as us, which differ from provisions of the corporate law of the State of Delaware.

General

We are a PRC joint stock company, which is a corporate entity organized under the PRC company law. Under the PRC company law, the registered capital of a joint stock company is divided into shares of equal par value. These shares are commonly called domestic ordinary shares. Each share of a joint stock company ranks equally with all other shares in its class as to voting rights (except for specified class voting rights) and rights to dividends and other distributions. Upon receiving approval from the relevant authorities, a joint stock company may offer its shares for sale to the public and seek to be listed on a stock exchange. The State Council may formulate separate regulations for the issuance of other classes of shares, including H shares. All of our issued shares are fully paid and nonassessable. Holders of H shares may transfer their shares without the approval of other shareholders. Among other things, a joint stock company must have (1) a board of directors of not fewer than five and not more than 19 members, and (2) a board of supervisors of not fewer than three members.

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The shareholders’ meeting of a joint stock company is the highest authority of the company and exercises the powers of the company with respect to significant matters, subject to applicable law and the articles of association of the company. The business of a joint stock company is under the overall management of a board of directors, subject to the PRC company law, other applicable laws and regulations (which in our case include the PRC insurance law and regulations), the company’s articles of association and duly adopted resolutions of its shareholders. The day-to-day operations of a joint stock company are under the direction of its general manager or president, subject to applicable laws and regulations, the company’s articles of association and duly adopted resolutions of the directors and shareholders. In addition, the PRC company law provides for the establishment of a board of supervisors for each joint stock company. The supervisors perform and exercise the functions and powers described below, including examination of the joint stock company’s affairs and monitoring the actions of the directors and officers of the company. The directors, supervisors and officers are not required to hold any qualifying shares in the joint stock company.

A joint stock company may be liquidated involuntarily due to insolvency or voluntarily in accordance with the terms of its articles of association or duly adopted shareholders’ resolutions. The property of a joint stock company remaining after full payment of its liquidation expenses, wages, labor insurance premiums of its employees and statutory compensations, outstanding taxes and debts, is distributed in proportion to the holdings of its shareholders.

Meetings of shareholders

Under PRC law, shareholders are given the power to approve specified matters. See “—Voting Rights and Shareholders’ Meetings”. In addition, the Mandatory Provisions provide that at shareholders’ meetings shareholders are entitled to consider any proposals made by shareholders holding in the aggregate at least 3% of voting power over the company’s shares.

Under Delaware law, the business and affairs of a Delaware corporation are, in general, managed by or under the direction of its board of directors. Only certain fundamental matters regarding the corporation are reserved by statute to be exercised by the shareholders. These matters include, in general, election or removal of directors, retention or dismissal of the corporation’s independent auditors, mergers or other business combinations involving the corporation, amendment of the corporation’s certificate of incorporation and liquidation or dissolution of the corporation.

Shareholders’ approval by written consent

PRC law does not provide shareholders of overseas listed joint stock companies with rights to approve corporate matters by written consent. Under Delaware law, unless otherwise provided in the certificate of incorporation, any action which is required or permitted to be taken at any shareholders’ meeting may be taken without a meeting, subject to various conditions.

Amendments of articles of association

Under PRC law, an amendment of the articles of association must be approved by an affirmative vote of two-thirds of shareholders attending a shareholders’ meeting. Under the Mandatory Provisions, proposed amendment to the articles is required to be approved by the board of directors, as well as the shareholders. Amendments with respect to the Mandatory Provisions only become effective after approval by the relevant governmental department authorized by the State Council and the China Securities Regulatory Commission.

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Under Delaware law, with certain exceptions, shareholder approvals must be obtained for any amendment to the certificate of incorporation. Board approvals are also required for any amendment to the certificate of incorporation, but no governmental approval is generally required.

Powers and responsibilities of directors

Under PRC law, the board of directors is responsible for specified actions, including the following functions and powers of a joint stock company:

• convening shareholders’ meetings and reporting its work to shareholders at these meetings;

• implementing shareholders’ resolutions;

• determining the company’s business plans and investment proposals;

• formulating the company’s annual financial budgets and final accounts;

• formulating the company’s profit distribution plans and loss recovery plans;

• formulating proposals for the increase or decrease in the company’s registered capital and the issue of debentures;

• formulating major acquisition and disposal plans and plans for the merger, division or dissolution of the company;

• to the extent authorized by the shareholders’ meeting, deciding on such matters as external investments, purchase or sale of assets, assets pledge and connected transactions of the company;

• deciding on the company’s internal management structure and formulating its basic management system; and

• appointing or removing the company’s principal executive officers; appointing and removing other senior officers based on the recommendation of the principal executive officer and deciding on the remuneration of the senior officers.

In addition, the Mandatory Provisions provide that the board has the authority to formulate any proposal to amend the articles of association and to exercise any other power conferred by a decision of the shareholders’ meeting.

Under Delaware law, the business and affairs of a Delaware corporation are managed by or under the direction of its board of directors. Their powers include fixing the remuneration of directors, except as otherwise provided by statute or in the certificate of incorporation or by-laws of the corporation.

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Powers and responsibilities of supervisors

Under PRC law, a PRC joint stock company must have a board of supervisors consisting of shareholder representatives and one or more employee representatives. Supervisors attend board meetings as non-voting observers. Directors, officers and company personnel in charge of financial matters may not serve as supervisors. The supervisors perform and exercise the following functions and powers:

• examining the company’s financial affairs;

• monitoring compliance with laws, regulations, the articles of association of the company and the shareholders resolutions by the directors and officers of the company; and suggesting removing the directors and officers who violate these laws and regulations;

• requiring corrective action from directors and officers whose actions are contrary to the interests of the company;

• examining the financial information, including financial statements, operation reports and plans for profit distribution, to be submitted by the board of directors to the shareholders’ meetings; and authorizing, in the company’s name, public certified accountants or licensed auditors to assist in the re-examination of such information, should any doubt arise in respect thereof;

• proposing the holding of extraordinary shareholders’ meetings;

• proposing new items to be inserted in the agenda of the shareholders’ meeting;

• bringing lawsuits against directors or members of senior management, if they violate laws, regulations or articles of association of the company; and

• exercising and performing other powers and functions provided for in the company’s articles of association.

In addition, the Mandatory Provisions provide that supervisors of overseas listed joint stock companies are entitled to retain auditors in the name of the company to examine any financial or business reports or profit distribution proposals to be submitted by the directors to a meeting of the shareholders which the supervisors consider questionable, and negotiate or take legal action against any director or the directors in the name of the company. The fees and expenses of attorneys and other professionals incurred by the supervisors in connection with the discharge of their duties are to be paid by the company.

Delaware law makes no provision for a comparable corporate institution.

Duties of directors, supervisors and officers

Under PRC law, directors, supervisors and officers of a joint stock company are required to comply with relevant laws and regulations and the company’s articles of association. A director, supervisor or officer who contravenes any law, regulation or the company’s articles of association in the performance of his duties shall be personally liable to the company for any loss incurred by the company. Directors, supervisors and officers are required to carry out their duties honestly and diligently, and protect the interests of the company. They are also under a duty of confidentiality to the company and prohibited from divulging confidential information concerning the company, except as permitted by relevant laws and regulations or by a decision of a shareholders’ meeting. They may not use their position and authority in the company to seek personal gain. Directors and officers may not directly or indirectly engage in the same business as the company or in any other business detrimental to the interests of the company, and they are required to forfeit any profits from these activities to the company.

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Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its shareholders.

Limitations on transactions with interested directors, supervisors and officers

Under PRC law, directors and officers of a joint stock company may not enter into any contracts or transactions with the company unless permitted by the articles of association or approved by the shareholders. A company may not provide any guarantees to shareholders or any de facto control person of the company unless such guarantees are approved by a majority of shareholders present at the shareholders’ meeting, excluding the shareholder who will be provided such guarantees. Under the Mandatory Provisions, a director, supervisor or officer is required to disclose to the board any transaction with the company in which he has a direct or indirect interest or in which there is a material conflict of interest between the company and himself. A director is not entitled to vote or be counted for quorum purposes in any board decision on any such transaction. A company may set aside any interested transaction which did not comply with these requirements, unless the other party to such transaction was honestly unaware of the breach of obligations by the interested director, supervisor or officer. A company may not loan or provide any guarantees to directors, supervisors or officers (including persons related to them), except for the loans made in accordance with employment contracts approved by the shareholders, or unless the company’s business scope allows for the provision of loans and guarantees and such loans or guarantees are made under regular commercial terms.

Under Delaware law, an interested transaction is not voidable if (1) the material facts as to the interested director’s relationship or interests are disclosed or are known to the board of directors and the board in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, (2) such material facts are disclosed or are known to the shareholders entitled to vote on such transaction and the transaction is specifically approved in good faith by vote of the majority of shares entitled to vote thereon or (3) the transaction is fair as to the corporation as of the time it is authorized, approved or ratified. Under Delaware law, the interested director could be held liable for a transaction in which such a director derived an improper personal benefit.

Election and removal of directors

Under PRC law, the term of office of directors of a joint stock company must be specified in the articles of association, but may not exceed three years. Directors may be re-elected. No director may be removed from office without cause by shareholders prior to the expiration of the director’s term. PRC law does not contemplate a classified board of directors.

Under Delaware law, directors of a Delaware corporation can be removed from office with or without cause by the holders of a majority of shares then entitled to vote at an election of directors, provided that except where the certificate of incorporation of the Delaware corporation otherwise provides, a member of a classified board may be removed by shareholders only for cause, and in a corporation with cumulative voting, if less than all of the directors are removed, no director may be removed if the votes cast against the director’s removal is sufficient to elect the director if cumulatively voted at an election of directors. The Court of Chancery may remove a director who has been convicted of a felony or found by a court to have committed a breach of the duty of loyalty in connection with his or her duties to the corporation following application by the corporation or derivatively in the right of the corporation by any shareholder. The court may order the removal only if it determines that the director did not act in good faith in performing the acts resulting in the prior conviction or judgment and that removal is necessary to avoid irreparable harm to the corporation.

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Dividend payments

Under PRC law, proposals for distribution of profits are formulated by the board of directors and submitted for shareholder approval at a shareholders’ meeting. Dividends may be distributed in the form of cash or shares.

Under Delaware law, the board of directors of a Delaware corporation may declare dividends out of distributable earnings and profits without the approval of the shareholders.

Amalgamations and business combinations; appraisal rights

Under PRC law, amalgamations and divisions involving joint stock companies are required to be approved by shareholders voting at a shareholders’ meeting. The Mandatory Provisions require an amalgamation or division involving the company to be approved by an affirmative vote of two-thirds of the votes present at the shareholders’ meeting called to consider the transaction. Any opposing shareholder may request the company or the consenting shareholders to purchase its shares at a fair price. In addition, a sale of fixed assets having a value exceeding 33% of the total fixed assets of the company requires the approval of at least one third of shareholders at the meeting where a quorum presents.

Under Delaware law, with certain exceptions, a merger, consolidation or sale of all or substantially all the assets of a corporation must be approved by the board of directors and holders of a majority of the outstanding shares entitled to vote. A shareholder objecting to the merger is entitled to appraisal rights pursuant to which the shareholder may receive cash in the amount of the fair value of the shares held by such shareholder (as determined by a court) in lieu of the consideration the shareholder would otherwise receive in the transaction.

Transactions with significant shareholders

Under Delaware law, a business combination between a Delaware corporation and an interested shareholder which takes place at any time during a period of three years commencing with the date the interested shareholder became an interested shareholder would need prior approval from the board of directors or a supermajority of the shareholders of the corporation, unless the corporation opted out of the relevant Delaware business combination statute. Under Delaware law, an interested shareholder of a corporation is someone who, together with its affiliates and associates, owns more than 15% of the outstanding common shares of the corporation. No such business combination statute or regulation applies to PRC joint stock companies.

Shareholders’ lawsuits

The PRC law provides that most disputes involving an H shareholder are to be resolved by final and binding arbitration.

Class actions and derivative actions generally are available to shareholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law.

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Limitations on liability and indemnification of directors and officers

PRC law does not provide for any specific limitations on liability or indemnification of directors and officers.

Under Delaware law, a corporation may indemnify a current director or officer of the corporation against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in defense of an action, suit or proceeding by reason of such position if (1) the director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and (2) with respect to any criminal action or proceeding, the director or officer had no reasonable cause to believe that his conduct was unlawful. Persons serving at the request of the corporation as directors, officers, employees or agents of another entity such as a subsidiary or an employee stock trust may receive advancement of expenses from the corporation. A corporation may not retroactively impair or eliminate indemnification or advancement rights by amending the corporation’s certificate of incorporation or bylaws after the occurrence of the act or omission that gives rise to indemnification or advancement rights, unless the provision contains, at the time of the act or omission, an explicit authorization of such elimination or limitation.

Shareholders’ rights of inspection of corporate records

Under PRC law, shareholders are entitled to inspect the articles of association, register of shareholders, corporate bond counter foils, minutes of shareholders’ meetings and board meetings and reports of the financial accounts of the company. In addition, the Mandatory Provisions provide that, after paying reasonable fees, shareholders are entitled to inspect the company’s shareholder list, certain personal information on the directors, supervisors and officers, the company’s capital position and certain information regarding share repurchases conducted by the company during the most recent fiscal year.

Delaware law permits any shareholder of a Delaware corporation to examine or obtain copies of or extracts from the corporation’s shareholder list and its other books and records for any purpose reasonably related to such person’s interest as a shareholder.

C. MATERIAL CONTRACTS

See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions” for certain arrangements we have entered into with CLIC, AMC, China Life Pension, CLPCIC, IHC, CGB and AMP.

D. EXCHANGE CONTROLS

The Renminbi currently is not a freely convertible currency. The SAFE, under the authority of the PBOC, controls the conversion of Renminbi into foreign currency. Until July 20, 2005, the PBOC had been setting and publishing daily a base exchange rate with reference primarily to the supply and demand of Renminbi against the U.S. dollar in the market during the prior day. The PBOC also took into account other factors, such as the general conditions existing in the international foreign exchange markets. From 1994 to July 20, 2005, the official exchange rate for the conversion of Renminbi to U.S. dollars was generally stable. On July 21, 2005, the PRC government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. On the same day, the value of the Renminbi appreciated by 2.0% against the U.S. dollar. Since then, the PRC government has made, and may in the future make, further adjustments to the exchange rate system. The PBOC announces the closing price of a foreign currency traded against the Renminbi in the inter-bank foreign exchange market after the closing of the market on each working day, and makes it the central parity for the trading against the Renminbi on the following working day.

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Although PRC governmental policies were introduced in 1996 to reduce restrictions on the convertibility of Renminbi into foreign currency for current account items, conversion of Renminbi into foreign exchange for capital items, such as foreign direct investment, loans or securities, requires the approval of the SAFE and other relevant authorities. Although experimental policies were recently introduced in certain pilot areas such as the Shanghai free trade zone to reduce foreign exchange control, restrictions on the convertibility of Renminbi into foreign currency still remain in force in most parts of China.

In the event of shortages of foreign currencies, we may be unable to convert sufficient Renminbi into foreign currency to meet our foreign currency obligations or to pay dividends in foreign currency.

Our H shares are traded on the Hong Kong Stock Exchange. There are no limitations on the right of non-resident or foreign owners to remit dividends or capital including capital gains imposed by Hong Kong law.

E. TAXATION

The taxation of income and capital gains of holders of H shares or ADSs is subject to the laws and practices of China and of jurisdictions in which holders of H shares or ADSs are resident or otherwise subject to tax. The following summary of certain relevant taxation provisions is based on current law and practice, is subject to change and does not constitute legal or tax advice. The discussion does not deal with all possible tax consequences relating to an investment in the H shares or ADSs. In particular, the discussion does not address the tax consequences under state, local and other laws, such as non-U.S. federal laws other than the laws of the PRC and Hong Kong. Accordingly, you should consult your own tax adviser regarding the tax consequences of an investment in the H shares and ADSs. The discussion is based upon laws and relevant interpretations in effect as of the date of this annual report, all of which are subject to change.

The People’s Republic of China

The following is a discussion of the material Chinese tax provisions relating to the ownership and disposition of H shares or ADSs held by the investors as capital assets. This discussion does not address all of the tax considerations that may be relevant to specific investors in light of their particular circumstances or to other investors subject to special treatment under the tax laws of the PRC. This discussion is based on the tax laws of China as in effect as of the date of this annual report, as well as on the Agreement between the United States of America and the People’s Republic of China for the Avoidance of Double Taxation, or the Treaty, all of which are subject to change (or changes in interpretation), possibly with retroactive effect.

This discussion does not address any aspects of Chinese taxation other than income taxation, capital taxation, stamp taxation and estate taxation. Prospective investors are urged to consult their tax advisers regarding Chinese and other tax consequences of owning and disposing of H shares.

Taxation of Dividends

Individual investors. According to the PRC Individual Income Tax Law, as amended, dividends paid by Chinese companies are ordinarily subject to a Chinese withholding tax levied at a flat rate of 20%. For a foreign individual who is not a resident of China, the receipt of dividends from a company in China is normally subject to a withholding tax of 20% unless reduced pursuant to an applicable tax treaty. According to a notice issued by the Chinese State Administration of Taxation, or the SAT, on June 28, 2011, if the withholding tax rate under applicable tax treaties is 10% or less, the receipt of dividends will be subject to 10% withholding tax; and if the withholding tax rate under applicable tax treaties is between 10% and 20%, the receipt of dividends will be subject to the actual tax rate as agreed under such tax treaties.

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Enterprises. According to the PRC Enterprise Income Tax Law and its implementation rules, effective on January 1, 2008, and the Circular on Issues Relating to the Withholding of Enterprise Income Tax for Dividends Distributed by Resident Enterprises in China to Non-resident Enterprises Holding H-shares of the Enterprises, issued by the SAT on November 6, 2008, resident enterprises in China are required to, in distributing dividends for 2008 or any year hereafter to non-resident enterprises holding Overseas Shares including H-shares and ADSs of the enterprises, withhold enterprise income tax for such dividends at a tax rate of 10%. Non-resident enterprises holding H-shares of any resident enterprise can, after receiving dividends due to them, apply for preferential tax treatment with competent tax authorities in accordance with tax treaties.

Tax treaties. Investors who do not reside in China and reside in countries that have entered into treaties for the avoidance of double-taxation with China may be entitled to a reduction of the withholding tax imposed on the payment of dividends to our investors who do not reside in China. China currently has treaties for the avoidance of double-taxation with a number of other countries, which include Australia, Canada, France, Germany, Japan, Malaysia, the Netherlands, Singapore, the United Kingdom and the United States.

Under the treaty between China and the United States, the China-US Treaty, China may tax a dividend paid by us to an Eligible U.S. Holder up to a maximum of 10% of the gross amount of the dividend. For the purposes of this discussion, an “Eligible U.S. Holder” is a U.S. holder that (i) is a resident of the United States for the purposes of the China-US Treaty, (ii) does not maintain a permanent establishment or fixed base in China to which H shares are attributable and through which the beneficial owner carries on or has carried on business (or, in the case of an individual, performs or has performed independent personal services) and (iii) is not otherwise ineligible for benefits under the China-US Treaty with respect to income and gains derived in connection with the H shares.

Taxation of Capital Gains

According to the PRC Enterprise Income Tax Law and its implementation rules, effective on January 1, 2008, capital gains realized by foreign enterprises which have no establishment or residence in China or whose capital gains from China do not relate to their establishment or residence in China, are ordinarily subject to enterprise income tax at the rate of 10% with respect to the gains realized within China, unless reduced pursuant to an applicable tax treaty.

According to the Interim Administrative Measures on the Source Withholding of Income Tax of Non-resident Enterprise issued by the SAT on January 9, 2009, where both parties to an equity transfer transaction are non-resident enterprises and where the transfer occurs outside of China, the non-resident enterprise receiving income shall pay taxes to the tax authority in the locality of the resident enterprise whose equity was transferred, either directly or by a representative. The resident enterprise whose equity was transferred shall assist the tax authority with the collection of taxes from the non-resident enterprise.

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According to the PRC Individual Income Tax Law, as amended, capital gains realized by individuals upon the transfer of shares, including Overseas Shares, are subject to capital gains tax levied at a flat rate of 20%; and relevant tax authorities are authorized to promulgate implementation rules in this regard. To date, the relevant tax authorities have not promulgated any implementation rules on the taxation of capital gains realized by individuals upon the transfer of shares, including Overseas Shares. If the relevant tax authorities promulgate such implementation rules in the future, a 20% tax may be levied on capital gains realized by foreign individuals in accordance with the PRC Individual Income Tax Law, as amended, unless reduced pursuant to an applicable tax treaty. To date, the relevant tax authorities have not collected capital gains tax on the income from the transfer of shares.

Additional Chinese Tax Considerations

Chinese stamp duty. Chinese stamp duty imposed on the transfer of shares of Chinese publicly traded companies under the Provisional Regulations of China Concerning Stamp Duty should not apply to the acquisition and disposal by non-Chinese investors of H shares or ADSs outside of China by virtue of the Provisional Regulations of China Concerning Stamp Duty, which became effective on October 1, 1988 and which provide that Chinese stamp duty is imposed only on documents executed or received within China that are legally binding in China and are protected under Chinese law.

Estate tax. No liability for estate tax under Chinese law will arise from non-Chinese nationals holding H shares.

Hong Kong

The following is a discussion of the material Hong Kong tax provisions relating to the ownership and disposition of H shares or ADSs held by the investors as capital assets. This discussion does not address all of the tax considerations that may be relevant to specific investors in light of their particular circumstances or to investors subject to special treatment under the tax laws of Hong Kong. This discussion is based on the tax laws of Hong Kong as in effect on the date of this annual report, which are subject to change (or changes in interpretation), possibly with retroactive effect. This discussion does not address any aspects of Hong Kong taxation other than income taxation, capital taxation, stamp taxation and estate taxation. Prospective investors are urged to consult their tax advisers regarding Hong Kong and other tax consequences of owning and disposing of H shares.

Tax Treaties

There is no relevant tax treaty in effect between Hong Kong and the United States.

Tax on Dividends

Under current practice, no tax is payable in Hong Kong in respect of dividends paid by us.

Tax on Gains from Sale

No tax is imposed in Hong Kong in respect of capital gains from the sale of property. However, trading gains from the sale of property by persons carrying on a trade, profession or business in Hong Kong where the gains are derived from or arise in Hong Kong from such trade, profession or business will be chargeable to Hong Kong profits tax, which is currently imposed at the rate of 16.5% on corporations and at a maximum rate of 15% on individuals. Certain categories of taxpayers are likely to be regarded as deriving trading gains rather than capital gains (for example, financial institutions, insurance companies and securities dealers) unless these taxpayers could prove that the investment securities are held for long-term investment purpose.

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Trading gains from sales of H shares effected on the Hong Kong Stock Exchange will be considered to be derived from or arise in Hong Kong. Liability for Hong Kong profits tax would thus arise in respect of trading gains from sales of H shares effected on the Hong Kong Stock Exchange realized by persons carrying on a business of trading or dealing in securities in Hong Kong.

There will be no liability for Hong Kong profits tax in respect of profits from the sale of ADSs, where purchases and sales of ADSs are effected outside Hong Kong, for example, on the New York Stock Exchange.

Stamp Duty

Hong Kong stamp duty, currently charged at the ad valorem rate of 0.1% on the higher of the consideration for, or the market value of, the H shares, will be payable by the purchaser on every purchase and by the seller on every sale of H shares (in other words, a total of 0.2% is currently payable on a typical sale and purchase transaction involving H shares). In addition, a fixed duty of HK$5.00 is currently payable on any instrument of transfer of H shares. Where one of the parties to a transfer is resident outside Hong Kong and does not pay the ad valorem duty due by it, the duty not paid will be assessed on the instrument of transfer (if any) and will be payable by the transferee. If stamp duty is not paid on or before the due date, a penalty of up to ten times the duty payable may be imposed.

The withdrawal of H shares upon the surrender of ADRs, and the issuance of ADRs upon the deposit of H shares, will also attract stamp duty at the rate described above for sale and purchase transactions unless such withdrawal or deposit does not result in a passing of the beneficial interest in the H shares under Hong Kong law, in which case only a fixed duty of HK$5.00 is payable on the transfer. The issuance of the ADRs upon the deposit of H shares issued directly to the depositary of the ADSs, or for the account of the depositary, will not be subject to any stamp duty. No Hong Kong stamp duty is payable upon the transfer of ADSs outside Hong Kong.

Estate Duty

The Revenue (Abolition of Estate Duty) Ordinance 2005 came into effect on February 11, 2006 in Hong Kong. No Hong Kong estate duty is payable and no estate duty clearance papers are needed for an application for a grant of representation in respect of holders of H shares whose deaths occur on or after February 11, 2006.

United States of America

The following is a discussion of the material United States federal income tax consequences relating to the purchase, ownership and disposition of H shares or ADSs by U.S. Holders (as defined below) that acquire H shares or ADSs for cash and hold them as capital assets. This discussion is based on the Internal Revenue Code of 1986, as amended, or “the Code”, Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect. This discussion does not address all of the tax considerations that may be relevant to specific U.S. Holders in light of their particular circumstances or to U.S. Holders subject to special treatment under U.S. federal income tax law (such as banks, insurance companies, tax-exempt entities, retirement plans, regulated investment companies, partnerships, dealers in securities, brokers, U.S. expatriates, persons who have acquired our H shares or ADSs as part of a straddle, hedge, conversion, or other integrated investment, persons who own, directly or by attribution, 10% or more of the combined voting power of all classes of stock of China Life or persons that have a “functional currency” other than the U.S. dollar). This discussion does not address any U.S. state or local or any U.S. federal estate, gift or alternative minimum tax considerations.

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As used in this discussion, the term “U.S. Holder” means a beneficial owner of H shares or ADSs that is, for U.S. federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation created or organized in or under the laws of the United States or of any state or political subdivision thereof or therein, including the District of Columbia or (iii) an estate or trust the income of which is subject to U.S. federal income tax regardless of the source thereof.

Investors are urged to consult their own tax advisers as to the particular tax considerations applicable to them relating to the purchase, ownership and disposition of H shares or ADSs in their individual circumstances, including the applicability of U.S. federal, state and local tax laws, any changes in applicable tax laws and any pending or proposed legislation or regulations.

Taxation of Dividends

Subject to the discussion below under “—Special Rules”, cash distributions with respect to the H shares or ADSs owned by a U.S. Holder will, upon receipt, be includible in the gross income of such U.S. Holder as ordinary dividend income to the extent of our current and accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent that the amount of any such cash distribution exceeds our current and accumulated earnings and profits as so computed, it will be treated first as a non-taxable return of capital to the extent of the U.S. Holder’s adjusted tax basis in such H shares or ADSs and, to the extent the amount of such cash distribution exceeds adjusted tax basis, will be treated as gain from the sale of such H shares or ADSs. Dividends paid by us generally will constitute income from sources outside the United States for foreign tax credit limitation purposes and will not be eligible for the “dividends received” deduction.

Dividends received by individuals from “qualified foreign corporations” are generally subject to a maximum U.S. federal income tax rate of 20%, so long as certain holding period requirements are met. A non-U.S. corporation (other than a passive foreign investment company) generally will be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of a comprehensive income tax treaty with the United States which the Secretary of the Treasury determines is satisfactory for purposes of the relevant provision and which includes an exchange of information program or (ii) with respect to any dividend it pays on stock which is readily tradable on an established securities market in the United States. The Treasury Department has determined that the U.S.-China income tax treaty as currently in effect meets the requirements described in clause (i) above. In addition, the ADSs are readily tradable on the New York Stock Exchange, an established securities market in the United States. Each U.S. Holder that is an individual is urged to consult his or her tax adviser regarding the applicability of this reduced rate to dividends received with respect to the H shares or ADSs in his particular circumstance.

The U.S. dollar value of any distribution made by us in Hong Kong dollars (or other currency that is not the U.S. dollar, or a “foreign currency”), should be calculated by reference to the exchange rate in effect on the date of receipt of such distribution by Deutsche Bank Trust Company Americas, as depositary, in the case of ADSs, or by the U.S. Holder, in the case of H shares held directly by such U.S. Holder regardless of whether the Hong Kong dollars (or such other foreign currency) so received are converted into U.S. dollars on the date of receipt. If the Hong Kong dollars (or such other foreign currency) so received are converted into U.S. dollars on the date of receipt, such U.S. Holder generally should not recognize foreign currency gain or loss on such conversion. If the Hong Kong dollars (or such other foreign currency) are not converted into U.S. dollars on the date of receipt, such U.S. Holder will have a basis in the Hong Kong dollars (or such other foreign currency) equal to their U.S. dollar value on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of the Hong Kong dollars (or such other foreign currency) generally will be treated as ordinary income or loss from sources within the United States for foreign tax credit limitation purposes.

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Subject to certain limitations, the Chinese tax withheld from dividends paid with respect to H shares or ADSs and paid over to China, as described above under “—The People’s Republic of China—Taxation of Dividends,” may be creditable against a U.S. Holder’s U.S. federal income tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the maximum 20% U.S. federal income tax rate. A U.S. Holder of H shares or ADSs that does not elect to claim a U.S. foreign tax credit may instead claim a deduction for such withheld tax, but only for a taxable year in which the U.S. Holder elects to do so with respect to all non-U.S. income taxes paid or accrued in such taxable year. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and U.S. Holders are urged to consult their own U.S. tax advisers with respect to foreign tax credit considerations in their individual circumstances.

Sale or other Disposition of H Shares or ADSs

Subject to the discussion below under “—Special Rules”, a U.S. Holder generally will recognize gain or loss for U.S. federal income tax purposes upon a sale or other disposition of H shares or ADSs that it owns in an amount equal to the difference between the amount realized from the sale or disposition and the U.S. Holder’s adjusted tax basis in such H shares or ADSs. The gain or loss generally will be a capital gain or loss and will be long-term capital gain (taxable at a reduced rate for individuals) or loss if, on the date of sale or disposition, such H shares or ADSs were held by the U.S. Holder for more than one year and will generally be U.S. source gain or loss. The claim of a deduction in respect of a capital loss may be subject to limitations.

A U.S. Holder that receives Hong Kong dollars (or other foreign currency) from the sale or disposition generally will realize an amount equal to the U.S. dollar value of the Hong Kong dollars (or such other foreign currency) on the settlement date of the sale or disposition if (i) the U.S. Holder is a cash basis or electing accrual basis taxpayer and our H shares or ADSs, as the case may be, are treated as being “traded on an established securities market” for this purpose or (ii) the settlement date is the date of the sale or disposition. If the Hong Kong dollars (or such other foreign currency) so received are converted into U.S. dollars on the settlement date, the U.S. Holder should not recognize foreign currency gain or loss on the conversion. If the Hong Kong dollars (or such other foreign currency) so received are not converted into U.S. dollars on the settlement date, the U.S. Holder will have a basis in the Hong Kong dollars (or such other foreign currency) equal to the U.S. dollar value on the settlement date. Any gain or loss on a subsequent conversion or other disposition of the Hong Kong dollars (or such other foreign currency) generally will be treated as ordinary income or loss from sources within the United States for foreign tax credit limitation purposes. A U.S. Holder should consult its own tax adviser regarding the U.S. federal income tax consequences of receiving Hong Kong dollars (or other currency) from a sale or disposition of the H shares or ADSs in cases not described in this paragraph.

A U.S. Holder that is a non-resident enterprise may be subject to Chinese tax on the gain realized upon the sale or other disposition of H shares or ADS. See “—The People’s Republic of China—Taxation of Capital Gains” above. Holders should consult their own tax advisers concerning their ability to credit such Chinese taxes against their U.S. federal income tax liability in their particular situation.

Special Rules

Related Person Insurance Income. Certain adverse U.S. income and tax reporting rules may apply to U.S. shareholders who, directly or indirectly, own stock of a non-U.S. corporation that earns “related person insurance income” (“RPII”), if 25% or more of the non-U.S. corporation’s direct or indirect shareholders are U.S. persons. RPII is generally defined as insurance income derived from the insurance (or reinsurance) of insureds who are U.S. shareholders in the non-U.S. corporation or who are related to such U.S. shareholders. If applicable, these rules would require U.S. Holders to include in taxable income each year their pro rata share of any RPII incurred by us for the year, regardless of whether such income is distributed, and also to file I.R.S. Form 5471, disclosing certain information regarding their direct or indirect ownership of China Life. Special rules apply for purposes of determining each U.S. shareholder’s pro rata share of any RPII. For organizations that are otherwise exempt from U.S. federal income tax under section 501(a) of the Code, any such income would constitute “unrelated business taxable income”. These rules could also apply to convert some or all of the gain recognized from the sale or disposition of H shares or ADSs from capital gain to ordinary income and to require such gain to be reported on I.R.S. Form 5471.

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Under a statutory exception, these rules do not apply if less than 20% of the non-U.S. corporation’s insurance income is RPII or if less than 25% of the non-U.S. corporation’s stock is owned by U.S. shareholders. Because CLIC holds approximately 68.37% of our share capital, and because we do not offer or intend to offer our products and services in the United States, it is highly unlikely that the RPII rules will apply. If more of our shares are sold to the public in the future, it is possible that such rules could apply at a later date.

Passive Foreign Investment Company. In general, a non-U.S. corporation will be a passive foreign investment company, or a “PFIC”, if 75% or more of its gross income constitutes “passive income” or 50% or more of its assets produce “passive income” or are held for the production of “passive income”.

For the purpose of determining whether a non-U.S. corporation is a PFIC, “passive income” is defined to include income of the kind which would be foreign personal holding company income under section 954(c) of the Code, and generally includes interest, dividends, annuities and other investment income. Passive income does not include interest income or dividends received from controlled subsidiaries or certain other related persons, to the extent properly allocable to income of such related person that is not passive income. In addition, the PFIC provisions specifically exclude from the definition of “passive income” any income “derived in the active conduct of an insurance business by a corporation which is predominantly engaged in an insurance business and which would be subject to tax under subchapter L if it were a domestic corporation”. This exception is intended to ensure that income derived by a bona fide insurance company is not treated as passive income. Thus, to the extent that income is attributable to financial reserves in excess of the reasonable needs of the insurance business, it may be treated as passive income.

We believe that we were in 2014, and we anticipate that we will continue to be, predominantly engaged in an insurance business and we believe that we did not in 2014, and will not, have financial reserves in excess of the reasonable needs of our insurance business. As a result, our income derived and assets held in the active conduct of our insurance business should not be passive income and passive assets, and we do not expect to be classified as a PFIC for any tax year. However, there is little guidance on the circumstances under which a non-U.S. company will be treated as predominantly engaged in an insurance business for purposes of determining PFIC status. Accordingly, there is no assurance that the U.S. Internal Revenue Service will not take a contrary position and assert that we are a PFIC. Furthermore, an actual determination of PFIC status is inherently factual in nature and cannot be made until the close of each applicable tax year and, accordingly, no assurances can be given that we will not become a PFIC at some point in the future.

In general, a U.S. shareholder of a PFIC is subject to a special tax and an interest charge at the time of the sale of (or receipt of an “excess distribution” with respect to) its shares in the PFIC. In general, a shareholder is treated as having received an “excess distribution” if the amount of the distribution was more than 125% of the average distribution with respect to its shares during the three preceding taxable years (or shorter period during which the taxpayer held the shares). The special tax is computed by assuming that the excess distribution or, in the case of a sale, the gain with respect to the shares was earned in equal portions throughout the holder’s period of ownership. The portion allocable to each year prior to the year of sale is taxed at the maximum marginal tax rate applicable for each such period. The interest charge is determined based on the applicable rate imposed on underpayments of U.S. federal income tax for the period. The special tax and the interest charge generally will not apply to a U.S. shareholder that validly makes a “qualified electing fund” election under section 1295 of the Code with respect to the shares of the PFIC. We do not intend to comply with the requirements necessary to permit a U.S. Holder to make such an election with respect to H shares or ADSs.

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The above results may also be avoided if a “mark-to-market” election is available and a U.S. Holder validly makes such an election. If the election is made, such U.S. Holder generally will be required to take into account the difference, if any, between the fair market value of, and its adjusted tax basis in, its H shares or ADSs at the end of each taxable year as ordinary income or ordinary loss (to the extent of any net mark-to-market gain previously included in income), and to make corresponding adjustments to the tax basis of such H shares or ADSs. In addition, any gain from a sale or other disposition of H shares or ADSs will be treated as ordinary income, and any loss will be treated as ordinary loss (to the extent of any net mark-to-market gain previously included in income). A mark-to-market election is available to a U.S. Holder only if our H shares or ADSs are considered “marketable stock” for these purposes. Generally, stock will be considered marketable stock if it is “regularly traded” on a “qualified exchange” within the meaning of applicable U.S. Treasury regulations. A class of stock is regularly traded during any calendar year during which such class of stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. A non-U.S. securities exchange will constitute a qualified exchange if it is regulated or supervised by a governmental authority of the country in which the market is located and meets certain trading, listing, financial disclosure and other requirements set forth in the Treasury Regulations. We do not know whether our H shares or ADSs will be treated as marketable stock for these purposes.

If we are a PFIC in any taxable year during which a U.S. Holder owns H Shares or ADSs, such U.S. Holder (i) may also suffer adverse tax consequences under the PFIC rules described above with respect to any other PFIC in which we have a direct or indirect equity interest and (ii) generally will be required to file annually a statement with its U.S. federal income tax returns. U.S. Holders should consult their own tax advisers regarding the U.S. federal income tax consequences of a direct or indirect investment in a PFIC.

Medicare Taxes

Certain U.S. Holders that are individuals, estates or trusts are subject to an additional tax at the rate of 3.8% on all or a portion of their “net investment income”, which may include all or a portion of their income arising from a distribution with respect to an ADS or an H Share and gain upon the sale, exchange or other disposition of such ADS or H Share.

Information Reporting and Backup Withholding

Under certain circumstances, information reporting and/or backup withholding may apply to U.S. Holders with respect to payments made on or proceeds from the sale, exchange or other disposition of ADSs or H Shares, unless an applicable exemption is satisfied. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability if the required information is furnished by the U.S. Holder on a timely basis to the IRS.

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Reportable Transactions

U.S. Holders that participate in “reportable transactions” (as defined in Treasury Regulations) must attach to their federal income tax returns a disclosure statement on Form 8886. We urge U.S. Holders to consult their own tax advisers as to the possible obligation to file Form 8886 with respect to the ownership or disposition of any Hong Kong dollars (or other foreign currency) received as a dividend or as proceeds from the sale of H shares or ADSs, or any other aspect of the purchase, ownership or disposition of H shares or ADSs.

Disclosure Requirements for Specified Foreign Financial Assets

Individual U.S. Holders (and certain U.S. entities to the extent specified in future IRS guidance) who, during any taxable year, hold any interest in any “specified foreign financial asset” generally will be required to file with their U.S. federal income tax returns Form 8938, setting forth certain information with respect to such asset, if the aggregate value of all such assets exceeds the applicable reporting threshold. “Specified foreign financial asset” generally includes any financial account maintained with a non-U.S. financial institution and may also include H Shares or ADSs if they are not held in an account maintained with a U.S. financial institution. Substantial penalties may be imposed for a failure to comply. U.S. Holders should consult their own tax advisers as to the possible application to them of these filing requirements.

F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G. STATEMENT BY EXPERTS

Not applicable.

H. DOCUMENTS ON DISPLAY

You may read and copy documents referred to in this annual report on Form 20-F that have been filed with the U.S. Securities and Exchange Commission, or SEC, at its public reference room located at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. The SEC also maintains a website at http://www.sec.gov that contains reports, proxy statements and other information regarding the registrations that file electronically with the SEC.

The SEC allows us to “incorporate by reference” the information we filed with the SEC. This means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this annual report on Form 20-F.

I. SUBSIDIARY INFORMATION

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Our exposure to financial market risks relates primarily to changes in interest rates, equity prices and exchange rates.

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The following discussions and tables, which constitute “forward-looking statements” that involve risks and uncertainties, summarize our market-sensitive financial instruments including fair value and maturity. Such discussions address market risk only and do not present other risks which we face in the normal course of business.

For further information on our management of market risk, including the objectives and general strategies of risk management, see “Item 4 Information on the Company—Business Overview—Investments—Risk Management” and Note 4 to our consolidated financial statements included elsewhere in this annual report.

Interest Rate Risk

Our profitability is affected by changes in interest rates. We are currently experiencing a comparatively low interest rate environment in general. The PBOC reduced the benchmark deposit rate twice during 2012. In November 2014, the interest rate on one-year term deposits was reduced from 3.00% to 2.75%, and in March 2015, the interest rate was further reduced from 2.75% to 2.50%. If interest rates were to decline in the future, the income we realize from our investments may decline, affecting our profitability. In addition, as instruments in our investment portfolio mature, we might have to reinvest the funds we receive in investments bearing a lower interest rate. However, if interest rates were to increase, surrenders and withdrawals of insurance and annuity policies and contracts may increase as policyholders seek other investments with higher perceived returns. This process may result in cash outflows requiring that we sell investment assets at a time when the prices of those assets are adversely affected by the increase in market interest rates, which may result in realized investment losses. In addition, if interest rates were to increase, but we did not raise the cap set by us on the rates we guarantee for non-participating insurance products, sales of some of our products, including our non-participating investment type products, could be adversely affected.

For the years ended December 31, 2014, 2013 and 2012, our investment yield was 5.36%, 4.86% and 2.79% respectively. Investment contracts are generally priced with guaranteed interest rates, subject to a cap on guaranteed rates set by the CIRC, which is currently 2.50% for participating insurance products. Dividends on participating policies are required to be at least 70% of distributable earnings attributable to such policies.

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The following tables set forth selected assets and liabilities with exposure to interest rates as of December 31, 2014, 2013 and 2012.

	Expected Maturity Date
As of December 31, 2014	2015			2016			2017			2018			2019			Thereafter			Total			Fair value
							(RMB in millions, except as otherwise stated)
Assets
Held-to-maturity and available-for-sale debt securities
Fixed rate bonds
in RMB		25,058			31,133			65,401			60,497			50,428			674,872			907,389			916,640
Average interest rate		4.87	%		4.85	%		4.93	%		4.22	%		5.26	%		4.76	%		4.77	%
in US$		6			260			—			—			—			48			314			319
Average interest rate		4.74	%		10.25	%		—			—			—			6.33	%		9.54	%
Variable rate bonds
in RMB		696			1,811			447			204			148			1,615			4,921			4,908
Average interest rate		5.65	%		5.40	%		6.21	%		4.67	%		6.95	%		3.99	%		5.06	%
Term deposits
in RMB		191,439			153,100			173,685			88,157			48,500			26,501			681,382			681,382
Average interest rate		4.17	%		5.05	%		5.20	%		4.94	%		5.99	%		5.30	%		4.90	%
in US$		8,774			—			—			—			—			—			8,774			8,774
Average interest rate		2.53	%		—			—			—			—			—			2.53	%
Liabilities
Securities sold under agreements to repurchase		46,089			—			—			—			—			—			46,089			46,089
Average interest rate		5.39	%		—			—			—			—			—			5.39	%
Long-term borrowings		—			—			—			—			2,623			—			2,623			2,623
Average interest rate		—			—			—			—			3.54	%		—			3.54	%
Investment contracts		2,070			1,841			1,681			610			498			65,575			72,275			70,694
Average interest rate		1.74	%		1.07	%		0.96	%		2.49	%		2.42	%		2.53	%		2.44	%
Long-term insurance contracts		105,760			140,904			117,175			138,251			22,911			1,063,899			1,588,900
Average guaranteed interest rate		2.47	%		2.50	%		2.52	%		2.94	%		2.64	%		2.43	%		2.49	%

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	Expected Maturity Date
	2014			2015			2016			2017			2018			Thereafter			Total			Fair value
As of December 31, 2013
							(RMB in millions, except as otherwise stated)
Assets
Held-to-maturity and available-for-sale debt securities
Fixed rate bonds
in RMB		17,393			27,861			27,794			65,558			57,199			640,030			835,835			797,837
Average interest rate		4.84	%		4.84	%		4.64	%		4.85	%		4.09	%		4.69	%		4.67	%
in US$		—			6			266			—			—			33			305			307
Average interest rate		—			5.38	%		10.25	%		—			—			5.85	%		9.68	%
Variable rate bonds
in RMB		3,476			550			1,221			—			175			1,499			6,921			6,838
Average interest rate		5.58	%		5.60	%		5.00	%		—			4.56	%		3.75	%		5.06	%
Term deposits
in RMB		64,532			164,300			153,100			173,685			88,157			10,000			653,774			653,774
Average interest rate		4.33	%		4.58	%		5.24	%		5.26	%		4.94	%		5.70	%		4.95	%
in US$		10,400			—			—			—			—			—			10,400			10,400
Average interest rate		3.13	%		—			—			—			—			—			3.13	%
Liabilities
Securities sold under agreements to repurchase		20,426			—			—			—			—			—			20,426			20,426
Average interest rate		6.29	%		—			—			—			—			—			6.29	%
Investment contracts		6,312			1,478			1,585			605			599			54,508			65,087			63,772
Average guaranteed interest rate		2.17	%		1.44	%		0.97	%		2.53	%		2.53	%		2.61	%		2.50	%
Long-term insurance contracts		86,866			87,473			148,122			124,840			101,108			934,537			1,482,946
Average guaranteed interest rate		2.44	%		2.47	%		2.50	%		2.52	%		2.50	%		2.41	%		2.44	%

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	Expected Maturity Date
As of December 31, 2012	2013			2014			2015			2016			2017			Thereafter			Total			Fair value
							(RMB in millions, except as otherwise stated)
Assets
Held-to-maturity and available-for-sale debt securities
Fixed rate bonds
in RMB		3,940			15,263			22,780			19,390			63,071			665,209			789,653			788,098
Average interest rate		4.78	%		4.84	%		4.57	%		3.90	%		4.79	%		4.55	%		4.56	%
in US$		—			—			—			266			—			—			266			266
Average interest rate		—			—			—			10.25	%		—			—			10.25	%
in HK$		—			—			6			—			—			30			36			39
Average interest rate		—			—			5.38	%		—			—			6.12	%		5.99	%
Variable rate bonds
in RMB		2,035			3,638			483			1,140			—			2,842			10,138			10,166
Average interest rate		5.21	%		5.58	%		5.57	%		5.00	%		—			4.36	%		5.10	%
in US$		1,886			—			—			—			—			—			1,886			1,886
Average interest rate		1.59	%		—			—			—			—			—			1.59	%
Term deposits
in RMB		82,367			58,850			164,300			151,600			173,685			600			631,402			631,402
Average interest rate		4.49	%		4.39	%		4.57	%		5.25	%		5.26	%		5.25	%		4.89	%
in US$		9,678			—			—			—			—			—			9,678			9,678
Average interest rate		1.81	%		—			—			—			—			—			1.81	%
Liabilities
Securities sold under agreements to repurchase		68,499			—			—			—			—			—			68,499			68,499
Average interest rate		4.45	%		—			—			—			—			—			4.45	%
Investment contracts		1,760			5,509			1,260			591			599			56,920			66,639			65,074
Average interest rate		1.69	%		1.94	%		1.22	%		2.54	%		2.55	%		2.58	%		2.48	%

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Equity Price Risk

Our investments in securities investment funds or equity securities expose us to changes in equity prices. We manage this risk on an integrated basis with other risks through our asset-liability management strategies. We also manage equity price risk through industry and issuer diversification and asset allocation techniques.

The following table sets forth our exposure to equity securities as of December 31, 2014, 2013 and 2012.

	As of December 31,
	2012				2013				2014
	Carrying amount		Fair value		Carrying amount		Fair value		Carrying amount		Fair value
(RMB in millions)
Equity securities		164,742		164,742		154,957		154,957		236,030		236,030
Securities at fair value through profit or loss		7,916		7,916		3,416		3,416		23,840		23,840
Available-for-sale		156,826		156,826		151,541		151,541		212,190		212,190

A hypothetical 10% decline in the December 31, 2014, 2013 and 2012 value of the securities at fair value through profit or loss equity securities would result in a charge to the income statement of approximately RMB 2,384 million, RMB 342 million and RMB 792 million, respectively.

A hypothetical 10% decline in the December 31, 2014, 2013 and 2012 value of the available-for-sale equity securities would result in an unrealized loss of approximately RMB 21,219 million, RMB 15,154 million and RMB 15,683 million, respectively.

The selection of a 10% immediate change in the value of equity securities should not be construed as a prediction by us of future market events but rather as an illustration of the potential impact of such an event.

Foreign Exchange Risk

Our exposure to fluctuations in foreign currency exchange rates against RMB results primarily from our holdings in non-RMB denominated term deposits and our foreign currency-denominated loans. Our debts and capital expenditures are predominantly in RMB and the principal currencies which create foreign currency exchange rate risk in our deposits are the U.S. dollar and Hong Kong dollar. The principal currency which exposes us to foreign currency exchange risk in our loans is British pound. In June 2014, to fund our overseas investments, we obtained a fixed-interest rate bank loan of 275 million British pounds sterling with a term of five years. We recorded RMB 268 million (US$43 million) in foreign exchange gains for the year ended December 31, 2014, resulting mainly from the depreciation of the British pound against the Renminbi. Future movements in the exchange rate of RMB against the U.S. dollar and other foreign currencies may adversely affect our results of operations and financial condition.

176

The following tables set forth assets denominated in currencies other than RMB as of December 31, 2014, 2013 and 2012.

	Expected Maturity Date
As of December 31, 2014	2015			2016			2017		2018		2019			Thereafter			Total			Fair value
	(in millions)
Debt securities
in US$		6			260			—		—		—			48			314			319
Average interest rate		4.74	%		10.25	%		—		—		—			6.33	%		9.54	%
Term deposits
in US$		8,774			—			—		—		—			—			8,774			8,774
Average interest rate		2.53	%		—			—		—		—			—			2.53	%
Cash and cash equivalents
in US$		3,662			—			—		—		—			—			3,662			3,662
Average interest rate		0.05	%		—			—		—		—			—			0.05	%
in HK$		68			—			—		—		—			—			68			68
Average interest rate		0.01	%		—			—		—		—			—			0.01	%
in British pound		54			—			—		—		—			—			54			54
Average interest rate		0.05	%		—			—		—		—			—			0.05	%
Liabilities
Long-term borrowings
in British pound		—			—			—		—		2,623			—			2,623			2,623
Average interest rate		—			—			—		—		3.54	%		—			3.54	%

177

	Expected Maturity Date
As of December 31, 2013	2014			2015			2016			2017		2018		Thereafter			Total			Fair value
	(in millions)
Debt securities
in US$		—			6			266			—		—		33			305			307
Average interest rate		—			5.38	%		10.25	%		—		—		5.85	%		9.68	%
Term deposits
in US$		10,400			—			—			—		—		—			10,400			10,400
Average interest rate		3.13	%		—			—			—		—		—			3.13	%
Cash and Cash equivalents
in US$		1,823			—			—			—		—		—			1,823			1,823
Average interest rate		0.05	%		—			—			—		—		—			0.05	%
in HK$		222			—			—			—		—		—			222			222
Average interest rate		0.01	%		—			—			—		—		—			0.01	%

178

	Expected Maturity Date
As of December 31, 2012	2013			2014		2015			2016			2017		Thereafter			Total			Fair value
	(in millions)
Debt securities
in US$		300			—		—			42			—		—			342			342
Average interest rate		1.59	%		—		—			10.25	%		—		—			2.66	%
in HK$		—			—		8			—			—		36			44			49
Average interest rate		—			—		5.38	%		—			—		6.12	%		5.99	%
Term deposits
in US$		1,540			—		—			—			—		—			1,540			1,540
Average interest rate		1.81	%		—		—			—			—		—			1.81	%
Cash and Cash equivalents
in US$		40			—		—			—			—		—			40			40
Average interest rate		0.05	%		—		—			—			—		—			0.05	%
in HK$		3,319			—		—			—			—		—			3,319			3,319
Average interest rate		0.01	%		—		—			—			—		—			0.01	%

179

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.

A. DEBT SECURITIES

Not applicable.

B. WARRANTS AND RIGHTS

Not applicable.

C. OTHER SECURITIES

Not applicable.

D. AMERICAN DEPOSITARY SHARES

The table below sets forth all fees and charges that a holder of our ADRs may have to pay to the depositary bank of our ADR program, either directly or indirectly.

Category	Depositary Actions	Associated Fee
(a) Depositing or substituting the underlying shares	Each person to whom ADRs are issued against deposits of shares, including deposits and issuances in respect of: share distributions, rights, merger exchange of securities or any other transaction or event or other distribution affecting the ADSs or the deposited securities	US$5.00 for each 100 ADSs (or portion thereof) evidenced by the new ADRs delivered
(b) Receiving or distributing dividends	Distribution of dividends	US$0.02 or less per ADS
(c) Selling or exercising rights	Distribution or sale of securities, the fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities	US$5.00 for each 100 ADSs (or portion thereof)
(d) Withdrawing an underlying security	Acceptance of ADRs surrendered for withdrawal of deposited securities	US$5.00 for each 100 ADSs (or portion thereof) evidenced by the ADRs surrendered
(e) Transferring, splitting or grouping receipts	Transfers, combining or grouping of depositary receipts	US$1.50 per ADS
(f) Expenses of the depositary	Expenses incurred on behalf of ADR holders in connection with: compliance with foreign exchange control regulations or any law or regulation relating to foreign investment; the depositary’s or its custodian’s compliance with applicable law, rule or regulation; stock transfer or other taxes and other governmental charges; cable, telex, facsimile transmission and delivery; expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars (which are paid out of such foreign currency); and any other charge payable by depositary or its agents.	Expenses payable at the sole discretion of the depositary by billing ADR holders or by deducting charges from one or more cash dividends or other cash distributions.

180

Deutsche Bank Trust Company Americas, or Deutsche Bank, has served as the depositary bank of our ADR program since January 4, 2010. Deutsche Bank has agreed to reimburse certain reasonable company expenses related to our ADR program and incurred by us in connection with our ADR program. The table below sets forth the amounts reimbursed from January 1, 2014 to April 10, 2015.

Category of Expenses	Amount Reimbursed from January 1, 2014 to April 10, 2015
NYSE listing fees	US$	6,993
Legal fees	US$	400,453
Investor relations(1)	US$	2,126,253
Broker reimbursements(2)	US$	65,266
Total	US$	2,598,965

⁽¹⁾  Includes expenses related to announcement of results, ADR training programs, non-deal roadshows and investor relations activities.

⁽²⁾  Broker reimbursements are fees payable to Broadridge and other service providers for the distribution of hard copy material to beneficial ADR holders holding in the Depositary Trust Company. Corporate material includes information related to shareholders’ meetings and related voting instruction cards. These fees are SEC approved.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.

A. MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS

See “Item 10. Additional Information—Articles of Association”.

B. USE OF PROCEEDS

The following use of proceeds information relates to our registration statement on Form F-1 (File No. 333-110615), filed by us in connection with our initial public offering of H shares in the United States. In connection with the registration of the H shares, a registration statement on Form F-6 (File No.333-110622) was also filed for ADSs representing such H shares. Each of these two registration statements was declared effective by the SEC on December 11, 2003. Our H shares commenced trading on the Hong Kong Stock Exchange on December 18, 2003 and the ADSs on the New York Stock Exchange on December 17, 2003.

The net proceeds from the initial public offering of our shares, after deduction of fees and expenses, amounted to RMB 24,707 million and were held in either H.K. dollars or U.S. dollars. As of the date of this annual report, a part of the cash proceeds from our global offering was held in bank deposit accounts denominated in foreign currencies in China, part of the cash proceeds was invested in securities listed on overseas stock exchanges, and part of the cash proceeds was invested in debt securities denominated in foreign currencies. We gradually converted approximately US$300 million of the cash proceeds into Renminbi to reduce foreign exchange risks. We invested approximately US$433 million, in addition to 2,282 billion in Renminbi, in Guangdong Development Bank in December 2006. We used approximately HK$12 billion for investments in Sino-Ocean Land Holdings Limited in 2009, 2010 and 2013. In January 2015, we engaged eight investment managers to invest, operate and manage US$ 800 million entrusted to them by us for investment in overseas capital markets.

181

ITEM 15. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, we have carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, of the effectiveness of our disclosure controls and procedures as of December 31, 2014, the end of the period covered by this annual report. Based on that evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2014.

Management’s Report on Internal Control Over Financial Reporting

Management of China Life Insurance Company Limited (together with its consolidated subsidiaries, the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with applicable generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:

• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets and liabilities of the Company;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with the applicable generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2014. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework (2013 framework). Based on this assessment, management determined that the Company’s internal control over financial reporting was effective as of December 31, 2014.

The Company’s internal control over financial reporting as of December 31, 2014 has been audited by Ernst & Young, an independent registered public accounting firm, as stated in their report which is on pages F-2 and F-3 of this annual report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2014.

182

Changes in Internal Control over Financial Reporting

There were no changes to the Company’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the year ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT.

Our board of directors has determined that Mr. Bruce Douglas Moore qualifies as an audit committee financial expert as defined in Item 16A of Form 20-F. Mr. Moore is “independent” in accordance with the applicable requirements of Rule 10A-3 of the Securities Exchange Act of 1934. Mr. Moore was appointed as an independent non-executive director and a member of the audit committee of our Company in May 2009. For Mr. Moore’s biographical information, see “Item 6. Directors, Senior Management and Employees”.

ITEM 16B. CODE OF ETHICS.

At the board of directors meeting held on June 29, 2004, we adopted a code of business conduct and ethics that applies to our chief executive officer, chief financial officer, controller and other senior officers of our company. We have filed the adopted code of business conduct and ethics as an exhibit to our annual report on Form 20-F for the fiscal year ended December 31, 2004, as filed on May 27, 2005.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table sets forth the aggregate audit fees, audit-related fees, tax fees and all other fees paid to our principal accountants for the fiscal years of 2014 and 2013.

	Audit Fees(1)	Audit-Related Fees	Tax Fees	All Other Fees
	(RMB in millions)
2014	55	—	—	—
2013	52	—	—	—

(1) Audit fees include fees billed for professional services rendered for audits of the consolidated financial statements and review of interim financial statements of China Life.

According to our current internal rules, before our principal accountants are engaged by us to render audit or non-audit services, the engagement must be approved by our audit committee.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.

Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.

As of December 31, 2014, China Life and its subsidiaries had not purchased, sold or redeemed any of China Life’s shares.

183

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT.

On December 21, 2012, our board of directors resolved, as recommended by our audit committee, to propose to appoint Ernst & Young as the Company’s independent registered certified public accountant. At the first extraordinary general meeting of the Company held on February 19, 2013, the shareholders of the Company approved the appointment of Ernst & Young as the Company’s independent registered certified public accountant effective for the fiscal year ending December 31, 2013. PricewaterhouseCoopers was responsible for the audit work of the Company for the fiscal year ended December 31, 2012. We reported the change in our independent registered certified public accountant on Form 6-K filed with the SEC on February 19, 2013. The change was made due to relevant PRC rules issued by the MOF limiting the term of service of audit firms continuously engaged by a PRC financial institution.

The reports of PricewaterhouseCoopers on our consolidated financial statements for the two fiscal years ended December 31, 2011 and 2012 contain no adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles.

During the two fiscal years ended December 31, 2011 and 2012, and the subsequent interim period through June 5, 2013, the date of resignation of PricewaterhouseCoopers, there have been no disagreements with PricewaterhouseCoopers on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of PricewaterhouseCoopers, would have caused it to make reference thereto in their reports on the consolidated financial statements for such years.

During the two fiscal years ended December 31, 2011 and 2012, and the subsequent interim period through June 5, 2013, there have been no reportable events requiring disclosure pursuant to Item 16F(a)(1)(v) of Form 20-F.

We provided a copy of the above disclosure under this Item 16F to PricewaterhouseCoopers and requested that PricewaterhouseCoopers furnish a letter addressed to the SEC stating whether it agrees with the above statements, and if not, stating the respects in which it does not agree. A copy of the letter from PricewaterhouseCoopers addressed to the SEC, dated April 25, 2014, was filed as Exhibit 15.1 to the Form 20-F for the fiscal year ended December 31, 2013 which we filed with the SEC on April 25, 2014.

During the two fiscal years ended December 31, 2011 and 2012, and the subsequent interim period prior to our engagement of Ernst & Young, neither we nor anyone on our behalf consulted Ernst & Young regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on our financial statements, or (ii) any matter that was either the subject of a disagreement with Ernst & Young or a reportable event. Also, during the two fiscal years ended December 31, 2011 and 2012, and the subsequent interim period prior to our engagement of Ernst & Young, we have not obtained any written report or oral advice that Ernst & Young concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue.

As used herein, the term “reportable event” means any of the items listed in paragraphs (a)(1)(v)(A)-(D) of Item 16F of Form 20-F, and the term “disagreement” shall be interpreted in accordance with Item 16F(a)(1)(iv) of Form 20-F and related instructions to Item 16-F of Form 20-F.

184

ITEM 16G. CORPORATE GOVERNANCE.

As a Chinese company with H shares, ADSs and A shares publicly traded on the HKSE, the NYSE and the SSE, respectively, we must comply with the corporate governance standards provided by PRC company law and other laws, as well as the securities laws and regulations in Hong Kong, United States and the listing requirements of the HKSE, the NYSE and the SSE that are applicable to us. The description set forth below includes, for purpose of Section 303A.11 of the NYSE Listed Company Manual, a summary of the significant ways in which our corporate governance practices differ from those followed by U.S. domestic companies under NYSE rules.

Board Independence

We identify our independent non-executive directors in accordance with the qualifications provided by relevant PRC and Hong Kong regulations, which prohibit independent directors from having, among other things, specified interests in our securities or business, relationships with the management and financial dependence on us. These tests vary in certain respects with those set forth under Section 303A.02 of the NYSE Listed Company Manual.

Section 303A.02 of the NYSE Listed Company Manual also requires the board of directors to affirmatively determine that the director has no material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company). Under the HKSE Listing Rules, each independent non-executive director must provide an annual confirmation of his independence to the listed company. Under the Tentative Guidelines on Corporate Governance of Insurance Companies issued by the CIRC in 2006 (the “Chinese Insurance Company Corporate Governance Guidelines”), each independent director must make a public announcement of the director’s independence and commitment to duties.

Section 303A.01 of the NYSE Listed Company Manual provides that a U.S. domestic issuer must have a majority of independent directors, unless more than 50% of such issuer’s voting power for the election of directors is controlled by an individual, a group or another company (a “controlled company”). Because more than 60% of our voting power is controlled by CLIC, we, as with controlled U.S. domestic companies, would not be required to comply with this independent board requirement. As of the date of this annual report, our board of directors comprised eleven directors, including four executive directors, three non-executive directors and four independent non-executive directors.

Section 303A.03 of the NYSE Listed Company Manual requires a U.S. domestic company to have its non-management directors meet at regularly scheduled executive sessions without management and hold an executive session including only independent directors at least once a year, or hold regular executive sessions of independent directors. Under the HKSE corporate governance rules effective since April 1, 2012, the chairman of our board of directors is required to have a meeting with non-executive directors (including independent non-executive directors) only at least once a year. On October 28, 2014, the chairman of our board convened a meeting of non-executive directors to discuss the operational management and development reform of the Company.

185

Nominating/Corporate Governance Committee and Compensation Committee

Under Section 303A.04 of the NYSE Listed Company Manual, a U.S. domestic company must have a nominating/corporate governance committee composed entirely of independent directors with a written charter that addresses certain specified responsibilities, unless it is a “controlled company”. Section 303A.05 of the NYSE Listed Company Manual requires a U.S. domestic company to have a compensation committee composed entirely of independent directors with a written charter that addresses certain specified duties, unless it is a “controlled company”. We, as with controlled U.S. domestic companies, are not required under NYSE rules to have such a nominating/corporate governance committee or compensation committee. We have established a nominating and remuneration committee in accordance with the HKSE Listing Rules, comprised of a majority of independent non-executive directors as construed under those rules. The primary duties of the nomination and remuneration committee are to review the structure and components of our board of directors, to formulate the appointment and successors to our board of directors and senior management, to review and recommend the nomination of our directors and senior officers, as well as to propose to our board of directors the remuneration policy for our directors, supervisors and senior management. The Chinese Insurance Company Corporate Governance Guidelines require that nominating and remuneration committees of Chinese insurance companies be comprised entirely of non-executive directors with the independent directors as the Chairmen. In 2014, our nominating and remuneration committee comprised two independent non-executive directors and one non-executive director with one of the independent non-executive directors serving as the Chairman. We have complied with the composition requirements of the nomination and remuneration committee as prescribed under the Chinese Insurance Company Corporate Governance Guidelines.

Audit Committee

The NYSE rules set forth two levels of audit committee standards for U.S. domestic companies and foreign private issuers. As a foreign private issuer, we are required to comply with the audit committee requirements under Section 303A.06 of the NYSE Listed Company Manual, such as audit committee independence and certain functions and powers, but are not subject to the additional qualifications, independence, function and other requirements for U.S. domestic companies provided under Section 303A.07 of the NYSE Listed Company Manual.

We have established an audit committee in accordance with the requirements of Section 303A.06 of the NYSE Listed Company Manual, the HKSE Listing Rules and the Chinese Insurance Company Corporate Governance Guidelines. In 2014, our audit committee comprised three independent non-executive directors with one of them serving as the Chairman. The primary duties of the audit committee are to review and supervise the financial reporting process, to assess the effectiveness of our internal control system, to supervise our internal audit system and its implementation and to implement and recommend the engagement or replacement of external auditors. Our audit committee is also responsible for communications between our internal and external auditors and our internal reporting system.

Corporate Governance Guidelines

Under Section 303A.09 of the NYSE Listed Company Manual, a U.S. domestic company must adopt and disclose corporate governance guidelines that address specified key subjects. We are not required by Chinese or Hong Kong laws or requirements to, and currently do not, have such corporate governance guidelines. However, we address several of the key subjects required by the NYSE Listed Company Manual to be included in the corporate governance guidelines in our articles of association, Rules of Procedures for Board of Directors, Rules of Internal Control and other internal corporate documents.

In addition, under the HKSE Listing Rules, we are expected to comply with, but may choose to deviate from, the provisions of the Code on Corporate Governance Practices in the HKSE Listing Rules, which sets out the principles of good corporate governance for issuers. However, we are required to disclose the reasons for deviation, if any, in our interim and annual reports.

186

We are required by the CSRC to disclose in our annual report filed with the CSRC our actual corporate governance practice as compared with CSRC’s rules on corporate governance of listed companies. Under such rules, we are required to disclose the differences between our actual practices and the requirements under such rules, if any. Accordingly, we have disclosed in our annual report for the year of 2014 filed with the CSRC that we had established a corporate governance structure with well-defined duties and responsibilities strictly in accordance with the PRC Company Law and PRC Securities Law as well as relevant rules and regulations, and that our actual corporate governance practices are generally in compliance with the applicable regulatory rules and requirements of the jurisdictions where we are listed.

Code of Business Conduct and Ethics

Section 303A.10 of the NYSE Listed Company Manual requires U.S. domestic companies to adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. We have adopted a Code of Business Conduct and Ethics for Directors and Senior Officers and Code of Conduct for Employees. We have disclosed the Code of Business Conduct and Ethics for Directors and Senior Officers in our annual report under Form 20-F for fiscal year ended December 31, 2004 and are required to disclose in the annual report under Form 20-F any waivers of the code for directors or executive officers. In addition, according to the HKSE Listing Rules, all of our directors must comply with the Model Code for Securities Transactions by Directors of Listed Companies that sets forth the required standards with which the directors of a listed company must comply in securities transactions of the listed company. Under the Listing Rules of the Shanghai Stock Exchange, any of the directors, supervisors or senior management of the listed company may not transfer any shares of such company held by him/her within one year of the listing of the company or six months after leaving the company. During his/her tenure at the company, he/she must file with the Shanghai Stock Exchange for record in advance any proposed transaction in the shares of the company in accordance with the relevant rules and regulations. In case of changes in shareholdings in the company, he/she shall report the changes on a timely basis to the company, which must then make relevant announcements on the website of the Shanghai Stock Exchange.

Certification Requirements

Under Section 303A.12(a) of the NYSE Listed Company Manual, each U.S. domestic company Chief Executive Officer must certify to the NYSE each year that he or she is not aware of any violation by the listed company of NYSE corporate governance listing standards. There are no similar requirements under PRC or Hong Kong laws or requirements.

ITEM 16H. MINE SAFETY DISCLOSURE.

Not applicable.

PART III

ITEM 17. FINANCIAL STATEMENTS.

We have elected to provide the financial statements and related information specified in Item 18 in lieu of Item 17.

ITEM 18. FINANCIAL STATEMENTS.

See Index to Consolidated Financial Statements for a list of all financial statements filed as part of this annual report.

187

ITEM 19. EXHIBITS.

(a) See Item 18 for a list of the financial statements filed as part of this annual report.

(b) Exhibits to this annual report.

188

EXHIBIT INDEX

No.	Description of Exhibit
1.1	Amended and Restated Articles of Association of the Registrant
2.1	Form of H share certificate(1)
2.2	Form of Deposit Agreement, including the Form of American Depositary Receipt(2)
4.1	Restructuring Agreement(1)
4.2	Trademark License Agreement(1)
4.3	Policy Management Agreement
4.4	Non-Competition Agreement(1)
4.5	Asset Management Agreement between China Life Insurance (Group) Company and China Life Asset Management Company Limited
4.6	Asset Management Agreement between China Life Insurance Company Limited and China Life Investment Holding Company Limited
4.7	Asset Management Agreement between China Life Insurance Company Limited and China Life Asset Management Company Limited(4)
4.8	Property Leasing Agreement
4.9	Property Transfer Framework Agreement(4)
4.10	Entrustment and Account Management Agreement for Enterprise Annuity Funds
4.11	Insurance Sales Framework Agreement between China Life Insurance Company Limited and China Life Property and Casualty Insurance Company Limited
8.1	List of subsidiaries of the Registrant
11.1	Code of Business Conduct and Ethics(3)
12.1	Certification pursuant to Rule 13a-14(a)
12.2	Certification pursuant to Rule 13a-14(a)
13.1	Certification pursuant to Rule 13a-14(a) and Section 1350 of Chapter 63 of Title 18 of the United States Code
15.1	Letter from PricewaterhouseCoopers(5)

(1) Incorporated by reference to the Registration Statement on Form F-1 (File No. 333-110615), filed with the Commission on December 9, 2003.

(2) Incorporated by reference to the Registration Statement on Form F-6 (File No. 333-164005) and Post-Effective Amendment No. 1 to Form F-6 (File No. 333-164005) filed with the Commission on January 4, 2010 and January 27, 2015, respectively.

(3) Incorporated by reference to the Annual Report on Form 20-F for the fiscal year ended December 31, 2004, filed with the Commission on May 27, 2005.

(4) Incorporated by reference to the Annual Report on Form 20-F for the fiscal year ended December 31, 2012, filed with the Commission on April 26, 2013.

(5) Incorporated by reference to the Annual Report on Form 20-F for the fiscal year ended December 31, 2013, filed with the Commission on April 25, 2014.

189

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

China Life Insurance Company Limited
By:	/s/ Lin Dairen
Name:	Lin Dairen
Title:	President and Executive Director

Date: April 24, 2015

CHINA LIFE INSURANCE COMPANY LIMITED

(Incorporated in the People’s Republic of China with limited liability)

Audited Consolidated Financial Statements

For the year ended 31 December 2014

CHINA LIFE INSURANCE COMPANY LIMITED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Historical Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Statement of Financial Position as of December 31, 2014 and 2013	F-5
Consolidated Statement of Comprehensive Income for the years ended December 31, 2014, 2013 and 2012	F-7
Consolidated Statement of Changes in Equity for the years ended December 31, 2014, 2013 and 2012	F-9
Consolidated Statement of Cash Flow for the years ended December 31, 2014, 2013 and 2012	F-12
Notes to the Consolidated Financial Statements	F-14

1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of China Life Insurance Company Limited

We have audited the accompanying consolidated statement of financial position of China Life Insurance Company Limited (the “Company”) as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income, changes in equity and cash flows for each of the two years in the period ended December 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of China Life Insurance Company Limited at December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2014, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), China Life Insurance Company Limited’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated April 24, 2015 expressed an unqualified opinion thereon.

/s/ Ernst & Young

Hong Kong

April 24, 2015

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of China Life Insurance Company Limited

We have audited China Life Insurance Company Limited’s internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the “COSO criteria”). China Life Insurance Company Limited’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on China Life Insurance Company Limited’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

F-2

Report of Independent Registered Public Accounting Firm (continued)

In our opinion, China Life Insurance Company Limited maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of financial position of China Life Insurance Company Limited as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income, statements of changes in equity and statements of cash flows for each of the two years in the period ended December 31, 2014 and our report dated April 24, 2015 expressed an unqualified opinion thereon.

/s/ Ernst & Young

Hong Kong

April 24, 2015

F-3

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

China Life Insurance Company Limited

In our opinion, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended December 31, 2012 present fairly, in all material respects, the result of operations and cash flows of China Life Insurance Company Limited and its subsidiaries (hereinafter - “the Group”) for the year ended December 31, 2012, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers

Hong Kong

27 March 2013, except for the change in the composition of reportable segments discussed in Note 5, as to which the date is 24 April 2015

F-4

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Financial Position

As at 31 December 2014

	Notes	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
ASSETS
Property, plant and equipment	6		25,348		23,393
Investment properties	7		1,283		1,329
Investments in associates and joint ventures	8		44,390		34,775
Held-to-maturity securities	9.1		517,283		503,075
Loans	9.2		166,453		118,626
Term deposits	9.3		690,156		664,174
Statutory deposits – restricted	9.4		6,153		6,153
Available-for-sale securities	9.5		607,531		491,527
Securities at fair value through profit or loss	9.6		53,052		34,172
Securities purchased under agreements to resell	9.7		11,925		8,295
Accrued investment income	9.8		44,350		34,717
Premiums receivable	11		11,166		9,876
Reinsurance assets	12		1,032		1,069
Other assets	13		19,411		20,430
Cash and cash equivalents			47,034		21,330
Total assets			2,246,567		1,972,941

The notes on pages 14 to 89 form an integral part of these consolidated financial statements.

F-5

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Financial Position

As at 31 December 2014

	Notes	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
LIABILITIES AND EQUITY
Liabilities
Insurance contracts	14		1,603,446		1,494,497
Investment contracts	15		72,275		65,087
Policyholder dividends payable			74,745		49,536
Interest-bearing loans and borrowings	16		2,623		—
Bonds payable	17		67,989		67,985
Financial liabilities at fair value through profit or loss			10,890		—
Securities sold under agreements to repurchase	18		46,089		20,426
Annuity and other insurance balances payable			25,617		23,179
Premiums received in advance			15,850		6,305
Other liabilities	19		20,062		18,233
Deferred tax liabilities	28		19,375		4,919
Current income tax liabilities			52		5
Statutory insurance fund	20		223		184
Total liabilities			1,959,236		1,750,356
Equity
Share capital	33		28,265		28,265
Reserves	34		145,919		97,029
Retained earnings			109,937		95,037
Attributable to equity holders of the Company			284,121		220,331
Non-controlling interests			3,210		2,254
Total equity			287,331		222,585
Total liabilities and equity			2,246,567		1,972,941

Approved and authorized for issue by the Board of Directors on 24 March 2015.

The notes on pages 14 to 89 form an integral part of these consolidated financial statements.

F-6

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2014

		2014			2013			2012
	Notes	RMB million			RMB million			RMB million
REVENUES
Gross written premiums			331,010			326,290			322,742
Less: premiums ceded to reinsurers			(515	)		(556	)		(384	)
Net written premiums			330,495			325,734			322,358
Net change in unearned premium reserves			(390	)		(921	)		(232	)
Net premiums earned			330,105			324,813			322,126
Investment income	21		93,548			82,816			73,243
Net realised gains and impairment on financial assets	22		7,120			5,793			(26,876	)
Net fair value gains/(losses) through profit or loss	23		5,808			137			(313	)
Other income			4,185			4,324			3,305
Total revenues			440,766			417,883			371,485
BENEFITS, CLAIMS AND EXPENSES
Insurance benefits and claims expenses
Life insurance death and other benefits	24		(192,659	)		(193,671	)		(107,674	)
Accident and health claims and claim adjustment expenses	24		(16,752	)		(11,263	)		(7,898	)
Increase in insurance contract liabilities	24		(105,883	)		(107,354	)		(184,990	)
Investment contract benefits	25		(1,958	)		(1,818	)		(2,032	)
Policyholder dividends resulting from participation in profits			(24,866	)		(18,423	)		(3,435	)
Underwriting and policy acquisition costs			(27,147	)		(25,690	)		(27,754	)
Finance costs	26		(4,726	)		(4,032	)		(2,575	)
Administrative expenses			(25,432	)		(24,805	)		(23,283	)
Other expenses			(4,151	)		(3,864	)		(3,304	)
Statutory insurance fund contribution	20		(701	)		(637	)		(609	)
Total benefits, claims and expenses			(404,275	)		(391,557	)		(363,554	)
Share of profit of associates and joint ventures	8		3,911			3,125			3,037
Profit before income tax	27		40,402			29,451			10,968
Income tax	28		(7,888	)		(4,443	)		304
Net profit			32,514			25,008			11,272
Attributable to:
- Equity holders of the Company			32,211			24,765			11,061
- Non-controlling interests			303			243			211
Basic and diluted earnings per share	29	RMB	1.14		RMB	0.88		RMB	0.39

The notes on pages 14 to 89 form an integral part of these consolidated financial statements.

F-7

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2014

		2014			2013			2012
	Note	RMB million			RMB million			RMB million
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			70,342			(25,135	)		8,864
Amount transferred to net profit from other comprehensive income			(7,120	)		(5,793	)		26,876
Portion of fair value changes on available-for-sale securities attributable to participating policyholders			(11,035	)		2,635			(2,635	)
Share of other comprehensive income of associates and joint ventures under the equity method			120			(332	)		167
Income tax relating to components of other comprehensive income	28		(13,023	)		7,050			(8,265	)
Other comprehensive income that may be reclassified to profit or loss in subsequent periods			39,284			(21,575	)		25,007
Other comprehensive income that will not be reclassified to profit or loss in subsequent periods			—			—			—
Other comprehensive income for the year, net of tax			39,284			(21,575	)		25,007
Total comprehensive income for the year, net of tax			71,798			3,433			36,279
Attributable to:
- Equity holders of the Company			71,443			3,203			36,056
- Non-controlling interests			355			230			223

The notes on pages 14 to 89 form an integral part of these consolidated financial statements.

F-8

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Changes in Equity

For the year ended 31 December 2014

	Attributable to equity holders of the Company							Non- controlling interests			Total
	Share capital		Reserves		Retained earnings
	RMB million		RMB million		RMB million			RMB million			RMB million
	(Note 33)		(Note 34)
As at 1 January 2012		28,265		83,424		79,841			1,858			193,388
Net profit		—		—		11,061			211			11,272
Other comprehensive income		—		24,995		—			12			25,007
Total comprehensive income		—		24,995		11,061			223			36,279
Transactions with owners
Appropriation to reserves (Note 34)		—		4,090		(4,090	)		—			—
Dividends paid (Note 31)		—		—		(6,501	)		—			(6,501	)
Dividends to non-controlling interests		—		—		—			(65	)		(65	)
Total transactions with owners		—		4,090		(10,591	)		(65	)		(6,566	)
As at 31 December 2012		28,265		112,509		80,311			2,016			223,101

The notes on pages 14 to 89 form an integral part of these consolidated financial statements.

F-9

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Changes in Equity

For the year ended 31 December 2014

	Attributable to equity holders of the Company								Non- controlling interests			Total
	Share capital RMB million		Reserves RMB million			Retained earnings RMB million			RMB million			RMB million
	(Note 33)		(Note 34)
As at 1 January 2013		28,265		112,509			80,311			2,016			223,101
Net profit		—		—			24,765			243			25,008
Other comprehensive income		—		(21,562	)		—			(13	)		(21,575	)
Total comprehensive income		—		(21,562	)		24,765			230			3,433
Transactions with owners
Capital paid in		—		—			—			88			88
Appropriation to reserves (Note 34)		—		6,082			(6,082	)		—			—
Dividends paid (Note 31)		—		—			(3,957	)		—			(3,957	)
Dividends to non-controlling interests		—		—			—			(80	)		(80	)
Total transactions with owners		—		6,082			(10,039	)		8			(3,949	)
As at 31 December 2013		28,265		97,029			95,037			2,254			222,585

The notes on pages 14 to 89 form an integral part of these consolidated financial statements.

F-10

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Changes in Equity

For the year ended 31 December 2014

	Attributable to equity holders of the Company							Non- controlling interests			Total
	Share capital RMB million		Reserves RMB million		Retained earnings RMB million			RMB million			RMB million
	(Note 33)		(Note 34)
As at 1 January 2014		28,265		97,029		95,037			2,254			222,585
Net profit		—		—		32,211			303			32,514
Other comprehensive income		—		39,232		—			52			39,284
Total comprehensive income		—		39,232		32,211			355			71,798
Transactions with owners
Capital paid in		—		826		—			692			1,518
Appropriation to reserves (Note 34)		—		8,832		(8,832	)		—			—
Dividends paid (Note 31)		—		—		(8,479	)		—			(8,479	)
Dividends to non-controlling interests		—		—		—			(91	)		(91	)
Total transactions with owners		—		9,658		(17,311	)		601			(7,052	)
As at 31 December 2014		28,265		145,919		109,937			3,210			287,331

The notes on pages 14 to 89 form an integral part of these consolidated financial statements.

F-11

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Cash Flows

For the year ended 31 December 2014

	2014 RMB million			2013 RMB million			2012 RMB million
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax		40,402			29,451			10,968
Adjustments for:
Investment income		(93,548	)		(82,816	)		(73,243	)
Net realised and unrealised gains and impairment on financial assets		(12,928	)		(5,930	)		27,189
Amount of investment cost below the fair value for identifiable net assets of an associate		—			(683	)		—
Insurance contracts		108,955			109,843			185,106
Depreciation and amortisation		2,124			2,026			1,949
Foreign exchange losses/(gains)		(268	)		437			49
Share of profit of associates and joint ventures		(3,911	)		(3,125	)		(3,037	)
Changes in operating assets and liabilities:
Securities at fair value through profit or loss		(13,698	)		(449	)		(10,152	)
Financial liabilities at fair value through profit or loss		9,704			—			—
Receivables and payables		41,330			23,300			(4,434	)
Income tax paid		(1,923	)		(5,343	)		(3,675	)
Interest received - securities at fair value through profit or loss		1,902			1,002			833
Dividends received - securities at fair value through profit or loss		106			579			629
Net cash inflow from operating activities		78,247			68,292			132,182
CASH FLOWS FROM INVESTING ACTIVITIES
Disposals and maturities:
Disposals of debt securities		21,242			20,623			51,281
Maturities of debt securities		22,407			15,244			5,277
Disposals of equity securities		285,647			231,864			105,519
Property, plant and equipment		437			159			218
Purchases:
Debt securities		(115,808	)		(122,952	)		(228,296	)
Equity securities		(312,544	)		(223,449	)		(70,557	)
Property, plant and equipment		(5,048	)		(3,724	)		(5,293	)
Additional capital contribution to associates and joint ventures		(5,671	)		(2,386	)		(1,339	)
Increase in term deposits, net		(25,972	)		(23,456	)		(120,287	)
Increase/(decrease) in securities purchased under agreements to resell, net		(3,630	)		(7,401	)		1,476
Interest received		78,903			72,667			61,410
Dividends received		4,258			2,861			4,768
Increase in policy loans, net		(13,478	)		(20,283	)		(7,572	)
Others		—			—			(409	)
Net cash outflow from investing activities		(69,257	)		(60,233	)		(203,804	)

The notes on pages 14 to 89 form an integral part of these consolidated financial statements.

F-12

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Cash Flows

For the year ended 31 December 2014

	2014 RMB million			2013 RMB million			2012 RMB million
CASH FLOWS FROM FINANCING ACTIVITIES
Increase/(decrease) in securities sold under agreements to repurchase, net		25,663			(48,073	)		55,499
Cash received from borrowings		2,881			—			—
Cash repaid to lenders		(10	)		—			—
Interest paid		(4,618	)		(4,083	)		(1,832	)
Dividends paid to equity holders of the Company		(8,479	)		(3,957	)		(6,501	)
Dividends paid to non-controlling interests		(91	)		(80	)		(65	)
Proceeds from issuance of subordinated debts		—			—			37,988
Capital injected into a subsidiary by non-controlling interests		1,358			88			—
Net cash inflow/(outflow) from financing activities		16,704			(56,105	)		85,089
Foreign exchange gains/(losses) on cash and cash equivalents		10			(76	)		—
Net increase/(decrease) in cash and cash equivalents		25,704			(48,122	)		13,467
Cash and cash equivalents
Beginning of the year		21,330			69,452			55,985
End of the year		47,034			21,330			69,452
Analysis of balances of cash and cash equivalents
Cash at banks and in hand		45,439			20,036			69,448
Short-term bank deposits		1,595			1,294			4

The notes on pages 14 to 89 form an integral part of these consolidated financial statements.

F-13

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

1 ORGANIZATION AND PRINCIPAL ACTIVITIES

China Life Insurance Company Limited (the “Company”) was established in the People’s Republic of China (“China” or the “PRC”) on 30 June 2003 as a joint stock company with limited liability as part of a group restructuring of China Life Insurance (Group) Company (“CLIC”, formerly China Life Insurance Company) and its subsidiaries (the “Restructuring”). The Company and its subsidiaries are hereinafter collectively referred to as the “Group”. The Group’s principal activity is the writing of life insurance business, providing life, annuity, accident and health insurance products in China.

The Company is a joint stock company incorporated in the PRC with limited liability. The address of its registered office is: 16 Financial Street, Xicheng District, Beijing, the PRC. The Company is listed on the New York Stock Exchange, the Stock Exchange of Hong Kong Limited, and the Shanghai Stock Exchange.

These consolidated financial statements are presented in millions of Renminbi (“RMB million”) unless otherwise stated. These consolidated financial statements have been approved for issue by the Board of Directors on 24 March 2015.

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 relating to the preparation of consolidated financial statements, which for this financial year and the comparative period continue to be those of the predecessor Companies Ordinance (Cap. 32), in accordance with transitional and saving arrangements for Part 9 of the Hong Kong Companies Ordinance (Cap. 622), “Accounts and Audit”, which are set out in sections 76 to 87 of Schedule 11 to that 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 conformity 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.

F-14

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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 1 January 2014

Standards/Amendments	Content
IAS 32 Amendment	Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities
IAS 36 Amendment	Recoverable Amount Disclosures for Non-Financial Assets
IAS 39 Amendment	Novation of Derivatives and Continuing of Hedge Accounting
IFRS 10, IFRS 12 and IAS 27 (Revised) Amendments	Investment Entities
IFRS 2 Amendment (i)(ii)	Definition of Vesting Condition
IFRS 3 Amendment (i)(ii)	Accounting for Contingent Consideration in a Business Combination
IFRS 13 Amendment (i)	Short-term Receivables and Payables
IFRS 1 Amendment (iii)	Meaning of Effective IFRSs

(i) These three amendments are included in Annual Improvements 2010-2012 Cycle.

(ii) These two amendments have been effective from 1 July 2014.

(iii) The amendment is included in Annual Improvements 2011-2013 Cycle.

IAS 32 Amendment – Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities

The amendment to IAS 32 clarifies the meaning of “currently has a legally enforceable right to set-off” and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting. The amendment has no impact on the Group’s consolidated financial statements.

IAS 36 Amendment – Recoverable Amount Disclosures for Non-Financial Assets

The amendment to IAS 36 removes the unintended consequences of IFRS 13 Fair Value Measurement on the disclosures required under IAS 36 Impairment of Assets. In addition, the amendment requires disclosure of the recoverable amounts for the assets or each cash-generating unit for which impairment loss has been recognised or reversed during the period, and expands the disclosure requirements regarding the fair value measurement for these assets or units if their recoverable amounts are based on fair value less costs of disposal. The Group will provide the required disclosures once an impairment loss for non-financial assets exists.

IAS 39 Amendment – Novation of Derivatives and Continuing of Hedge Accounting

The amendment to IAS 39 provides relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. The amendment is not relevant to the Group, since the Group has not applied hedge accounting during the current period.

IFRS 10, IFRS 12 and IAS 27 (Revised) Amendments – Investment Entities

These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under IFRS 10 Consolidated Financial Statements. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. These amendments are not relevant to the Group, since the Group does not qualify to be an investment entity under IFRS 10.

F-15

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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 1 January 2014 (continued)

IFRS 2 Amendment – Definition of Vesting Condition

The amendment to IFRS 2 clarifies various issues relating to the definitions of performance condition and service condition which are vesting conditions, including (i) a performance condition must contain a service condition; (ii) a performance target must be met while the counterparty is rendering service; (iii) a performance target may relate to the operations or activities of an entity, or to those of another entity in the same group; (iv) a performance condition may be a market or non-market condition; and (v) if the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service condition is not satisfied. The amendment has no impact on the Group.

IFRS 3 Amendment – Accounting for Contingent Consideration in a Business Combination

The amendment to IFRS 3 clarifies that contingent consideration arrangements arising from a business combination that are not classified as equity should be subsequently measured at fair value through profit or loss whether or not they fall within the scope of IFRS 9 or IAS 39. The amendment has no impact on the Group.

IFRS 13 Amendment – Short-term Receivables and Payables

The amendment to IFRS 13 clarifies that short-term receivables and payables with no stated interest rates can be measured at invoice amounts when the effect of discounting is immaterial. The amendment has no impact on the Group.

IFRS 1 Amendment – Meaning of Effective IFRSs

The amendment clarifies that an entity may choose to apply either a current standard or a new standard that is not yet mandatory, but permits early application, provided either standard is applied consistently throughout the periods presented in the entity’s first IFRSs financial statements. The amendment has no impact on the Group, since the Group is an existing IFRSs preparer.

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 1 January 2014

Standards/Amendments	Content	Effective for annual period beginning on or after
IAS 27 Amendment	Equity Method in Separate Financial Statements	1 January 2016
IFRS 10 and IAS 28 Amendments	Sale or Contribution of Assets between an Investor and its Associate or Joint Venture	1 January 2016
IFRS 11 Amendment	Accounting for Acquisitions of Interests in Joint Operations	1 January 2016
IFRS 15	Revenue from Contracts with Customers	1 January 2017
IFRS 9	Financial Instruments	1 January 2018

IAS 27 Amendment – Equity Method in Separate Financial Statements

The amendment to IAS 27 will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. The amendment is effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. The amendment is not expected to have any impact on the Group’s consolidated financial statements since the Group has no intention to apply the equity method in the separate financial statements.

F-16

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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 1 January 2014 (continued)

IFRS 10 and IAS 28 Amendments – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

These amendments eliminate the inconsistency between the requirements in IFRS 10 and those in IAS 28 Investments in Associates and Joint Ventures with regard to dealing with the contribution or sale of assets between an investor and its associate or joint venture. These amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. The amendments are not expected to have material impact on the Group’s consolidated financial statements.

IFRS 11 Amendment – Accounting for Acquisitions of Interests in Joint Operations

The amendment to IFRS 11 requires that a joint operator accounting for the acquisition of an interest in a joint operation, in which the activity of the joint operation constitutes a business, must apply the relevant IFRS 3 principles for business combinations accounting. The amendment also clarifies that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. The amendment is effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. It is not expected that the amendment would be relevant to the Group, since the Group has no joint operation as at 31 December 2014.

IFRS 15 – Revenue from Contracts with Customers

IFRS 15 establishes a new five-step model that will apply to 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 to measuring and recognising revenue. IFRS 15 is effective for annual periods beginning on or after 1 January 2017, with early adoption permitted. IFRS 15 is not applied to the insurance contracts and financial instruments, which are the main source of the Group’s revenue. The Group is currently assessing the impact on the Group’s consolidated financial statements.

IFRS 9 – Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early adoption permitted. The Group is currently assessing the impact on the Group’s consolidated financial statements.

Except for those described in Note 2.1.1, Annual Improvements 2010-2012 Cycle and Annual Improvements 2011-2013 Cycle issued in December 2013, and Annual Improvements 2012-2014 Cycle issued in September 2014 set out amendments to other standards. These annual improvements were established to make non-urgent but necessary amendments to IFRSs. No material changes to the accounting policies of the Group are expected as a result of these annual improvements.

In addition, the new Hong Kong Companies Ordinance (Cap. 622) will affect the presentation and disclosure of certain information in the consolidated financial statements for the year ending 31 December 2015. The Group is in the process of making an assessment of the impact of these changes.

F-17

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.2 Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries for the year ended 31 December 2014. Subsidiaries are those entities which are controlled by the Group (including the structured entities controlled by the Group). Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

• power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

• exposure, or rights, to variable returns from its involvement with the investee; and

• the ability to use its power over the investee to affect its returns.

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• the contractual arrangement with the other vote holders of the investee;

• rights arising from other contractual arrangements; and

• the Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.

Profit or loss and each component of other comprehensive income (“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.

F-18

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.2 Consolidation (continued)

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 interests 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 period. Gains and 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 dividend received and receivable.

Transactions with non-controlling interests

The Group treats transactions with non-controlling interests that do not result in loss of controls as equity transactions. For shares purchased from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposal of shares to non-controlling interests are also recorded in equity.

When the Group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in OCI in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in OCI are reclassified to profit or loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in OCI is reclassified to profit or loss as appropriate.

F-19

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.3 Associates and joint ventures

Associates are entities over which the Group has significant influence, generally accompanying a shareholding of between 20% and 50% of the voting right 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 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 and losses on the disposal of an entity take into consideration the carrying amount of goodwill relating to the entity sold.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associates and joint ventures is 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 to dispose of and value in use. The impairment of investment 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 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.

F-20

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.5 Foreign currency translation

Except for China Life Franklin Asset Management Company Limited (“AMC HK”), the functional currency of the Group is RMB. The reporting currency of the consolidated financial statements of the Group is RMB. Transactions in foreign currencies are translated at the exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates ruling at the end of the reporting period. Exchange differences arising in these cases are recognised in net profit.

2.6 Property, plant and equipment

Property, plant and equipment, are stated at historical costs less accumulated depreciation and any accumulated impairment losses, except for those acquired prior to 30 June 2003, which are stated at deemed cost less accumulated depreciation and any accumulated impairment losses.

The historical costs of property, plant and equipment comprise its purchase price, including import duties and non-refundable purchase taxes, and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after terms of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the statement of comprehensive income in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the assets as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation

Depreciation is computed on a straight-line basis to write down the cost of each asset to its residual value over its estimated useful lives as follows:

	Estimated useful lives
Buildings	15 to 35 years
Office equipment, furniture and fixtures	5 to 11 years
Motor vehicles	4 to 8 years
Leasehold improvements	Over the shorter of the remaining term of the lease and the useful lives

The 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 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 a 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.

F-21

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.7 Investment properties

Investment properties are interests in land and buildings that are held to earn rental income and/or for capital appreciation, rather than for the supply of services or for administrative purposes.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and any impairment loss.

Depreciation is computed on the straight-line basis over the estimated useful lives. The estimated useful lives of investment properties are 15 to 35 years.

Overseas investment properties that are held by the Group in the forms of property ownership, equity investment, or other forms, have expected useful lives of 50 years, determined based on the usage in their locations.

The useful lives and depreciation method are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from the individual investment properties.

An investment property is derecognised when either it has been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the statement of comprehensive income in the year of retirement or disposal. A transfer to, or from, an investment property is made when, and only when, there is evidence of a change in use.

2.8 Financial assets

2.8.a Classification

The Group classifies its financial assets into the following categories: securities at fair value through profit or loss, held-to-maturity securities, loans and receivables and available-for-sale securities. Management determines the classification of its financial assets at initial recognition which depends on the purpose for which the assets are acquired. The Group’s investments in securities fall into the following four categories:

(i) Securities at fair value through profit or loss

This category has two sub-categories: securities held for trading and those designated at fair value through profit or loss at inception. Securities are classified as held for trading at inception if acquired principally for the purpose of selling in the short term or if they form part of a portfolio of financial assets in which there is evidence of short term profit-taking. The Group may classify other financial assets as at fair value through profit or loss if they meet certain criteria 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.

F-22

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.8 Financial assets (continued)

2.8.b Recognition and measurement

Purchase and sale of investments are recognised on trade date, when the Group commits to purchase or sell assets. Investments are initially recognised at fair value plus, in the case of all financial assets not carried at fair value through profit or loss, transaction costs that are directly attributable to their acquisition. Investments are derecognised when the rights to receive cash flows from the investments have expired or when they have been transferred and the Group has also transferred substantially all risks and rewards of ownership.

Securities at fair value through profit or loss and available-for-sale securities are carried at fair value. Equity investments that do not have a quoted price in an active market and whose fair value cannot be reliably measured are carried at cost, net of allowance for impairments. Held-to-maturity securities are carried at amortised cost using the effective interest method. Investment gains and losses on sales of securities are determined principally by specific identification. Realised and unrealised gains and losses arising from changes in the fair value of the securities at fair value through profit or loss category, and the change of fair value of available-for-sale debt securities due to foreign exchange impact on the amortised cost are included in net profit in the period in which they arise. The remaining unrealised gains and losses arising from changes in the fair value of available-for-sale securities are recognised in OCI. When securities classified as available-for-sale securities are sold or impaired, the accumulated fair value adjustments are included in net profit as realised gains or losses and impairment 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 loan is outstanding. In the event of default by the counterparty to repay the loan, 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.

F-23

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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 and impairment 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 categorized within the fair value hierarchy, described in Notes 4.3, 7 and 10, 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.

F-24

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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.

2.11 Insurance contracts and investment contracts

2.11.1 Classification

The Group issues contracts that transfer insurance risk or financial risk or both. The contracts issued by the Group are classified as insurance contracts and investment contracts. Insurance contracts are those contracts that transfer significant insurance risk. They may also transfer financial risk. Investment contracts are those contracts that transfer financial risk without significant insurance risk. A number of insurance and investment contracts contain a discretionary participating feature (“DPF”). This feature entitles the policyholders to receive additional benefits or bonuses that are, at least in part, at the discretion of the Group.

2.11.2 Insurance contracts

2.11.2.a Recognition and measurement

(i) Short-term insurance contracts

Premiums from the sale of short duration accident and health insurance products are recorded when written and are accreted to earnings on a pro-rata basis over the term of the related policy coverage. Reserves for short duration insurance products consist of unearned premium reserve and expected claims and claim adjustment expenses reserve. Actual claims and claim adjustment expenses are charged to net profit as incurred.

The unearned premium reserve represents the portion of the premiums written net of certain acquisition costs relating to the unexpired terms of coverage.

Reserves for claims and claim adjustment expenses consist of the reserves for reported and unreported claims and reserves for claim expenses with respect to insured events. In developing these reserves, the Group considers the nature and distribution of the risks, claims cost development, and experiences in deriving the reasonable estimated amount and the applicable margins. The methods used for reported and unreported claims include case-by-case estimation method, average cost per claim method, chain ladder method, etc. The Group calculates the reserves for claim expenses based on the reasonable estimates of the future payments for claim expenses.

(ii) Long-term insurance contracts

Long-term insurance contracts include whole life and term life insurance, endowment insurance and annuity policies with significant life contingency risk. Premiums are recognised as revenue when due from policyholders.

F-25

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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)

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 expenses assumption, and based on the following principles:

(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;

• reasonable expenses incurred to manage insurance contracts or to process claims, including maintenance expenses and claim settlement expenses. Future administration expenses are included in the maintenance expenses. Expenses are determined based on expense analysis with consideration of future inflation and the Group’s expense management control.

On each reporting date, the Group reviews the assumptions for reasonable estimates of liability and risk margins, with consideration of all available information, taking into account the Group’s historical experience and expectation of future events. Changes in assumptions are recognised in net profit. Assumptions for the amortization of residual margin are locked in at policy issuance and are not adjusted at each reporting date.

(b) Margin has been taken into consideration while computing the reserve of insurance contracts, measured separately and recognised in net profit in each period over the life of the contracts. At the inception of the contracts, the Group does not recognise Day 1 gain, whereas on the other hand, Day 1 loss is recognised in net profit immediately.

Margin comprises of 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.

F-26

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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)

(c) The Group has considered the impact of time value on the reserve calculation for insurance contracts.

(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.

F-27

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.11 Insurance contracts and investment contracts (continued)

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 certain 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.

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 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 options 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 relate 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).

F-28

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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 vesting period is included in net fair value gains/(losses) through profit or loss in net profit. The related liability is included in other liabilities.

2.17 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of equity instruments are shown in equity as a deduction, net of tax, from the proceeds.

2.18 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 service is provided. Policy fee income net of certain acquisition costs are deferred as unearned revenue and amortised over the expected life of the contracts. Policy fee income is recognised in revenue as part of other income.

Investment income

Investment income comprises interest income from term deposits, cash and cash equivalents, debt securities, securities purchased under agreements to resell, loans, and dividend income from equity securities. Interest income is recorded on an accrual basis using the effective interest rate method. Dividend income is recognised when the right to receive dividend payment is established.

F-29

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.19 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.

2.20 Current and deferred income taxation

Income tax expense for the period comprises current and deferred tax. Income tax is recognised in net profit, except to the extent that it relates to items recognised directly in OCI where the income tax is recognised in OCI.

Current income tax assets and liabilities for the current period are calculated on the basis of the tax laws enacted or substantively enacted at the end of each reporting period in the jurisdictions where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken with respect to situations in which applicable tax regulation is subject to interpretation.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Substantively enacted tax rates are used in the determination of deferred income tax.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse 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 realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

2.21 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.

F-30

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2.22 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 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.

2.23 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 expenses assumption are made based on the most recent historical analysis and current and future economic conditions. The liability uncertainty arising from uncertain future benefit payments, premiums and relevant expenses, is reflected in the risk margin.

The residual margin relating to the long-term insurance contracts is amortised over the expected life of the contracts, based on the assumptions (mortality rates, morbidity rates, lapse rates, discount rates, and expenses assumption) that are determined at inception of the contracts and remain unchanged for the duration of the contracts.

The judgements exercised in the valuation of insurance contract liabilities (including contracts with DPF) affect the amounts recognised in the consolidated financial statements as insurance contract benefits and insurance contract liabilities.

The impact of the various assumptions and their changes are described in Note 14.

F-31

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

3.2 Investments

The Group’s principal financial instruments 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 considerations. 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.

• Term deposits and loans: the carrying amounts of these assets in the statement of consolidated financial position approximate fair value.

For the description of valuation techniques, please refer to Note 4.3. Using different valuation techniques and parameter assumptions may lead to some differences of fair value estimations.

3.3 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.

3.4 Determination of control over investee

The Group applies its judgment to determine whether the control indicators set out in Note 2.2 indicate that the Group controls structured entities such as funds and asset management products.

The Group sponsors certain structured entities (e.g. funds), 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 2014, the Group has consolidated five fund products issued and managed by the Company’s subsidiary, China Life AMP Asset Management Company (“CL AMP”), in the consolidated financial statements.

F-32

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

4 RISK MANAGEMENT

Risk management is carried out by the Group’s Risk Management Committee under policies approved by the Group’s Board of Directors.

The Group issues contracts that transfer insurance risk or financial risk or both. This section summarises these risks and the way the Group manages them.

4.1 Insurance risk

4.1.1 Types of insurance risks

The risk under any one insurance contract is the possibility that an insured event occurs and the uncertainty about the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and therefore unpredictable. For a portfolio of insurance contracts where the theory of probability is applied to the pricing and provisioning, the principal risk that the Group faces under its insurance contracts is that the actual claims and benefit payments are less favourable than the underlying assumptions used in establishing the insurance liabilities. This occurs when the frequency or severity of claims and benefits exceeds the estimates. Insurance events are random, and the actual number of claims and the amount of benefits paid will vary each year from estimates established using statistical techniques.

Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability of the expected outcome will be. In addition, a more diversified portfolio is less likely to be affected across the board by a change in any subset of the portfolio. The Group has developed its insurance underwriting strategy to diversify the types of insurance risks accepted and within each of these categories to achieve a sufficiently large population to reduce the variability of the expected outcome. The Group manages insurance risk through underwriting strategy, 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 reinsurances 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 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.

F-33

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

4 RISK MANAGEMENT (continued)

4.1 Insurance risk (continued)

4.1.2 Concentration of insurance risks (continued)

The table below presents the Group’s major products of long-term insurance contracts:

	2014					2013
Product name	RMB million		%			RMB million		%
Premiums of long-term insurance contracts
New Xin Feng Endowment (Type A) (a)		62,635		20.56	%		92		0.03	%
Kang Ning Whole Life (b)		24,623		8.08	%		25,672		8.40	%
Hong Ying Participating Endowment (c)		16,293		5.35	%		29,235		9.56	%
Mei Man Yi Sheng Participating Annuity (d)		12,367		4.06	%		18,881		6.18	%
Hong Fu Participating Endowment (e)		149		0.05	%		631		0.21	%
Others (f)		188,610		61.90	%		231,209		75.62	%
Total		304,677		100.00	%		305,720		100.00	%
Insurance benefits of long-term insurance contracts
New Xin Feng Endowment (Type A) (a)		56		0.06	%		—		—
Kang Ning Whole Life (b)		3,556		3.74	%		3,339		2.59	%
Hong Ying Participating Endowment (c)		482		0.51	%		432		0.34	%
Mei Man Yi Sheng Participating Annuity (d)		2,659		2.79	%		2,719		2.11	%
Hong Fu Participating Endowment (e)		10,255		10.77	%		300		0.23	%
Others (f)		78,170		82.13	%		122,102		94.73	%
Total		95,178		100.00	%		128,892		100.00	%

	As at 31 December 2014					As at 31 December 2013
	RMB million		%			RMB million		%
Liabilities of long-term insurance contracts
New Xin Feng Endowment (Type A) (a)		63,701		4.01	%		91		0.01	%
Kang Ning Whole Life (b)		191,865		12.08	%		172,055		11.60	%
Hong Ying Participating Endowment (c)		187,274		11.79	%		179,258		12.09	%
Mei Man Yi Sheng Participating Annuity (d)		124,381		7.83	%		114,531		7.72	%
Hong Fu Participating Endowment (e)		92,985		5.85	%		107,477		7.25	%
Others (f)		928,694		58.44	%		909,534		61.33	%
Total		1,588,900		100.00	%		1,482,946		100.00	%

F-34

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

4 RISK MANAGEMENT (continued)

4.1 Insurance risk (continued)

4.1.2 Concentration of insurance risks (continued)

(a) New Xin Feng is an endowment insurance contract with single premium. Its insured period is 5 years. This product is applicable to healthy policyholders between 18-year-old and 70-year-old. Both maturity and death benefits are paid at the basic sum insured. Accident death benefit is paid at 300% of the basic sum insured.

(b) Kang Ning is a whole life insurance contract with the options for single premium or regular premium of 10 years or 20 years. 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.

(c) 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. For accident death incurred on a train, a ship or a flight, accident 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. For accident death incurred not on a train, a ship nor a flight, accident 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.

(d) Mei Man Yi Sheng is a participating endowment insurance contract with the options for regular premium of 3 years, 5 years, 8 years or 12 years, applicable to healthy policyholders between 30-day-old and 60-year-old. The insured period is till when the insured is 75 years old. Annuity is paid at 1% of the basic sum insured multiplied by the number of years of premium payments during the insured period. Maturity benefit is paid at the basic sum insured multiplied by the number of years of premium payments. Disease death benefit incurred within the first two policy years is paid at the premium received (without interest). Accident or disease death benefit after the first two policy years is paid at 110% of the basic sum insured multiplied by the number of years of premium payments.

(e) Hong Fu is a participating endowment insurance contract with the options for single premium or regular premium of 3 years. Its insured period can be 6 years or 9 years. This product is applicable to healthy policyholders between 30-day-old and 60-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. Accident 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.

(f) Others consist of various long-term insurance contracts with no significant concentration.

F-35

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

4 RISK MANAGEMENT (continued)

4.1 Insurance risk (continued)

4.1.3 Sensitivity analysis

Sensitivity analysis of long-term insurance contracts

Liabilities for long-term insurance contracts and liabilities unbundled from universal life insurance contracts and unit-linked insurance contracts with insurance risk are calculated based on the assumptions on mortality rates, morbidity rates, lapse rates and discount rates. Changes in insurance contract reserve assumptions reflect the Company’s actual operating results and changes in its expectation of future events. The Company considers the potential impact of future risk factors on its operating results and incorporates such potential impact in the determination of assumptions.

Holding all other variables constant, if mortality rates and morbidity rates were to increase or decrease from the current best estimate by 10%, pre-tax profit for the year would have been RMB12,971 million or RMB13,554 million (as at 31 December 2013: RMB12,120 million or RMB12,660 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 RMB5,191 million or RMB5,478 million ( as at 31 December 2013: RMB5,460 million or RMB5,765 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 RMB41,300 million or RMB46,868 million ( as at 31 December 2013: RMB39,833 million or RMB45,292 million) higher or lower, respectively.

Sensitivity analysis of short-term insurance contracts

The assumptions of reserves for claims and claim adjustment expenses may be affected by other variables such as claims payment of short-term insurance contracts, which may result in the synchronous changes to reserves for claims and claim adjustment expenses.

Holding all other variables constant, if claim ratios are 100 basis points higher or lower than the current assumption, pre-tax profit is expected to be RMB258 million lower or higher, respectively ( as at 31 December 2013: RMB193 million).

The following table indicates the claim development for short-term insurance contracts without taking account of reinsurance impacts:

	Short-term insurance contracts (accident year)
Estimated claims expenses	2010			2011			2012			2013			2014			Total
Current year		8,826			8,002			8,056			11,476			16,499
1 year later		8,967			8,279			8,164			11,872
2 years later		8,640			8,090			8,123
3 years later		8,640			8,090
4 years later		8,640
Estimated accumulated claims expenses		8,640			8,090			8,123			11,872			16,499			53,224
Accumulated claims expenses paid		(8,640	)		(8,090	)		(8,123	)		(11,419	)		(9,636	)		(45,908	)
Unpaid claims expenses		—			—			—			453			6,863			7,316

F-36

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

4 RISK MANAGEMENT (continued)

4.1 Insurance risk (continued)

4.1.3 Sensitivity analysis (continued)

The following table indicates the claim development for short-term insurance contracts taking account of reinsurance impacts:

	Short-term insurance contracts (accident year)
Estimated claims expenses	2010			2011			2012			2013			2014			Total
Current year		8,741			7,889			7,916			11,331			16,379
1 year later		8,879			8,161			8,035			11,743
2 years later		8,557			7,977			7,997
3 years later		8,557			7,977
4 years later		8,557
Estimated accumulated claims expenses		8,557			7,977			7,997			11,743			16,379			52,653
Accumulated claims expenses paid		(8,557	)		(7,977	)		(7,997	)		(11,292	)		(9,553	)		(45,376	)
Unpaid claims expenses		—			—			—			451			6,826			7,277

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 to the consolidated financial statements.

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.

F-37

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

4 RISK MANAGEMENT (continued)

4.2 Financial risk (continued)

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 2014, 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 RMB883 million (as at 31 December 2013: RMB934 million) higher or lower, respectively, mainly as a result of higher or lower interest income on floating rate cash and cash equivalents, term deposits, statutory deposits - restricted, debt securities and loans and the fair value losses or gains on debt securities assets at fair value through profit or loss. Pre-tax available-for-sale reserve in equity would have been RMB6,675 million (as at 31 December 2013: RMB10,720 million) lower or higher respectively, as a result of a decrease or increase in the fair value of available-for-sale securities.

(ii) Price risk

Price risk arises mainly from the volatility of prices of equity securities held by the Group. Prices of equity securities are determined by market forces. The Group is subject to increased price risk largely because China’s stock markets are relatively volatile.

The Group manages price risk by holding an appropriately diversified investment portfolio as permitted by laws and regulations designed to reduce the risk of concentration in any one specific industry or issuer.

As at 31 December 2014, if all the Group’s equity securities’ prices had increased or decreased by 10% with all other variables held constant, pre-tax profit for the year would have been RMB1,054 million (as at 31 December 2013: RMB164 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 RMB12,881 million (as at 31 December 2013: RMB15,154 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.

F-38

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

4 RISK MANAGEMENT (continued)

4.2 Financial risk (continued)

4.2.1 Market risk (continued)

(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 operates principally in the PRC except for limited exposure to foreign exchange rate risk arising primarily with respect to financial assets and financial liabilities denominated in US dollar or HK dollar or GB pound.

The following table summarizes financial assets and financial liabilities denominated in currencies other than RMB as at 31 December 2014 and 2013, expressed in RMB equivalent:

As at 31 December 2014	US dollar		HK dollar		GB pound		Total
Financial assets
Equity securities
- Available-for-sale securities		—		8,303		—		8,303
Debt securities
- Held-to-maturity securities		54		—		—		54
- Available-for-sale securities		260		—		—		260
Term deposits		8,774		—		—		8,774
Cash and cash equivalents		3,662		68		54		3,784
Total		12,750		8,371		54		21,175
Financial liabilities
Interest-bearing loans and borrowings		—		—		2,623		2,623
Total		—		—		2,623		2,623
As at 31 December 2013	US dollar		HK dollar		GB pound		Total
Financial assets
Equity securities
- Available-for-sale securities		—		2,985		—		2,985
Debt securities
- Held-to-maturity securities		39		—		—		39
- Available-for-sale securities		266		—		—		266
Term deposits		10,400		—		—		10,400
Cash and cash equivalents		1,823		222		—		2,045
Total		12,528		3,207		—		15,735

As at 31 December 2014, if RMB had strengthened or weakened by 10% against US dollar, HK dollar and GB pound, with all other variables held constant, pre-tax profit for the year would have been RMB1,025 million (as at 31 December 2013: RMB1,275 million) lower or higher, respectively, mainly as a result of foreign exchange losses or gains on translation of US dollar, HK dollar and GB pound 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 RMB830 million (as at 31 December 2013: RMB299 million) lower or higher, respectively, as a result of foreign exchange losses or gains on translation of the available-for-sale equity securities. The actual exchange gain in 2014 was RMB268 million (2013: exchange loss of RMB437 million).

F-39

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

4 RISK MANAGEMENT (continued)

4.2 Financial risk (continued)

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 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.

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 2014 and 2013.

Collateral and other credit enhancements

Securities purchased under agreements to resell are pledged by counterpart’s debt securities or term deposits of which the Group could take the ownership if the owner of the collateral default. Policy loans and premium receivables are collateralized by their policies’ cash value according to the terms and conditions of policy loan contracts and policy contracts, respectively.

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 2014, 99.1% (as at 31 December 2013: 99.1%) of the corporate bonds held by the Group had credit rating of AA/A-2 or above. As at 31 December 2014, 99.6% (as at 31 December 2013: 99.7% ) of the subordinated bonds or debts held by the Group either have credit rating of AA/A-2 or above, or were issued by national commercial banks. The bonds or debts’ credit rating is assigned by a qualified appraisal institution in the PRC at the time of its issuance and updated at each reporting date.

As at 31 December 2014, 99.7% (as at 31 December 2013: 99.6%) 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 other loans excluding policyholder loans, are guaranteed by third parties or with pledge, or have the national 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 2014 and 2013.

The credit risk associated with securities purchased under agreements to resell, policy loans and premium receivables will not cause a material impact on the Group’s consolidated financial statements taking into consideration their collateral held and maturity term of no more than one year as at 31 December 2014 and 2013.

F-40

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

4 RISK MANAGEMENT (continued)

4.2 Financial risk (continued)

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.

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)
As at 31 December 2014	Carrying amount		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			Later than 5 years
Financial assets
Contractual cash inflows
Equity securities		236,030		236,030			—			—			—			—
Debt securities		941,836		—			72,234			186,342			186,285			982,202
Loans		166,453		—			85,652			27,423			44,344			36,144
Term deposits		690,156		—			212,356			367,662			155,236			26,621
Statutory deposits - restricted		6,153		—			182			2,620			4,434			—
Securities purchased under agreements to resell		11,925		—			11,925			—			—			—
Accrued investment income		44,350		—			31,928			8,413			4,009			—
Premiums receivable		11,166		—			11,166			—			—			—
Cash and cash equivalents		47,034		—			47,034			—			—			—
Subtotal		2,155,103		236,030			472,477			592,460			394,308			1,044,967
Financial and insurance liabilities
Expected cash outflows
Insurance contracts		1,603,446		—			(60,896	)		(118,434	)		(22,634	)		(2,463,567	)
Investment contracts		72,275		—			(14,703	)		(15,192	)		(9,827	)		(84,013	)
Contractual cash outflows
Securities sold under agreements to repurchase		46,089		—			(46,089	)		—			—			—
Financial liabilities at fair value through profit or loss		10,890		(10,890	)		—			—			—			—
Annuity and other insurance balances payable		25,617		—			(25,617	)		—			—			—
Interest-bearing loans and borrowings		2,623		—			(106	)		(213	)		(2,783	)		—
Bonds payable		67,989		—			(3,424	)		(73,198	)		—			—
Subtotal		1,828,929		(10,890	)		(150,835	)		(207,037	)		(35,244	)		(2,547,580	)
Net cash inflows/(outflows)		326,174		225,140			321,642			385,423			359,064			(1,502,613	)

F-41

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

4 RISK MANAGEMENT (continued)

4.2 Financial risk (continued)

4.2.3 Liquidity risk (continued)

					Contractual and expected cash flows (undiscounted)
As at 31 December 2013	Carrying amount		Without Maturity		No later than 1 year			Later than 1 year but not later than 3 years			Later than 3 years but not later than 5 years			Later than 5 years
Financial assets
Contractual cash inflows
Equity securities		154,957		154,957		—			—			—			—
Debt securities		873,817		—		67,013			142,017			201,242			994,360
Loans		118,626		—		63,142			16,740			26,382			29,326
Term deposits		664,174		—		87,700			355,944			295,967			10,050
Statutory deposits - restricted		6,153		—		378			891			6,253			—
Securities purchased under agreements to resell		8,295		—		8,295			—			—			—
Accrued investment income		34,717		—		28,358			32			6,327			—
Premiums receivable		9,876		—		9,876			—			—			—
Cash and cash equivalents		21,330		—		21,330			—			—			—
Subtotal		1,891,945		154,957		286,092			515,624			536,171			1,033,736
Financial and insurance liabilities
Expected cash outflows
Insurance contracts		1,494,497		—		(30,721	)		(120,270	)		(109,561	)		(2,237,733	)
Investment contracts		65,087		—		(14,692	)		(11,642	)		(8,564	)		(77,315	)
Contractual cash outflows
Securities sold under agreements to repurchase		20,426		—		(20,426	)		—			—			—
Annuity and other insurance balances payable		23,179		—		(23,179	)		—			—			—
Bonds payable		67,985		—		(3,424	)		(36,848	)		(39,774	)		—
Subtotal		1,671,174		—		(92,442	)		(168,760	)		(157,899	)		(2,315,048	)
Net cash inflows/(outflows)		220,771		154,957		193,650			346,864			378,272			(1,281,312	)

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, lapse rate, loss ratio and expense and other assumptions. Actual experience may differ from estimates.

F-42

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

4 RISK MANAGEMENT (continued)

4.2 Financial risk (continued)

4.2.3 Liquidity risk (continued)

The liquidity analysis above does not include policyholder dividends payable amounting to RMB74,745 million as at 31 December 2014 (as at 31 December 2013: RMB49,536 million). At 31 December 2014, declared dividends of RMB44,515 million (as at 31 December 2013: RMB33,671 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 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 RMB47,589 million and RMB24,064 million, respectively for the year ended 31 December 2014 (2013: RMB46,196 million and RMB18,364 million, respectively), payable within one year.

4.2.4 Capital management

The Group’s objectives for managing capital, which is actual capital calculated as the difference between admitted assets (defined by the CIRC) and the admitted liabilities (defined by the CIRC), are to comply with the insurance capital requirements required by the CIRC to meet the minimum capital 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 is also subject to other local capital requirements, such as statutory deposits - restricted requirement, statutory reserve fund requirement, general reserve requirement and statutory insurance fund requirement discussed in detail in Note 9.4, Note 34 and Note 20, respectively.

The Group ensures its continuous and full compliance with the regulations mainly through monitoring its quarterly and annual solvency ratio, as well as the solvency ratio based on dynamic solvency testing.

The table below summarises the solvency ratio of the Company, the actual capital held against the minimum required capital:

	As at 31 December 2014 RMB million			As at 31 December 2013 RMB million
Actual capital		236,151			168,501
Minimum capital		80,193			74,485
Solvency ratio		294	%		226	%

According to “Solvency Regulations of Insurance Companies”, the solvency ratio is computed by dividing the actual capital by the minimum capital. The CIRC closely monitors those insurance companies with a solvency ratio less than 100% and may, depending on the individual circumstances, undertakes certain regulatory measures, including but not limited to restriction of payment of dividends. Insurance companies with a solvency ratio between 100% and 150% will be required to submit and implement plans preventing capital deterioration to an inadequate level. Insurance companies with a solvency ratio above 100% but with significant solvency risk identified would be required to take necessary rectifying actions.

F-43

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

4 RISK MANAGEMENT (continued)

4.3 Fair value hierarchy

Level 1 fair value is based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can obtain at the measurement date.

Other than Level 1 quoted prices, Level 2 fair value is based on valuation techniques using significant inputs, that are observable for the asset being measured, either directly or indirectly, for substantially the full term of the asset through corroboration with observable market data. Observable inputs generally used to measure the fair value of securities classified as Level 2 include quoted market prices for similar assets in active markets; quoted market prices in markets that are not active for identical or similar assets and other market observable inputs. This level includes the debt securities for which quotations are available from pricing services providers. Fair value 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, and as well as the recalculation of prices obtained from pricing services at the end of each reporting period.

Under certain conditions, the Group may not receive price 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 2014, assets classified as Level 1 accounted for approximately 33.91% 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. The Group considers a combination of certain factors to determine whether a market for a financial instrument is active, including the occurrence of trades within the specific period, the respective trading volume, and the degree which the implied yields for a debt security for observed transactions differs from the Group’s understanding of the current relevant market rates and information. Trading prices from the Chinese interbank market are determined by both trading counterparties and can be observed publicly. The Company adopted this price of the debt securities traded on the Chinese interbank market at the reporting date as their fair market value and classified the investments as Level 1. Open-ended funds also have active markets. Fund management companies publish the net asset value of these funds on their websites on each trade date. Investors subscribe for and redeem units of these funds in accordance with the fund net asset value published by the fund management companies on each trade date. The Company adopted the unadjusted net asset value of the funds at reporting dates as their fair market value and classified the investments as Level 1.

As at 31 December 2014, assets classified as Level 2 accounted for approximately 62.58% 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, analyze 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 2014, assets classified as Level 3 accounted for approximately 3.51% 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, market comparison approach, etc.

For the accounting policies regarding the determination of fair values of financial assets and liabilities, see Note 3.2.

F-44

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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 2014:

	Fair value measurement using
	Quoted prices in active market Level 1 RMB million			Significant observable inputs Level 2 RMB million		Significant unobservable inputs Level 3 RMB million		Total RMB million
Assets measured at fair value
Available-for-sale securities
- Equity securities		151,817			23,479		21,635		196,931
- Debt securities		25,437			369,403		501		395,341
Securities at fair value through profit or loss
- Equity securities		22,716			582		542		23,840
- Debt securities		18,805			10,407		—		29,212
Total		218,775			403,871		22,678		645,324
Liabilities measured at fair value
Financial liabilities at fair value through profit or loss		(10,890	)		—		—		(10,890	)
Investment contracts at fair value through profit or loss		(21	)		—		—		(21	)
Total		(10,911	)		—		—		(10,911	)

The following table presents the changes in Level 3 assets for the year ended 31 December 2014:

	Available-for-sale securities					Securities at fair value through profit or loss
	Debt securities RMB million		Equity securities RMB million			Equity securities RMB million		Total RMB million
Opening balance		301		13,588			—		13,889
Purchases		200		5,935			—		6,135
Transferred into Level 3		—		363			473		836
Transferred out of Level 3		—		(377	)		—		(377	)
Total gains/(losses) recorded in profit or loss		—		—			69		69
Total gains/(losses) recorded in other comprehensive income		—		2,126			—		2,126
Closing balance		501		21,635			542		22,678

F-45

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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 2013:

	Fair value measurement using
	Quoted prices in active market Level 1 RMB million			Significant observable inputs Level 2 RMB million		Significant unobservable inputs Level 3 RMB million		Total RMB million
Assets measured at fair value
Available-for-sale securities
- Equity securities		134,085			3,868		13,588		151,541
- Debt securities		34,020			305,665		301		339,986
Securities at fair value through profit or loss
- Equity securities		3,416			—		—		3,416
- Debt securities		9,333			21,423		—		30,756
Total		180,854			330,956		13,889		525,699
Liabilities measured at fair value
Investment contracts at fair value through profit or loss		(25	)		—		—		(25	)
Total		(25	)		—		—		(25	)

The following table presents the changes in Level 3 assets for the year ended 31 December 2013:

	Available-for-sale securities					Securities at fair value through profit or loss
	Debt securities RMB million		Equity securities RMB million			Equity securities RMB million			Total RMB million
Opening balance		301		3,649			85			4,035
Purchases		—		9,349			—			9,349
Transferred into Level 3		—		362			—			362
Transferred out of Level 3		—		(205	)		(85	)		(290	)
Total gains/(losses) recorded in profit or loss		—		(144	)		—			(144	)
Total gains/(losses) recorded in other comprehensive income		—		577			—			577
Closing balance		301		13,588			—			13,889

The assets whose fair value measurements are classified under Level 3 above do not have any material impact on the profit or loss of the Group.

For the assets and liabilities measured at fair value, during the year ended 31 December 2014, RMB22,436 million (2013: RMB10,194 million) debt securities were transferred from Level 1 to Level 2 within the fair value hierarchy, whereas RMB10,344 million (2013: RMB13,368 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 2014 and 2013, 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 2014 and 2013, unobservable inputs such as weighted average cost of capital and liquidity discount were used in the valuation of assets classified as Level 3 of fair value. The fair value was not significantly sensitive to reasonable changes in these unobservable inputs.

F-46

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

5 SEGMENT INFORMATION

5.1 Operating segments

The Group operates in four operating segments:

(i) Life insurance business (Life)

Life insurance business relates primarily to the sale of life insurance policies, including those life insurance policies without significant insurance risk transferred.

(ii) Health insurance business (Health)

Health insurance business relates primarily to the sale of health insurance policies, including those health insurance policies without significant insurance risk transferred.

(iii) Accident insurance business (Accident)

Accident insurance business relates primarily to the sale of accident insurance policies.

(iv) Other businesses (Others)

Other businesses relate primarily to income and allocated cost of insurance agency business in respect of services to CLIC as described in Note 32, share of results of associates and joint ventures, income and expenses of subsidiaries, and unallocated income and expenditure of the Group.

In order to better reflect the changes in the Group’s external environment and business structure, and the objectives of future development, as well as providing users of financial statements with more useful information, the Group has adjusted its internal reporting method of segments in 2014, and realigned the composition of its reporting segments by changing the previously reported individual life insurance, group life insurance, short-term insurance, supplementary major medical insurance and other segments into four newly identified segments, namely life insurance, health insurance, accident insurance and others. The Group’s management has conducted analysis and evaluation on the operating results based on the new reporting segments.

The Group has restated prior year’s comparative amounts based on the adjusted operating segments as follows.

5.2 Allocation basis of income and expenses

Investment income, net realised gains and impairment on financial assets, net fair value gains /(losses) through profit or loss and foreign exchange gains/(losses) within other expenses are allocated among segments in proportion to the respective segment’s average liabilities of insurance contracts and investment contracts at the beginning and end of the year. Administrative expenses are allocated among segments in proportion to the unit cost of respective products in the different segments. Unallocated other income and other expenses are presented in the “Others” segment directly. Income tax is not allocated.

5.3 Allocation basis of assets and liabilities

Financial assets and securities sold under agreements to repurchase are allocated among segments in proportion to the respective segment’s average liabilities of insurance contracts and investment contracts at the beginning and end of the year. Insurance and investment contracts liabilities are presented under the respective segments. The remaining assets and liabilities are not allocated.

F-47

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

5 SEGMENT INFORMATION (continued)

	For the year ended 31 December 2014
	Life			Health			Accident			Others			Elimination			Total
	RMB million
Revenues
Gross written premiums		285,619			33,192			12,199			—			—			331,010
- Term life		2,871			—			—			—			—
- Whole life		29,767			—			—			—			—
- Endowment		217,662			—			—			—			—
- Annuity		35,319			—			—			—			—
Net premiums earned		285,574			32,624			11,907			—			—			330,105
Investment income		89,814			2,236			315			1,183			—			93,548
Net realised gains and impairment on financial assets		6,970			174			24			(48	)		—			7,120
Net fair value gains/(losses) through profit or loss		6,179			154			22			(547	)		—			5,808
Other income		898			67			—			4,148			(928	)		4,185
Including: inter-segment revenue		—			—			—			928			(928	)		—
Segment revenues		389,435			35,255			12,268			4,736			(928	)		440,766
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits		(191,291	)		(1,355	)		(13	)		—			—			(192,659	)
Accident and health claims and claim adjustment expenses		—			(12,883	)		(3,869	)		—			—			(16,752	)
Increase in insurance contract liabilities		(97,577	)		(8,196	)		(110	)		—			—			(105,883	)
Investment contract benefits		(1,806	)		(152	)		—			—			—			(1,958	)
Policyholder dividends resulting from participation in profits		(24,742	)		(124	)		—			—			—			(24,866	)
Underwriting and policy acquisition costs		(18,126	)		(4,770	)		(3,354	)		(897	)		—			(27,147	)
Finance costs		(4,451	)		(111	)		(16	)		(148	)		—			(4,726	)
Administrative expenses		(16,677	)		(4,092	)		(2,576	)		(2,087	)		—			(25,432	)
Other expenses		(3,608	)		(204	)		(705	)		(562	)		928			(4,151	)
Including: inter-segment expenses		(903	)		(22	)		(3	)		—			928			—
Statutory insurance fund contribution		(506	)		(116	)		(79	)		—			—			(701	)
Segment benefits, claims and expenses		(358,784	)		(32,003	)		(10,722	)		(3,694	)		928			(404,275	)
Share of profit of associates and joint ventures		—			—			—			3,911			—			3,911
Segment results		30,651			3,252			1,546			4,953			—			40,402
Income tax																	(7,888	)
Net profit																	32,514
Attributable to
- Equity holders of the Company																	32,211
- Non-controlling interests																	303
Other comprehensive income attributable to equity holders of the Company		38,270			951			134			(123	)		—			39,232
Depreciation and amortisation		1,427			324			221			152			—			2,124

F-48

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

5 SEGMENT INFORMATION (continued)

	As at 31 December 2014
	Life		Health		Accident		Others		Elimination		Total
	RMB million
Assets
Financial assets (including cash and cash equivalents)		2,059,641		50,013		6,961		27,421		—		2,144,036
Others		7,881		3,985		312		44,390		—		56,568
Segment assets		2,067,522		53,998		7,273		71,811		—		2,200,604
Unallocated
Property, plant and equipment												25,348
Others												20,615
Total												2,246,567
Liabilities
Insurance contracts		1,558,714		38,872		5,860		—		—		1,603,446
Investment contracts		63,710		8,565		—		—		—		72,275
Securities sold under agreements to repurchase		43,310		1,076		152		1,551		—		46,089
Others		90,703		2,732		372		13,513		—		107,320
Segment liabilities		1,756,437		51,245		6,384		15,064		—		1,829,130
Unallocated
Others												130,106
Total												1,959,236

F-49

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

5 SEGMENT INFORMATION (continued)

	For the year ended 31 December 2013 (restated)
	Life			Health			Accident			Others			Elimination			Total
	RMB million
Revenues
Gross written premiums		290,778			24,713			10,799			—			—			326,290
- Term life		2,327			—			—			—			—
- Whole life		29,782			—			—			—			—
- Endowment		209,034			—			—			—			—
- Annuity		49,635			—			—			—			—
Net premiums earned		290,738			24,180			9,895			—			—			324,813
Investment income		80,640			1,665			253			258			—			82,816
Net realised gains and impairment on financial assets		5,679			117			18			(21	)		—			5,793
Net fair value gains/(losses) through profit or loss		149			3			—			(15	)		—			137
Other income		870			66			—			4,266			(878	)		4,324
Including: inter-segment revenue		—			—			—			878			(878	)		—
Segment revenues		378,076			26,031			10,166			4,488			(878	)		417,883
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits		(192,621	)		(1,047	)		(3	)		—			—			(193,671	)
Accident and health claims and claim adjustment expenses		—			(8,027	)		(3,236	)		—			—			(11,263	)
Increase in insurance contract liabilities		(101,311	)		(5,981	)		(62	)		—			—			(107,354	)
Investment contract benefits		(1,749	)		(69	)		—			—			—			(1,818	)
Policyholder dividends resulting from participation in profits		(18,369	)		(54	)		—			—			—			(18,423	)
Underwriting and policy acquisition costs		(17,529	)		(4,408	)		(3,012	)		(741	)		—			(25,690	)
Finance costs		(3,931	)		(81	)		(12	)		(8	)		—			(4,032	)
Administrative expenses		(16,968	)		(3,384	)		(2,581	)		(1,872	)		—			(24,805	)
Other expenses		(3,090	)		(149	)		(577	)		(926	)		878			(3,864	)
Including: inter-segment expenses		(857	)		(18	)		(3	)		—			878			—
Statutory insurance fund contribution		(470	)		(92	)		(75	)		—			—			(637	)
Segment benefits, claims and expenses		(356,038	)		(23,292	)		(9,558	)		(3,547	)		878			(391,557	)
Share of profit of associates and joint ventures		—			—			—			3,125			—			3,125
Segment results		22,038			2,739			608			4,066			—			29,451
Income tax																	(4,443	)
Net profit																	25,008
Attributable to
- Equity holders of the Company																	24,765
- Non-controlling interests																	243
Other comprehensive income attributable to equity holders of the Company		(20,696	)		(428	)		(66	)		(372	)		—			(21,562	)
Depreciation and amortisation		1,392			271			221			142			—			2,026

F-50

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

5 SEGMENT INFORMATION (continued)

	As at 31 December 2013 (restated)
	Life		Health		Accident		Others		Elimination		Total
	RMB million
Assets
Financial assets (including cash and cash equivalents)		1,831,849		38,363		5,578		6,279		—		1,882,069
Others		7,991		2,609		303		34,863		—		45,766
Segment assets		1,839,840		40,972		5,881		41,142		—		1,927,835
Unallocated
Property, plant and equipment												23,393
Others												21,713
Total												1,972,941
Liabilities
Insurance contracts		1,461,121		28,229		5,147		—		—		1,494,497
Investment contracts		57,991		7,096		—		—		—		65,087
Securities sold under agreements to repurchase		19,592		404		62		368		—		20,426
Others		89,003		2,318		322		—		—		91,643
Segment liabilities		1,627,707		38,047		5,531		368		—		1,671,653
Unallocated
Others												78,703
Total												1,750,356

F-51

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

5 SEGMENT INFORMATION (continued)

	For the year ended 31 December 2012 (restated)
	Life			Health			Accident			Others			Elimination			Total
	RMB million
Revenues
Gross written premiums		294,405			18,789			9,548			—			—			322,742
- Term life		1,980			—			—			—			—
- Whole life		30,901			—			—			—			—
- Endowment		223,660			—			—			—			—
- Annuity		37,864			—			—			—			—
Net premiums earned		294,374			18,565			9,187			—			—			322,126
Investment income		71,418			1,301			212			312			—			73,243
Net realised gains and impairment on financial assets		(26,196	)		(477	)		(78	)		(125	)		—			(26,876	)
Net fair value gains/(losses) through profit or loss		(312	)		(6	)		(1	)		6			—			(313	)
Other income		706			39			—			3,356			(796	)		3,305
Including: inter-segment revenue		—			—			—			796			(796	)		—
Segment revenues		339,990			19,422			9,320			3,549			(796	)		371,485
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits		(106,929	)		(744	)		(1	)		—			—			(107,674	)
Accident and health claims and claim adjustment expenses		—			(4,975	)		(2,923	)		—			—			(7,898	)
Increase in insurance contract liabilities		(180,621	)		(4,354	)		(15	)		—			—			(184,990	)
Investment contract benefits		(1,898	)		(134	)		—			—			—			(2,032	)
Policyholder dividends resulting from participation in profits		(3,409	)		(26	)		—			—			—			(3,435	)
Underwriting and policy acquisition costs		(19,945	)		(4,457	)		(2,739	)		(613	)		—			(27,754	)
Finance costs		(2,518	)		(45	)		(8	)		(4	)		—			(2,575	)
Administrative expenses		(15,641	)		(3,459	)		(2,339	)		(1,844	)		—			(23,283	)
Other expenses		(2,824	)		(158	)		(536	)		(582	)		796			(3,304	)
Including: inter-segment expenses		(780	)		(14	)		(2	)		—			796			—
Statutory insurance fund contribution		(441	)		(99	)		(69	)		—			—			(609	)
Segment benefits, claims and expenses		(334,226	)		(18,451	)		(8,630	)		(3,043	)		796			(363,554	)
Share of profit of associates and joint ventures		—			—			—			3,037			—			3,037
Segment results		5,764			971			690			3,543			—			10,968
Income tax																	304
Net profit																	11,272
Attributable to
- Equity holders of the Company																	11,061
- Non-controlling interests																	211
Other comprehensive income attributable to equity holders of the Company		24,419			445			72			59			—			24,995
Depreciation and amortisation		1,368			308			213			60			—			1,949

F-52

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

6 PROPERTY, PLANT AND EQUIPMENT

	Buildings			Office equipment furniture and fixtures			Motor vehicles			Assets under construction			Leasehold improvements			Total
	RMB million
Cost
As at 1 January 2014		19,949			6,730			1,448			6,125			1,166			35,418
Transfers upon completion		2,781			268			—			(3,194	)		100			(45	)
Additions		175			361			2			3,614			13			4,165
Disposals		(128	)		(683	)		(58	)		(212	)		(33	)		(1,114	)
As at 31 December 2014		22,777			6,676			1,392			6,333			1,246			38,424
Accumulated depreciation
As at 1 January 2014		(5,910	)		(4,349	)		(883	)		—			(858	)		(12,000	)
Charge for the year		(788	)		(778	)		(167	)		—			(111	)		(1,844	)
Disposals		58			654			54			—			26			792
As at 31 December 2014		(6,640	)		(4,473	)		(996	)		—			(943	)		(13,052	)
Impairment
As at 1 January 2014		(25	)		—			—			—			—			(25	)
Charge for the year		—			—			—			—			—			—
Disposals		1			—			—			—			—			1
As at 31 December 2014		(24	)		—			—			—			—			(24	)
Net book value
As at 1 January 2014		14,014			2,381			565			6,125			308			23,393
As at 31 December 2014		16,113			2,203			396			6,333			303			25,348

F-53

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

6 PROPERTY, PLANT AND EQUIPMENT (continued)

	Buildings			Office equipment furniture and fixtures			Motor vehicles			Assets under construction			Leasehold improvements			Total
	RMB million
Cost
As at 1 January 2013		19,247			6,282			1,531			5,126			1,080			33,266
Transfers upon completion		1,263			18			—			(1,389	)		108			—
Additions		127			822			155			3,373			—			4,477
Transfer to investment properties		(624	)		—			—			(811	)		—			(1,435	)
Disposals		(64	)		(392	)		(238	)		(174	)		(22	)		(890	)
As at 31 December 2013		19,949			6,730			1,448			6,125			1,166			35,418
Accumulated depreciation
As at 1 January 2013		(5,265	)		(3,973	)		(932	)		—			(736	)		(10,906	)
Charge for the year		(744	)		(727	)		(169	)		—			(138	)		(1,778	)
Transfer to investment properties		83			—			—			—			—			83
Disposals		16			351			218			—			16			601
As at 31 December 2013		(5,910	)		(4,349	)		(883	)		—			(858	)		(12,000	)
Impairment
As at 1 January 2013		(25	)		—			—			—			—			(25	)
Charge for the year		—			—			—			—			—			—
Transfer to investment properties		—			—			—			—			—			—
Disposals		—			—			—			—			—			—
As at 31 December 2013		(25	)		—			—			—			—			(25	)
Net book value
As at 1 January 2013		13,957			2,309			599			5,126			344			22,335
As at 31 December 2013		14,014			2,381			565			6,125			308			23,393

F-54

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

7 INVESTMENT PROPERTIES

	Buildings RMB million
Cost
As at 1 January 2014		1,435
Additions		—
As at 31 December 2014		1,435
Accumulated depreciation
As at 1 January 2014		(106	)
Charge for the year		(46	)
As at 31 December 2014		(152	)
Net book value
As at 1 January 2014		1,329
As at 31 December 2014		1,283
Fair value
As at 1 January 2014		2,045
As at 31 December 2014		2,080
	Buildings RMB Million
Cost
As at 1 January 2013		—
Additions		—
Transfer from property, plant and equipment		1,435
As at 31 December 2013		1,435
Accumulated depreciation
As at 1 January 2013		—
Charge for the year		(23	)
Transfer from property, plant and equipment		(83	)
As at 31 December 2013		(106	)
Net book value
As at 1 January 2013		—
As at 31 December 2013		1,329
Fair value
As at 1 January 2013		—
As at 31 December 2013		2,045

F-55

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

7 INVESTMENT PROPERTIES (continued)

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 categorized as property, plant and equipment of the Group in the consolidated statement of financial position.

The Group has no restrictions on the reliability of its investment properties and no contractual obligations to each investment property purchased, constructed or developed or for repairs, maintenance and enhancements.

There were no investment properties without title certificates as at 31 December 2014.

The fair value of investment properties of the Group as at 31 December 2014 amounted to RMB2,080 million (as at 31 December 2013: RMB2,045 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.

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.

F-56

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

8 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

	2014 RMB million			2013 RMB million
As at 1 January		34,775			28,991
Investments in associates and joint ventures (i)		5,671			2,506
Amount of additional investment cost below the fair value for identifiable net assets		—			683
Scrip dividend (ii)		268			81
Share of profit		3,911			3,125
Other equity movements		280			(332	)
Dividend received (ii)		(515	)		(279	)
As at 31 December		44,390			34,775

(i) On 9 June 2014, the Company, CLIC and China Life Property and Casualty Insurance Company Limited (“CLP&C”) signed a contract, pursuant to which the Company and CLIC agreed to contribute capital of RMB2,800 million and RMB4,200 million in cash respectively to CLP&C. After the capital injection, the Company’s percentage of holding in CLP&C remained unchanged and its accumulated investment cost increased to RMB6,000 million.

On 20 June 2014, King Phoenix Tree Limited, a subsidiary of the Company, invested GBP275 million to establish 10 Upper Bank Street Separate Limited Partnership (“10 Upper Bank Street SLP”), holding 70% of the total partnership interest. According to the partnership agreement, King Phoenix Tree Limited, as a limited partner, cannot control 10 Upper Bank Street SLP on its own, but has joint control with the general partner. Therefore, 10 Upper Bank Street SLP was accounted for as a joint venture of the Group.

(ii) 2013 final dividend of HKD0.16 per ordinary share was approved and declared in the annual general meeting of Sino-Ocean Land Holdings Limited (“Sino-Ocean”) on 9 May 2014, and each shareholder could elect to receive the 2013 final dividend in cash or in scrip shares. The Company elected the scrip shares option and received scrip shares amounting to RMB268 million.

2014 interim dividend of HKD0.075 per ordinary share was approved and declared in the board meeting of Sino-Ocean on 19 September 2014, and each shareholder could elect to receive the 2014 interim dividend in cash or in scrip shares. The Company elected the cash option and received cash dividend amounting to RMB131 million.

The Group’s investments in associates and joint ventures are unlisted except for Sino-Ocean, which is listed in Hong Kong. As at 31 December 2014, the stock price of Sino-Ocean was HKD4.41 per share.

As at 31 December 2014, the Group owned the following associates and joint venture:

Name	Country of incorporation		Percentage of equity interest held
Associates
China Guangfa Bank Co. Ltd (“CGB”)		PRC		20.00	%
CLP&C		PRC		40.00	%
Sino-Ocean		Hong Kong, PRC		29.46	%
COFCO Futures Company Limited (“COFCO Futures”)		PRC		35.00	%
Joint venture
10 Upper Bank Street SLP		Jersey Island		70.00	%

F-57

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

8 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (continued)

As at 31 December 2013, the Group owned the following associates:

Name	Country of incorporation		Percentage of equity interest held
CGB		PRC		20.00	%
CLP&C		PRC		40.00	%
Sino-Ocean		Hong Kong, PRC		29.02	%
COFCO Futures		PRC		35.00	%

The following table illustrates the summarised financial information of the Group’s associates and joint venture as at 31 December 2014 and for the year ended 31 December 2014:

	CGB RMB million			CLP&C RMB million			Sino-Ocean RMB million			COFCO Futures RMB million			10 Upper Bank Street SLP RMB million
Total assets		1,648,056			52,769			132,212			9,784			8,199
Total liabilities		1,560,607			35,876			87,829			7,245			4,450
Total equity		87,449			16,893			44,383			2,539			3,749
Total equity attributable to equity holders of the associates and joint ventures		87,449			16,893			40,491			2,539			3,749
Total adjustments (i)		—			—			984			—			(209	)
Total equity attributable to equity holders of the associates and joint ventures after adjustments		87,449			16,893			41,475			2,539			3,540
Proportion of the Group’s ownership		20.00	%		40.00	%		29.46	%		35.00	%		70.00	%
Carrying amount of the investments		20,535			6,757			13,186			1,434			2,478
Total revenues		44,644			36,522			40,411			3,306			241
Net profit		12,037			1,407			4,606			84			142
Other comprehensive income		2,120			318			(19	)		8			(299	)
Total comprehensive income		14,157			1,725			4,587			92			(157	)

The Group had no contingent liabilities or capital commitments with the associates and joint venture as at 31 December 2014.

The following table illustrates the summarised financial information of the Group’s associates as at 31 December 2013 and for the year ended 31 December 2013:

	CGB RMB million			CLP&C RMB million			Sino-Ocean RMB million			COFCO Futures RMB million
Total assets		1,469,850			37,359			137,869			8,486
Total liabilities		1,396,558			29,192			94,424			6,039
Total equity		73,292			8,167			43,445			2,447
Total equity attributable to equity holders of the associates		73,292			8,167			37,525			2,445
Total adjustments (i)		—			—			1,877			—
Total equity attributable to equity holders of the associates after adjustments		73,292			8,167			39,402			2,445
Proportion of the Group’s ownership		20.00	%		40.00	%		29.02	%		35.00	%
Carrying amount of the investments		17,704			3,267			12,403			1,401
Total revenues		34,477			28,054			32,386			1,483
Net profit		11,583			535			4,661			169
Other comprehensive income		(1,820	)		253			46			9
Total comprehensive income		9,763			788			4,707			178

The Group had no contingent liabilities or capital commitments with the associates as at 31 December 2013.

(i) Including adjustments for the difference of accounting policies, fair value, and others.

F-58

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

9 FINANCIAL ASSETS

9.1 Held-to-maturity securities

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Debt securities
Government bonds		88,843		97,702
Government agency bonds		126,140		113,618
Corporate bonds		146,595		131,022
Subordinated bonds/debts		155,705		160,733
Total		517,283		503,075
Debt securities
Listed in mainland, PRC		68,199		49,159
Listed in Hong Kong, PRC		37		21
Listed in Singapore		23		23
Unlisted		449,024		453,872
Total		517,283		503,075

The estimated fair value of all held-to-maturity securities was RMB526,526 million as at 31 December 2014

(as at 31 December 2013: RMB464,996 million).

Unlisted debt securities include those traded on the Chinese interbank market.

Debt securities- Contractual maturity schedule	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Maturing:
Within one year		11,823		12,905
After one year but within five years		70,592		64,878
After five years but within ten years		149,986		109,334
After ten years		284,882		315,958
Total		517,283		503,075

F-59

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

9 FINANCIAL ASSETS (continued)

9.2 Loans

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Policy loans		73,654		60,176
Other loans (i)		92,799		58,450
Total		166,453		118,626
	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Maturing:
Within one year		80,214		60,315
After one year but within five years		53,894		26,192
After five years but within ten years		32,345		32,119
Total		166,453		118,626

(i) Other loans mainly consisted of different types of asset management products. As at 31 December 2014, RMB84,300 million (as at 31 December 2013: RMB62,200 million) of asset management products had been managed by China Life Asset Management Company Limited (“AMC”), a subsidiary of the Company, of which RMB39,571 million (as at 31 December 2013: RMB34,920 million) was owned by the Group. Meanwhile, the Group also owned RMB50,034 million (as at 31 December 2013: RMB22,836 million) of asset management products managed by other financial institutions. All asset management products are guaranteed by third parties or with pledge, or have the national 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 2014, the Group’s investment income from the above asset management products was RMB4,137 million (2013: RMB2,894 million), the related asset management fee received by AMC was RMB171 million (2013: RMB106 million).

9.3 Term deposits

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Maturing:
Within one year		200,214		74,932
After one year but within five years		463,442		579,242
After five years but within ten years		26,500		10,000
Total		690,156		664,174

F-60

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

9 FINANCIAL ASSETS (continued)

9.4 Statutory deposits - restricted

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Contractual maturity schedule
Within one year		—		—
After one year but within five years		6,153		6,153
Total		6,153		6,153

Insurance companies in China are required to deposit an amount equal to 20% of their registered capital with banks in conformity with regulations of the CIRC. These funds may not be used for any purpose, other than to pay off debts during liquidation proceedings.

9.5 Available-for-sale securities

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Available-for-sale securities, at fair value
Debt securities
Government bonds		26,328		31,435
Government agency bonds		138,487		119,739
Corporate bonds		206,511		165,001
Subordinated bonds/debts		22,798		23,579
Others (i)		1,217		232
Subtotal		395,341		339,986
Equity securities
Funds		83,121		58,052
Common stocks		71,592		77,250
Preferred stocks		3,000		—
Others (i)		39,218		16,239
Subtotal		196,931		151,541
Available-for-sale securities, at cost
Equity securities
Others (i)		15,259		—
Total		607,531		491,527

(i) Other available-for-sale securities mainly include bank wealth management products, private equity funds, other unlisted equity investments, etc. The Group 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-61

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

9 FINANCIAL ASSETS (continued)

9.5 Available-for-sale securities (continued)

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Debt securities
Listed in mainland, PRC		46,137		37,652
Listed in Singapore		260		266
Unlisted		348,944		302,068
Subtotal		395,341		339,986
Equity securities
Listed in mainland, PRC		71,553		80,638
Listed in Hong Kong, PRC		8,303		2,985
Unlisted		132,334		67,918
Subtotal		212,190		151,541
Total		607,531		491,527

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.

Debt securities- Contractual maturity schedule	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Maturing:
Within one year		13,939		7,964
After one year but within five years		139,737		115,636
After five years but within ten years		120,284		117,242
After ten years		121,381		99,144
Total		395,341		339,986

F-62

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

9 FINANCIAL ASSETS (continued)

9.6 Securities at fair value through profit or loss

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Debt securities
Government bonds		254		1,489
Government agency bonds		4,085		4,659
Corporate bonds		24,873		24,608
Subtotal		29,212		30,756
Equity securities
Funds		499		939
Common stocks		23,341		2,477
Subtotal		23,840		3,416
Total		53,052		34,172
Debt securities
Listed in mainland, PRC		5,920		5,375
Unlisted		23,292		25,381
Subtotal		29,212		30,756
Equity securities
Listed in mainland, PRC		23,488		2,484
Unlisted		352		932
Subtotal		23,840		3,416
Total		53,052		34,172

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.

F-63

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

9 FINANCIAL ASSETS (continued)

9.7 Securities purchased under agreements to resell

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Maturing:
Within 30 days		11,925		8,295
After 30 days but within 90 days		—		—
Total		11,925		8,295

9.8 Accrued investment income

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Bank deposits		27,084		20,210
Debt securities		15,667		13,402
Others		1,599		1,105
Total		44,350		34,717
Current		31,928		28,358
Non-current		12,422		6,359
Total		44,350		34,717

F-64

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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 December 2014 RMB million			As at 31 December 2013 RMB million			As at 31 December 2014 RMB million			As at 31 December 2013 RMB million
Held-to-maturity securities (ii)		517,283			503,075			526,526			464,996
Loans		166,453			118,626			166,453			118,626
Term deposits		690,156			664,174			690,156			664,174
Statutory deposits - restricted		6,153			6,153			6,153			6,153
Available-for-sale securities, at fair value		592,272			491,527			592,272			491,527
Securities at fair value through profit or loss		53,052			34,172			53,052			34,172
Securities purchased under agreements to resell		11,925			8,295			11,925			8,295
Cash and cash equivalents		47,034			21,330			47,034			21,330
Investment contracts (iii)		(72,275	)		(65,087	)		(70,694	)		(63,772	)
Financial liabilities at fair value through profit or loss		(10,890	)		—			(10,890	)		—
Securities sold under agreements to repurchase		(46,089	)		(20,426	)		(46,089	)		(20,426	)
Bonds payable (iii)		(67,989	)		(67,985	)		(68,370	)		(65,486	)

(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 are 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 under Level 1 was RMB69,506 million and under Level 2 was RMB457,020 million as at 31 December 2014 (as at 31 December 2013: Level 1 RMB54,643 million and Level 2 RMB410,353 million).

(iii) Investment contracts at fair value through profit or loss have quoted prices in active markets, so its fair value was classified as Level 1.

The fair value of investment contracts at amortised cost and bonds payable were determined by 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 value of investment contracts at amortised cost and bonds payable were classified as Level 3.

11 PREMIUMS RECEIVABLE

As at 31 December 2014, the carrying value of premiums receivable within one year was RMB11,143 million (as at 31 December 2013: RMB9,871 million).

12 REINSURANCE ASSETS

	As at 31 December 2014 million		As at 31 December 2013 RMB million
Long-term insurance contracts ceded (Note 14)		908		846
Due from reinsurance companies		20		42
Ceded unearned premiums (Note 14)		65		121
Claims recoverable from reinsurers (Note 14)		39		60
Total		1,032		1,069
Current		124		223
Non-current		908		846
Total		1,032		1,069

F-65

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

13 OTHER ASSETS

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Land use rights		6,137		6,183
Due from related parties		684		656
Automated policy loans		2,281		2,056
Tax refundable		2,449		8,175
Fund subscription and redemption fees receivable		4,104		—
Others		3,756		3,360
Total		19,411		20,430
Current		12,956		14,092
Non-current		6,455		6,338
Total		19,411		20,430

F-66

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

14 INSURANCE CONTRACTS

(a) Process used to decide on assumptions

(i) For the insurance contracts of which future insurance benefits are affected by investment yields of corresponding investment portfolios, the discount rate assumption is based on expected investment returns of the asset portfolio backing these liabilities, considering the impacts of time value on reserves.

In developing discount rate assumptions, the Group considers investment experience, the current investment portfolio and trend of the relevant yield curves. The discount rates reflect the future economic outlook as well as the Group’s investment strategy. The assumed discount rates with risk margin for the past two years are as follows:

	Discount rate assumptions
As at 31 December 2014	4.80%~5.00%
As at 31 December 2013	4.80%~5.00%

For the insurance contracts of which future insurance benefits are not affected by investment yields of the corresponding investment portfolios, the discount rate assumption is based on the “Yield curve of reserve computation benchmark for insurance contracts”, published on the “China Bond” website with consideration of liquidity spreads, taxation and other relevant factors. The assumed discount rates with risk margin for the past two years are as follows:

	Discount rate assumptions
As at 31 December 2014	3.52%~5.96%
As at 31 December 2013	3.47%~5.74%

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 by age of the insured and contract type.

The Group bases its mortality assumptions on China Life Insurance Mortality Table (2000-2003), adjusted where appropriate to reflect the Group’s recent historical mortality experience. The main source of uncertainty with life insurance contracts is that epidemics and wide-ranging lifestyle changes could result in deterioration in future mortality experience, thus leading to an inadequate reserving of liability. Similarly, improvements in longevity due to continuing advancements in medical care and social conditions may expose the Group to longevity risk.

The Group bases its morbidity assumptions for critical illness products on analysis of historical experience and expectations of future developments. There are two main sources of uncertainty. First, wide-ranging lifestyle changes could result in future deterioration in morbidity experience. Second, future development of medical technologies and improved coverage of medical facilities available to policyholders may bring forward the timing of diagnosing critical illness, which demands earlier payment of the critical illness benefits. Both could ultimately result in an inadequate reserving of liability if current morbidity assumptions do not properly reflect such trends.

Risk margin is considered in the Group’s mortality and morbidity assumptions.

F-67

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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 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 2014	37.00~45.00	0.85%~0.90%		14.00		0.90	%
As at 31 December 2013	37.00~45.00	0.85%~0.90%		14.00		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 brings 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 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 risk margin level by itself as the regulations have not imposed any specific requirement on it.

The Group adopted a consistent process to decide on assumptions for the insurance contracts disclosed in this note. On each reporting date, the Group reviews the assumptions for reasonable estimates of liability and risk margin, with consideration of all available information, and taking into account the Group’s historical experience and expectation of future events.

(b) Net liabilities of insurance contracts

	As at 31 December 2014 RMB million			As at 31 December 2013 RMB million
Gross
Long-term insurance contracts		1,588,900			1,482,946
Short-term insurance contracts
- Claims and claim adjustment expenses		7,316			4,655
- Unearned premiums		7,230			6,896
Total, gross		1,603,446			1,494,497
Recoverable from reinsurers
Long-term insurance contracts (Note 12)		(908	)		(846	)
Short-term insurance contracts
- Claims and claim adjustment expenses (Note 12)		(39	)		(60	)
- Unearned premiums (Note 12)		(65	)		(121	)
Total, ceded		(1,012	)		(1,027	)
Net
Long-term insurance contracts		1,587,992			1,482,100
Short-term insurance contracts
- Claims and claim adjustment expenses		7,277			4,595
- Unearned premiums		7,165			6,775
Total, net		1,602,434			1,493,470

F-68

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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:

	2014 RMB million			2013 RMB million
Notified claims		835			202
Incurred but not reported		3,820			2,876
Total as at 1 January - Gross		4,655			3,078
Cash paid for claims settled
- Cash paid for current year claims		(9,636	)		(7,106	)
- Cash paid for prior year claims		(4,557	)		(2,712	)
Claims incurred
- Claims arising in current year		16,499			11,476
- Claims arising in prior years		355			(81	)
Total as at 31 December - Gross		7,316			4,655
Notified claims		2,135			835
Incurred but not reported		5,181			3,820
Total as at 31 December - Gross		7,316			4,655

The table below presents movements in unearned premium reserves:

	2014									2013
	RMB million									RMB million
	Gross			Ceded			Net			Gross			Ceded			Net
As at 1 January		6,896			(121	)		6,775			5,955			(101	)		5,854
Increase		7,230			(65	)		7,165			6,896			(121	)		6,775
Release		(6,896	)		121			(6,775	)		(5,955	)		101			(5,854	)
As at 31 December		7,230			(65	)		7,165			6,896			(121	)		6,775

F-69

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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:

	2014 RMB million			2013 RMB million
As at 1 January		1,482,946			1,375,504
Premiums		304,677			305,720
Release of liabilities (i)		(265,137	)		(264,175	)
Accretion of interest		69,214			64,478
Change in assumptions
-Change in discount rates		(4,599	)		1,222
-Change in other assumptions (ii)		420			271
Other movements		1,379			(74	)
As at 31 December		1,588,900			1,482,946

(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 2014, change in other assumptions was mainly caused by change in morbidity rate assumptions of certain products, which increased insurance contract liabilities by RMB441 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 decreased insurance contract liabilities by RMB21 million.

For the year ended 31 December 2013, change in other assumptions was mainly caused by change in lapse rate assumptions of certain products, which increased insurance contract liabilities by RMB337 million. This change reflected the Group’s most recent experience and future expectations about lapse rate as at the reporting date. Changes in assumptions other than lapse rates decreased insurance contract liabilities by RMB66 million.

15 INVESTMENT CONTRACTS

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Investment contracts with DPF at amortised cost		47,962		46,555
Investment contracts without DPF
- At amortised cost		24,292		18,507
- At fair value through profit or loss		21		25
Total		72,275		65,087

The table below presents movements of investment contracts with DPF:

	2014 RMB million			2013 RMB million
As at 1 January		46,555			47,977
Deposits received		3,486			2,622
Deposits withdrawn, payments on death and other benefits		(3,334	)		(5,315	)
Policy fees deducted from account balances		(33	)		(13	)
Interest credited		1,288			1,284
As at 31 December		47,962			46,555

F-70

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

16 INTEREST-BEARING LOANS AND BORROWINGS

	Maturity date	Interest rate			As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Guaranteed loans	17 June 2019		3.54	%		2,623		—

17 BONDS PAYABLE

As at 31 December 2014, all bonds payable were subordinated bonds with a total carrying value of RMB67,989 million (as at 31 December 2013: RMB67,985 million) and the par value of RMB68,000 million (as at 31 December 2013: RMB68,000 million).

Issue date	Maturity date	Interest rate p.a.			As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
					Par Value
26 October 2011	26 October 2021		5.50	%		30,000		30,000
29 June 2012	29 June 2022		4.70	%		28,000		28,000
5 November 2012	5 November 2022		4.58	%		10,000		10,000
Total						68,000		68,000

The Company issued the above three subordinated bonds with a maturity term of 10 years to qualified investors who met the relevant regulatory requirements. The coupon rates per annum for the first 5 years are 5.50%, 4.70%, 4.58%, respectively, for bonds issued on 26 October 2011, 29 June 2012 and 5 November 2012. The Company has the right to call the subordinated bonds at par at the end of the fifth year after issuance. If the Company does not exercise the call option, the coupon rate per annum for the remaining 5 years will be raised by 200 basis points.

Subordinated bonds are measured at amortised cost as described in Note 2.14.

18 SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Interbank market		41,477		13,862
Stock exchange market		4,612		6,564
Total		46,089		20,426
Maturing:
Within 30 days		42,971		17,426
After 30 but within 90 days		118		3,000
After 90 days		3,000		—
Total		46,089		20,426

As at 31 December 2014, bonds with a carrying value of RMB42,177 million (as at 31 December 2013: RMB14,338 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 2014, the carrying value of securities deposited in the collateral pool was RMB49,963 million (as at 31 December 2013: RMB35,677 million). The collateral is restricted from trading during the period of the repurchase transaction.

F-71

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

19 OTHER LIABILITIES

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Salary and welfare payable		4,589		4,792
Interest payable to policyholders		5,008		4,014
Commission and brokerage payable		1,919		1,630
Interest payable of subordinated debts		1,044		1,039
Stock appreciation rights (Note 30)		1,025		770
Payable to constructors		783		1,708
Agent deposits		761		682
Tax payable		717		377
Others		4,216		3,221
Total		20,062		18,233
Current		20,062		18,233
Non-current		—		—
Total		20,062		18,233

F-72

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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.

21 INVESTMENT INCOME

	For the year ended 31 December
	2014 RMB million		2013 RMB million		2012 RMB million
Debt securities
- held-to-maturity securities		25,357		22,588		15,194
- available-for-sale securities		18,571		16,188		16,219
- at fair value through profit or loss		1,571		963		911
Equity securities
- available-for-sale securities		4,458		3,408		4,773
- at fair value through profit or loss		106		579		656
Bank deposits		34,934		32,667		30,512
Loans		8,138		5,773		4,339
Securities purchased under agreements to resell		299		556		633
Others		114		94		6
Total		93,548		82,816		73,243

For the year ended 31 December 2014, included in investment income was interest income of RMB88,984 million (2013: RMB78,829 million, 2012: RMB67,814 million). All interest income was accrued using the effective interest method.

The investment income from listed debt and equity securities for the year ended 31 December 2014 was RMB6,449 million (2013: RMB6,395 million, 2012: RMB6,009 million). The investment income from unlisted debt and equity securities for the year ended 31 December 2014 was RMB43,614 million (2013: RMB37,331 million, 2012: RMB31,744 million).

F-73

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

22 NET REALISED GAINS AND IMPAIRMENT ON FINANCIAL ASSETS

	For the year ended 31 December
	2014 RMB million			2013 RMB million			2012 RMB million
Debt securities
Net realised gains		142			385			1,192
Reversal of impairment		—			—			51
Subtotal		142			385			1,243
Equity securities
Net realised gains		8,127			9,211			2,975
Impairment		(1,149	)		(3,803	)		(31,094	)
Subtotal		6,978			5,408			(28,119	)
Total		7,120			5,793			(26,876	)

Net realised gains and impairment on financial assets are from available-for-sale securities.

During the year ended 31 December 2014, the Group recognised impairment charge of RMB146 million (2013: RMB142 million, 2012: RMB14,950 million) of available-for-sale funds, RMB1,003 million (2013: RMB3,517 million, 2012: RMB15,980 million) of available-for-sale common stocks, and no impairment charge (2013: RMB144 million, 2012: RMB164 million) of other available-for-sale securities, for which the Group determined that objective evidence of impairment existed.

23 NET FAIR VALUE GAINS / (LOSSES) THROUGH PROFIT OR LOSS

	For the year ended 31 December
	2014 RMB million			2013 RMB million			2012 RMB million
Debt securities		2,272			(239	)		47
Equity securities		4,977			305			(88	)
Stock appreciation rights		(255	)		71			(272	)
Financial liabilities at fair value through profit or loss		(1,186	)		—			—
Total		5,808			137			(313	)

F-74

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

24 INSURANCE BENEFITS AND CLAIMS EXPENSES

	Gross RMB million		Ceded RMB million			Net RMB million
For the year ended 31 December 2014
Life insurance death and other benefits		192,863		(204	)		192,659
Accident and health claims and claim adjustment expenses		16,854		(102	)		16,752
Increase in insurance contract liabilities		105,945		(62	)		105,883
Total		315,662		(368	)		315,294
For the year ended 31 December 2013
Life insurance death and other benefits		193,755		(84	)		193,671
Accident and health claims and claim adjustment expenses		11,392		(129	)		11,263
Increase in insurance contract liabilities		107,442		(88	)		107,354
Total		312,589		(301	)		312,288
For the year ended 31 December 2012
Life insurance death and other benefits		107,688		(14	)		107,674
Accident and health claims and claim adjustment expenses		8,011		(113	)		7,898
Increase in insurance contracts liabilities		185,018		(28	)		184,990
Total		300,717		(155	)		300,562

25 INVESTMENT CONTRACT BENEFITS

Benefits of investment contracts are mainly the interest credited to investment contracts.

26 FINANCE COSTS

	For the year ended 31 December
	2014 RMB million		2013 RMB million		2012 RMB million
Interest expenses for bonds payable		3,433		3,423		2,394
Interest expenses for securities sold under agreements to repurchase		1,234		609		181
Interest expenses for interest-bearing loans and borrowings		59		—		—
Total		4,726		4,032		2,575

27 PROFIT BEFORE INCOME TAX

Profit before income tax is stated after charging the following:

	For the year ended 31 December
	2014 RMB million			2013 RMB million		2012 RMB million
Employee salaries and welfare cost		11,564			10,789		9,699
Housing benefits		787			740		643
Contribution to the defined contribution pension plan		1,553			1,932		1,743
Depreciation and amortisation		2,124			2,026		1,949
Exchange loss/(gain)		(268	)		437		49
Auditors’ remuneration		55			52		65

F-75

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

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 fiscal authority.

(a) The amount of taxation charged to net profit represents:

	For the year ended 31 December
	2014 RMB million		2013 RMB million		2012 RMB million
Current taxation - Enterprise income tax		6,455		428		1,581
Deferred taxation		1,433		4,015		(1,885	)
Taxation charges		7,888		4,443		(304	)

(b) The reconciliation between the Group’s effective tax rate and the statutory tax rate of 25% in the PRC (2013 and 2012: 25%) is as follows:

	For the year ended 31 December
	2014 RMB million			2013 RMB million			2012 RMB million
Profit before income tax		40,402			29,451			10,968
Tax computed at the statutory tax rate		10,101			7,363			2,742
Non-taxable income (i)		(3,434	)		(3,172	)		(3,462	)
Expenses not deductible for tax purposes (i)		1,190			200			364
Unused tax losses		19			51			49
Others		12			1			3
Income tax at the effective tax rate		7,888			4,443			(304	)

(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 commission, brokerage, donation and other expenses that do not meet the criteria for deduction according to the relevant tax regulations.

F-76

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

28 TAXATION (continued)

(c) As at 31 December 2014 and 2013, deferred income tax was calculated in full on temporary differences under the liability method using a principal tax rate of 25%. The movements in deferred tax assets and liabilities during the year are as follows:

Deferred tax assets / (liabilities)

	Insurance RMB million			Investments RMB million			Others RMB million			Total RMB million
	(i)			(ii)			(iii)
As at 1 January 2013		(11,787	)		3,061			892			(7,834	)
(Charged) / credited to net profit		820			(5,024	)		189			(4,015	)
(Charged) / credited to other comprehensive income
- Available-for-sale securities		—			7,731			—			7,731
- Portion of fair value changes on available-for-sale securities attributable to participating policyholders		(660	)		—			—			(660	)
- Others		—			(21	)		—			(21	)
Others		—			(120	)		—			(120	)
As at 31 December 2013		(11,627	)		5,627			1,081			(4,919	)
As at 1 January 2014		(11,627	)		5,627			1,081			(4,919	)
(Charged) / credited to net profit		552			(1,940	)		(45	)		(1,433	)
(Charged) / credited to other comprehensive income
- Available-for-sale securities		—			(15,805	)		—			(15,805	)
- Portion of fair value changes on available-for-sale securities attributable to participating policyholders		2,759			—			—			2,759
- Others		—			23			—			23
As at 31 December 2014		(8,316	)		(12,095	)		1,036			(19,375	)

(i) The deferred tax arising from the insurance category is mainly related to the change of long-term insurance contract liabilities at 31 December 2008 as a result of the first time adoption of IFRSs in 2009 and the temporary differences of short-term insurance contract liabilities and policyholder dividend payables.

(ii) The deferred tax arising from the investments category is mainly related to the temporary differences of unrealised gains/(losses), which includes available-for-sale securities, securities at fair value through profit or loss, and others.

(iii) The deferred tax arising from the other categories is mainly related to the temporary differences of employee salaries and welfare cost payables.

Unrecognised deductible tax losses of the Group amounted to RMB879 million as at 31 December 2014 (as at 31 December 2013: RMB863 million). Unrecognised deductible temporary differences of the Group amounted to RMB166 million as at 31 December 2014 (as at 31 December 2013: RMB124 million).

F-77

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

28 TAXATION (continued)

(d) The analysis of deferred tax assets and deferred tax liabilities is as follows:

	As at 31 December 2014 RMB million			As at 31 December 2013 RMB million
Deferred tax assets:
- deferred tax assets to be recovered after 12 months		4,219			7,084
- deferred tax assets to be recovered within 12 months		2,027			1,827
Subtotal		6,246			8,911
Deferred tax liabilities:
- deferred tax liabilities to be settled after 12 months		(24,130	)		(13,557	)
- deferred tax liabilities to be settled within 12 months		(1,491	)		(273	)
Subtotal		(25,621	)		(13,830	)
Net deferred tax liabilities		(19,375	)		(4,919	)

29 EARNINGS PER SHARE

There is no difference between basic and diluted earnings per share. The basic and diluted earnings per share for the year ended 31 December 2014 are based on the net profit for the year attributable to equity holders of the Company and the weighted average number of 28,264,705,000 ordinary shares (2013 and 2012: 28,264,705,000 ordinary shares).

F-78

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

30 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 2014. As at 31 December 2014, there were 55.01 million units outstanding and exercisable (as at 31 December 2013: 55.01 million). As at 31 December 2014, the amount of intrinsic value for the vested stock appreciation rights was RMB1,012 million (as at 31 December 2013: RMB757 million).

The fair value of the stock appreciation rights is estimated on the date of valuation at each reporting date using lattice-based option valuation models based on expected volatility from 25% to 45%, an expected dividend yield of no higher than 2% and a risk-free interest rate ranging from 0.1% to 0.2%.

The Company recognised a loss of RMB255 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 2014 (2013: fair value gain of RMB71 million, 2012: fair value loss of RMB272 million). RMB1,012 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 2014 (as at 31 December 2013: RMB757 million and RMB13 million), respectively. There was no unrecognised compensation cost for the stock appreciation rights as at 31 December 2014 (as at 31 December 2013: Nil).

31 DIVIDENDS

Pursuant to the shareholders’ approval at the Annual General Meeting in May 2014, a final dividend of RMB0.30 per ordinary share totalling RMB8,479 million in respect of the year ended 31 December 2013 was declared and paid in 2014. The dividend has been recorded in the consolidated financial statements for the year ended 31 December 2014.

Pursuant to the shareholders’ approval at the Annual General Meeting in June 2013, a final dividend of RMB0.14 per ordinary share totalling RMB3,957 million in respect of the year ended 31 December 2012 was declared and paid in 2013. The dividend has been recorded in the consolidated financial statements for the year ended 31 December 2013.

Pursuant to the shareholders’ approval at the Annual General Meeting in May 2012, a final dividend of RMB0.23 per ordinary share totalling RMB6,501 million in respect of the year ended 31 December 2011 was declared and paid in 2012. The dividend has been recorded in the consolidated financial statements for the year ended 31 December 2012.

Pursuant to a resolution passed at the meeting of the Board of Directors on 24 March 2015, a final dividend of RMB0.40 per ordinary share totalling approximately RMB11,306 million for the year ended 31 December 2014 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 2014.

F-79

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

32 SIGNIFICANT RELATED PARTY TRANSACTIONS

(a) Related parties

The table set forth below summarises the names of significant related parties and nature of relationship with the Company as at 31 December 2014:

Significant related parties	Relationship with the Company
CLIC	Immediate and ultimate holding company
AMC	A subsidiary of the Company
China Life Pension Company Limited (“Pension Company”)	A subsidiary of the Company
China Life (Suzhou) Pension and Retirement Investment Company Limited (“Suzhou Pension Company”)	A subsidiary of the Company
Golden Phoenix Tree Limited (i)	A subsidiary of the Company
AMC HK	An indirect subsidiary of the Company
CL AMP	An indirect subsidiary of the Company
King Phoenix Tree Limited (i)	An indirect subsidiary of the Company
China Life Wealth Management Co., Limited (“CL Wealth”) (i)	An indirect subsidiary of the Company
Sino-Ocean	An associate of the Company
CGB	An associate of the Company
CLP&C	An associate of the Company
COFCO Futures	An associate of the Company
10 Upper Bank Street SLP	A joint venture of the Company
China Life Real Estate Co., Limited (“CLRE”)	Under common control of CLIC
China Life Insurance (Overseas) Company Limited (“CL Overseas”)	Under common control of CLIC
China Life Investment Holding Company Limited (“CLI”)	Under common control of CLIC
China Life Ecommerce Company Limited (“CL Ecommerce”)	Under common control of CLIC
China Life Enterprise Annuity Fund (“EAP”)	A pension fund jointly set up by the Company and others
CL AMP Exchange Traded Realtime Fund (ii)	A consolidated structured entity of the Company
CL AMP Money Market Fund (ii)	A consolidated structured entity of the Company
CL AMP CSI 300 Index Fund (ii)	A consolidated structured entity of the Company
CL AMP Zunxiang Bond Fund (ii)	A consolidated structured entity of the Company
CL AMP Money Market Xinjinbao Fund (ii)	An indirect consolidated structured entity of the Company

(i) Golden Phoenix Tree Limited, King Phoenix Tree Limited and CL Wealth were incorporated in 2014.

(ii) These five funds were issued and managed by CL AMP in 2014.

(b) Related parties with control relationship

Information of the parent company is as follows:

Name	Location of registration	Principal business	Relationship with the company	Nature of ownership	Legal representative
CLIC	Beijing, China	Insurance services including receipt of premiums and payment of benefits in respect of the in-force life, health, accident and other types of personal insurance business, and the reinsurance business; holding or investing in domestic and overseas insurance companies or other financial insurance institutions; fund management business permitted by national laws and regulations or approved by the State Council of the People’s Republic of China; and other businesses approved by insurance regulatory agencies.	Immediate and ultimate holding company	State -owned	Yang Mingsheng

F-80

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

32 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)

(c) Registered capital of related parties with control relationship and changes during the year

Name of related party	As at 31 December 2013 RMB million		Increase RMB million		Decrease RMB million		As at 31 December 2014 RMB million
CLIC		4,600		—		—		4,600
AMC		3,000		1,000		—		4,000
Pension Company (i)		2,500		—		—		2,500
Suzhou Pension Company		300		—		—		300
CL AMP		588		—		—		588
CL Wealth		—		200		—		200

(i) On 31 December 2014, the CIRC approved Pension Company’s application to change its registered capital. After the capital contribution by the Company and other shareholder, Pension Company’s paid-in capital increased from RMB2,500 million to RMB3,400 million. As at 31 December 2014, since the business registration modification procedure for Pension Company was still in progress, the registered capital remained RMB2,500 million. The Company contributed capital of RMB441 million for the capital injection. The capital injection led to a decrease in the total percentage of the Group’s holding in Pension Company from 92.20% to 74.27%, an increase of non-controlling interests of RMB692 million, and other reserves of RMB666 million in the Group’s consolidated financial statements.

(ii) AMC HK and Golden Phoenix Tree Limited were registered in Hong Kong, and King Phoenix Tree Limited was registered in the Jersey Island, so the legal definition of registered capital is not applicable for them.

(d) Percentages of holding of related parties with control relationship and changes during the year

Shareholder	As at 31 December 2013									As at 31 December 2014
	Amount million		Percentage of holding			Increase million		Decrease million		Amount million		Percentage of holding
CLIC	RMB	19,324		68.37	%		—		—	RMB	19,324		68.37	%

Subsidiaries	As at 31 December 2013							As at 31 December 2014
	Amount million		Percentage of holding	Increase million		Decrease million		Amount million		Percentage of holding
AMC	RMB	1,680	60.00% directly		—		—	RMB	1,680		60.00% directly
Pension Company	RMB	2,305	92.20% directly and indirectly	RMB	441		—	RMB	2,746		74.27% directly and indirectly
AMC HK	HKD	30	50.00% indirectly		—		—	HKD	30		50.00% indirectly
Suzhou Pension Company	RMB	300	100.00% directly		—		—	RMB	300		100.00% directly
CL AMP	RMB	500	85.03% indirectly		—		—	RMB	500		85.03% indirectly
CL Wealth		—	—	RMB	200		—	RMB	200		100.00% indirectly
Golden Phoenix Tree Limited		—	—		—		—		—		100.00% directly
King Phoenix Tree Limited		—	—		—		—		—		100.00% indirectly

F-81

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

32 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)

(e) Transactions with significant related parties

The following table summarises significant transactions carried out by the Group with its significant related parties.

		For the year ended 31 December
	Notes	2014 RMB million		2013 RMB million		2012 RMB million
Transactions with CLIC and its subsidiaries
Policy management fee received from CLIC	(i)(vii)		987		1,022		1,063
Asset management fee received from CLIC	(ii.a)		128		133		133
Investment in the Group’s consolidated fund products from CLIC			718		—		—
Payment of dividends from the Company to CLIC			5,797		2,705		4,444
Distribution of profits from AMC to CLIC			91		80		65
Asset management fee received from CL Overseas	(ii.b)		30		28		20
Capital contribution to CLP&C	(viii)		2,800		—		—
Asset management fee received from CLP&C	(ii.c)		11		10		12
Payment of insurance premium to CLP&C			50		53		58
Claim and other payments received from CLP&C			18		24		19
Agency fee received from CLP&C	(iii)(vii)		1,013		852		648
Payment of an agency fee to CLP&C	(iii)		4		16		16
Rental and a service fee received from CLP&C			41		28		28
Payment of rental, project fee and others expenses to CLRE			35		27		38
Investment in the Group’s consolidated fund products from CLRE			81		—		—
Property leasing expenses charged by CLI	(iv)		86		87		63
Asset management fee received from CLI			14		6		5
Payment to CLI for purchase of fixed assets	(viii)		79		78		61
Payment of an asset management fee to CLI	(ii.d)		89		8		—
Property leasing income received from CLI			29		24		23
Additional capital contribution to China Life Yuantong			—		—		361
Investment in Group’s consolidated fund products from CL Ecommerce			478		—		—
Transactions between CGB and the Group
Interest on deposits received from CGB			838		683		733
Commission expenses charged by CGB	(v)		8		6		9
Premiums received from CGB			6		9		2
Claim payment to CGB			2		5		—
Transactions between Sino-Ocean and the Group
Capital contribution to Sino-Ocean			—		2,387		—
Scrip dividend from Sino-Ocean (Note 8)			268		81		182
Cash dividend from Sino-Ocean (Note 8)			131		198		—
Interest payment of subordinated debts received from Sino-Ocean			25		25		26
Project management fee paid to Sino-Ocean			34		30		61
Transactions between EAP and the Group
Contribution to EAP			286		262		261
Transactions between AMC and the Company
Payment of an asset management fee to AMC	(ii.e)(vii)		886		846		761
Distribution of profits from AMC			137		121		97
Transactions between Pension Company and the Company
Capital contribution to Pension Company			441		—		—
Rental received from Pension Company			23		17		16
Agency fee received from Pension Company for entrusted sales of annuity funds	(vi)		12		11		7
Marketing fee income for promotion of annuity business from Pension Company			19		23		18
Transactions between AMC HK and the Company
Payment of an investment management fee to AMC HK	(ii.f)		11		8		8

F-82

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

32 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)

(e) Transactions with significant related parties (continued)

Notes:

(i) On 15 December 2011, the Company and CLIC signed a confirmation letter to renew a renewable insurance agency agreement for three years, effective from 1 January 2012 to 31 December 2014, whereby the Company was engaged to provide various policy administration services to CLIC in relation to the non-transferred policies. The Company, as a service provider, does not acquire any rights or assume any obligations as an insurer of the non-transferrable policies. In consideration of the services provided under the agreement, CLIC paid the Company a policy management fee based on the estimated cost of providing the services, plus a margin. The policy management fee was payable semi-annually, and is equal to the sum of (1) the number of non-transferred 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 collected during the period, in respect of such policies. The policy management fee income is included in other income in the consolidated statement of comprehensive income.

(ii.a) On 29 December 2011, CLIC signed a renewable asset management agreement with AMC, entrusting AMC to manage and make investments of its insurance funds. The agreement is effective from 1 January 2012 to 31 December 2014, whereby 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 net asset value of the assets under management (after deducting the funds obtained and interests accrued for from repurchase transactions) 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 actual results against benchmark returns and made adjustment to the basic service fee.

(ii.b) On 24 January 2014, CL Overseas renewed an investment management agreement with AMC HK, effective from 1 January 2014 to 31 December 2014. According to the agreement, CL Overseas entrusted AMC HK to manage and make investments of its insurance funds and paid AMC HK a basic investment management fee and an investment performance fee. The basic investment management fee is accrued for by multiplying the weighted average total funds by the basic fee rate. The investment performance fee was calculated based on the difference between total actual annual yield and predetermined net realized 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.

(ii.c) In 2012, CLP&C signed an agreement for the management of insurance funds with AMC, entrusting AMC to manage and make investments of its insurance funds. The agreement was effective till 31 December 2013 and subject to an automatic one-year renewal if no objections were raised by both parties upon expiry. The agreement was automatically renewed for another year, effective from 1 January 2014 to 31 December 2014. According to 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 each category asset 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 22 March 2013, the Company and CLI signed a management agreement of alternative investment of insurance funds, which was effective till 31 December 2013 and subject to an automatic one-year renewal if no objections were raised by both parties upon expiry. The agreement was automatically renewed for another year, effective from 1 January 2014 to 31 December 2014. According to the agreement, the Company entrusted CLI to engage in specialized investment, operation and management of real estates, equities and related financial products under the instructions of the annual guidelines. The Company paid CLI a basic asset management fee and a performance related bonus or charged a performance related deduction. The basic asset management fee was calculated by multiplying the total investment with a management fee rate of 0.6%, and paid on a quarterly basis; and the performance related bonus or deduction was calculated based on the comprehensive investment yield. On 15 April 2014, the Company and CLI signed a supplementary agreement to the management agreement of alternative investment of insurance funds, effective from the date on which the investment instruction of 2014 was issued to 31 December 2014. During the effective period of the supplementary agreement, the performance assessment and evaluation method in the investment instruction of 2014 replaced the relevant parts in the abovementioned management agreement of alternative investment of insurance funds. In accordance with the investment instruction of 2014, the performance related bonus or deduction was linked to the realised investment yield and the comprehensive investment yield.

F-83

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

32 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)

(e) Transactions with significant related parties (continued)

Notes (continued):

(ii.e) On 27 December 2012, the Company and AMC entered into a renewable agreement for the management of insurance funds, effective from 1 January 2013 to 31 December 2014. The agreement was subject to an automatic one-year renewal if no objections were raised by both parties upon expiry. According to the agreement, the Company entrusted AMC to manage and make investments of 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 asset value of the assets under management and the rate of 0.05%; the variable service fee was payable annually, based on the results of performance evaluation, at 20% of the fixed service fee per annum. The service fees were determined by the Company and AMC based on an analysis of the cost of service, market practice and the size and composition of the asset pool to be managed. Asset management fees charged to the Company by AMC are eliminated in the consolidated statement of comprehensive income.

(ii.f) On 19 September 2013, the Company and AMC HK renewed the offshore investment management service agreement, effective for two years starting from the signing date. The agreement was subject to an automatic one-year renewal if no objections were raised by both parties upon expiry. According to the agreement, the Company entrusted AMC HK to manage and make investment of its insurance funds and paid AMC HK asset management fee. The asset management fee was calculated at a fixed rate of 0.40% of portfolio asset value and a performance bonus capped at 0.15% of 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 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. 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) The Company and CLP&C renewed a 2-year framework insurance agency agreement on 8 March 2012, whereby CLP&C entrusted the Company to act as an agent to sell designated P&C insurance products in certain authorized 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. The agreement was automatically renewed for another year from 8 March 2014.

On 8 April 2012, the Company and CLP&C signed a 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 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. The agreement was automatically renewed for another year from 8 April 2014.

(iv) On 31 December 2012, the Company signed a property leasing agreement with CLI, effective till 31 December 2014, pursuant to which CLI leased to the Company certain owned and leased 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.

(v) On 19 April 2012, the Company and CGB renewed an insurance agency agreement to distribute insurance products. All individual insurance products suitable for distribution through bancassurance channels are included in the agreement. CGB provides agency services, including the selling of insurance products, and collecting premiums and paying benefits. The Company paid the agency commission by multiplying the net amount of total premiums received from sale of each category individual insurance product after deducting the withdrawn policies premiums in the hesitation period, by the responding fixed commission rate. The commission rates for various insurance products sold by CGB are agreed based on arm’s length transactions. The commissions are payable on a monthly basis. The agreement is effective for three years and subject to an automatic one-year renewal with no limitation of times if no objections were raised by either party upon expiry.

F-84

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

32 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)

(e) Transactions with significant related parties (continued)

Notes (continued):

(vi) In December 2011, the Company and Pension Company signed an agency agreement for the distribution and customer service of enterprise annuity funds and pension management business, effective till 28 December 2012. The agreement was subject to an automatic one-year renewal if no objections were raised by either party upon expiry. In accordance with the agreement, Pension Company entrusted the Company to act as an agent to distribute enterprise annuity fund and pension management business, and to provide related customer services. The commissions for the entrusting service of enterprise annuity fund management, which is the core business of Pension Company, are calculated at 30% to 50% 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 charge 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 agreement was automatically renewed for another year from 29 December 2012. On 20 November 2013, the Company and Pension Company renewed the agreement, effective for a year starting from 28 November 2013.

On 27 November 2014, the Company and Pension Company renewed the agency agreement for the distribution and customer service of enterprise annuity funds, pension management business and occupation annuity. The agreement was effective for one year starting from 28 November 2014, and was subject to an automatic one-year renewal if no objections were raised by both parties upon expiry. In the renewed agreement, the charge clause for the entrusting service of enterprise annuity fund management, which is the core business of Pension Company, was consistent with that in the prior year. The calculation base, method and charge rate for the agency fee of occupation annuity refer to enterprise annuity funds. The charge rate for the agency fee of group pension plan is in line with that of the investment management fee of enterprise annuity funds. The agency fee of personal pension plan is 30% of daily management fee of personal pension plan annually.

(vii) 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.

(viii) The transaction constitutes a one-off connected transaction which is subject to reporting and announcement requirements but is 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.

F-85

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

32 SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)

(f) Amounts due from / to significant related parties

The following table summarises the balances due from and to significant related parties. The balances are non-interest bearing, unsecured and have no fixed repayment dates except for the deposits with CGB and the subordinated debts issued by Sino-Ocean.

	As at 31 December 2014 RMB million			As at 31 December 2013 RMB million
The resulting balance due from and to significant related parties of the Group
Amount due from CLIC		541			549
Amount due to CLIC		(1	)		(1	)
Amount due from CL Overseas		15			16
Amount due from CLP&C		114			76
Amount due to CLP&C		(6	)		—
Amount due from CLI		12			14
Amount due to CLI		(49	)		(32	)
Amount due from CLRE		2			1
Amount deposited with CGB		16,287			15,051
Amount due from CGB		296			284
Amount due to CGB		(1	)		—
Subordinated debts of Sino-Ocean		260			266
The resulting balance due from and to subsidiaries of the Company
Amount due from Pension Company		48			46
Amount due to Pension Company		(5	)		(3	)
Amount due to AMC		(225	)		(73	)
Amount due to AMC HK		(3	)		(2	)

(g) Key management compensation

	For the year ended 31 December
	2014 RMB million		2013 RMB million		2012 RMB million
Salaries and other benefits		13		26		23

The total compensation package for the Company’s key management for the year ended 31 December 2014 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 2013 has been approved by the relevant authorities. The total compensation of 2013 was RMB26 million, including a deferred payment about RMB5 million.

(h) 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 and during the year ended 31 December 2014, most of 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 2014, 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 office; and almost all of the reinsurance agreements of the Group were entered into with a state-owned reinsurance company.

F-86

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

33 SHARE CAPITAL

	As at 31 December 2014				As at 31 December 2013
	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 2014, the Company’s share capital was as follows:

	As at 31 December 2014
	No. of shares		RMB million
Owned by CLIC (i)		19,323,530,000		19,324
Owned by other equity holders		8,941,175,000		8,941
Including: Domestic listed		1,500,000,000		1,500
Overseas listed (ii)		7,441,175,000		7,441
Total		28,264,705,000		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 and the New York Stock Exchange.

34 RESERVES

	Share premium		Other reserves			Unrealised gains/ (losses) from available-for- sale securities			Share of other comprehensive income of investees under the equity method			Statutory reserve fund		Discretionary reserve fund		General reserve		Exchange differences on translating foreign operations			Total
	RMB million		RMB million			RMB million			RMB million			RMB million		RMB million		RMB million		RMB million			RMB million
												(a)		(b)		(c)
As at 1 January 2012		53,860		(9	)		(19,454	)		(141	)		18,064		16,202		14,905		(3	)		83,424
Other comprehensive income for the year		—		—			24,828			167			—		—		—		—			24,995
Appropriation to reserves		—		—			—			—			1,107		1,848		1,135		—			4,090
As at 31 December 2012		53,860		(9	)		5,374			26			19,171		18,050		16,040		(3	)		112,509
As at 1 January 2013		53,860		(9	)		5,374			26			19,171		18,050		16,040		(3	)		112,509
Other comprehensive income for the year		—		—			(21,209	)		(353	)		—		—		—		—			(21,562	)
Appropriation to reserves		—		—			—			—			2,470		1,107		2,505		—			6,082
As at 31 December 2013		53,860		(9	)		(15,835	)		(327	)		21,641		19,157		18,545		(3	)		97,029
As at 1 January 2014		53,860		(9	)		(15,835	)		(327	)		21,641		19,157		18,545		(3	)		97,029
Other comprehensive income for the year		—		—			39,089			143			—		—		—		—			39,232
Appropriation to reserves		—		—			—			—			3,160		2,470		3,202		—			8,832
Capital paid in		—		826			—			—			—		—		—		—			826
As at 31 December 2014		53,860		817			23,254			(184	)		24,801		21,627		21,747		(3	)		145,919

F-87

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

34 RESERVES (continued)

(a) 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 RMB3,160 million for the year ended 31 December 2014 (2013: RMB2,470 million).

(b) Approved by the Annual General Meeting in May 2014, the Company appropriated RMB2,470 million to the discretionary reserve fund for the year ended 31 December 2014 based on net profit under CAS (2013: RMB1,107 million).

(c) 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 2014, the Company appropriated 10% of net profit under CAS which amounted to RMB3,160 million to the general reserve for future uncertain catastrophes, which cannot be used for dividend distribution or conversion to share capital increment (2013:RMB2,470 million). In addition, pursuant to the CAS, the Group appropriated RMB42 million to the general reserve of its subsidiaries attributable to the Company in the consolidated financial statements (2013: RMB35 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.

35 PROVISIONS AND CONTINGENCIES

The following is a summary of the significant contingent liabilities:

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Pending lawsuits		389		215

The Group involves in certain lawsuits arising from the ordinary course of businesses. In order to accurately disclose the contingent liabilities for pending lawsuits, the Group analyzed 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 2014 and 2013, the Group had other contingent liabilities but disclosure of such was not practical because the amounts of liabilities could not be reliably estimated.

F-88

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

36 COMMITMENTS

(a) Capital commitments

The Group had the following capital commitments relating to property development projects and investments:

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Contracted, but not provided for
Investments		23,929		7,690
Property, plant and equipment		9,887		7,830
Others		87		65
Total		33,903		15,585
Authorized, but not contracted for
Investments		—		5,834
Property, plant and equipment		65		87
Total		65		5,921

(b) Operating lease commitments - as lessee

The future minimum lease payments under non-cancellable operating leases are as follows :

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Not later than one year		549		480
Later than one year but not later than five years		753		472
Later than five years		10		18
Total		1,312		970

The operating lease payments charged to profit before income tax for the year ended 31 December 2014 were RMB774 million (2013: RMB736 million).

(c) Operating lease commitments - as lessor

The future minimum rentals receivable under non-cancellable operating leases are as follows:

	As at 31 December 2014 RMB million		As at 31 December 2013 RMB million
Not later than one year		207		144
Later than one year but not later than five years		361		247
Later than five years		17		57
Total		585		448

F-89