EX-99.1 2 d296703dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

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

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

Our products and services include individual life insurance, group life insurance, and accident and health insurance. The Company is a leading provider of individual and group life insurance, annuity products and accident and health insurance in China. As at 31 December 2016, the Company had approximately 246 million long-term individual and group life insurance policies, annuity contracts, and long-term health insurance policies in force. We also provide both individual and group accident and short-term health insurance policies and services.


China Life Insurance Company Limited    Annual Report 2016

Contents

 

Definitions and Material Risk Alert

     2  

Company Profile

     3  

Financial Summary

     5  

Chairman’s Statement

     6  

Management Discussion and Analysis

     10  

Report of the Board of Directors

     35  

Report of the Supervisory Committee

     45  

Significant Events

     48  

Changes in Ordinary Shares and Shareholders Information

     61  

Directors, Supervisors, Senior Management and Employees

     65  

Corporate Governance

     80  

Internal Control and Risk Management

     102  

Honors and Awards

     106  

Independent Auditor’s Report

     107  

Consolidated Statement of Financial Position

     113  

Consolidated Statement of Comprehensive Income

     115  

Consolidated Statement of Changes in Equity

     117  

Consolidated Statement of Cash Flows

     118  

Notes to the Consolidated Financial Statements

     120  

Embedded Value

     227  

 

1


China Life Insurance Company Limited    Annual Report 2016

Definitions and Material Risk Alert

 

In this annual report, unless the context otherwise requires, the following expressions have the following meanings:

 

The Company1    China Life Insurance Company Limited and its subsidiaries
CLIC    China Life Insurance (Group) Company, the controlling shareholder of the Company
AMC    China Life Asset Management Company Limited, a non-wholly owned subsidiary of the Company
Pension Company    China Life Pension Company Limited, a non-wholly owned subsidiary of the Company
AMP    China Life AMP Asset Management Company Limited, an indirect non-wholly owned subsidiary of the Company
CLWM    China Life Wealth Management Company Limited, an indirect non-wholly owned subsidiary of the Company
CLP&C    China Life Property and Casualty Insurance Company Limited, a non-wholly owned subsidiary of CLIC
CLI    China Life Investment Holding Company Limited, a wholly- owned subsidiary of CLIC
CIRC    China Insurance Regulatory Commission
CSRC    China Securities Regulatory Commission
HKSE    The Stock Exchange of Hong Kong Limited
SSE    Shanghai Stock Exchange
Company Law    Company Law of the People’s Republic of China
Insurance Law    Insurance Law of the People’s Republic of China
Securities Law    Securities Law of the People’s Republic of China
Articles of Association    Articles of Association of China Life Insurance Company Limited
China or PRC    For the purpose of this report, “China” or “PRC” refers to the People’s Republic of China, excluding the Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan region
RMB    Renminbi Yuan

Material Risk Alert:

The Company has stated in this report the details of its existing risks including risks relating to macro trends, risks relating to business and risks relating to investments. Please refer to the analysis of the risks which the Company may face in its future development in the section headed “Management Discussion and Analysis”.

 

1 Except for “the Company” referred to in the Consolidated Financial Statements.

 

2


China Life Insurance Company Limited    Annual Report 2016

Company Profile

 

Registered Name in Chinese:

 

LOGO

Registered Name in English:

China Life Insurance Company Limited (“China Life”)

Legal Representative: Yang Mingsheng

Board Secretary: Zheng Yong

Office Address: 16 Financial Street, Xicheng District, Beijing, P.R. China

Telephone: 86-10-63631241

Fax: 86-10-66575112

Email: ir@e-chinalife.com

Securities Representative: Li Yinghui

Office Address: 16 Financial Street, Xicheng District, Beijing, P.R. China

Telephone: 86-10-63631191

Fax: 86-10-66575112

Email: liyh@e-chinalife.com

  * Ms. Li Yinghui, Securities Representative of the Company, is also the main contact person of the external Company Secretary engaged by the Company

Registered Office Address:

16 Financial Street, Xicheng District, Beijing, P.R. China 100033

Current Office Address:

16 Financial Street, Xicheng District, Beijing, P.R. China 100033

Telephone: 86-10-63633333

Fax: 86-10-66575722

Website: www.e-chinalife.com

Email: ir@e-chinalife.com

 

3


China Life Insurance Company Limited    Annual Report 2016

Company Profile

 

Hong Kong Office:

Office Address: 16/F, Tower A, China Life Centre, One Harbour Gate,

18 Hung Luen Road, Hung Hom, Kowloon, Hong Kong

Telephone: 852-29192628

Fax: 852-29192638

Media for the Company’s A Share Disclosure:

China Securities Journal

Shanghai Securities News

Securities Times

CSRC’s Designated Website for the Company’s Annual Report Disclosure:

www.sse.com.cn

The Company’s H Share Disclosure Websites:

HKExnews website at www.hkexnews.hk

The Company’s website at www.e-chinalife.com

The Company’s Annual Reports may be obtained at:

12/F, China Life Plaza, 16 Financial Street, Xicheng District, Beijing, P.R. China

 

Stock Information:      
Stock Type   A Share   H Share   ADR

Exchanges on which the Stocks are Listed

 

Shanghai Stock Exchange

 

The Stock Exchange of Hong Kong Limited

 

New York Stock Exchange

Stock Short Name   China Life   China Life   —  
Stock Code   601628   2628   LFC

H Share Registrar and Transfer Office:

Computershare Hong Kong Investor Services Limited

Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong

Depositary of ADR:

Deutsche Bank

60 Wall Street, New York, NY 10005

Domestic Legal Adviser:

King & Wood Mallesons

International Legal Advisers:

Latham & Watkins

Debevoise & Plimpton LLP

Auditors of the Company:

 

        Domestic Auditor:    Ernst & Young Hua Ming LLP
   Address:   

Level 16, Ernst & Young Tower, Oriental Plaza, No.1 East Changan Avenue,

Dongcheng District, Beijing, P.R. China

   Name of the Signing Auditors: Zhang Xiaodong, Wu Jun

 

        International Auditor:    Ernst & Young
   Address:    22/F, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong

 

4


China Life Insurance Company Limited    Annual Report 2016

Financial Summary

 

                                       RMB million  
     Under International Financial
Reporting Standards (IFRS)
 

Major Financial Data1

   2016      2015     Change      2014      2013      2012  

For the year ended

                

Total revenues

     540,781        507,449       6.6%        440,766        417,883        371,485  

Net premiums earned

     426,230        362,301       17.6%        330,105        324,813        322,126  

Benefits, claims and expenses

     522,794        463,492       12.8%        404,275        391,557        363,554  

Insurance benefits and claims expenses

     407,045        352,219       15.6%        315,294        312,288        300,562  

Profit before income tax

     23,842        45,931       -48.1%        40,402        29,451        10,968  

Net profit attributable to equity holders of the Company

     19,127        34,699       -44.9%        32,211        24,765        11,061  

Net profit attributable to ordinary share holders of the Company

     18,741        34,514       -45.7%        32,211        24,765        11,061  

Net cash inflow/(outflow) from operating activities

     89,098        (18,811     N/A        78,247        68,292        132,182  

As at 31 December

                

Total assets

     2,696,951        2,448,315       10.2%        2,246,567        1,972,941        1,898,916  

Investment assets2

     2,453,283        2,287,639       7.2%        2,100,870        1,848,681        1,790,838  

Total liabilities

     2,389,303        2,122,101       12.6%        1,959,236        1,750,356        1,675,815  

Total equity holders’ equity

     303,621        322,492       -5.9%        284,121        220,331        221,085  

Per share (RMB)

                

Earnings per share (basic and diluted)3

     0.66        1.22       -45.7%        1.14        0.88        0.39  

Equity holders’ equity per share

     10.74        11.41       -5.9%        10.05        7.80        7.82  

Net cash inflow/(outflow) from operating activities per share

     3.15        (0.67     N/A        2.77        2.42        4.68  

Major financial ratio

                

Weighted average ROE (%)

     6.16        11.56      
decrease of 5.40
percentage points
 
 
     12.83        11.22        5.38  

Ratio of assets and liabilities4 (%)

     88.59        86.68      
increase of 1.91
percentage points
 
 
     87.21        88.72        88.25  

Gross investment yield5 (%)

     4.56        6.39      
decrease of 1.83
percentage points
 
 
     5.39        4.88        2.80  

Notes:

 

1. Net profit refers to net profit attributable to equity holders of the Company, while equity holders’ equity refers to equity attributable to equity holders of the Company.
2. Investment assets = Cash and cash equivalents + Securities at fair value through profit or loss + Available-for-sale securities + Held-to-maturity securities + Term deposits + Securities purchased under agreements to resell + Loans + Statutory deposits - restricted + Investment properties
3. In calculating “Earnings per share (basic and diluted)”, the tail differences of the basic figures have been taken into account.
4. Ratio of assets and liabilities = Total liabilities/Total assets
5. Gross investment yield = (Net investment income + Net realised gains/(losses) on financial assets + Net fair value gains/(losses) through profit or loss)/((Investment assets at the beginning of the period + Investment assets at the end of the period)/2). The figures as at the end of the past years were adjusted on the same basis.

 

5


China Life Insurance Company Limited    Annual Report 2016

Chairman’s Statement

 

LOGO

2016 OVERVIEW: GROWTH, DEVELOPMENT AND BREAKTHROUGH

The year 2016 marked the beginning of the “13th Five-Year Plan” and was also a year in which the Company achieved fruitful results with pioneering spirit. Specifically, we achieved good results, emphasizing on the protection function of insurance, adhering to the operating guideline of “prioritizing value, strengthening sales force, optimizing business structure, achieving stable growth and safeguarding against risks”, and actively promoted supply-side reform. We achieved an incredible result not only in the history of the Company but also in the history of the industry.

New records for business development. During the Reporting Period, the Company’s gross written premiums were RMB430,498 million, an increase of 18.3% year-on-year, the highest growth since 2009, making the Company the first and the sole insurance company with premiums exceeding RMB400,000 million in China. First-year regular premiums were RMB93,945 million, an increase of 51.8% year-on-year, and first-year regular premiums with ten years or longer payment duration were RMB51,378 million, an increase of 59.0% year-on-year, both indicators setting record highs. Premiums from short-term insurance were RMB40,060 million, an increase of 23.7% year-on-year. Renewal premiums were RMB223,502 million, exceeding RMB200,000 million for the first time, realizing an increase of 16.6% year-on-year, and setting a record high since 2012.

Great breakthrough in business restructuring. The Company continued reducing its single premium business in the bancassurance channel and focused on accelerating the growth of first-year regular premium business. First-year regular premiums and first-year regular premiums with ten years or longer payment duration doubled over the past two years.

 

6


China Life Insurance Company Limited    Annual Report 2016

Chairman’s Statement

 

The percentage of first-year regular premiums in long-term new policy premiums was 56.28%, an increase of 12.06 percentage points year-on-year. The first-year regular premiums surpassed single premiums for the first time since the listing of the Company. Of these, the percentage of first-year regular premiums with ten years or longer payment duration in first-year regular premiums was 54.69%, an increase of 2.49 percentage points year-on-year. Along with the high growth of the businesses, the premium payment duration was also lengthened, resulting in the initial establishment of a sustainable development model with first-year premiums driven by first-year regular premiums and gross written premiums driven by renewal businesses. Meanwhile, the Company pushed forward the product diversification strategy, promoted product innovation, put more efforts into developing protection type businesses, and continually optimized the business structure. The value of one year’s sales was RMB49,311 million, an increase of 56.4% year-on-year, with the value doubled over the past two years.

New enhancement in competitiveness. “No matter how long and difficult the road is, one can reach the destination with steady walks.” Being market-oriented, centering around the development of individual insurance as the guideline and pushing forward the three core strategies of developing individual business, focusing on large-and medium-sized cities and reinforcing rural business development with concerted efforts, the Company was committed to improving sustainable development capability and the competitiveness in key markets. With a leading market share in terms of gross written premiums, the Company also took the lead in terms of first-year regular premiums and sales force in the exclusive agent channel whose core role has been brought into full play. Competitive landscape in large- and medium-sized cities has continued to improve and first-mover advantage in rural market has been further reinforced. As at the end of the Reporting Period, the total number of sales force across all channels was 1.814 million, an increase of 57.1% year-on-year. The number of productive agents grew significantly, and remarkable achievements have been made in the size expansion and quality improvement of the sales force.

New progress in reform and innovation. Being customer-oriented and accelerating the construction of a “New Generation of Integrated Business Processing System”, the Company started its business process reengineering, constructed a new business mode and technological infrastructure, and launched two platforms of “China Life E-Store” and “China Life E-Bao Mobile Customer Services System”, as well as more than twenty new applications, through which customer experience and operational efficiency have been significantly improved, and as a result, the Company has taken a solid step in the transformation to an Internet-based operation and management mode. In addition, the Company built a motivating platform for innovation, and established four operation and management innovation pilot zones where the atmosphere of reform and innovation was strong and the fruitful results generated by innovation were gradually emerging.

New stride in comprehensive strength. As at the end of the Reporting Period, total assets of the Company amounted to RMB2.70 trillion, an increase of 10.2% year-on-year, remaining at the first place in the industry, and investment assets amounted to RMB2.45 trillion, an increase of 7.2% year-on-year. Core solvency ratio and comprehensive solvency ratio of the Company reached 280.34% and 297.16%, respectively. The Company achieved an industry-leading score in the “Solvency Aligned Risk Management Requirements and Assessment” (“SARMRA”) conducted by the CIRC. In order to accommodate new situations of economic and financial development and meet comprehensive needs of customers, the Company successfully increased its stakes in China Guangfa Bank Co., Ltd. (“CGB”), and a concerted action plan between CGB and the Company was initiated, under which insurance products sold by CGB business outlets grew rapidly and preliminary synergy effects from insurance-banking collaboration have been emerging.

RETROSPECTIVE REVIEW: SEIZING OPPORTUNITIES, STICKING TO THE INHERENT RULES, AND HARMONIZING WITH THE STAKEHOLDERS

In 2016, at the 20th anniversary of the separated operation of life insurance business and the overall adoption of the individual agent system, the Company has achieved outstanding results in leap-frog development of its business and a historic breakthrough in business restructuring. What the Company has achieved in 2016 is the result of advancement with great endeavor and accumulated hard work for many years. Extensive experience in Chinese insurance market tells us that fulfilling the essence of the insurance industry requires persistence, and the new era of reform needs enthusiasm and innovation.

 

7


China Life Insurance Company Limited    Annual Report 2016

Chairman’s Statement

 

Seizing opportunities. “A flexible person with good knowledge can win, and a creative person with integrity can make progress.” Reform and opening-up over three decades has brought profound changes to China’s economy and society, and the consistent improvement of the market economy has laid an institutional foundation for the insurance industry. In particular, since the issuance of the “Several Opinions of the State Council on Accelerating the Development of the Modern Insurance Service” in 2014, developing the commercial insurance industry has become a national commitment. Seizing the opportunities and adhering to the guideline of “development as the first priority”, the Company was committed to continuous growth of the value of our business and the upgrade of insurance supply so as to meet the increasing insurance demands of customers. Adapting to changes in the demographic structure, changes in the ways of care for senior citizens, new requirements for social security, and healthcare system reforms, the Company implemented the strategy of “Integrated Pension and Inclusive Healthcare Service”. Specifically, the Company undertook more than 250 supplementary major medical insurance projects, providing services for 420 million people; carried out innovative smart pension services by establishing senior living communities in places such as Beijing, Suzhou, Tianjin, and Sanya; and creating a healthcare and pension service sub-brand called “China Life Senior Living Homes”, forming a strategic layout of the senior living communities featuring “Three Points in a Line and Evergreen in Four Seasons”; and the Company sped up its presence in the healthcare and medicare industry and extended the healthcare industry chain. Firmly following the anti-poverty strategy of the state, the Company advanced the mode of poverty alleviation by means of insurance in Ningxia, Gansu and Chongqing and developed inclusive businesses such as micro-insurance to achieve a unification between economic and social benefits. With the help of the national “Internet+” initiative, the Company deeply integrated IT innovation results and life insurance business, advancing the construction of “High-tech China Life” and firmly facilitating reform and innovation throughout the Company.

Sticking to the inherent rules. “For anything to succeed, it requires thorough consideration and then forceful execution.” As a leader in the industry, the Company’s development echoed the path of life insurance industry in China towards “an insurance superpower” in the world. Just as the leap-frog development of the Chinese insurance industry has not always been smooth, China Life’s development is full of obstacles. In many years of our professional operation, we learned by doing and did by learning, increasingly realizing the significance of “knowing the rules, following the rules and practicing the rules”, which is the greatest advantage of an insurance operation. Adhering to the philosophy of “prudent operation and credible service”, we controlled the cost of liabilities to a reasonable level and realized an interactive linkage between assets and liabilities; sticking to the development plan of focusing on value, regular premiums, individual insurance, sales force and urban areas and taking value as the guide, we coordinated the relations among shareholders, employees, sales force and customers; we put great efforts into developing long- and medium-term regular businesses and protection type products, optimizing business structure and reinforcing sustainable development; we followed a route of business growth driven by development of sales force, including both its size expansion and quality improvement, and continually expanded our business coverage and the rate of market penetration. While persisting in our constant recurring rules, we realized “change is the only constant”, such that we took “innovation driven” as the general strategy and have been actively building the Company to be an innovative enterprise. We need to achieve accelerated growth while building a firm foundation, and look for opportunities and momentum while embracing the changes.

Harmonizing with the stakeholders. “Victory is ensured when people pool their strength; success is secured when people pour their talents together.” We valued customer interests, offered solutions based on customer needs, and cultivated new customers while maintaining existing customers so that customer resources became the value engine for corporate development. We listened to the opinions of investors, and communicated with investors in all respects, and in addition to ensuring that shareholders shared in the growth of the Company, we also actively included opinions of investors into the Board’s decision making process. Knowing the truth that “prosperity of a business is driven by people”, we listened to employees and agents, improved the talent development system, advanced the China Life “entrepreneur” project, and built platforms for employees’ and agents’ career development, thus steadily increasing the income of the sales force and enhancing the organic driving force. Consciously contributing to the economy and society and actively engaging in public welfare undertakings, we are an excellent corporate citizen. With the expectations of the Company’s stakeholders being generally satisfied and stronger senses of achievement being fulfilled by employees and agents, the corporate culture of “success for you, success by you” could be further promoted.

 

8


China Life Insurance Company Limited    Annual Report 2016

Chairman’s Statement

 

2017 OUTLOOK: STABILITY, TRANSFORMATION AND DEVELOPMENT

“With a new year coming, spring is back on the earth”. The year 2017 is a year of deepening the supply-side structural reform and also an important year to make China Life stronger and better. Based on a comprehensive analysis of domestic and international situations, the global economy is expected to continue its slow growth, and instability and uncertainty are significantly increasing. China is in a critical stage of overcoming obstacles, with its economy facing downside pressure and challenges. Despite all these problems accompanying advancement and development, the fundamental trend of a slower but stable performance with good momentum for economic growth in China remains unchanged, and golden opportunities for the development of the insurance industry still exist. Especially, with more stringent regulations and requirements set by the CIRC and the advancement of the industry’s transformation, more opportunities arise for a value-oriented and prudent company like China Life.

Standing at a new starting point, we will stick to the general keynote of “making steady progress”, focusing on “stability” of the Company’s strategies and operations, and seeking “progress” in transformation and innovation. The Company will stick to the guideline of supply-side reform, strictly follow the right direction, and advance the three critical tasks of accelerated growth, transformation and upgrade, and risk prevention and control to improve the level of supply. We will accelerate our transformation to an operation and management mode which is customer-oriented, featured by Internet and artificial intelligence, so as to substantially improve customer experience and make China Life the first choice for customers. We will establish a professional and systematic sales channel management system, fully promote the sales transformation, and further improve the quality and efficiency of development; adhere to the value-oriented principle, serve the overall interests of the country, enhance our investment capabilities, and do our best to raise profit while effectively preventing investment risks; strengthen the management of assets and liabilities, push forward the diversification of products, increase our efforts in developing the protection type businesses, and gradually promote the diversification of the Company’s profit sources. Meanwhile, we will thoroughly implement a cross-channel operation as well as insurance-banking collaboration, promote the integration of resources in a deeper and more diverse direction, and fully exploit the development potential. In the meantime, we will also implement the strategy of innovation driven development with great efforts, deepen the market-oriented reform, take advantage of our strengths, and continually enhance the Company’s development momentum.

The times offer China Life a historic opportunity to develop and prosper, and a noble mission to serve the society. We will put ourselves in customers’ position, uphold virtues and improve ourselves day after day to achieve perfection.

 

By Order of the Board

Yang Mingsheng

Chairman

Beijing, China

23 March 2017

 

9


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

LOGO

 

I BUSINESS OVERVIEW OF 2016

 

  (I) Key Performance Indicators

 

            RMB million  
     2016      2015  

Net premiums earned

     426,230        362,301  

Premiums from new policies

     206,996        172,364  

Including: First-year regular premiums

     93,945        61,900  

First-year regular premiums with ten years or longer payment duration

     51,378        32,312  

Gross investment income

     108,151        140,160  

Net profit attributable to equity holders of the Company

     19,127        34,699  

Value of one year’s sales

     49,311        31,528  

Including: Exclusive individual agent channel

     46,326        28,851  

Group insurance channel

     375        371  

Bancassurance channel

     2,610        2,306  

 

10


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

            RMB million  
     As at      As at  
     31 December 2016      31 December 2015  

Embedded value

     652,057        560,277  

Number of in-force policies (hundred million)

     2.46        2.16  

Policy Persistency Rate (14 months) (%) Note

     90.20        90.00  

Policy Persistency Rate (26 months) (%) Note

     85.90        85.50  

 

Note:    The Persistency Rate for long-term individual life insurance policy is an important operating performance indicator for life insurance companies. It measures the ratio of in-force policies in a pool of policies after a certain period of time. It refers to the proportion of policies that are still effective during the designated month in the pool of policies whose issue date was 14 or 26 months ago.

In 2016, facing the complex and changing economic environment and the challenges from the fierce market competition, the Company adhered to the overall strategy of innovation-driven development, regarded transformation and upgrading as the main focus, followed the business strategy of “prioritizing value, strengthening sales force, optimizing business structure, achieving stable growth and safeguarding against risks”, accelerated the development of its core businesses, and advanced the transformation of its sales model. The Company worked cohesively as a whole to improve, explore and innovate, so as to achieve a great-leap-forward development and a historic breakthrough of business restructuring, setting a great start for the “13th Five-Year Plan”.

During the Reporting Period, the Company’s net premiums earned were RMB426,230 million, an increase of 17.6% year-on-year, which made the Company the first and the sole insurance company in China with premiums exceeding RMB400,000 million. The Company’s market share2 was approximately 19.9%, remaining the first place in the industry.

Net premiums earned

(RMB million)

 

LOGO

 

2  Calculated according to the premium data of life insurance companies in 2016 released by the CIRC.

 

11


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

Out of the premiums from new policies, first-year regular premiums amounted to RMB93,945 million, an increase of 51.8% year-on-year, which surpassed the single premiums for the first time since the listing of the Company. First-year regular premiums with ten years or longer payment duration reached RMB51,378 million, increased by 59.0% year-on-year. Both of them doubled over the past two years, with their growth rates setting record highs since the listing of the Company. Renewal premiums reached RMB223,502 million, an increase of 16.6% year-on-year, which set a record high in the past five years. As at 31 December 2016, the number of in-force policies increased by 13.9% from the end of 2015. The Policy Persistency Rate (14 months and 26 months) reached 90.20% and 85.90%, respectively; and the Surrender Rate3 was 3.54%, a decrease of 2.01 percentage points from 2015.

First-year premiums from long-term policies

(RMB million)

 

LOGO

First-year regular premiums & first-year regular

premiums with 10 years or longer payment duration

doubled over the past two years

(RMB million)

 

LOGO

 

3  Surrender Rate = Surrender payment/(Liability of long-term insurance contracts at the beginning of the period + Premiums of long-term insurance contracts)

 

12


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

The Company adhered to the value-oriented principle and actively promoted the development of long-term regular businesses and protection type businesses. In 2016, the value of one year’s sales was RMB49,311 million, an increase of 56.4% year-on-year, setting a record high since the year 2005, with the value doubled over the past two years. As at 31 December 2016, the embedded value of the Company was RMB652,057 million, an increase of 16.4% year-on-year.

Value of one year’s sales doubled over the past two years

(RMB million)

 

LOGO

Affected by such factors as the downturn of interest rate and the fluctuations in the capital market, the Company’s gross investment income in 2016 was RMB108,151 million, a 22.8% decrease year-on-year. Due to the decrease in gross investment income and the update on the discount rate assumption for reserves of traditional insurance contracts, during the Reporting Period, net profit attributable to equity holders of the Company was RMB19,127 million, a 44.9% decrease year-on-year.

 

  (II) Insurance Business

 

  1. Gross written premiums categorized by business:

 

For the year ended 31 December

   2016      RMB million
2015
 

Life Insurance Business

     361,905        308,169  

First-year business

     160,590        134,449  

Single

     72,973        78,068  

First-year regular

     87,617        56,381  

Renewal business

     201,315        173,720  

Health Insurance Business

     54,010        42,041  

First-year business

     32,141        24,435  

Single

     25,852        18,993  

First-year regular

     6,289        5,442  

Renewal business

     21,869        17,606  

Accident Insurance Business

     14,583        13,761  

First-year business

     14,265        13,480  

Single

     14,226        13,403  

First-year regular

     39        77  

Renewal business

     318        281  
  

 

 

    

 

 

 

Total

     430,498        363,971  
  

 

 

    

 

 

 

 

13


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

During the Reporting Period, gross written premiums from the life insurance business of the Company amounted to RMB361,905 million, an increase of 17.4% year-on-year. Of these, the first-year regular premiums were RMB87,617 million, an increase of 55.4% year-on-year. The percentage of first-year regular premiums in first-year premiums was 54.56%. Renewal premiums were RMB201,315 million, an increase of 15.9% year-on-year. The Company actively promoted development of the health insurance business and the gross written premiums from which were RMB54,010 million, an increase of 28.5% year-on-year. Gross written premiums from the accident insurance business amounted to RMB14,583 million, an increase of 6.0% year-on-year.

 

  2. Gross written premiums categorized by channel:

 

For the year ended 31 December

   2016      RMB million
2015
 

Exclusive Individual Agent Channel

     282,136        225,957  

First-year business of long-term insurance

     74,813        47,974  

Single

     283        495  

First-year regular

     74,530        47,479  

Renewal business

     199,826        171,632  

Short-term insurance business

     7,497        6,351  

Group Insurance Channel

     24,915        20,107  

First-year business of long-term insurance

     5,430        3,571  

Single

     4,571        3,372  

First-year regular

     859        199  

Renewal business

     703        553  

Short-term insurance business

     18,782        15,983  

Bancassurance Channel

     108,256        106,028  

First-year business of long-term insurance

     85,882        87,222  

Single

     68,047        73,508  

First-year regular

     17,835        13,714  

Renewal business

     21,813        18,558  

Short-term insurance business

     561        248  

Other Channels1

     15,191        11,879  

First-year business of long-term insurance

     811        1,209  

Single

     90        701  

First-year regular

     721        508  

Renewal business

     1,160        864  

Short-term insurance business

     13,220        9,806  
  

 

 

    

 

 

 

Total

     430,498        363,971  
  

 

 

    

 

 

 

Notes:

 

1. Other channels mainly include supplementary major medical insurance business, tele-sales, etc.
2. The Company’s channel premium breakdown was presented based on the separate groups of sales personnels including exclusive individual agent team, group insurance sales representatives, bancassurance sales team and other distribution channels.

 

14


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

Exclusive Individual Agent Channel. During the Reporting Period, by optimizing the business structure and improving the quality as well as expanding the size of sales team, businesses of the exclusive individual agent channel achieved a strong growth, remaining the leading position in the market. The gross written premiums from the exclusive individual agent channel of the Company amounted to RMB282,136 million, an increase of 24.9% year-on-year. First-year regular premiums of individual insurance increased by 57.0% year-on-year, first-year regular premiums with ten years or longer payment duration increased by 59.6% year-on-year, the percentages of first-year regular premiums with five years or longer payment duration and first-year regular premiums with ten years or longer payment duration in first-year regular premiums were 86.20% and 62.17%, respectively. Renewal premiums from the exclusive individual agent channel increased by 16.4% year-on-year. Through the implementation of structural transformation and the development strategy aiming at improving the quality and expanding the size of sales force, the Company increased the qualified new recruits, reinforced training for agent managers so as to further improve the productivity of its sales team, consolidate the foundation for sales force development and further optimize its quality. As at the end of the Reporting Period, the number of exclusive individual agents reached 1,495,000, a 52.7% increase from the end of 2015, and the quarterly number of productive agents on average increased by 67.1% year-on-year.

First-year regular premiums from the exclusive individual agent channel

(RMB million)

 

LOGO

Structure breakdown of first-year regular premiums from

the exclusive individual agent channel

 

LOGO

 

15


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

Group Insurance Channel. During the Reporting Period, the group insurance channel actively strengthened the promotion of core businesses, continuously promoted the diversified business development, and the overall business developed steadily. During the Reporting Period, the gross written premiums from the group insurance channel of the Company amounted to RMB24,915 million, an increase of 23.9% year-on-year. The short-term insurance premiums from the group insurance channel amounted to RMB18,782 million, an increase of 17.5% year-on-year. As the sales force in the group insurance channel expanded rapidly, the number of direct sales representatives reached over 85,000 as at the end of the Reporting Period.

Gross written premiums from the group insurance channel

(RMB million)

 

LOGO

Bancassurance Channel. During the Reporting Period, the bancassurance channel deepened the restructuring, accelerated the development of regular premium businesses, continued to reduce single premium business, and improved the business value to the Company. First-year regular premiums from bancassurance channel were RMB17,835 million, an increase of 30.0% year-on-year. The percentage of first-year regular premiums with five years or longer payment duration in first-year regular premiums was 52.17%. Single premiums were RMB68,047 million, a decrease of 7.4% year-on-year. Regular premium businesses made by major banks and postal offices achieved a rapid growth since the Company promoted sales via electronic bank sales channels, such as E-Banking, self-service terminals, mobile banks, etc. During the Reporting Period, the number of sales representatives in the bancassurance channel reached 234,000.

Long-term premiums from the bancassurance channel

(RMB million)

 

LOGO

 

16


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

Other Channels. During the Reporting Period, gross written premiums from other channels were RMB15,191 million, an increase of 27.9% year-on-year, among which the first-year regular premiums of long-term insurance from tele-sales increased by over 40% year-on-year. The Company also actively carried out online marketing activities, and both the premiums and the number of insurance policies from on-line sales increased substantially as compared to the same period of last year. The Company also actively and steadily promoted its supplementary major medical insurance business, and as at the end of 2016, had undertaken accumulatively more than 250 supplementary major medical insurance projects serving 420 million people.

 

  (III) Asset Management

In 2016, the global economy experienced a weak recovery, and the international financial market has undergone a greater fluctuation. The downward pressure on the domestic economy has been eased and the domestic economy was by and large stable. China’s A share market fluctuated within a narrow range after plummeting at the beginning of the year. The bond market has experienced range-bound fluctuations, and in the fourth quarter, bond yields increased significantly. In 2016, with further optimization of its investment management system, the Company continually expanded the size of market-oriented third party asset management, accelerated the development of its alternative investment platform, and steadily pushed forward the diversified and decentralized investment arrangements. In terms of investment strategies, following the rules for the insurance asset investments and adhering to the general principle of matching assets and liabilities, the Company caught up with the market timing with respect to fixed income investment allocation, increased allocation in assets with long duration, controlled risk exposure and maintained its allocation in equity investment in the open market at a reasonable level. Aiming at making long-term strategic investments in non-traditional assets, the Company continued to further global asset allocations and actively engaged in projects such as health- and pension-related programs, infrastructure and premium commercial properties both within China and abroad, so as to further diversify the sources for investment portfolio income.

As at the end of the Reporting Period, the Company’s investment assets reached RMB2,453,283 million, an increase of 7.2% from the end of 2015. Among the major types of investments, the percentage of bonds was 45.63% as compared to 43.55% as at the end of 2015, the percentage of term deposits was 21.94% as compared to 24.59% as at the end of 2015, the percentage of investment in stocks and funds (excluding money market funds) was 10.05% as compared to 9.34% as at the end of 2015, and the percentage of investment in financial products was 9.28% as compared to 7.44% as at the end of 2015.

 

17


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

  1. Investment Portfolios

As at the end of the Reporting Period, our investment assets categorized by investment object are set out as below:

 

     As at 31 December 2016    

RMB million

As at 31 December 20151

 

Investment category

   Amount      Percentage     Amount      Percentage  

Fixed-maturity investments

     1,920,125        78.27     1,777,180        77.69

Term deposits

     538,325        21.94     562,622        24.59

Bonds

     1,119,388        45.63     996,236        43.55

Financial product investments2

     143,201        5.84     117,887        5.15

Other fixed-maturity investments3

     119,211        4.86     100,435        4.40

Equity investments

     421,383        17.17     411,623        17.99

Common stocks

     140,166        5.71     111,516        4.87

Funds4

     119,973        4.89     169,485        7.41

Financial product investments2

     84,338        3.44     52,475        2.29

Other equity investments5

     76,906        3.13     78,147        3.42

Investment properties

     1,191        0.05     1,237        0.05

Cash and others6

     110,584        4.51     97,599        4.27
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

     2,453,283        100.00     2,287,639        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

Notes:

 

1. The figures as at the end of last year were adjusted on the same basis.
2. Financial product investments include debt investment plans, equity investment plans, trust schemes, wealth management products, project asset-backed plans, and specialized asset management plans, etc.
3. Other fixed-maturity investments include policy loans, and statutory deposits-restricted, etc.
4. Funds include equity funds, bond funds and money market funds, etc. In particular, the balances of money market funds as at 31 December 2016 and 31 December 2015 were RMB13,609 million and RMB67,282 million, respectively.
5. Other equity investments include private equity funds, unlisted equities, and preference shares, etc.
6. Cash and others include cash, cash at banks, short-term bank deposits and securities purchased under agreements to resell.

 

18


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

  2. Investment Income

 

For the year ended 31 December

   2016     RMB million
20151
 

Net investment income2

     109,207       97,654  

+Net realized gains on financial assets

     6,038       32,297  

+Net fair value gains/(losses) through profit or loss

     (7,094     10,209  

Gross investment income3

     108,151       140,160  

+Net share of profit of associates and joint ventures

     5,855       1,974  

Gross investment income including net share of profit of associates and joint ventures4

     114,006       142,134  

Net investment yield5

     4.61     4.45

Gross investment yield6

     4.56     6.39

Gross investment yield including net share of profit of associates and joint ventures7

     4.65     6.35

Notes:

 

1. The figures for the same period of last year were adjusted on the same basis.
2. Net investment income include interest income from debt investments, interest income from deposits, dividend and bonus from equity investments, interest income from loans, net income from investment properties, etc.
3. Gross investment income = Net investment income + Net realized gains/(losses) on financial assets + Net fair value gains/(losses) through profit or loss
4. Gross investment income including net share of profit of associates and joint ventures = Gross investment income + Net share of profit of associates and joint ventures
5. Net investment yield = Net investment income/((Investment assets at the beginning of the period + Investment assets at the end of the period)/2)
6. Gross investment yield = Gross investment income/((Investment assets at the beginning of the period + Investment assets at the end of the period)/2)
7. Gross investment yield including net share of profit of associates and joint ventures = (Gross investment income + Net share of profit of associates and joint ventures)/((Investment assets at the beginning of the period + Investments in associates and joint ventures at the beginning of the period + Investment assets at the end of the period + Investments in associates and joint ventures at the end of the period)/2)

 

19


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

In 2016, the balances of investment in fixed income assets and equity assets increased from the end of 2015. As the interest rate generally remained at a low level last year, the yields of the Company’s new investment in fixed income assets decreased, dividend income from equity investment increased as compared to last year and the overall interest income from investment portfolios achieved a stable growth. As affected by the stock market, the spread income and the fair value gains/(losses) through profit or loss decreased materially from last year, impairment losses increased, and the gross investment income decreased as compared to last year. During the Reporting Period, the net investment yield was 4.61%; the gross investment yield was 4.56%, and the gross investment yield including net share of profit of associates and joint ventures was 4.65%. The comprehensive investment yield taking into account the current net fair value changes of available-for-sale securities recognized in other comprehensive income4 was 2.43%.

 

  3. Major Investments

On 29 February 2016, the Company entered into a share purchase agreement with Citigroup Inc. (“Citigroup”) and an equity transfer agreement with IBM Credit LLC (“IBM Credit”) and Citigroup. Pursuant to such agreements, the Company purchased from Citigroup and IBM Credit an aggregate of 3,648,276,645 shares of CGB at a price of RMB6.39 per share for a total consideration of RMB23,312,487,761.55. Upon the closing of the transaction on 29 August 2016, the Company held 6,728,756,097 shares of CGB, representing 43.686% of the issued share capital of CGB, and became its single largest shareholder. CGB has a stronger differentiating competitive edge in retail, small and micro businesses and other sectors and a well-developed infrastructure construction, which enables it to have a sound foundation for accelerating its development in the future. CGB is highly complementary with the Company in aspects such as asset size, customers and business. After the Company becomes the single largest shareholder of CGB, both parties will have opportunities to collaborate for integrated development in various aspects, including sales channels, customer services and mid-office and back-office operations, which will optimize the operating efficiency, enhance customer loyalty and the capability of integrated financial services, and thereby increasing the comprehensive competitiveness and risk resistance ability. For details, please refer to the announcement published by the Company on the website of the SSE on 1 March 2016 and the announcement on the HKExnews website of the Hong Kong Exchanges and Clearing Limited on 29 February 2016.

During the Reporting Period, there was no other material equity investment or non-equity investment of the Company that is subject to disclosure requirements.

 

4  Comprehensive investment yield = (Gross investment income + Current net fair value changes of available-for-sale securities recognized in other comprehensive income)/((Investment assets at the beginning of the period + Investment assets at the end of the period) /2)

 

20


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

  (IV) Operational Support and Customer Services

With adherence to the “customer-oriented” operating concept and implementing the product diversification strategy with great efforts so as to meet multifarious demands of customers, the Company has been continuously committed to improve the customer experience and to work on the upgrades and development of our services. By the end of 2016, we had provided insurance services to over 500 million customers. In order to provide more convenient and efficient services, the Company actively applied technologies such as mobile Internet, big data and cloud computing. “E-Bao Mobile Customer Services System”, the Company’s on-line service system, has a total number of binding users of 10.99 million, and the number of online applications available on it has reached 49. Based on WeChat and other Internet channels, the Company launched “E-Settlement”, a mobile-based claims settlement service. With this service, the customers are able to remotely apply for claims settlement by themselves, which makes claims settlement service “available on fingertips”. In line with the social security insurance, a pilot program of direct payment for claims was introduced in various areas, which enabled customers to enjoy “five exemption” services (namely, exemption from case reporting, application and counter services, etc.) at home. Moreover, the Company entered into an agreement with the Institute of Medical Information, Chinese Academy of Medical Sciences, the National Health and Family Planning Commission of the People’s Republic of China, to carry out offsite settlement and reimbursement for medical services across provinces under the New Village Cooperative Medical Scheme. As accredited by the CRM Committee of the China Federation of IT Promotion, the “95519” Call Center received the award of “China’s Best Call Center of Year 2015-2016”. During the Reporting Period, the Company promptly responded to 31 critical emergency incidents, including the tour bus accident in Taiwan and the debris flow in Zhejiang Province, launched contingency plans immediately, simplified the procedures and sped up the process of claims settlement, actively performing the responsibility as a member of the insurance industry.

The Company continuously paid attention to the multifarious demands of customers, and strived to build customer service ecosphere in order to improve customer experience. During the Reporting Period, the Company held 12,579 activities in total, such as the 10th “Hand-in-Hand” series of customer service activities, the 6th “Little Painters of China Life”, China Life “Run for 700”, “China Life Lectures from Gurus” and the “Dream Project”, providing services for more than 7.67 million customers, which helped to maintain a good interaction with customers. Meanwhile, the Company continuously increased the global emergency services and VIP services in order to satisfy the multi-layer and personalized service requirements of customers.

 

LOGO

 

21


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

In 2016, the Company pushed forward in full swing the establishment of a new generation of the integrated business processing system, a customer-based, responsive and safe and reliable system characterized by the application of the Internet. The Company is committed to improving its management and operation ability through process evolution. Starting from each aspect with respect to the operation and management of the life insurance business, and focusing on the improvement of customer experience and development of Internet services, the Company fully advanced the re-engineering and optimization of management and operation processes, effectively promoted the transformation of the Company’s business services to a more Internet-based service mode, and continuously enhanced the intensification and intelligent operation capability of the Company.

 

  (V) Internal Control and Risk Management

The Company continuously complied with Section 404 of the U.S. Sarbanes-Oxley Act. Meanwhile, it implemented procedures for the compliance with standard systems of corporate internal control by following the “Standard Regulations on Corporate Internal Control” and the “Implementation Guidelines for Corporate Internal Control” jointly issued by five PRC ministries and commissions including the Ministry of Finance, etc., and the “Basic Standards of Internal Control for Insurance Companies” issued by the CIRC. Pursuant to the requirements of the CIRC with respect to the China Risk Oriented Solvency System (C-ROSS), the Company pushed forward the establishment of a solvency risk management system, reinforced the mechanism of formation, transmission and application of the risk preference system, and implemented key risk monitoring and risk early-warning classification management, in order to enhance the Company’s ability of solvency risk management. The Company received an industry-leading score in the Solvency Aligned Risk Management Requirements and Assessment (“SARMRA”) conducted by the CIRC in 2016. The Company consistently followed the requirements under anti-money laundering laws and regulations, and performed legal responsibilities including client identity verification, documentation of client identity information and transaction records, money laundering risk classification and report of large sums and suspicious transaction data. Meanwhile, pursuant to external regulatory requirements, the Company conducted special governance on illegal fund raising activities and carried out the review and rectification in key risk areas, which improved the Company’s precaution capability in key risk areas.

In 2016, the Company actively utilized its internal audit and supervision function. In addition to conducting regular audits such as economic responsibility auditing and audit on connected transactions, the Company also conducted special audit projects based on a risk-oriented approach, focusing on audits on the management of orphan policies, supplementary major medical insurance and solvency risk management system. The Company further strengthened the rectification actions with respect to issues identified from audits, so as to improve the Company’s audit rectification system and ensure that the Company operates in compliance with legal requirements.

 

22


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

II ANALYSIS OF MAJOR ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS

 

  (I) Analysis of Major Items of the Consolidated Statement of Comprehensive Income

 

  1. Revenues

 

                         RMB million

For the year ended 31 December

   2016      2015      Change    

Main Reasons for Change

Net premiums earned

     426,230        362,301        17.6   —  

Life insurance business

     361,649        308,081        17.4   Fast growth in the first-year regular premiums and renewals

Health insurance business

     50,590        40,855        23.8   Catering to the demand of the market, the Company took efforts to develop health insurance business

Accident insurance business

     13,991        13,365        4.7   Further optimization of business structure and a decrease in certain high claims settlement business

Investment income*

     109,147        97,582        11.9   Please refer to the table below

Net realised gains on financial assets

     6,038        32,297        -81.3   Substantial decrease in spread income of stocks and funds influenced by the fluctuation of the capital market

Net fair value gains/(losses) through profit or loss

     (7,094      10,209        N/A     Substantial decrease in spread income of stocks influenced by the fluctuation of the capital market

Other income

     6,460        5,060        27.7   An increase in commission fees earned from CLP&C

 

23


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

*Investment Income

 

                         RMB million

For the year ended 31 December

   2016      2015      Change    

Main Reasons for Change

Investment income from securities at fair value through profit or loss

     6,210        1,708        263.6   An increase in interest income resulting from the growing scale of trading bonds, mainly including commercial papers and corporate bonds

Investment income from available-for-sale securities

     37,243        27,476        35.5   An increase in dividend income from available-for-sale equity investment

Investment income from held-to-maturity securities

     24,854        24,541        1.3   An increase in the allocation of bonds, but with a decline of the rate of return for reinvestments and newly added allocations under the low interest rate environment

Investment income from bank deposits

     27,851        32,285        -13.7   A decrease in negotiated deposits, and a decline of the rate of return for newly added allocations under the low interest rate environment

Investment income from loans

     12,018        11,115        8.1   An increase in the investments of other loans

Other investment income

     971        457        112.5   An increase in the scale of securities purchased under agreements to resell
  

 

 

    

 

 

      

Total

     109,147        97,582        11.9  
  

 

 

    

 

 

      

 

24


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

  2. Benefits, Claims and Expenses

 

                         RMB million

For the year ended 31 December

   2016      2015      Change    

Main Reasons for Change

Insurance benefits and claims expenses

     407,045        352,219        15.6   —  

Life insurance business

     360,922        313,612        15.1   An increase in maturities payable and annuity payment of life insurance business

Health insurance business

     40,513        34,398        17.8   An increase in the scale of health insurance business

Accident insurance business

     5,610        4,209        33.3   Fluctuation in claims expenses of certain business

Investment contract benefits

     5,316        2,264        134.8   An increase in the scale of investment contracts

Policyholder dividends resulting from participation in profits

     15,883        33,491        -52.6   A decrease in investment yield from participating accounts

Underwriting and policy acquisition costs

     52,022        35,569        46.3   An increase in underwriting costs for first-year regular premium business resulting from the growth of the Company’s business and the optimization of its business structure

Finance costs

     4,767        4,320        10.3   An increase in interest income from securities sold under agreements to repurchase

Administrative expenses

     31,854        27,458        16.0   The growth of business

Other expenses

     4,859        7,428        -34.6   Since 1 May 2016, the Company’s income from financial and insurance services is subject to the value-added tax instead of the business tax

Statutory insurance fund contribution

     1,048        743        41.0   The growth of insurance business

 

25


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

  3. Profit before Income Tax

 

                         RMB million

For the year ended 31 December

   2016      2015      Change    

Main Reasons for Change

Life insurance business

     14,732        40,921        -64.0   A decrease in gross investment income and the impact of the update of discount rate assumption of reserves of traditional insurance contracts

Health insurance business

     2,093        557        275.8   Improvement on health insurance business structure

Accident insurance business

     852        1,753        -51.4   An increase in claims expenses

Other businesses

     6,165        2,700        128.3   Affected by an increase in net share of profit of associates and joint ventures

 

  4. Income Tax

During the Reporting Period, income tax of the Company was RMB4,257 million, a year-on-year decrease of 60.4%. This was primarily due to the combined impact of the taxable income and deferred tax.

 

  5. Net Profit

During the Reporting Period, net profit attributable to equity holders of the Company was RMB19,127 million, a year-on-year decrease of 44.9%. This was primarily due to the decrease in gross investment income and the impact of the update of discount rate assumption of reserves of traditional insurance contracts.

 

26


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

  (II) Analysis of Major Items of the Consolidated Statement of Financial Position

 

  1. Major Assets

 

     As at 31      As at 31            RMB million
     December
2016
     December
2015
     Change    

Main Reasons for Change

Investment assets

     2,453,283        2,287,639        7.2   —  

Term deposits

     538,325        562,622        -4.3   A decrease in the scale of negotiated deposits

Held-to-maturity securities

     594,730        504,075        18.0   An increase in the allocation of bonds

Available-for-sale securities

     766,423        770,516        -0.5   —  

Securities at fair value through profit or loss

     209,124        137,990        51.6   An increase in the scale of trading bonds, mainly including commercial papers and corporate bonds

Securities purchased under agreements to resell

     43,538        21,503        102.5   The needs for liquidity management

Cash and cash equivalents

     67,046        76,096        -11.9   The needs for liquidity management

Loans

     226,573        207,267        9.3   An increase in the investments of policy loans and other loans

Statutory deposits – restricted

     6,333        6,333        —       —  

Investment properties

     1,191        1,237        -3.7   The depreciation of investment properties

Investments in associates and joint ventures

     119,766        47,175        153.9   New investments in associates and joint ventures and an increase in associates’ interests

 

27


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

  2. Major Liabilities

 

                         RMB million
     As at
31 December 2016
     As at
31 December 2015
     Change    

Main Reasons for Change

Insurance contracts*

     1,847,986        1,715,985        7.7   The accumulation of insurance liabilities from new insurance business and renewal business

Investment contracts

     195,706        84,106        132.7   An increase in the scale of certain investment contract accounts

Securities sold under agreements to repurchase

     81,088        31,354        158.6   The needs for liquidity management

Policyholder dividends payable

     87,725        107,774        -18.6   A decrease in investment yield from participating accounts

Annuity and other insurance balances payable

     39,038        30,092        29.7   An increase in maturities payable

Interest-bearing loans and other borrowingsNote

     16,170        2,643        511.8  

An increase in borrowings in foreign

currency

Bonds payable

     37,998        67,994        -44.1   Redemption of certain subordinated term debts

Deferred tax liabilities

     7,768        16,953        -54.2   Affected by a decrease in the fair value of available-for-sale securities

Note:    Interest-bearing loans and other borrowings include a five-year bank loan of GBP275 million with a maturity date on 17 June 2019, a three-year bank loan of USD948 million with a maturity date on 27 September 2019, a three-year bank loan of USD940 million with a maturity date on 30 September 2019 and a six-month bank loan of EUR100 million with a maturity date on 9 June 2017. All of the above are fixed rate loans.

* Insurance Contracts

 

            RMB million  
     As at
31 December 2016
     As at
31 December 2015
 

Life Insurance

     1,762,363        1,652,469  

Health Insurance

     77,837        57,024  

Accident Insurance

     7,786        6,492  
  

 

 

    

 

 

 

Total of Insurance Contracts

     1,847,986        1,715,985  
  

 

 

    

 

 

 

As at the date of the statement of financial position, the reserves of various insurance contracts of the Company passed the liability adequacy test.

 

28


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

  3. Equity Holders’ Equity

As at the end of the Reporting Period, equity holders’ equity was RMB303,621 million, a 5.9% decrease from the end of 2015. This was primarily due to the impact of profit distribution and total comprehensive income during the Reporting Period.

 

  (III) Analysis of Cash Flows

 

  1. Liquidity Sources

Our principal cash inflows come from insurance premiums, income from non-insurance contracts, interest income, dividend and bonus, and proceeds from sales and maturity of financial assets. The primary liquidity risks with respect to these cash inflows are the risk of surrender by contract holders and policyholders, as well as the risks of default by debtors, interest rate fluctuations and other market volatilities. We closely monitor and manage these risks.

Our cash and bank deposits can provide us with a source of liquidity to meet normal cash outflows. As at the end of the Reporting Period, the balance of cash and cash equivalents was RMB67,046 million. In addition, the vast majority of our term deposits in banks allow us to withdraw funds on deposit, subject to a penalty interest charge. As at the end of the Reporting Period, the amount of term deposits was RMB538,325 million.

Our investment portfolio also provides us with a source of liquidity to meet unexpected cash outflows. We are also subject to market liquidity risk due to the large size of our investments in some of the markets in which we invest. In some circumstances, some of our holdings of investment securities may be large enough to have an influence on the market value. These factors may adversely affect our ability to sell these investments or sell them at a fair price.

 

  2. Liquidity Uses

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

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

 

29


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

  3. Consolidated Cash Flows

The Company has established a cash flow testing system, and conducts regular tests to monitor the cash inflows and outflows under various scenarios and adjusts the asset portfolio accordingly to ensure sufficient sources of liquidity.

 

                       RMB million

For the year ended 31 December

   2016     2015     Change    

Main Reasons for Change

Net cash inflow/(outflow) from operating activities

     89,098       (18,811     N/A     An increase in the insurance income and the growth in the scale of the investment contract accounts

Net cash inflow/(outflow) from investing activities

     (104,703     67,047       N/A     The needs for investment management

Net cash inflow/(outflow) from financing activities

     6,270       (19,415     N/A     The needs for liquidity management

Foreign exchange gains/ (losses) on cash and cash equivalents

     285       241       18.3  

Net increase/(decrease) in cash and cash equivalents

     (9,050     29,062       N/A    

 

III SOLVENCY RATIO

An insurance company shall have the capital commensurate with its risks and business scale. According to the nature and capacity of loss absorption by capital, the capital of an insurance company is classified into the core capital and the supplementary capital. The core solvency ratio is the ratio of core capital to minimum capital, which reflects the adequacy of the core capital of an insurance company. The comprehensive solvency ratio is the ratio of the sum of core capital and supplementary capital to minimum capital, which reflects the overall capital adequacy of an insurance company. The following table shows our solvency ratios as at the end of the Reporting Period:

 

     As at
31 December 2016
    RMB million
As at
31 December 2015
(unaudited)
 

Core capital

     639,396       633,779  

Actual capital

     677,768       702,076  

Minimum capital

     228,080       195,553  

Core solvency ratio

     280.34     324.10

Comprehensive solvency ratio

     297.16     359.02
  

 

 

   

 

 

 

 

  Note: The China Risk Oriented Solvency System was formally implemented on 1 January 2016. This table is compiled according to the rules of the system.

The decrease in the Company’s solvency ratio was mainly due to the impact of the higher minimum capital requirement as a result of the growth of the Company’s insurance business.

 

30


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

IV ANALYSIS OF CORE COMPETITIVENESS

The Company has the advantage of very strong brand recognition. It is the only life insurance company in China with shares listed on the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the New York Stock Exchange. It is also a core member of China Life Insurance (Group) Company which is one of the “Fortune Global 500” and the “World’s 500 Most Influential Brands”. In 2016, the brand of China Life has been ranked as one of the “World’s 500 Most Influential Brands” published by World Brand Lab for ten consecutive years. The brand was also ranked as No. 4 on the “China’s 500 Most Valuable Brands” list, with brand value estimated at RMB253,628 million, ranking No. 1 among the insurance industry.

The Company has an extensive services and distribution network, with its business outlets and services counters covering both urban and rural areas. It has 1,495,000 exclusive individual agents, 85,000 direct sales representatives and 234,000 sales representatives at those bancassurance outlets, which forms a unique distribution and services network in China and makes the Company become the life insurance service provider close to customers. Making use of internationally leading information technology and expanding telephone, Internet, email and other electronic service channels, the Company strives to meet customer demand for purchasing insurance products through multiple channels.

The Company has an extensive customer base. As at 31 December 2016, the Company had approximately 246 million long-term individual and group life insurance policies, annuity contracts and long-term health insurance policies in force.

The Company possesses great financial strength. As at 31 December 2016, the registered capital and the total assets of the Company were RMB28,265 million and RMB2,696,951 million, respectively, which ranked No. 1 in China’s life insurance industry. As at the end of 2016, the total market capitalization of the Company was USD91.6 billion, which ranked No. 3 among all listed insurance companies in the world.

The Company is one of the largest institutional investors in China, and becomes one of the largest insurance asset management companies in China through its controlling shareholding in China Life Asset Management Company Limited. As at 31 December 2016, the investment assets reached RMB2,453,283 million, an increase of 7.2% from the end of 2015.

The Company has rich experience in life insurance management. The predecessor of China Life was the first enterprise to underwrite life insurance business in China, and played the role of an explorer and pioneer in China’s life insurance industry. During the long course of its development, the Company has accumulated a wealth of experience in operation and management, has a stable, professional management team, and has become well versed in the art of management in China’s life insurance market. The Company’s key management teams and personnel comprise those who have in-depth knowledge and understanding of the life insurance market in China, including members of the Company’s senior management, qualified underwriting personnel, actuaries and experienced investment managers. During the Reporting Period, there was no movement of these personnel which might have material impacts on the Company.

 

V SALE OF MATERIAL ASSETS AND EQUITY

During the Reporting Period, there was no sale of material assets and equity of the Company.

 

31


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

VI BUSINESS OPERATIONS OF OUR MAIN SUBSIDIARIES AND AFFILIATES

 

 

Company Name

  

Major Business Scope

   Registered
Capital
     Shareholding     Total
Assets
     Net
Assets
     RMB million
Net
Profit
 

China Life Asset Management Company Limited

   Management and utilization of proprietary funds; acting as agent or trustee for asset management business; consulting business relevant to the above businesses; other asset management business permitted by applicable PRC laws and regulations      4,000        60     8,284        7,548        991  

China Life Pension Company Limited

   Group pension insurance and annuity; individual pension insurance and annuity; short-term health insurance; accident insurance; reinsurance of the above insurance businesses; business for the use of insurance funds that are permitted by applicable PRC laws and regulations; pension insurance asset management product business; management of funds in RMB or foreign currency as entrusted by entrusting parties for the retirement benefit purpose; other businesses permitted by the CIRC      3,400       



70.74% is
held by the
Company, and
3.53% is held by
AMC
 
 
 
 
 
    3,697        3,070        143  

China Life Property and Casualty Insurance Company Limited

   Property loss insurance; liability insurance; credit insurance and bond insurance; short-term health insurance and accident insurance; reinsurance of the above insurance businesses; business for the use of insurance funds that are permitted by applicable PRC laws and regulations; other business permitted by the CIRC      15,000        40     72,773        19,823        1,157  

China Guangfa Bank Co., Ltd.

   The businesses approved by the China Banking Regulatory Commission including commercial banking businesses such as public and private deposits, loans, payment and settlement, and capital business      15,402        43.686     2,047,592        105,974        9,504  

 

Note: For details, please refer to Note 8 and Note 33(e) in the Notes to the Consolidated Financial Statements in this annual report.

 

VII STRUCTURED ENTITIES CONTROLLED BY THE COMPANY

Details of structured entities controlled by the Company is set out in Note 39(c) in the Notes to the Consolidated Financial Statements in this annual report.

 

32


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

VIII FUTURE PROSPECT AND RISK ANALYSIS

In 2017, the Company will strengthen its in-depth analysis of macro-economic trends and complex risk factors to maintain its continuous and healthy growth. The major risk factors which may have an impact on the Company’s future development strategy and business objectives include:

 

  (1) Macro-economic Risks

In 2017, given the rising “de-globalization” ideology and protectionism tendency, unclear policies for major economies and their spillover effects as well as significantly increasing instabilities and uncertainties, the global economy is expected to continue its slow growth. Overall, we estimate the domestic economy will achieve a slower but stable performance with good momentum for growth, however, with a shaky ground to stabilize our economy which is in a critical stage of overcoming obstacles, a lot of problems and difficulties will arise during our economic development. Changes in international and domestic markets will be transferred to the insurance industry through multiple channels such as the real economy, financial markets and consumer demands, which will in turn affect the business development, asset management and solvency in various aspects.

 

  (2) Business Risks

Currently, China’s financial market is susceptible to high risks. Although systematic risks are generally in control, risks such as non-performing assets risk, liquidity risk and bond default risk are cumulating. Meanwhile, the potential long-term low interest rate environment will put more challenges on the management of the Company’s assets and liabilities, and the Company will need to make more efforts to prevent risks in relation to negative interest spread and mismatching of assets and liabilities. The CIRC has greatly advocated the essential function of protection of the insurance industry, and has promulgated regulatory policies with respect to adjusting and regulating the development of short- and medium-term insurance business, asset management and others. Affected by these factors, the Company will have certain pressures to maintain rapid business growth with growing uncertainties and complexities. Due to factors such as investment income and the cost of liabilities, there may be higher possibility of fluctuation of the Company’s profits. In addition, the operational and financial risks of associated enterprises and the fluctuation in their profitability may undermine the expected returns on investment, which would have an impact on the Company’s profitability.

 

  (3) Investment Risks

In light of the complexity of the domestic and international economies, as well as the greater volatility of the financial markets, the market risk related to investment portfolios and credit risk may increase; and if the low interest rate environment continues for a long time, the Company will face more challenges on asset allocation, and the risk of assets and liabilities mismatching will increase. Meanwhile, the Company may develop new investment channels, utilize new investment vehicles or appoint new investment managers. All of the above may affect the Company’s investment income and the book value of its assets, and thus result in a greater fluctuation of the Company’s profits. Moreover, some of the Company’s assets are held in foreign currencies, which may be subject to foreign exchange risks due to fluctuation in exchange rate.

 

33


China Life Insurance Company Limited    Annual Report 2016

Management Discussion and Analysis

 

In 2017, the Company will maintain its strategic consistency and have a tactic flexibility, stick to the guideline of supply-side reform, and strictly follow the protection coverage function of insurance. Meanwhile, by following the operating guideline of “prioritizing value, strengthening sales force, optimizing business structure, achieving stable growth and safeguarding against risks”, the Company will continually facilitate the implementation of “Three Strategies” in relation to development of individual insurance and markets in large- and medium-sized cities and rural areas, push forward the three critical tasks of accelerated growth, transformation and upgrade and risk prevention and control, achieve all annual targets for performance assessment in a wrap-around way by means of considerate planning, target execution and hardwork, so as to relentlessly improve the Company’s core competitiveness and sustainable development capability and strive to build a world-class life insurance company. Given the above mentioned risk factors, the Company will firmly adhere to its established development strategies, and fine-tune its business development objectives in accordance with changing situations to an appropriate extent, so as to efficiently respond to challenges from market competitors and changes in the external environment.

It is expected that the Company will have sufficient capital to meet its insurance business expenditures and new investment needs in general in 2017. At the same time, if there is any further capital demands, the Company will make corresponding financing arrangements based on capital market conditions to further implement its future business development strategies.

 

34


China Life Insurance Company Limited     Annual Report 2016

Report of the Board of Directors

 

LOGO

Directors of the Company during the Reporting Period and up to the date of this report were as follows:

 

Executive Directors    Yang Mingsheng (Chairman)
  

Lin Dairen

Xu Hengping

Xu Haifeng

 
Non-executive Directors    Miao Jianmin  
   Zhang Xiangxian   (resigned with effect from 3 August 2016 due to age reason)
   Wang Sidong  
   Liu Jiade  
Independent Directors    Anthony Francis Neoh   (retired upon expiry of the term with effect from 20 July 2016)
   Chang Tso Tung Stephen  
   Huang Yiping   (resigned with effect from 7 March 2016 pursuant to the relevant policies)
   Robinson Drake Pike  
   Tang Xin   (appointed as Director with effect from 7 March 2016)
   Leung Oi-Sie Elsie   (appointed as Director with effect from 20 July 2016)

 

35


China Life Insurance Company Limited    Annual Report 2016

Report of the Board of Directors

 

1. PRINCIPAL BUSINESS

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

 

2. BUSINESS REVIEW

 

  (I) Overall operation of the Company during the Reporting Period

For details of the overall operation of the Company during the Reporting Period, the future development of its business and the principal risks faced by it, please refer to the sections of “Management Discussion and Analysis” and “Internal Control and Risk Management” in this annual report. These discussions form part of the “Report of the Board of Directors”.

 

  (II) Environmental policies and performance of the Company

The Company responded to the call from the PRC government for energy saving and emission reduction, put into practice the concept of green development and actively promoted green operations and green services. Through the enhancement of all employees’ awareness on energy saving, adoption of various energy saving technologies and promotion of energy saving measures, etc., the Company greatly put forward any work associated with energy saving and emission reduction. While maintaining its business development pace, the Company reduced its energy consumption in the head office, the level of its paperless offices was increasingly enhanced and the utilization rate of intelligent communication equipment was improved in an efficient and effective manner, which as a result provided its customers with products and services that are more user-friendly, environmental-friendly and high-quality.

Local branches of the Company reported and submitted to the head office the measuring data of water, electricity, gas and heating supplies on a quarterly basis in strict compliance with the “Provisional Measures for the Administration of Energy Saving and Emission Reduction”, so that the Company can better monitor energy consumption data, and manage and control energy consumption in a reasonable manner.

By taking advantage of the new technological means of Internet platform, the Company launched electronic documents, electronic insurance policies and office automation to effectively save the paper consumption resulting from paper cheques, letters and insurance policies. The Company constantly improved its statistics mechanism for the collection of environmental information, and regulated the utilization, repair and retirement of measuring instruments and equipment for water, electricity, gas, heating and other supplies. The Company established the Research & Development Center and Data Center to form a centralized operational services system, which lowered carbon emissions while enhancing its efficiency. The Company strengthened the management of office buildings of its head office, and established a management system for energy saving to save energy, reduce wastages and optimize procedures, thus cutting down energy consumption and carbon emissions in every aspect of operation.

 

36


China Life Insurance Company Limited    Annual Report 2016

Report of the Board of Directors

 

  (III) Compliance by the Company with the relevant laws and regulations that have a significant impact

The Company adhered to the principles of being trustworthy, assuming risks, emphasizing on services and being legal compliant, and insisted on the business compliance concepts of “being compliant from the top level, having responsibility for all to be compliant, and creating value from compliance”, strictly observed and effectively implemented applicable laws and regulations and regulatory requirements, such as the Insurance Law, the Company Law, the “Regulations for the Administration of Insurance Companies”, seriously applied the “Notice on Comprehensively Launching a Pilot Project for the Levy of Value added Tax in Place of Business Tax” published by the Ministry of Finance of the PRC, the “Notice on Matters Relevant to Further Improving the Actuarial System for Personal Insurance”, the “Notice on Strengthening the Supervision on Personal Insurance Products” and the “Notice on Issues concerning the Administrative Licensing for Banking Sideline Insurance Agents” published by the CIRC. The Company vigorously developed risk protection and long-term savings businesses, constantly improved the relevant rules and mechanisms concerning product design, business operation and taxation management, and offered full cooperation, support and protection for the three strategic missions of the Company – speedy development, transformation and upgrade, and prevention and control of risks.

 

  (IV) Relationship between the Company and its customers

While actively performing its obligations to insurance policies, the Company bears in mind the core mission of an enterprise to provide high quality services to its customers. The Company regards customer satisfaction and customer experience as the basic standards for assessing its services, and established a customer-oriented business model in order to create value for its customers. As at the end of the Reporting Period, the Company provided insurance services for more than 500 million customers. The result of customer satisfaction increased by 1.14% year-on-year, and the result of customer loyalty remained stable.

With the customers’ demands in mind, the Company consistently broadened its value-added services and continued to improve customer experience. In 2016, the Company further promoted the global VIP care services, and constantly improved the services including the international travel and medical emergency services, the PRC medical emergency services, 12-hour health consultation hotlines and the global VIP benefit services, with a view to satisfying the multi-layer and personalized service requirements of its customers. The Company organized the 10th “Hand-in-Hand” series of customer service activities, which amounted to a total of 12,579 activities, serving approximately 7.67 million customers. Such activities mainly included the following: by conducing the 10th China Life customer festival activities under the theme of “Hand-in-hand with China Life for Better Health All Along” across China, the Company constantly paid attention to the health of customers; by conducting a variety of outdoor running and hiking activities, the Company was committed to establishing a platform of “enjoying healthy life through scientific sports” for customers; by conducting the “China Life Lectures from Gurus” activity, the Company enhanced the knowledge of its customers on healthy life, scientific sports and first aid; by organizing the 6th “Little Painters of China Life” series of activities, the Company was consistently concerned about the growth and education of teenagers and children; by organizing series of activities such as the “Dream Project”, the Company assisted its customers in realizing their beautiful dreams. The Company also continuously improved its services and deepened the customers’ understanding through a variety of customer activities, thus maintaining good interaction with its customers.

 

37


China Life Insurance Company Limited    Annual Report 2016

Report of the Board of Directors

 

The Company was committed to offering convenient and professional services to its customers by adopting innovative form of customer services and actively applying technologies, such as mobile Internet, big data and cloud computing, in a bid to enhance the service capacity of e-channel, call center and sales force and to improve customer experience. In addition, the Company enhanced its protection of the rights and interests of insurance customers by consistently improving a mechanism for protection of such rights and interests, and intensified its supervisory function through assessment.

 

  (V) Relationship between the Company and its employees

The Company created a harmonious labor relationship according to law and entered into employment contracts with its employees in a timely manner. The Company strengthened the management of employees in all aspects by establishing the following three mechanisms: an employee team management mechanism with the characteristics of basic level orientation, combination of training and utilization of employees, hierarchical responsibility and unified regulation; a performance management mechanism that is result-oriented, adopts vertical assessment and horizontal ranking, and focuses on application; and a remuneration distribution mechanism that is based on the principles of salary determined by position, remuneration paid based on performance, emphasis on incentives and preference to the local level. The Company was concerned about the overall development of employees, and actively facilitated the career development of employees through various means, such as education and training, regular job rotation, local office secondment, base platform exercises, and cultivation of professional leaders and talents. The Company attached importance to humanistic concern by safeguarding the legitimate rights and interest of employees in a practical manner, encouraging and guiding employees to arrange their casual leave and annual leave in a scientific way, with an aim to achieving work-life balance.

The Company actively promoted the construction of a democratic management system with employee representative meetings as its basic form to protect the democratic rights of employees and to facilitate the joint development between employees and enterprise. Its head office and branches have fully established the system of employee representative meetings, organized their respective employees to perform democratic management and supervisory role according to law, and inspected and monitored the implementation of any resolutions adopted by employee representative meetings, thus carrying out the supervisory and performing functions of proposals in a serious manner and constantly improving democratic management. According to the spirit of alleviating poverty proposed at the Central Poverty Alleviation and Development Conference, the Company formulated a special plan for warm families for 2016-2018 so as to establish and improve a multi-level assistance and support system for needy employees.

For details regarding the Company’s employees (including the number of employees, composition of professionals, educational levels, remuneration policy and training program), please refer to the section “Directors, Supervisors, Senior Management and Employees” in this annual report.

 

3. FORMULATION AND IMPLEMENTATION OF PROFIT DISTRIBUTION POLICY

 

  (I) In accordance with Article 211 of the Articles of Association, the basic principles of the Company’s profit distribution are as follows:

 

  1. The Company shall take the investment return for investors into full account and allocate the required percentage of the Company’s realized distributable profits to shareholders as dividends each year;

 

38


China Life Insurance Company Limited    Annual Report 2016

Report of the Board of Directors

 

  2. The Company shall maintain a sustainable and steady profit distribution policy and at the same time take into consideration the Company’s long-term interest, general interest of all the shareholders and the sustainable development of the Company;

 

  3. The Company shall give priority to cash dividends as its profit distribution manner.

 

  (II) In accordance with Article 212 of the Articles of Association, the Company’s profit distribution policy is as follows:

 

  1. Profit distribution modes: The Company may distribute dividends in the form of cash or shares or a combination of cash and shares. If practicable, the Company may distribute interim dividends. The Company’s dividends shall not bear interest, save in the case where the Company fails to distribute the dividends to the shareholders on the day when dividends were due to have been distributed.

 

  2. Conditions for and percentage of distribution of cash dividends: If the Company makes profits in a given year and the cumulative undistributed profit is positive, the Company shall distribute dividends in the form of cash and the cumulative profits distributed in cash over the past three years by the Company shall be no less than thirty percent (30%) of the average annual distributable profits.

 

  3. Conditions for distribution of share dividends: If the Company’s operation is sound and the Board of Directors is of the opinion that share dividends distribution is in the interest of all the Company’s shareholders since the Company’s stock price does not match the Company’s share capital, the Company may propose a share dividends distribution plan if the conditions for cash dividends listed above are satisfied.

In addition, the Company’s profit distribution is required to comply with relevant regulatory requirements. If the Company’s core solvency ratio or comprehensive solvency ratio does not meet the minimum requirements, the CIRC may adopt regulatory measures against the Company due to its failure to meet the minimum requirements, which may restrict the Company’s ability to distribute dividends to its shareholders.

 

  (III) In accordance with Article 213 of the Articles of Association, the procedures of reviewing the Company’s profit distribution proposal is as follows:

The Company’s profit distribution proposal shall be reviewed by the Board of Directors. The Board of Directors shall have a sufficient discussion of the reasonableness of the profit distribution proposal. After a special resolution regarding the proposal is reached and independent opinions have been given by the Company’s Independent Directors, the proposal shall be submitted to the Company’s general meeting for approval. In reviewing the profit distribution proposal, the Company shall provide Internet-based voting mechanism to the shareholders. When deliberating on specific cash dividend proposal by the Company’s general meeting, the Company shall make active communication with shareholders, especially small-and medium-sized shareholders, through various channels. The Company shall also fully solicit opinions and appeals from small- and medium-sized shareholders, and give timely reply to concerns of small- and medium-sized shareholders.

 

39


China Life Insurance Company Limited    Annual Report 2016

Report of the Board of Directors

 

  (IV) Profit distribution plan and public reserves capitalization plan

 

  1. Profit distribution plan or public reserves capitalization plan for the year of 2016

In accordance with the profit distribution plan for the year 2016 approved by the Board on 23 March 2017, with the appropriation to its discretionary surplus reserve fund of RMB1,927 million (10% of the net profit for 2016), the Company, based on 28,264,705,000 shares in issue, proposed to distribute cash dividends amounting to RMB6,784 million to all shareholders of the Company at RMB0.24 per share (inclusive of tax). The foregoing profit distribution plan is subject to the approval by the 2016 Annual General Meeting to be held on 31 May 2017 (Wednesday). Dividends payable to domestic shareholders are declared, valued and paid in RMB. Dividends payable to shareholders of the Company’s foreign-listed shares are declared and valued in RMB and paid in the currency of the jurisdiction in which the foreign-listed shares are listed (if the Company is listed in more than one jurisdiction, dividends shall be paid in the currency of the Company’s principal jurisdiction of listing as determined by the Board). The Company shall pay dividends to shareholders of foreign-listed shares in conformity with the PRC regulations on foreign exchange control. If no such regulations are in place, the applicable exchange rate is the average closing rate published by the People’s Bank of China one week before the declaration of the distribution of dividends.

No public reserve capitalization is provided for in the profit distribution plan for the current financial year.

The profit distribution policy of the Company complied with the Articles of Association and the examination and approval procedures of the Company, clearly defined the dividend distribution standards and percentage and the decision-making procedures and system. Small- and medium-sized shareholders of the Company have sufficient opportunities to express their opinions and appeals, and their legitimate rights have been well protected. The Independent Directors diligently considered the profit distribution policy and expressed their independent opinion in this regard.

 

  2. The dividend distribution of the Company for the recent 3 years is as follows:

 

                                        RMB million  

Year in which dividends were distributed

   Number
of
bonus
stocks
per ten
shares
(shares)
     Amount
of
dividends
per ten
shares
(RMB)
(including
tax)
     Transfer
of public
reserve
into
share
capital
per ten
shares
(shares)
     Amount
of cash
dividends
(including
tax)
     Net profit
attributable
to equity
holders of
the
Company in
the
consolidated
statements
for the year
in which
dividends
were
distributed
     Percentage of
amount of cash
dividends in net
profit
attributable to
equity holders of
the Company in
the consolidated
statements
 

2016

     —          2.4        —          6,784        19,127        35

2015

     —          4.2        —          11,871        34,699        34

2014

     —          4.0        —          11,306        32,211        35

 

40


China Life Insurance Company Limited    Annual Report 2016

Report of the Board of Directors

 

4. CHANGES IN ACCOUNTING ESTIMATES

The changes in accounting estimates of the Company during the Reporting Period are set out in Note 3 in the Notes to the Consolidated Financial Statements in this annual report.

 

5. RESERVES

Details of the reserves of the Company are set out in Note 36 in the Notes to the Consolidated Financial Statements in this annual report.

 

6. CHARITABLE DONATIONS

The total amount of charitable donations made by the Company during the Reporting Period was approximately RMB142 million.

 

7. PROPERTY, PLANT AND EQUIPMENT

Details of the movement in property, plant and equipment of the Company are set out in Note 6 in the Notes to the Consolidated Financial Statements in this annual report.

 

8. SHARE CAPITAL

Details of the movement in share capital of the Company are set out in Note 34 in the Notes to the Consolidated Financial Statements in this annual report.

 

9. INFORMATION OF TAX DEDUCTION FOR HOLDERS OF LISTED SECURITIES

Shareholders are taxed and/or enjoy tax relief for the dividend income received from the Company in accordance with the “Individual Income Tax Law of the People’s Republic of China”, the “Enterprise Income Tax Law of the People’s Republic of China”, and relevant administrative rules, governmental regulations and guiding documents. Please refer to the announcement published by the Company on the website of the SSE on 9 June 2016 for the information on income tax in respect of the dividend distributed to A Share shareholders during the Reporting Period, and the announcement published by the Company on the HKExnews website of the Hong Kong Exchanges and Clearing Limited on 30 May 2016 for the information on income tax in respect of the dividend distributed to H Share shareholders during the Reporting Period.

 

10. PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S SECURITIES

During the Reporting Period, the Company and its subsidiaries did not purchase, sell or redeem any of the Company’s listed securities.

 

11. H SHARE STOCK APPRECIATION RIGHTS

No H Share Stock Appreciation Rights of the Company were granted or exercised in 2016. The Company will deal with such rights and related matters in accordance with the PRC governmental policies.

 

12. DAY-TO-DAY OPERATIONS OF THE BOARD

Details of the Board meetings and the Board’s performance of its duties during the Reporting Period are set out in the section headed “Corporate Governance” in this annual report.

 

41


China Life Insurance Company Limited    Annual Report 2016

Report of the Board of Directors

 

13. DIRECTORS’ AND SUPERVISORS’ SERVICE CONTRACTS

None of the Directors or Supervisors has entered into any service contract with the Company and its subsidiaries that are not terminable within one year or can only be terminated by the Company with payment of compensation (other than statutory compensation).

 

14. INTERESTS OF DIRECTORS AND SUPERVISORS (AND THEIR CONNECTED ENTITIES) IN MATERIAL TRANSACTIONS, ARRANGEMENTS OR CONTRACTS

None of the Directors or Supervisors (and their connected entities) is or was materially interested, directly or indirectly, in any transaction, arrangement or contract of significance entered into by the Company or its controlling shareholders or any of their respective subsidiaries at any time during the Reporting Period or subsisted at the end of the Reporting Period.

 

15. DIRECTORS’ AND SUPERVISORS’ RIGHTS TO ACQUIRE SHARES

No arrangements to which the Company, any of its subsidiaries or holding companies, or any subsidiary of the Company’s holding companies is a party, and whose objects are, or one of whose objects is, to enable Directors or Supervisors (including their spouses and children under the age of 18) to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, subsisted at any time during the Reporting Period or at the end of the Reporting Period.

 

16. DISCLOSURE OF INTERESTS OF DIRECTORS, SUPERVISORS AND THE CHIEF EXECUTIVE IN THE SHARES OF THE COMPANY

As at the end of the Reporting Period, none of the Directors, Supervisors and the chief executive of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “SFO”)) that were required to be recorded in the register of the Company required to be kept pursuant to Section 352 of the SFO or which had to be notified to the Company and the HKSE pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”). In addition, the Board has created a code of conduct in relation to the sale and purchase of the Company’s securities by Directors and Supervisors, which is no less stringent than the Model Code. Upon specific inquiry by the Company, the Directors and Supervisors have confirmed observation of the Model Code and the Company’s own code of conduct in the year of 2016.

 

17. PRE-EMPTIVE RIGHTS AND ARRANGEMENTS FOR SHARE OPTIONS

According to the Articles of Association and relevant PRC laws, there is no provision for any pre-emptive rights of the shareholders of the Company. At present, the Company does not have any arrangement for share options.

 

18. MANAGEMENT CONTRACTS

No management or administration contracts for the whole or substantial part of any business of the Company were entered into during the Reporting Period.

 

42


China Life Insurance Company Limited    Annual Report 2016

Report of the Board of Directors

 

19. MATERIAL GUARANTEES

Independent Directors of the Company have rendered their independent opinions on the Company’s external guarantees, and are of the view that:

 

  (1) during the Reporting Period, the Company did not provide any external guarantee;

 

  (2) the Company’s internal control system regarding external guarantees is in compliance with laws, regulations, and the requirements under the “Notice in relation to the Standardization of Capital Flows between Listed Companies and Related Parties and Issues in relation to External Guarantees Granted by Listed Companies”; and

 

  (3) the Company has expressly provided in its Articles of Association the level of authority required for approving external guarantees and the approval procedures.

 

20. RESPONSIBILITY STATEMENT OF DIRECTORS ON FINANCIAL REPORTS

The Directors are responsible for overseeing the preparation of the financial report for each financial period which gives a true and fair view of the Company’s financial position, performance results and cash flows for that period. To the best knowledge of the Directors, there was no material event or condition during the Reporting Period that might have a material adverse effect on the continuing operation of the Company.

 

21. BOARD’S STATEMENT ON INTERNAL CONTROL

In accordance with the requirements of the “Standard Regulations on Corporate Internal Control”, the Board conducted an assessment on internal control relating to the Company’s financial reporting functions, and confirmed that its internal control was effective as at 31 December 2016.

 

22. MAJOR CUSTOMERS

In 2016, the gross written premiums received from the Company’s five largest customers accounted for less than 30% of the Company’s gross written premiums for the year. There is no related party of the Company among the five largest customers.

 

23. SUFFICIENCY OF PUBLIC FLOAT

Based on the information publicly available to the Company and within the knowledge of the Directors as at the Latest Practicable Date (23 March 2017), not less than 25% of the issued share capital of the Company (being the minimum public float applicable to the shares of the Company) was held in public hands.

 

24. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

The Company has applied the principles of the Corporate Governance Code (the “CG Code”) as set out in Appendix 14 to the Listing Rules, and has complied with all code provisions of the CG Code during the Reporting Period.

 

43


China Life Insurance Company Limited    Annual Report 2016

Report of the Board of Directors

 

25. AUDITORS

Resolutions were passed at the First Extraordinary General Meeting 2015 and the 2015 Annual General Meeting to engage Ernst & Young Hua Ming LLP and Ernst & Young as the PRC and international auditors of the Company for the year 2016, respectively. Ernst & Young Hua Ming LLP and Ernst & Young have been serving as the Company’s auditors for four consecutive years.

Due to its requirements for project management, Ernst & Young resigned as the auditor of the Company for US Form 20-F, with effect from the conclusion of the First Extraordinary General Meeting 2016 of the Company. Following the approval by the shareholders of the Company at the First Extraordinary General Meeting 2016, the auditor of the Company responsible for auditing the US Form 20-F for the year 2016 has been changed from Ernst & Young to Ernst & Young Hua Ming LLP, who shall hold office until the conclusion of the 2016 Annual General Meeting of the Company. Ernst & Young remains as the Hong Kong auditor of the Company. Ernst & Young has confirmed in writing that there is no matter relating to its resignation as the auditor of the Company for US Form 20-F that needs to be brought to the attention of the shareholders of the Company. There is also no disagreement between the Company and Ernst & Young.

Remuneration paid by the Company to the auditors is subject to approval at the shareholders’ general meeting, pursuant to which the Board is authorized to determine the amount and make payment. Audit fees paid by the Company to the auditors will not affect the independence of the auditors.

Remuneration paid by the Company to the auditors in 2016 was as follows:

 

Service/Nature

   Fees (RMB million)  

Financial report audit fee

     44.54  

Internal control audit fee

     11.14  

At the 2016 Annual General Meeting to be held on 31 May 2017, the Board will propose a resolution to re-appoint Ernst & Young Hua Ming LLP as the PRC auditor and the auditor for US Form 20-F of the Company for the year 2017, and Ernst & Young as the Hong Kong auditor of the Company for the year 2017.

 

   

By Order of the Board

Yang Mingsheng

Chairman

 

Beijing, China

23 March 2017

 

44


China Life Insurance Company Limited    Annual Report 2016

Report of the Supervisory Committee

 

LOGO

 

1. ACTIVITIES OF THE SUPERVISORY COMMITTEE

 

  1. Currently, the fifth session of the Supervisory Committee comprises Mr. Miao Ping, Mr. Shi Xiangming, Ms. Xiong Junhong, Mr. Zhan Zhong and Ms. Wang Cuifei, with Mr. Miao Ping acting as the Chairman of the Supervisory Committee. Of the members of the Supervisory Committee, Mr. Miao Ping, Mr. Shi Xiangming and Ms. Xiong Junhong are Non Employee Representative Supervisors, and Mr. Zhan Zhong and Ms. Wang Cuifei are Employee Representative Supervisors.

 

  2. Attending meetings of the Supervisory Committee and diligently discharging their duties. Pursuant to the regulatory requirements of the jurisdictions where the Company is listed, the Articles of Association and the “Procedural Rules for Supervisory Committee Meetings” of the Company, and in accordance with the work arrangement of the Supervisory Committee, the Supervisory Committee convened its regular meetings in a timely manner, at which it considered and approved proposals in relation to the Company’s financial reports, periodic reports, internal control, and risk management. In 2016, the fifth session of the Supervisory Committee held 5 meetings, at which the Supervisors earnestly expressed their views, actively participated in discussions and diligently discharged their duties, thereby providing valuable advice for the business development of the Company.

 

  3. Attending and participating in corporate governance meetings and actively exercising their supervisory role. In 2016, the Supervisory Committee attended the 2015 Annual General Meeting and the First Extraordinary General Meeting 2016 of the Company, and participated in the regular meetings of the Board. All members of the Supervisory Committee participated in the meetings of the Nomination and Remuneration Committee, the Risk Management Committee, and the Strategy and Investment Decision Committee, respectively, in accordance with the work allocation among Supervisors determined by the Supervisory Committee, with a focus on the meetings of the Audit Committee. By attending these meetings, all Supervisors diligently discharged their duties, oversaw the procedures for convening meetings, carefully listened to the matters considered at the meetings, and participated in discussions when necessary, thus bringing positive effects on further enhancement of corporate governance.

 

45


China Life Insurance Company Limited    Annual Report 2016

Report of the Supervisory Committee

 

  4. Strengthening training and constantly enhancing duty performance of the Supervisors. In 2016, Mr. Miao Ping, the Chairman of the Supervisory Committee, attended the eighth special training course of 2016 for directors and supervisors of listed companies within the territory of Beijing as organized by the Listed Companies Association of Beijing, which gave him the opportunity to learn and understand the businesses of listed companies, such as the regulatory overview of listed companies within the territory of Beijing, merger, acquisition and restructuring of enterprises during the reform of state-owned enterprises, merger, acquisition and restructuring and corporate growth, overseas strategy of enterprises, overseas investment trend and operation of the PRC enterprises, and the strategy of “One Belt One Road” and internationalization. Mr. Zhan Zhong and Ms. Wang Cuifei attended the first special training course of 2016 for directors and supervisors of listed companies within the territory of Beijing as organized by the Listed Companies Association of Beijing, which gave them the opportunity to learn and understand courses on the regulatory overview of listed companies within the territory of Beijing and the relevant issues and requirements, system of regulatory laws and regulations of listed companies, as well as the information disclosure standards, economic development trend, and innovative transformation of listed companies, etc.

 

  5. Actively conducting research and investigation activities and training courses and performing their supervisory function. From 29 November to 2 December 2016, Mr. Miao Ping, the Chairman of the Supervisory Committee, carried out investigation and research with the members of the Supervisory Committee on local branches of the Company in Guizhou Province and southeast Guizhou Province, as well as a local sub-branch of the Company in Tianzhu County, listened to their business reports, held in-depth conferences with their respective key management, conducted an on-site investigation and research on intra-city counters of the customer service center of Guiyang branch, and the customer service center of each of the southeast Guizhou branch and Tianzhu sub-branch, for the purpose of understanding the business development and the risk prevention and control of the local branches. Through investigation and research, all Supervisors comprehended the working situation of local branches in great depth and examined the effectiveness of the implementation of decisions of the Board and the management, thus further enhancing the legal compliance and risk prevention of the Company in a practical manner.

 

  6. Participating the activity of the “Assessment and Selection of the Supervisory Committees of Listed Companies with the Best Practice”. In order to strengthen the internal control compliance, audit supervision and risk management of the Company and further enhance the supervisory capability and duty performance effect of the Supervisory Committee, the Supervisory Committee of the Company participated in the activity of the “Assessment and Selection of the Supervisory Committees of Listed Companies with the Best Practice” jointly organized by the Listed Companies Association of the PRC, the Shanghai Stock Exchange and the Shenzhen Stock Exchange, and was named as one of the “Top 20 Supervisory Committees of Listed Companies with the Best Practice” and elected as an “Excellent Case for Supervisory Committees of Listed Companies with the Best Practice”.

 

46


China Life Insurance Company Limited    Annual Report 2016

Report of the Supervisory Committee

 

2. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON CERTAIN MATTERS

During the Reporting Period, the Supervisory Committee of the Company performed its supervisory duties in a diligent manner in accordance with the requirements of the Company Law, the Articles of Association and the “Procedural Rules for Supervisory Committee Meetings”.

 

  1. The Company’s operational compliance with the law. During the Reporting Period, the Company’s operations were in compliance with the law. The Company’s operations and decision-making procedures were in compliance with the Company Law and the Articles of Association. All Directors and senior management of the Company maintained strict principles of diligence and integrity and performed their duties conscientiously. The Supervisory Committee is not aware of any of them having violated any law, regulation, or any provision in the Articles of Association or harmed the interests of the Company in the course of discharging their duties.

 

  2. The authenticity of the financial report. The Company’s annual financial report truly and completely reflected the Company’s financial position and operating results. Ernst & Young Hua Ming LLP and Ernst & Young have performed audits on the financial statements for 2016 and have issued unqualified auditors’ reports in accordance with the China Standards on Auditing of PRC Certified Public Accountants and the International Standards on Auditing, respectively.

 

  3. Acquisition and sale of assets. During the Reporting Period, the prices for acquisition and sale of assets were fair and reasonable. The Supervisory Committee is not aware of any insider trading, any acts harming the interests of shareholders or incurring any loss to the Company’s assets.

 

  4. Connected transactions. During the Reporting Period, the connected transactions of the Company were on commercial terms. The Supervisory Committee is not aware of any acts harming the interests of the Company.

 

  5. Internal control system and self-evaluation report on internal control. During the Reporting Period, the Company sought to improve its internal control system, and continued to improve the effectiveness of such system. The Supervisory Committee of the Company reviewed the self-evaluation report on the Company’s internal control systems and did not raise any objection against the self-evaluation report of the Board regarding the Company’s internal control system.

 

   

By Order of the Supervisory Committee

Miao Ping

Chairman of the Supervisory Committee

 

Beijing, China

23 March 2017

 

47


China Life Insurance Company Limited    Annual Report 2016

Significant Events

 

I. MATERIAL LITIGATIONS OR ARBITRATIONS

During the Reporting Period, the Company was not involved in any material litigation or arbitration.

 

II. MAJOR CONNECTED TRANSACTIONS

 

  (I) Continuing Connected Transactions

During the Reporting Period, the following continuing connected transactions were carried out by the Company pursuant to Rule 14A.76(2) of the Listing Rules, including the policy management agreement between the Company and CLIC, the asset management agreement between the Company and AMC, the insurance sales framework agreement between the Company and CLP&C, and the framework agreements entered into by CLWM with the Company, CLIC, CLP&C, China Life Insurance (Overseas) Company Limited (“CLO”) and CLI, respectively. These continuing connected transactions were subject to the reporting, announcement and annual review requirements but were exempt from the independent shareholders’ approval requirement under the Listing Rules. CLIC, the controlling shareholder of the Company, holds 60% of the equity interest in CLP&C and 100% of the equity interest in each of CLO and CLI. Therefore, each of CLIC, CLP&C, CLO and CLI constitutes a connected person of the Company. AMC is held as to 60% and 40% by the Company and CLIC, respectively, and is therefore a connected subsidiary of the Company. CLWM is a subsidiary of AMC, and is therefore a connected subsidiary of the Company.

During the Reporting Period, the continuing connected transactions carried out by the Company that were subject to the reporting, announcement, annual review and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules included the 2017-2019 framework agreements entered into by AMP with the Company, Pension Company, CLIC and CLP&C, respectively. Such agreements and the transactions thereunder have been approved by the First Extraordinary General Meeting 2016 of the Company held on 27 December 2016. AMP is a non-wholly owned subsidiary of AMC and is therefore a connected subsidiary of the Company.

In addition, the asset management agreement for alternative investments entered into between the Company and CLI and the transactions thereunder were subject to the reporting, announcement and annual review requirements but were exempt from the independent shareholders’ approval requirement under the Listing Rules. However, such agreement was subject to the approval by the shareholders’ general meeting of the Company under the SSE Listing Rules. Such agreement and the transactions thereunder have been approved by the shareholders’ general meeting of the Company held on 29 December 2015.

During the Reporting Period, the Company also carried out certain continuing connected transactions, including the asset management agreement between CLIC and AMC, which were exempt from the reporting, announcement, annual review and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The Company has complied with the disclosure requirements under Chapter 14A of the Listing Rules in respect of the above continuing connected transactions. When conducting the above continuing connected transactions during the Reporting Period, the Company has followed the pricing policies and guidelines formulated at the time when such transactions were entered into.

 

48


China Life Insurance Company Limited    Annual Report 2016

Significant Events

 

  1. Policy Management Agreement

Since 30 September 2003, the Company and CLIC have from time to time entered into policy management agreements. The renewed agreement between the parties expired on 31 December 2014. On 29 December 2014, the Company and CLIC entered into the 2015 policy management agreement, with a term from 1 January 2015 to 31 December 2017. Pursuant to the agreement, the Company agreed to provide policy administration services to CLIC relating to the non-transferred policies. The Company acts as a service provider under the agreement and does not acquire any rights or assume any obligations as an insurer under the non-transferred policies. For details as to the method of calculation of the service fee, please refer to Note 33 in the Notes to the Consolidated Financial Statements. The annual cap for each of the three years ending 31 December 2017 is RMB1,037 million.

For the year ended 31 December 2016, the service fee paid by CLIC to the Company amounted to RMB869 million.

 

  2. Asset Management Agreements

 

  (1) Asset Management Agreement between the Company and AMC

Since 30 November 2003, the Company and AMC have from time to time entered into asset management agreements. The renewed agreement between the parties expired on 31 December 2015. On 29 December 2015, the Company and AMC entered into the 2016 asset management agreement, with a term of three years from 1 January 2016 to 31 December 2018. Pursuant to the agreement, AMC agreed to invest and manage assets entrusted to it by the Company, on a discretionary basis, within the scope granted by the Company and in accordance with the requirements of applicable laws and regulations, regulatory requirements and the investment guidelines given by the Company. In consideration of AMC’s services in respect of investing and managing various categories of assets entrusted to it by the Company under the agreement, the Company agreed to pay AMC a service fee. For details as to the method of calculation of the service fee, please refer to Note 33 in the Notes to the Consolidated Financial Statements. The annual cap for each of the three years ending 31 December 2018 is RMB1,500 million.

For the year ended 31 December 2016, the Company paid AMC a service fee of RMB1,081 million.

 

  (2) Asset Management Agreement between CLIC and AMC

Since 30 November 2003, CLIC and AMC have from time to time entered into asset management agreements. The renewed agreement between the parties expired on 31 December 2015. On 30 December 2015, CLIC and AMC entered into the 2016 asset management agreement, with an entrustment term from 1 January 2016 to 31 December 2018. Pursuant to the agreement, AMC agreed to invest and manage assets entrusted to it by CLIC, on a discretionary basis, subject to the investment guidelines and instructions given by CLIC. In consideration of AMC’s services in respect of investing and managing assets entrusted to it by CLIC under the agreement, CLIC agreed to pay AMC a service fee. For details as to the method of calculation of the service fee, please refer to Note 33 in the Notes to the Consolidated Financial Statements. The annual caps for the three years ending 31 December 2018 are RMB320 million, RMB310 million and RMB300 million, respectively.

For the year ended 31 December 2016, CLIC paid AMC a service fee of RMB124 million.

 

49


China Life Insurance Company Limited    Annual Report 2016

Significant Events

 

  (3) Asset Management Agreement for Alternative Investments between the Company and CLI

Since 22 March 2013, the Company and CLI have from time to time entered into asset management agreements for alternative investments. The renewed agreement between the parties expired on 31 December 2015. On 3 February 2016, the Company and CLI entered into the 2016 asset management agreement for alternative investments, with a term from 1 January 2016 to 30 June 2017. Pursuant to the agreement, CLI agreed to invest and manage assets entrusted to it by the Company (including equity, real estate, related financial products and securitization financial products), on a discretionary basis, within the scope of utilization of insurance funds as specified by the CIRC and in accordance with the requirements of applicable laws and regulations and the investment guidelines given by the Company, and the Company agreed to pay CLI an investment management service fee and a performance incentive fee. For details as to the method of calculation of the investment management service fee and performance incentive fee, please refer to Note 33 in the Notes to the Consolidated Financial Statements. During the term of the agreement, the investment management service fee and performance incentive fee payable by the Company to CLI will not exceed RMB1,000 million or its equivalent in foreign currency, in particular, the investment management service fee and performance incentive fee for the year of 2016 will not exceed RMB590 million or its equivalent in foreign currency, and the investment management service fee and performance incentive fee for the first half of 2017 will not exceed RMB410 million or its equivalent in foreign currency. The contractual amount of assets entrusted by the Company to CLI for investment and management will not exceed RMB250,000 million or its equivalent in foreign currency (including the contractual amount already entrusted prior to the execution of the agreement and the contractual amount to be entrusted during the term of the agreement) as at the expiry date of the agreement, in particular, the contractual amount as at 31 December 2016 will not exceed RMB200,000 million or its equivalent in foreign currency, and the contractual amount as at 30 June 2017 will not exceed RMB250,000 million or its equivalent in foreign currency; the contractual amount to be entrusted during the term of the agreement will not exceed RMB150,000 million or its equivalent in foreign currency (including the contractual amount to be entrusted during the year of 2016 of no more than RMB100,000 million or its equivalent in foreign currency, and the contractual amount to be entrusted during the first half of 2017 of no more than RMB50,000 million or its equivalent in foreign currency). The contractual amount of the assets to be entrusted by the Company in its co-investments with CLIC and CLP&C during the term of the agreement will not exceed RMB40,000 million or its equivalent in foreign currency, in particular, the contractual amount of the co-investments to be entrusted by the Company during the year of 2016 will not exceed RMB23,500 million or its equivalent in foreign currency, and the contractual amount of the co-investments to be entrusted by the Company during the first half of 2017 will not exceed RMB16,500 million or its equivalent in foreign currency.

For the year ended 31 December 2016, the Company paid CLI investment management service fee and performance incentive fee of RMB298 million. As at 31 December 2016, the contractual amount of the assets entrusted by the Company to CLI for investment and management was RMB148,574 million, among which, for the year ended 31 December 2016, the contractual amount of the assets newly entrusted by the Company was RMB50,129 million, and the contractual amount of the assets newly entrusted by the Company in its co-investment with CLIC and CLP&C was RMB9,000 million.

 

50


China Life Insurance Company Limited    Annual Report 2016

Significant Events

 

  3. Insurance Sales Framework Agreement

Since 18 November 2008, the Company and CLP&C have from time to time entered into insurance sales framework agreements. The renewed agreement between the parties expired on 7 March 2015. On 8 March 2015, the Company and CLP&C entered into the 2015 insurance sales framework agreement, with a term of two years from 8 March 2015. The agreement will automatically be extended for another year after its expiry unless terminated by either party by giving the other party a written notice within 30 days prior to its expiry. Pursuant to the agreement, CLP&C entrusted the Company to act as an agent to sell selected insurance products within the authorized regions, and agreed to pay an agency service fee to the Company in consideration of the services provided. For details as to the method of calculation of the agency service fee, please refer to Note 33 in the Notes to the Consolidated Financial Statements. The original annual caps for the three years ending 31 December 2017 were RMB1,386 million, RMB1,738 million and RMB2,222 million, respectively. With the approval given at the eighth meeting of the fifth session of the Board, the Company revised the annual caps for the two years ending 31 December 2017 under the 2015 insurance sales framework agreement to RMB3,000 million and RMB5,000 million, respectively.

For the year ended 31 December 2016, CLP&C paid the Company an agency service fee of RMB2,337 million.

 

  4. Framework Agreements with AMP

 

  (1) Framework Agreement between the Company and AMP

The Company and AMP entered into the “Framework Agreement in relation to Subscription and Redemption of Fund Products, Sale of Funds, Asset Management for Specific Clients and Other Daily Transactions” on 30 May 2014. The agreement became effective upon signing by the parties and expired on 31 December 2016. Pursuant to the agreement, the Company and AMP would enter into certain daily transactions, including subscription and redemption of fund products, sales agency services, asset management for specific clients and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement was determined by the parties through arm’s length negotiations with reference to the industry practices. For the three years ended 31 December 2016, the annual caps of the subscription price and corresponding subscription fee for the subscription of fund products were RMB30,000 million, RMB66,000 million and RMB72,600 million, respectively; the annual caps of the redemption price and corresponding redemption fee for the redemption of fund products were RMB30,000 million, RMB66,000 million and RMB72,600 million, respectively; the annual caps of the sales commission fee and client maintenance fee payable by AMP were RMB100 million, RMB300 million and RMB400 million, respectively; the annual caps of the management fee payable by the Company for the asset management for specific clients were RMB10 million, RMB20 million and RMB20 million, respectively; and the annual caps of the fees for other daily transactions were RMB50 million, RMB100 million and RMB100 million, respectively. As approved by the First Extraordinary General Meeting 2016 of the Company, the 2017 – 2019 framework agreement was entered into between the Company and AMP on 30 December 2016 for a term of three years from 1 January 2017 to 31 December 2019. Pursuant to the agreement, the Company and AMP will continue to conduct certain daily transactions, including subscription and redemption of fund products, sales agency services, asset management for specific clients and other daily transactions permitted by laws and regulations. For the three years ending 31 December 2019, the annual caps of the subscription price and corresponding subscription fee for the subscription of fund products are RMB72,600

 

51


China Life Insurance Company Limited    Annual Report 2016

Significant Events

 

million; the annual caps of the redemption price and corresponding redemption fee for the redemption of fund products are RMB72,600 million; the annual caps of the sales commission fee and client maintenance fee payable by AMP are RMB700 million, RMB800 million and RMB900 million, respectively; the annual caps of the management fee and performance-based fee payable by the Company for the asset management for specific clients are RMB300 million, RMB400 million and RMB500 million, respectively; and the annual caps of the fees for other daily transactions are RMB100 million.

For the year ended 31 December 2016, the subscription price and corresponding subscription fee for the subscription of fund products was RMB9,188.01 million, the redemption price and corresponding redemption fee for the redemption of fund products was RMB4,338.51 million, the sales commission fee and client maintenance fee paid by AMP was RMB0 million, the management fee paid by the Company for the asset management for specific clients was RMB10.90 million, and the fees for other daily transactions were RMB4.15 million.

 

  (2) Framework Agreement between Pension Company and AMP

Pension Company and AMP entered into the “Framework Agreement in relation to Subscription and Redemption of Fund Products, Sale of Funds and Other Daily Transactions” on 4 September 2014. The agreement became effective upon signing by the parties and expired on 31 December 2016. Pursuant to the agreement, Pension Company and AMP would enter into certain daily transactions, including subscription and redemption of fund products, sales agency services and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement was determined by the parties through arm’s length negotiations with reference to the industry practices. For the three years ended 31 December 2016, the annual caps of the subscription price and corresponding subscription fee for the subscription of fund products were RMB5,000 million, RMB10,000 million and RMB10,000 million, respectively; the annual caps of the redemption price and corresponding redemption fee for the redemption of fund products were RMB5,000 million, RMB10,000 million and RMB10,000 million, respectively; the annual caps of the sales commission fee and client maintenance fee payable by AMP were RMB50 million, RMB100 million and RMB100 million, respectively; and the annual caps of the fees for other daily transactions were RMB50 million, RMB100 million and RMB100 million, respectively. As approved by the First Extraordinary General Meeting 2016 of the Company, the 2017-2019 framework agreement was entered into between Pension Company and AMP on 23 December 2016 for a term of three years from 1 January 2017 to 31 December 2019. Pursuant to the agreement, Pension Company and AMP will continue to conduct certain daily transactions, including subscription and redemption of fund products, sales agency services, asset management for specific clients and other daily transactions permitted by laws and regulations. For the three years ending 31 December 2019, the annual caps of the subscription price and corresponding subscription fee for the subscription of fund products are RMB10,000 million; the annual caps of the redemption price and corresponding redemption fee for the redemption of fund products are RMB10,000 million; the annual caps of the sales commission fee and client maintenance fee payable by AMP are RMB100 million; the annual caps of the management fee and performance-based fee payable by Pension Company for the asset management for specific clients are RMB100 million; and the annual caps of the fees for other daily transactions are RMB100 million.

 

52


China Life Insurance Company Limited    Annual Report 2016

Significant Events

 

For the year ended 31 December 2016, the subscription price and corresponding subscription fee for the subscription of fund products was RMB0 million, the redemption price and corresponding redemption fee for the redemption of fund products was RMB0 million, the sales commission fee and client maintenance fee paid by AMP was RMB0 million, and the fees for other daily transactions were RMB0 million.

 

  (3) Framework Agreement between CLIC and AMP

CLIC and AMP entered into the “Framework Agreement in relation to Subscription and Redemption of Fund Products” on 30 May 2014. The agreement became effective upon signing by the parties and expired on 31 December 2016. Pursuant to the agreement, CLIC and AMP would enter into transactions in relation to the subscription and redemption of fund products. Pricing of the transactions under the agreement was determined by the parties through arm’s length negotiations with reference to the industry practices. For the three years ended 31 December 2016, the annual caps of the subscription price and corresponding subscription fee for the subscription of fund products were RMB5,000 million, RMB10,000 million and RMB10,000 million, respectively; and the annual caps of the redemption price and corresponding redemption fee for the redemption of fund products were RMB5,000 million, RMB10,000 million and RMB10,000 million, respectively. As approved by the First Extraordinary General Meeting 2016 of the Company, the 2017-2019 framework agreement was entered into between CLIC and AMP on 16 December 2016 for a term of three years from 1 January 2017 to 31 December 2019. Pursuant to the agreement, CLIC and AMP will continue to conduct certain daily transactions, including subscription and redemption of fund products, and asset management for specific clients. For the three years ending 31 December 2019, the annual caps of the subscription price and corresponding subscription fee for the subscription of fund products are RMB10,000 million; the annual caps of the redemption price and corresponding redemption fee for the redemption of fund products are RMB10,000 million; and the annual caps of the management fee and performance-based fee payable by CLIC for the asset management for specific clients are RMB100 million.

For the year ended 31 December 2016, the subscription price and corresponding subscription fee for the subscription of fund products was RMB1,530.59 million, and the redemption price and corresponding redemption fee for the redemption of fund products was RMB2,585.28 million.

 

  (4) Framework Agreement between CLP&C and AMP

CLP&C and AMP entered into the “Cooperation Framework Agreement” on 6 June 2014. The agreement became effective upon signing by the parties and expired on 31 December 2016. Pursuant to the agreement, CLP&C and AMP would enter into certain daily transactions, including subscription and redemption of fund products, sales agency services and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement was determined by the parties through arm’s length negotiations with reference to the industry practices. For the three years ended 31 December 2016, the annual caps of the subscription price for the fund products were RMB5,000 million, RMB10,000 million and RMB10,000 million, respectively; the annual caps of the redemption price for the fund products were RMB5,000 million, RMB10,000 million and RMB10,000 million, respectively; the annual caps of the subscription fee for the fund products were RMB50 million, RMB100 million and RMB100 million, respectively; the annual caps of the redemption fee for the fund products are RMB50 million, RMB100 million and RMB100 million, respectively; the annual caps of

 

53


China Life Insurance Company Limited    Annual Report 2016

Significant Events

 

the sales commission fee and client maintenance fee payable by AMP were RMB50 million, RMB100 million and RMB100 million, respectively; and the annual caps of the fees for other daily transactions were RMB50 million, RMB100 million and RMB100 million, respectively. As approved by the First Extraordinary General Meeting 2016 of the Company, the 2017-2019 framework agreement was entered into between CLP&C and AMP on 22 December 2016 for a term of three years from 1 January 2017 to 31 December 2019. Pursuant to the agreement, CLP&C and AMP will continue to conduct certain daily transactions, including subscription and redemption of fund products, sales agency services, asset management for specific clients and other daily transactions permitted by laws and regulations. For the three years ending 31 December 2019, the annual caps of the subscription price for the fund products are RMB10,000 million; the annual caps of the redemption price for the fund products are RMB10,000 million; the annual caps of the subscription fee for the fund products are RMB100 million; the annual caps of the redemption fee for the fund products are RMB100 million; the annual caps of the sales commission fee and client maintenance fee payable by AMP are RMB100 million; the annual caps of the management fee and performance-based fee payable by CLP&C for the asset management for specific clients are RMB100 million; and the annual caps of the fees for other daily transactions are RMB100 million.

For the year ended 31 December 2016, the subscription price for the fund products was RMB100.00 million, the redemption price for the fund products was RMB0 million, the subscription fee for the fund products was RMB0 million, the redemption fee for the fund products was RMB0 million, the sales commission fee and client maintenance fee paid by AMP was RMB0 million, and the fees for other daily transactions were RMB0 million.

 

  5. Framework Agreements with CLWM

 

  (1) Framework Agreement between the Company and CLWM

The Company and CLWM entered into the “Framework Agreement in relation to Asset Management Services and Other Daily Transactions” on 30 December 2015. The agreement became effective upon signing by the parties and will expire on 31 December 2017. Pursuant to the agreement, the Company and CLWM will enter into certain daily transactions, including asset management services, sale agency services for asset management products and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to the industry practices. For the three years ending 31 December 2017, the annual caps of the management fee payable by the Company for the asset management services are RMB55 million, RMB180 million and RMB240 million, respectively; the annual caps of fees in connection with the sale agency services payable by CLWM, including the sales commission fee, client maintenance fee, handling fee and intermediary fee are RMB25 million, RMB50 million and RMB100 million, respectively; the annual caps of the fees for other daily transactions are RMB25 million, RMB50 million and RMB100 million, respectively.

For the year ended 31 December 2016, the management fee paid by the Company for the asset management services was RMB0.03 million; the fees in connection with the sale agency services paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and intermediary fee were RMB0 million; the fees for other daily transactions were RMB0.14 million.

 

54


China Life Insurance Company Limited    Annual Report 2016

Significant Events

 

  (2) Framework Agreement between CLIC and CLWM

CLIC and CLWM entered into the “Framework Agreement in relation to Asset Management Services” on 26 January 2016. The agreement became effective upon signing by the parties and will expire on 31 December 2017. Pursuant to the agreement, CLIC will subscribe for the asset management products, in respect of which CLWM acts as the manager, according to its needs of asset allocation. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to the industry practices. For the three years ending 31 December 2017, the annual caps of the management fee payable by CLIC for the asset management services are RMB40 million, RMB70 million and RMB80 million, respectively.

For the year ended 31 December 2016, the management fee paid by CLIC for the asset management services was RMB0.48 million.

 

  (3) Framework Agreement between CLP&C and CLWM

CLP&C and CLWM entered into the “Framework Agreement in relation to Asset Management Services and Other Daily Transactions” on 9 March 2016. The agreement became effective upon signing by the parties and will expire on 31 December 2017. Pursuant to the agreement, CLP&C and CLWM will enter into certain daily transactions, including asset management services, sale agency services for asset management products and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to the industry practices. For the three years ending 31 December 2017, the annual caps of the management fee payable by CLP&C for the asset management services are RMB5 million, RMB180 million and RMB300 million, respectively; the annual caps of fees in connection with the sale agency services payable by CLWM, including the sales commission fee, client maintenance fee, handling fee and intermediary fee are RMB2 million, RMB150 million and RMB200 million, respectively; the annual caps of the fees for other daily transactions are RMB5 million, RMB50 million and RMB50 million, respectively.

For the year ended 31 December 2016, the management fee paid by CLP&C for the asset management services was RMB0 million; the fees in connection with the sale agency services paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and intermediary fee were RMB0 million; the fees for other daily transactions were RMB0.01 million.

 

55


China Life Insurance Company Limited    Annual Report 2016

Significant Events

 

  (4) Framework Agreement between CLO and CLWM

CLO and CLWM entered into the “Framework Agreement in relation to Asset Management Services and Other Daily Transactions” on 30 December 2015. The agreement became effective upon signing by the parties and will expire on 31 December 2017. Pursuant to the agreement, CLO and CLWM will enter into certain daily transactions, including asset management services, sale agency services for asset management products and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to the industry practices. For the three years ending 31 December 2017, the annual caps of the management fee payable by CLO for the asset management services are RMB10 million, RMB30 million and RMB50 million, respectively; the annual caps of fees in connection with the sale agency services payable by CLWM, including the sales commission fee, client maintenance fee, handling fee and intermediary fee are RMB5 million, RMB5 million and RMB10 million, respectively; the annual caps of the fees for other daily transactions are RMB5 million, RMB5 million and RMB10 million, respectively.

For the year ended 31 December 2016, the management fee paid by CLO for the asset management services was RMB0 million; the fees in connection with the sale agency services paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and intermediary fee were RMB0 million; the fees for other daily transactions were RMB0 million.

 

  (5) Framework Agreement between CLI and CLWM

CLI and CLWM entered into the “Framework Agreement in relation to Asset Management Services and Other Daily Transactions” on 3 February 2016. The agreement became effective upon signing by the parties and will expire on 31 December 2017. Pursuant to the agreement, CLI and CLWM will enter into certain daily transactions, including asset management services, sale agency services for asset management products and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to the industry practices. For the three years ending 31 December 2017, the annual caps of the management fee payable by CLI for the asset management services are RMB20 million (including the management fee in an amount of RMB0.4 million paid by CLI to CLWM for the provision of asset management services prior to the execution of the framework agreement), RMB30 million and RMB50 million, respectively; the annual caps of fees in connection with the sale agency services payable by CLWM, including the sales commission fee, client maintenance fee, handling fee and intermediary fee are RMB10 million, RMB40 million and RMB80 million, respectively; the annual caps of the fees for other daily transactions are RMB10 million, RMB40 million and RMB80 million, respectively.

For the year ended 31 December 2016, the management fee paid by CLI for the asset management services was RMB0.04 million; the fees in connection with the sale agency services paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and intermediary fee were RMB0 million; the fees for other daily transactions were RMB0 million.

 

56


China Life Insurance Company Limited    Annual Report 2016

Significant Events

 

Confirmation by auditor

The Board has received a comfort letter from the auditor of the Company with respect to the above continuing connected transactions which were subject to the reporting, announcement and/or independent shareholders’ approval requirements, and the letter stated that during the Reporting Period:

 

  (1) nothing has come to the auditors’ attention that causes them to believe that the disclosed continuing connected transactions have not been approved by the Company’s Board of Directors;

 

  (2) for transactions involving the provision of goods or services by the Company, nothing has come to the auditors’ attention that causes them to believe that the transactions were not, in all material respects, in accordance with the pricing policies of the Company;

 

  (3) nothing has come to the auditors’ attention that causes them to believe that the transactions were not entered into, in all material respects, in accordance with the relevant agreements governing such transactions; and

 

  (4) nothing has come to the auditors’ attention that causes them to believe that the amounts of the continuing connected transactions have exceeded the total amount of the annual caps set by the Company.

Confirmation by Independent Directors

The Company’s Independent Directors have reviewed the above continuing connected transactions which were subject to the reporting, announcement and/or independent shareholders’ approval requirements, and confirmed that:

 

  (1) the transactions were entered into in the ordinary and usual course of business of the Company;

 

  (2) the transactions were conducted on normal commercial terms;

 

  (3) the transactions were entered into in accordance with the agreements governing those continuing connected transactions, and the terms are fair and reasonable and in the interests of shareholders of the Company as a whole; and

 

  (4) the amounts of the above transactions have not exceeded the relevant annual caps.

 

57


China Life Insurance Company Limited    Annual Report 2016

Significant Events

 

  (II) Other Major Connected Transactions

 

  1. Formation of partnership

On 23 November 2016, the Company, CLIC, CLP&C and China Life Chengda (Shanghai) Healthcare Equity Investment Management Company Limited (“CLCD”) entered into a partnership agreement for the formation of the China Life Chengda (Shanghai) Healthcare Equity Investment Center (Limited Partnership) (the “Partnership”). Pursuant to the partnership agreement, the total capital contribution by all the partners of the Partnership shall be RMB12,010 million, of which RMB10 million shall be contributed by CLCD as the general partner and managing partner, and RMB9,000 million, RMB2,000 million and RMB1,000 million shall be contributed by each of the Company, CLIC and CLP&C as a limited partner. The purpose of the Partnership is to achieve capital appreciation through investment in enterprises or projects in healthcare and related industries. The Partnership shall have a term of eight years. The Partnership shall distribute profits and share losses pursuant to the provisions of the partnership agreement. On 23 November 2016, the Company entered into a subscription agreement with CLCD (as the general partner) and China Life Equity Investment Company Limited (“CLEI”, as the manager of the Partnership) to confirm the Company’s capital contribution to the Partnership. As CLI (a wholly-owned subsidiary of CLIC) holds 100% of the equity interest in CLEI, which in turn holds 100% of the equity interest in CLCD, each of CLEI and CLCD is a connected person of the Company.

 

  2. Investment in trust scheme

On 6 December 2016, AMC, as the authorized agent on behalf of the Company and CLP&C (each as the principal and beneficiary), entered into a trust contract with Chongqing International Trust Co., Ltd. (“Chongqing Trust”)(as the trustee) for the subscription of the trust units under the Chongqing Trust – Collective Fund Trust Scheme for the PPP Project for Qingdao Metro Line 4 (the “Trust Scheme”) established by Chongqing Trust. Pursuant to the trust contract, the total amount of the trust funds under the Trust Scheme shall be RMB2,116 million. The Company and CLP&C shall subscribe for 2,086 million and 30 million trust units under the Trust Scheme at a consideration of RMB2,086 million and RMB30 million, respectively. The trust funds under the Trust Scheme will be ultimately used for the investment in the PPP Project for Qingdao Metro Line 4. The trust benefits to be distributed by Chongqing Trust to the beneficiaries are ultimately derived from the operating income generated from the PPP Project for Qingdao Metro Line 4 and the special subsidies provided by the Qingdao Municipal Government for the project every year.

The above transactions in relation to the formation of partnership and investment in trust scheme were subject to the reporting and announcement requirements but were exempt from the independent shareholders’ approval requirement pursuant to Rule 14A.76(2) of the Listing Rules. The Company has complied with the disclosure requirements under Chapter 14A of the Listing Rules in respect of such connected transactions.

 

  (III) Statement on Claims, Debt Transactions and Guarantees etc. with Related Parties outside the Course of its Business

During the Reporting Period, the Company was not involved in claims, debt transactions or guarantees with related parties outside the course of its business.

 

58


China Life Insurance Company Limited    Annual Report 2016

Significant Events

 

III. MATERIAL CONTRACTS AND THEIR PERFORMANCE

 

  1. During the Reporting Period, the Company neither acted as trustee, contractor or lessee of other companies’ assets, nor entrusted, contracted or leased its assets to other companies, the profit or loss from which accounted for 10% or more of the Company’s profits for the Reporting Period, nor were there any such matters that occurred in previous periods but subsisted during the Reporting Period.

 

  2. The Company neither gave external guarantees nor provided guarantees to its non-wholly owned subsidiaries during the Reporting Period.

 

  3. Entrusted cash asset investment during the Reporting Period or any investment occurred in previous periods but subsisted during the Reporting Period: Investment is one of the principal businesses of the Company. The Company has adopted the mode of entrusted investment for management of its investment assets, and established a diversified framework of entrusted investment management with China Life’s internal managers playing the key role and the external managers offering effective supports. The internal managers include AMC and its subsidiaries, and CLI. The external managers comprise both domestic and overseas managers, including fund companies, securities companies and other professional investment management institutions. The Company selected different investment managers based on the purpose of allocation of various types of investments, their risk features and the expertise of different managers, so as to establish a great variety of investment portfolios and improve the efficiency of capital utilization. The Company entered into entrusted investment management agreements with all managers and supervised the managers’ daily investment performance through the measures such as investment guidelines, asset entrustment and performance appraisals. The Company also adopted risk control measures in respect of specific investments based on the characteristics of different managers and investment products.

 

  4. Except as otherwise disclosed in this annual report, the Company had no other material contracts during the Reporting Period.

 

IV. UNDERTAKINGS OF THE COMPANY, SHAREHOLDERS, EFFECTIVE CONTROLLERS, ACQUIRERS, DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT OR OTHER RELATED PARTIES WHICH ARE EITHER GIVEN OR EFFECTIVE DURING THE REPORTING PERIOD

Prior to the listing of the Company’s A Shares (30 November 2006), land use rights were injected by CLIC into the Company during its reorganization. Out of these, four pieces of land (with a total area of 10,421.12 square meters) had not had its formalities in relation to the change of ownership completed. Further, out of the properties injected into the Company, there were six properties (with a gross floor area of 8,639.76 square meters) in respect of which the formalities in relation to the change of ownership had not been completed. CLIC undertook to complete the above-mentioned formalities within one year of the date of listing of the Company’s A Shares, and in the event that such formalities could not be completed within such period, CLIC would bear any potential losses to the Company due to the defective ownership.

CLIC strictly followed these commitments. As at the end of the Reporting Period, save for the two properties and related land of the Company’s Shenzhen Branch, the ownership registration formalities of which had not been completed due to historical reasons, all other formalities in relation to the change of land and property ownership had been completed. The Shenzhen Branch of the Company continues to use such properties and land, and no other parties have questioned or hindered the use of such properties and land by the Company.

 

59


China Life Insurance Company Limited    Annual Report 2016

Significant Events

 

The Company’s Shenzhen Branch and the other co-owners of the properties have issued a letter to the governing department of the original owner of the properties in respect of the confirmation of ownership of the properties, requesting it to report the ownership issue to the State-owned Assets Supervision and Administration Commission of the State Council (“SASAC”), and requesting the SASAC to confirm the respective shares of each co-owner in the properties and to issue written documents in this regard to the department of land and resources of Shenzhen, so as to assist the Company and the other co-owners to complete the formalities in relation to the division of ownership of the properties.

Given that the change of ownership of the above two properties and related land use rights were directed by the co-owners, and all formalities in relation to the change of ownership were proceeded slowly due to reasons such as issues rooted in history and government approvals, CLIC the controlling shareholder of the Company, made further commitment as follows: CLIC will assist the Company in completing, and urge the co-owners to complete, the formalities in relation to the change of ownership in respect of the above two properties and related land use rights as soon as possible. If the formalities cannot be completed due to the reasons of the co-owners, CLIC will take any other legally practicable measures to resolve the issue and will bear any potential losses suffered by the Company as a result of the defective ownership.

 

60


China Life Insurance Company Limited    Annual Report 2016

Changes in Ordinary Shares and Shareholders Information

 

1. CHANGES IN SHARE CAPITAL

During the Reporting Period, there was no change in the total number of shares and the share capital of the Company.

 

2. ISSUE AND LISTING OF SECURITIES

As at the end of the Reporting Period, the Company had not issued any securities in the last three years. During the Reporting Period, there was no change in the total number of shares and the share structure of the Company due to bonus issues or placings, nor were there any internal employees’ shares.

 

3. INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER

 

  1. Total number of shareholders and their shareholdings

 

Total number of ordinary share shareholders as at the end of the Reporting Period    No. of A Share shareholders: 126,966 No. of H Share shareholders: 30,361    Total number of ordinary share shareholders as at the end of the month prior to the disclosure of this annual report    No. of A Share shareholders: 122,882 No. of H Share shareholders: 30,257

 

Particulars of top ten shareholders of the Company    Unit: Shares

 

Name of shareholder

  

Nature of shareholder

   Percentage of
shareholding
    Number of
shares held as at
the end of the
Reporting Period
     Increase/decrease
during the
Reporting Period
     Number of
shares subject to
selling restrictions
     Number of
shares pledged
or frozen
 

China Life Insurance (Group) Company

   State-owned legal person      68.37     19,323,530,000        —          —          —    

HKSCC Nominees Limited

   Overseas legal person      25.88     7,314,015,954        +3,725        —          —    

China Securities Finance Corporation Limited

   State-owned legal person      2.02     572,311,916        +51,619,506        —          —    

Central Huijin Asset Management Limited

   State-owned legal person      0.42     119,719,900        —          —          —    

Industrial and Commercial Bank of China Limited – China Southern Flexible Allocation of Consumption and Vitality of Hybrid Securities Investment Fund

   Other      0.21     59,384,610        +25,016,894        —          —    

Hong Kong Securities Clearing Company Limited

   Overseas legal person      0.10     27,290,235        +17,584,819        —          —    

China International Television Corporation

   State-owned legal person      0.07     18,452,300        —          —          —    

China Universal Asset Management Co., Ltd – Industrial and Commercial Bank of China Limited – China Universal – Tianfu Bull No. 53 Asset Management Plan

   Other      0.05     15,015,845        —          —          —    

New China Life Insurance Company Ltd. – Participating – Group Participating –018L –FH001 Hu

   Domestic Non-State-owned legal person      0.05     13,538,001        +13,538,001        —          —    

China National Nuclear Corporation

   State-owned legal person      0.04     12,400,000        -7,600,000        —          —    

 

61


China Life Insurance Company Limited    Annual Report 2016

Changes in Ordinary Shares and Shareholders Information

 

  1.    HKSCC Nominees Limited is a company that holds shares on behalf of the clients of the Hong Kong stock brokers and other participants of the CCASS system. The relevant regulations of the HKSE do not require such persons to declare whether their shareholdings are pledged or frozen. Hence, HKSCC Nominees Limited is unable to calculate or provide the number of shares that are pledged or frozen.
Details of shareholders   2.    China International Television Corporation and China National Nuclear Corporation became the top 10 shareholders of the Company through the strategic placement during the initial public offering of A Shares of the Company in December 2006. The trading restriction period of the shares from the strategic placement was from 9 January 2007 to 9 January 2008.
  3.    Industrial and Commercial Bank of China Limited-China Southern Flexible Allocation of Consumption and Vitality of Hybrid Securities Investment Fund has Industrial and Commercial Bank of China Limited as its fund depositary. China Universal Asset Management Co., Ltd – Industrial and Commercial Bank of China Limited – China Universal – Tianfu Bull No.53 Asset Management Plan has Industrial and Commercial Bank of China Limited as its asset trustee. Save as above, the Company was not aware of any connected relationship and concerted parties as defined by the “Measures for the Administration of the Takeover of Listed Companies” among the top ten shareholders of the Company.

 

  2. Information relating to the Controlling Shareholder and Effective Controller

The controlling shareholder of the Company is CLIC, and its relevant information is set out below:

 

Name of company      China Life Insurance (Group) Company
Legal representative      Yang Mingsheng
Date of incorporation      21 July 2003 (CLIC was formerly known as China Life Insurance Company, a company approved and formed by the State Council in January 1999. With the approval of the CIRC in 2003, China Life Insurance Company was restructured as CLIC)
Major businesses     

Insurance services including receipt of premiums and payment of benefits in

respect of the in-force life, health, accident and other types of personal insurance business, and the reinsurance business; holding or investing in domestic and overseas insurance companies or other financial insurance institutions; funds management business permitted by national laws and regulations or approved by the State Council of PRC; other businesses approved by insurance regulatory agencies.

Shareholdings in other subsidiaries and affiliates listed in China or abroad during the Reporting Period      As at 31 December 2016, CLIC held 1,785,098,644 shares (H Share) of Town Health International Medical Group Limited, representing 23% of its total shares.

 

62


China Life Insurance Company Limited    Annual Report 2016

Changes in Ordinary Shares and Shareholders Information

 

The effective controller of the Company is the Ministry of Finance of the People’s Republic of China. The equity and controlling relationship between the Company and its effective controller is set out in below:

 

 

LOGO

During the Reporting Period, there was no change to the controlling shareholder and the effective controller of the Company. As at the end of the Reporting Period, there was no other corporate shareholder holding more than 10% of the shares in the Company.

 

4. INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY HELD BY SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS UNDER HONG KONG LAWS AND REGULATIONS

So far as is known to the Directors, Supervisors and the chief executive of the Company, as at 31 December 2016, the following persons (other than the Directors, Supervisors and the chief executive of the Company) had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “SFO”), or which were recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO, or as otherwise notified to the Company and HKSE:

 

Name of substantial shareholder

   Capacity    Class of shares      Number of
shares held
    Percentage of
the respective
class of shares
    Percentage of
the total number
of shares in issue
 

China Life Insurance (Group) Company

   Beneficial owner      A Shares        19,323,530,000 (L)      92.80     68.37

JPMorgan Chase & Co. (Note 1)

   Beneficial owner,
investment manager,
trustee and custodian
corporation/approved
lending agent
     H Shares       

568,720,847

131,839,776

264,241,698

(L) 

(S) 

(P) 

   

7.64

1.77

3.55


   

2.01

0.47

0.93


BlackRock, Inc. (Note 2)

   Interest in controlled
corporation
     H Shares       

516,788,896

1,066,000

(L) 

(S) 

   

6.94

0.01


   

1.83

0.00


The letter “L” denotes a long position. The letter “S” denotes a short position. The letter “P” denotes interest in a lending pool.

 

63


China Life Insurance Company Limited    Annual Report 2016

Changes in Ordinary Shares and Shareholders Information

 

(Note 1):    JPMorgan Chase & Co. was interested in a total of 568,720,847 H shares in accordance with the provisions of Part XV of the SFO. Of these shares, J.P. Morgan Securities LLC, JF Asset Management Limited, J.P. Morgan Investment Management Inc., J.P. Morgan GT Corporation, J.P. Morgan Whitefriars Inc., J.P. Morgan Securities plc, JPMorgan Chase Bank, N.A., J.P. Morgan Chase Bank Berhad, JPMorgan Asset Management (UK) Limited and China International Fund Management Co Ltd were interested in 94,276,750 H shares, 1,744,000 H shares, 238,000 H shares, 500,000 H shares, 36,304,793 H shares, 169,712,429 H shares, 264,246,283 H shares, 800,592 H shares, 698,000 H shares and 200,000 H shares respectively. All of these entities are either controlled or indirectly controlled subsidiaries of JPMorgan Chase & Co.
   Included in the 568,720,847 H shares are 264,241,698 H shares (3.55%), which are held in the “lending pool”, as defined under Section 5(4) of the Securities and Futures (Disclosure of Interests-Securities Borrowing and Lending) Rules. Of these 568,720,847 H shares, 52,558,380 H shares were physically settled listed derivatives, 1,652,000 H shares were cash settled listed derivatives, 237,826 H shares were physically settled unlisted derivatives and 28,128,300 H shares were cash settled unlisted derivatives.
   JPMorgan Chase & Co. held a short position as defined under Part XV of the SFO in 131,839,776 H shares (1.77%). Of these 131,839,776 H shares, 18,998,675 H shares were physically settled listed derivatives, 41,455,100 H shares were cash settled listed derivatives, 8,447,345 H shares were physically settled unlisted derivatives and 33,686,156 H shares were cash settled unlisted derivatives.
(Note 2):    BlackRock, Inc. was interested in a total of 516,788,896 H shares in accordance with the provisions of Part XV of the SFO. Of these shares, BlackRock Investment Management, LLC, BlackRock Financial Management, Inc., BlackRock Institutional Trust Company, National Association, BlackRock Fund Advisors, BlackRock Advisors, LLC, BlackRock Japan Co., Ltd., BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia) Limited, BlackRock Asset Management North Asia Limited, BlackRock (Netherlands) B.V., BlackRock Advisors (UK) Limited, BlackRock International Limited, BlackRock Asset Management Ireland Limited, BLACKROCK (Luxembourg) S.A., BlackRock Investment Management (UK) Limited, BlackRock Asset Management Deutschland AG, BlackRock Fund Managers Limited, BlackRock Life Limited, BlackRock (Singapore) Limited and BlackRock Asset Management (Schweiz) AG were interested in 3,236,000 H shares, 2,609,000 H shares, 94,535,254 H shares, 168,530,000 H shares, 1,536,955 H shares, 9,184,502 H shares, 2,665,235 H shares, 3,855,000 H shares, 37,301,218 H shares, 1,562,000 H shares, 39,034,785 H shares, 3,427,700 H shares, 48,150,096 H shares, 65,373,505 H shares, 30,179,276 H shares, 539,000 H shares, 3,878,370 H shares, 591,000 H shares, 564,000 H shares and 36,000 H shares respectively. All of these entities are either controlled or indirectly controlled subsidiaries of BlackRock, Inc. Of these 516,788,896 H shares, 2,991,915 H shares were cash settled unlisted derivatives.
   BlackRock, Inc. held by way of attribution a short position as defined under Part XV of the SFO in 1,066,000 H shares (0.01%). Of these 1,066,000 H shares, 358,000 H shares were cash settled unlisted derivatives.

Save as disclosed above, the Directors, Supervisors and the chief executive of the Company are not aware that there is any party who, as at 31 December 2016, had an interest or short position in the shares and underlying shares of the Company which were recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO.

 

64


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

I DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

 

  (I) Current Directors

 

Name

 

Position

  Gender     Age     Term     Number
of shares
held at
the
beginning
of the
year
    Number
of

shares
held

at the
end of
the year
    Reason
for
changes
    Remuneration
paid/fee in
RMB ten
thousands
    Other
benefits,
social
insurance,

housing
provident
fund and
enterprise
annuity
fund paid
by  the
Company

in RMB
ten
thousands
    Total
emoluments
received
from the
Company
during the
Reporting
Period in
RMB  ten
thousands
(before

tax)
    Whether
received
emoluments

from
related
parties of the
Company
 

Yang Mingsheng

  Chairman of the Board, Executive Director     Male       61      
Since
22 May 2012
 
 
    0       0       /       0       0       0       Yes  

Lin Dairen

  Executive Director     Male       58      
Since
27 October 2008
 
 
    0       0       /       140.00       24.56       164.56       No  

Xu Hengping

  Executive Director     Male       58      
Since
11 July 2015
 
 
    0       0       /       113.40       24.48       137.88       No  

Xu Haifeng

  Executive Director     Male       57      
Since
11 July 2015
 
 
    0       0       /       113.40       24.18       137.58       No  

Miao Jianmin

  Non-executive Director     Male       52      
Since
27 October 2008
 
 
    0       0       /       0       0       0       Yes  

Wang Sidong

  Non-executive Director     Male       55      
Since
24 July 2012
 
 
    0       0       /       0       0       0       Yes  

Liu Jiade

  Non-executive Director     Male       54      
Since
11 July 2015
 
 
    0       0       /       0       0       0       Yes  

Chang Tso Tung Stephen

  Independent Director     Male       68      
Since
20 October 2014
 
 
    0       0       /       32.00       0       32.00       Yes  

Robinson Drake Pike

  Independent Director     Male       65      
Since
11 July 2015
 
 
    0       0       /       32.00       0       32.00       No  

Tang Xin

  Independent Director     Male       45      
Since
7 March 2016
 
 
    0       0       /       26.67       0       26.67       Yes  

Leung Oi-Sie Elsie

  Independent Director     Female       77      
Since
20 July 2016
 
 
    0       0       /       15.00       0       15.00       Yes  
 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  /     /       /       /       0       0       /       /       /       545.69       /  
 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Notes:

 

1. According to the “Procedural Rules for Board of Directors Meetings of China Life Insurance Company Limited”, Directors serve for a term of three years and may be re-elected. However, Independent Directors may not serve for more than six years.
2. The positions of the Directors in this annual report reflect their positions as at the submission date of this annual report. The emoluments are calculated based on their terms of office during the Reporting Period.
3. According to the requirements of the relevant remuneration policies of the Company, the final amount of emoluments of the Executive Directors is currently subject to review and approval. The result of the review will be disclosed when the final amount is confirmed.
4. Following the election at the First Extraordinary General Meeting 2015 and upon the approval from the CIRC, Mr. Tang Xin was appointed as a Director with effect from 7 March 2016. Following the election at the 2015 Annual General Meeting and upon the approval from the CIRC, Ms. Leung Oi-Sie Elsie was appointed as a Director with effect from 20 July 2016.

 

65


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

  (II) Current Supervisors

 

Name

 

Position

 

Gender

  Age    

Term

  Number
of shares
held at
the
beginning
of the
year
    Number
of
shares
held at
the end
of the
year
    Reason
for
changes
    Remuneration
paid/fee in
RMB ten
thousands
    Other
benefits,
social
insurance,
housing
provident
fund and
enterprise
annuity
fund paid
by  the
Company

in RMB
ten
thousands
    Total
emoluments
received
from the
Company
during the
Reporting
Period in
RMB  ten
thousands
(before

tax)
    Whether
received
emoluments
from
related
parties of the
Company
 

Miao Ping

  Chairman of the Supervisory Committee   Male     58     Since 11 July 2015     0       0       /       114.80       24.48       139.28       No  

Shi Xiangming

  Supervisor   Male     57     Since 25 May 2009     0       0       /       117.91       30.03       147.94       No  

Xiong Junhong

  Supervisor   Female     48     Since 20 October 2014     0       0       /       0       0       0       Yes  

Zhan Zhong

  Employee Representative Supervisor   Male     48     Since 11 July 2015     0       0       /       122.38       30.45       152.83       No  

Wang Cuifei

  Employee Representative Supervisor   Female     53     Since 11 July 2015     0       0       /       108.78       29.29       138.07       No  
 

 

 

 

 

 

 

   

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  /   /     /     /     0       0       /       /       /       578.12       /  
 

 

 

 

 

 

 

   

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Notes:

 

1. Pursuant to the Articles of Association, Supervisors serve for a term of three years and may be re-elected.
2. The positions of the Supervisors in this annual report reflect their positions as at the submission date of this annual report. The emoluments are calculated based on their terms of office during the Reporting Period.
3. According to the requirements of the relevant remuneration policies of the Company, the final amount of emoluments of the Chairman of the Supervisory Committee and the Supervisors is currently subject to review and approval. The result of the review will be disclosed when the final amount is confirmed.

 

66


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

  (III) Current Senior Management

 

Name

 

Position

  Gender     Age    

Term

  Number
of share
held at
the

beginning
of the
year
    Number
of

share
held at

the end
of

the year
    Reason
for
changes
    Remuneration
paid in RMB
ten thousands
    Other
benefits,
social
insurance,
housing
provident
fund and
enterprise
annuity
fund paid
by  the
Company
in RMB
ten
thousands
    Total
emoluments
received
from the
Company
during the
Reporting

Period  in
RMB

ten
thousands
(before

tax)
    Whether
received
emoluments
from

related
parties of the
Company
 

Lin Dairen

  President     Male       58     Since April 2014     0       0       /       140.00       24.56       164.56       No  

Xu Hengping

  Vice President     Male       58     Since November 2014     0       0       /       113.40       24.48       137.88       No  

Xu Haifeng

  Vice President     Male       57     Since November 2014     0       0       /       113.40       24.18       137.58       No  

Li Mingguang

  Vice President, Chief Actuary     Male       47     As Vice President since November 2014 and Chief Actuary since March 2012     0       0       /       113.40       24.64       138.04       No  

Zhao Lijun

  Vice President     Male       53     Since July 2016     0       0       /       56.70       12.22       68.92       No  

Xiao Jianyou

  Vice President     Male       48     Since October 2016     0       0       /       107.33       24.75       132.08       No  

Zheng Yong

  Board Secretary     Male       54     Since June 2013     0       0       /       105.00       32.47       137.47       No  

Ruan Qi

  Chief Information Technology Officer     Male       50     Since October 2016     0       0       /       24.50       8.60       33.10       No  
 

 

 

 

 

   

 

 

   

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  /     /       /     /     0       0       /       /       /       949.63       /  
 

 

 

 

 

   

 

 

   

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Notes:

 

1. The positions of the members of the Senior Management in this annual report reflect their positions as at the submission date of this annual report. The emoluments are calculated based on their terms of office during the Reporting Period.
2. According to the requirements of the relevant remuneration policies of the Company, the final amount of emoluments of the Senior Management is currently subject to review and approval. The result of the review will be disclosed when the final amount is confirmed.
3. With the approval given at the seventh meeting of the fifth session of the Board of Directors of the Company and the approval from the CIRC, Mr. Zhao Lijun was appointed as the Vice President of the Company with effect from 20 July 2016. With the approval given at the ninth meeting of the fifth session of the Board of Directors of the Company, Mr. Xiao Jianyou, the former Assistant President, was appointed as the Vice President of the Company with effect from 27 October 2016, and Mr. Ruan Qi was appointed as the Chief Information Technology Officer of the Company with effect from 27 October 2016.

 

67


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

  (IV) Resignation and Retirement of Directors, Supervisors and Senior Management

 

Name

 

Previous
Position

  Gender     Age     Term     Number
of share
held at
the
beginning
of the
year
    Number
of

share
held at
the end
of the
year
    Reason
for
changes
    Remuneration
paid/fee in
RMB ten
thousands
    Other
benefits,
social
insurance,
housing
provident
fund and
enterprise
annuity
fund paid
by  the
Company
in RMB
ten
thousands
    Total
emoluments
received
from the
Company
during the
Reporting
Period in
RMB ten
thousands
(before

tax)
    Whether
received
emoluments
from related
parties of the
Company
   

Reason for

changes

Zhang Xiangxian

  Non-executive Director     Male       61      


24 July
2012 –
3 August
2016
 
 
 
 
    0       0       /       0       0       0       Yes     Resigned due to age reason

Anthony Francis Neoh

  Independent Director     Male       70      


21 June
2010 –
20 July
2016
 
 
 
 
    0       0       /       15.00       0       15.00       Yes     Retired due to the expiration of session of the Board

Huang Yiping

  Independent Director     Male       53      


20 October
2014 –
7 March
2016
 
 
 
 
    0       0       /       5.33       0       5.33       No     Resigned pursuant to the relevant policies

Yang Zheng

  Vice President     Male       46      


November
2014 –
August
2016
 
 
 
 
    0       0       /       65.33       14.05       79.38       No     Resigned due to adjustment of work arrangements

Huang Xiumei

  Financial Controller     Female       49      


December
2014 –
February
2016
 
 
 
 
    0       0       /       16.33       3.05       19.38       No     Resigned due to adjustment of work arrangements
 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

Total

  /     /       /       /       0       0       /       /       /       119.09       /     /
 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

68


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

   DIRECTORS
LOGO   

Mr. Yang Mingsheng, born in 1955, Chinese

 

Mr. Yang became an Executive Director and the Chairman of the Company in May 2012. He has been the Chairman of China Life Insurance (Group) Company since March 2012, the Chairman of China Life Property and Casualty Insurance Company Limited since March 2012, the Chairman of China Life Insurance (Overseas) Company Limited since January 2013, the Chairman of China Life Asset Management Company Limited since December 2013, and the Chairman of China Guangfa Bank Co., Ltd. since September 2016. Mr. Yang has many years of experience in financial industry. He acted as the Vice Chairman of China Insurance Regulatory Commission from 2007 to 2012, and worked for Agricultural Bank of China from 1980 to 2007, where he held various positions such as the Vice President of Shenyang Branch, Head of the Industrial Credit Department and President of Tianjin Branch. He was appointed as the Vice President of Agricultural Bank of China in 1997 and was then promoted to the President of Agricultural Bank of China in 2003. Mr. Yang, a Senior Economist, graduated from the Faculty of Finance of Nankai University, majoring in Monetary Banking with a Master’s degree in Economics.

LOGO   

Mr. Lin Dairen, born in 1958, Chinese

 

Mr. Lin became an Executive Director of the Company in October 2008, and was appointed as the President of the Company by the Board in March 2014. He serves concurrently as a Non-executive Director of China Life Property and Casualty Insurance Company Limited, China Life Pension Company Limited and China Life Asset Management Company Limited. He served as the Vice President of the Company from 2003 to March 2014, and an Executive Director and the President of China Life Pension Company Limited from November 2006 to March 2014. Mr. Lin graduated with a Bachelor’s degree in Medicine from Shandong Province Changwei Medical Institute in 1982. Mr. Lin, a Senior Economist, has over 30 years of experience in the operation of the life insurance business and insurance management, and was awarded special allowance by the State Council. He is currently the Chairman of the China Life Foundation, the Vice Chairman of the Insurance Institute of China and the Insurance Association of China, a Non-executive Director of China Insurance Security Fund Co., Ltd., the Director of the Life Insurance Committee of the Insurance Association of China and the Director of the Insurance Institutional Investors Professional Committee of the Insurance Asset Management Association of China.

 

69


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

LOGO

  

Mr. Xu Hengping, born in 1958, Chinese

 

Mr. Xu became an Executive Director of the Company in July 2015. He has been the Vice President of the Company since November 2014, the Chief Operating Officer of the Company since August 2010, the General Manager of the Company’s Fujian Branch since April 2007, the Deputy General Manager of the Company’s Fujian Branch since December 2002, an Assistant to the General Manager of the Company’s Fujian Branch since September 1998, and the Director of Personal Insurance Division of the Company’s Fujian Branch since July 1996. Mr. Xu once served as the General Manager of the Sales Department and the General Manager of Longyan Branch of Fuzhou Life Insurance Company Limited. Mr. Xu graduated from Hunan University, majoring in Finance. Mr. Xu, a Senior Economist, has over 35 years of experience in operation of the life insurance business and insurance management.

LOGO   

Mr. Xu Haifeng, born in 1959, Chinese

 

Mr. Xu became an Executive Director of the Company in July 2015. He has been the Vice President of the Company since November 2014 and a Non-executive Director of China Life Asset Management Company Limited since September 2015. He served as a Non-executive Director of China Life Ecommerce Company Limited from January 2015 to January 2017. He served as the Business Controller of the Company from February to November 2014, during which he concurrently served as the General Manager of Hebei Branch of the Company. Mr. Xu served as the General Manager of Beijing Branch and the General Manager of Hebei Branch of the Company from 2006 to 2014. Prior to that, Mr. Xu served as the Deputy General Manager and General Manager of Linyi Branch in Shandong Province and the General Manager of the Business Management Department in Shandong Branch of the Company, the General Manager of Jinan Branch and the Deputy General Manager of Beijing Branch of the Company. Mr. Xu graduated from Linyi Foreign Language Normal University in 1982, from Shandong Provincial Party School majoring in Economic Management in 1996, and obtained a Master’s degree in Business Administration from Zhongnan University of Economics and Law in 2007. Mr. Xu, a Senior Economist, has over 30 years of experience in the operation of life insurance business and insurance management.

LOGO   

Mr. Miao Jianmin, born in 1965, Chinese

 

Mr. Miao became a Non-executive Director of the Company in October 2008. He is the Vice Chairman and the President of China Life Insurance (Group) Company. He is concurrently the Chairman of China Life Pension Company Limited, a Director of China Life Asset Management Company Limited, a Director of China World Trade Center Co., Ltd., and an Executive Director of China Finance 40 Forum. He was awarded special allowance by the State Council. In 2009, he was named as a “State-level Candidate for the New Century Talents Project” and one of the “60 People in China Insurance Industry in the 60-year History of New China”. Mr. Miao graduated from the Central University of Finance and Economics with a Doctorate degree in Economics. Before that, Mr. Miao graduated from the post-graduate division of the People’s Bank of China with a Master’s degree in Monetary Banking, and the Central University of Finance and Economics with a Bachelor’s degree in Insurance. Mr. Miao is a Senior Economist.

 

70


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

LOGO   

Mr. Wang Sidong, born in 1961, Chinese

 

Mr. Wang became a Non-executive Director of the Company in July 2012. He has been the Vice President of China Life Insurance (Group) Company, the Chairman of China Life Investment Holding Company Limited, a Director of China Life Pension Company Limited, and a Director of China Life Ecommerce Company Limited since June 2004. Mr. Wang worked for the Ministry of Foreign Economic Relations and Trade, the Xinhua News Agency Hong Kong Branch, and the Hong Kong Chinese Enterprises Association. He served as the Deputy Director of the General Office of China Life Insurance Company, the Deputy General Manager of its Zhejiang Branch and the Deputy Director of the Shares Reform Office of China Life from 2000. Mr. Wang was the Director of the General Office of China Life Insurance (Group) Company in 2003. Mr. Wang, a Senior Economist, graduated from Shandong University with a Bachelor’s degree in Arts, majoring in Chinese Language and Literature.

LOGO   

Mr. Liu Jiade, born in 1963, Chinese

 

Mr. Liu became a Non-executive Director of the Company in July 2015. He is the Vice Chairman and the President of China Guangfa Bank Co., Ltd. and concurrently serves as a Supervisor of Sinopec Sales Company Limited and a member of the Accounting Informatization Committee of the Ministry of Finance. Mr. Liu served as the Deputy Director and the Director of the Trade and Finance Department of the Ministry of Finance, the Deputy County Magistrate (as a titular position) of Guantao County People’s Government in Hebei Province, and the Deputy Director of the Finance Department of the Ministry of Finance. Mr. Liu served as the Vice President of the Company from August 2003 to March 2014, the Chairman of China Life Pension Company Limited from March 2014 to December 2016 (in particular, he concurrently served as the President of China Life Pension Company Limited from March 2014 to March 2015), and the Vice President of China Life Insurance (Group) Company from August 2014 to October 2016. Since 2003, he also concurrently served as a Director of China Life Asset Management Company Limited, a Director of China Life Property and Casualty Insurance Company Limited, and a Director of China Life Franklin Asset Management Company Limited. Mr. Liu, a Senior Economist, graduated from the Central Finance College (now known as the Central University of Finance and Economics) majoring in Finance with a Bachelor’s degree in Economics.

 

71


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

LOGO   

Mr. Chang Tso Tung Stephen, born in 1948, Chinese

 

Mr. Chang became an Independent Director of the Company in October 2014. He served as the Vice Chairman of the Greater China Region of Ernst & Young, the Managing Partner for professional services and the Chairman of auditing and consulting service of Ernst & Young until his retirement in 2004. From 2007 to 2013, Mr. Chang was an Independent Non-executive Director of China Pacific Insurance (Group) Co., Ltd. Mr. Chang is currently an Independent Non-executive Director of China Cinda Asset Management Co., Ltd., Kerry Properties Limited and Hua Hong Semiconductor Limited, all of which are listed on the HKSE. Mr. Chang has been practicing as a certified public accountant in Hong Kong for around 30 years and has extensive experience in accounting, auditing and financial management. Mr. Chang holds a Bachelor of Science degree from the University of London, and is a fellow member of the Institute of Chartered Accountants in England and Wales.

LOGO   

Mr. Robinson Drake Pike, born in 1951, American

 

Mr. Pike became an Independent Director of the Company in July 2015. Before his retirement from Goldman Sachs in 2014, Mr. Pike served as the Managing Director of Goldman Sachs and the Chief Representative of the Beijing Representative Office of Goldman Sachs International Bank UK from August 2011 to May 2014, and the Managing Director of Goldman Sachs and the senior advisor and project coordinator sent to the Industrial and Commercial Bank of China by Goldman Sachs from January 2007 to August 2011. He was the Senior Vice President of Lehman Brothers and the Deputy Head and the Head of Asia Credit Risk Management of Lehman Brothers from July 2000 to December 2006. Mr. Pike currently sits on the four-member Committee of Inspection of Peregrine Fixed Income Limited. He has over 30 years of experience in the Asian financial industry with a focus on risk management and China’s banking industry. He holds a Bachelor of Arts degree in Chinese Language and Literature from Yale University and a Master of Public Affairs degree in development economics from Princeton University’s Woodrow Wilson School.

 

72


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

LOGO   

Mr. Tang Xin, born in 1971, Chinese

  

 

Mr. Tang became an Independent Director of the Company in March 2016. He is a professor of the School of Law of Tsinghua University, the Deputy Head of the Commercial Law Research Center of Tsinghua University, an associate editor of “Tsinghua Law Review”, a member of the Listing Committee of the Shanghai Stock Exchange, the Chairman of the Independent Director Committee of the Listed Companies Association of the PRC, and an Independent Director of each of Harvest Fund Management Co., Ltd., GF Securities Co., Ltd. and Oriza Holdings Co., Ltd. Mr. Tang was elected as a member of the first and second sessions of the Merger, Acquisition and Reorganization Review Committee of the China Securities Regulatory Commission from 2008 to 2010. He served as an Independent Director of China Spacesat Co., Ltd. from 2008 to 2014, an Independent Director of each of SDIC Power Holdings Co., Ltd. and Changjiang Securities Company Limited from 2009 to 2013, and an Independent Director of Beijing Rural Commercial Bank Co., Ltd. from 2009 to 2015. Mr. Tang graduated from Renmin University of China with Bachelor’s, Master’s and Doctorate degrees in Law.

LOGO    Ms. Leung Oi-Sie Elsie, born in 1939, Chinese
  

 

Ms. Leung Oi-Sie Elsie became an Independent Director of the Company in July 2016. She was the first Secretary for Justice of Hong Kong, as well as a member of the Executive Council of Hong Kong. She is currently the Deputy Director of the Hong Kong Basic Law Committee of the Standing Committee of the National People’s Congress and a consultant of Iu, Lai & Li Solicitors & Notaries. Ms. Leung served as a member of the Social Welfare Advisory Committee and the Equal Opportunities Commission, an executive committee member and a council member of the Hong Kong Federation of Women, the Chairperson and President of the International Federation of Women Lawyers, and the Honorary President of the Nanhai Worldwide Friendship Federation. She is a Justice of the Peace, a Notary Public and a China-Appointed Attesting Officer. She has been awarded the “Grand Bauhinia Medal” and admitted as a solicitor by the Law Societies of Hong Kong and England. Ms. Leung graduated from the University of Hong Kong with a Master’s degree in Law, and is a fellow of the International Academy of Matrimonial Lawyers. She has been an Independent Non-executive Director of United Company RUSAL Plc since December 2009, an Independent Non-executive Director of China Resources Power Holdings Company Limited since April 2010, and an Independent Non-executive Director of Beijing Tong Ren Tang Chinese Medicine Company Limited since May 2013.

 

73


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

   SUPERVISORS
LOGO   

Mr. Miao Ping, born in 1958, Chinese

 

Mr. Miao became the Chairman of the Supervisory Committee of the Company in July 2015. He served as an Executive Director of the Company from July 2014 to May 2015 and the Vice President of the Company from December 2009 to May 2015. Mr. Miao served as the General Manager of the Company’s Jiangsu Branch since September 2006, the General Manager of the Company’s Jiangxi Branch since September 2004, and the Deputy General Manager of the Company’s Jiangsu Branch since April 2002. Mr. Miao graduated from the Correspondence College of Yangzhou University in 1996, majoring in Economics and Management. Mr. Miao, a Senior Economist, has over 30 years of experience in the operation of life insurance business and the management of insurance business.

LOGO   

Mr. Shi Xiangming, born in 1959, Chinese

 

Mr. Shi became a Supervisor of the Company in May 2009, and has been the General Manager of the Supervisory Department of the Company since September 2008. Mr. Shi served as the Deputy General Manager of the Human Resources Department and the Office Director of the Company from September 2003 to September 2008. From March 2002 to August 2003, Mr. Shi served as the Deputy General Manager of the Supervisory Department of China Life Insurance Company. Mr. Shi graduated from the Chemistry School of the first branch college of Peking University with a Bachelor of Science degree.

LOGO   

Ms. Xiong Junhong, born in 1968, Chinese

 

Ms. Xiong became a Supervisor of the Company in October 2014. She is a Senior Economist with a PhD in Finance from Nankai University. From July 1993 to August 2003, Ms. Xiong worked at the Banking Department and the Trust Department of China People’s Insurance Trust and Investment Company, and the Assets Management Department of China Life Insurance Company. Ms. Xiong has been the Director of the Assets Management Department of China Life Insurance (Group) Company since September 2003, the Senior Manager of the Strategic Planning Department of China Life Insurance (Group) Company since August 2006, an Assistant to the General Manager of the Strategic Planning Department of China Life Insurance (Group) Company since September 2008, an Assistant to the General Manager (equivalent to the rank of departmental deputy general manager of China Life Insurance (Group) Company) of the Company’s Hebei Branch since December 2010, and the Deputy General Manager of the Strategic Planning Department of China Life Insurance (Group) Company since June 2013. Ms. Xiong has many years of experience in strategic management and investment research, and has extensive working experience in assets preservation, risk management, investment research and strategic planning.

 

74


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

LOGO   

Mr. Zhan Zhong, born in 1968, Chinese

 

Mr. Zhan became a Supervisor of the Company in July 2015. He has been the General Manager of the Individual Insurance Division of the Company (at the general manager level of provincial branches) since July 2014. Mr. Zhan served as the General Manager of the Company’s Qinghai Branch from January 2014 to June 2014. Mr. Zhan joined the Company in November 1994, and has successively served as the General Manager of the Individual Insurance Division of the Company’s Guangdong Branch, an Assistant to the General Manager of the Company’s Guangdong Branch, the Deputy General Manager (responsible for daily operation) and the General Manager of the Individual Insurance Division of the Company and the Deputy Secretary of the Party Committee and the Deputy General Manager (responsible for daily operation) of the Company’s Qinghai Branch. Mr. Zhan graduated from Kunming Institute of Technology with a Bachelor’s degree in Computer and Automation.

LOGO   

Ms. Wang Cuifei, born in 1964, Chinese

 

Ms. Wang became a Supervisor of the Company in July 2015. She has been the General Manager of the Customer Services Department of the Company since September 2014. Ms. Wang served as the General Manager of the Sales Inspection Department of the Company from March 2009 to August 2014. She joined the Company in July 2001, and has served successively as the person-in-charge (at the deputy director level) and the Manager of the Training Management Division of the Brokerage Agency Department, the Deputy General Manager of the Bancassurance Department and the General Manager of the Sales Inspection Department of the Company. Ms. Wang graduated from the Party School of the Central Committee of CPC with a Bachelor’s degree in Economic Management.

   SENIOR MANAGEMENT
   Mr. Lin Dairen, please see the section “Directors” for his profile.
   Mr. Xu Hengping, please see the section “Directors” for his profile.
   Mr. Xu Haifeng, please see the section “Directors” for his profile.
LOGO   

Mr. Li Mingguang, born in 1969, Chinese

 

Mr. Li became the Vice President of the Company in November 2014. He became the Chief Actuary of the Company in March 2012. Mr. Li joined the Company in 1996 and subsequently served as the Deputy Director, the Director, an Assistant to the General Manager of the Product Development Department, the Responsible Actuary of the Company and the General Manager of the Actuarial Department. He graduated from Shanghai Jiaotong University majoring in Computer Science with a Bachelor’s degree in 1991, Central University of Finance and Economics majoring in Monetary Banking (Actuarial Science) with a Master’s degree in 1996 and Tsinghua University with an EMBA in 2010, and also studied in University of Pennsylvania in the United States in 2011. Mr. Li is a Fellow of the China Association of Actuaries (FCAA) and a Fellow of the Institute and Faculty of Actuaries (FIA). He was the Chairman of the first session of the China Actuarial Working Committee and the Secretary-general of both the first and the second sessions of the China Association of Actuaries. He is currently an Executive Director of the China Association of Actuaries and a Special Executive of the Board of Directors of the Insurance Institute of China.

 

75


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

LOGO    Mr. Zhao Lijun, born in 1963, Chinese
  

 

Mr. Zhao became the Vice President of the Company in July 2016. He served as the Chief Financial Officer and the General Manager of the Finance Department of China Life Insurance (Group) Company from May 2014 to April 2016. From 2012 to 2014, Mr. Zhao successively served as the Deputy General Manager (responsible for daily operation) and the General Manager of the Data Center of the Company. From 2010 to 2012, Mr. Zhao served as the General Manager of the Legal and Compliance Department of the Company. From 2008 to 2010, Mr. Zhao served as the Deputy General Manager of Shandong branch of the Company. From 2003 to 2008, Mr. Zhao successively served as an Assistant to the General Manager and the General Manager of the Finance Department of the Company. Prior to that, he successively served as a cadre in the Planning & Finance Department of the People’s Insurance Company of China, the Director and Deputy Manager of the Planning & Finance Department of China Reinsurance Corporation in Hong Kong, the Deputy Manager and Manager of the Planning & Finance Department of China Insurance H.K. (Holdings) Company Limited, the Deputy Director, the Director and an Assistant to the General Manager of the Planning & Finance Department of China Life Insurance Company. Mr. Zhao graduated from the Accounting Department of Anhui Finance & Trade College with a Bachelor’s degree in Accounting and Finance in 1987, and from Tsinghua University with an EMBA in 2010. Mr. Zhao is a Senior Accountant.

LOGO   

Mr. Xiao Jianyou, born in 1968, Chinese

  

 

Mr. Xiao became the Vice President of the Company in October 2016. He has been an Assistant to the President of the Company since July 2015, and a Non-executive Director of China Life Property and Casualty Insurance Company Limited since September 2015. He served as the General Manager of the Company’s Jiangsu Branch from January 2014, and the Deputy General Manager (responsible for daily operation) of the Company’s Jiangsu Branch from April 2013 to January 2014. From 2006 to 2013, he successively served as the Deputy General Manager, an Assistant to the General Manager and the Marketing Director of Jiangsu Branch and the General Manager and the Deputy General Manager of Taizhou Branch in Jiangsu Province. Before that, Mr. Xiao held various other positions at the Company’s Jiangsu Branch, including the Deputy Manager of the Marketing Department and Management Department, an Assistant to the General Manager, the Deputy General Manager (responsible for daily operation) and the General Manager of the Individual Insurance Department. Mr. Xiao, a Senior Economist, graduated from Jiangxi Traditional Chinese Medicine College in 1991 with a Bachelor’s degree, and received the double Bachelor’s degrees in Medicine and Law from Jiangxi Traditional Chinese Medicine College and Nanjing University, respectively.

 

76


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

LOGO    Mr. Zheng Yong, born in 1962, Chinese
  

 

Mr. Zheng became the Board Secretary of the Company in June 2013. He previously held positions as the Department Head of the Ministry of Justice of the PRC, a practicing lawyer of Beijing Longan Law Firm, China Legal Service Ltd. (Hong Kong) and Beijing DeHeng Law Offices, the Deputy General Manager of the Department of Legal Affairs, the Company Secretary, and the General Manager of the Legal and Compliance Department of the Company, and an Executive Director and Vice President of China Guangfa Bank Co., Ltd. Mr. Zheng received his LL.B. degree from Peking University, and LL.M. degrees from the China University of Political Science and Law and University of Essex (UK). Mr. Zheng was a visiting researcher at Harvard Law School and Harvard Kennedy School of Government in the United States from August 1996 to October 1997. Mr. Zheng, a Senior Economist, currently serves as an arbitrator of the China International Economics and Trade Arbitration Commission, and the Deputy Chairman of the Chamber of Hong Kong Listed Companies.

LOGO    Mr. Ruan Qi, born in 1966, Chinese
  

 

Mr. Ruan became the Chief Information Technology Officer of the Company in October 2016. He has been the General Manager (at the general manager level of provincial branches) of the Information Technology Department of the Company since March 2016. He served as the General Manager of China Life Data Center and the General Manager (at the general manager level of the provincial branches) of the Information Technology Department of the Company from 2014 to 2016, and the Deputy General Manager and the General Manager of the Information Technology Department of the Company from 2004 to 2014. He served as a staff member of the Computer Department of Fujian Branch, the Deputy Head of the Technical Division of the Computer Office, an Assistant to the Director, and the Deputy Director of the Computer Office, and the Deputy Manager (responsible for daily operation) and the Manager of the Information Technology Department of the Company from 1989 to 2004. He was a cadre at Fujian Research Institute of Posts and Telecommunications from 1987 to 1989. Mr. Ruan, a Senior Engineer, graduated from Beijing Institute of Posts and Telecommunications in August 1987 with a Bachelor’s degree in Computer Science and Communications and from Xiamen University with Executive Master of Business Administration (EMBA) in December 2007.

   COMPANY SECRETARY
LOGO    Mr. Heng Victor Ja Wei, born in 1977, British
  

 

Mr. Heng is the managing partner of Morison Heng, Certified Public Accountants. Mr. Heng holds a Master of Science degree of the Imperial College of Science, Technology and Medicine, the University of London. Mr. Heng is a member of The Hong Kong Institute of Certified Public Accountants and a fellow of The Association of Chartered Certified Accountants. Mr. Heng has over 10 years of experience in accounting and auditing for private and public companies and financial consultancy. Mr. Heng serves as an Independent Non-executive Director of China Fire Safety Enterprise Group Limited, Lee & Man Chemical Company Limited, Matrix Holdings Limited, Best Food Holding Company Limited (formerly known as Lee & Man Handbags Holding Limited) and SCUD Group Limited, all of which are listed on the main board of the HKSE.

 

77


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

II POSITIONS HELD BY CURRENT DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT IN SHAREHOLDERS OF THE COMPANY

 

Name

  

Name of shareholders

  

Position

  

Term

Yang Mingsheng    China Life Insurance (Group) Company    Chairman    Since March 2012
Miao Jianmin    China Life Insurance (Group) Company    Vice Chairman, President    Since October 2013
Wang Sidong    China Life Insurance (Group) Company    Vice President    Since June 2004
Xiong Junhong    China Life Insurance (Group) Company   

Deputy General Manager of Strategic Planning Department

   Since June 2013

 

III EMPLOYEES

 

  (I) Employees

 

Number of employees of the Company

     98,505  

Number of employees of the Company’s major subsidiaries

     1,234  

Employees in total

     99,739  

Retired employees of the Company and its major subsidiaries for which extra costs have to be incurred

     7  

As at the end of the Reporting Period, the composition of the employees of the Company and its major subsidiaries is as follows:

 

  1. Structure of Expertise

 

Class of Expertise

   Number of Employees  

Management and administration

     21,868  

Sales and sales management

     36,091  

Finance and auditing

     5,225  

Insurance verification, claims processing and customer services

     28,420  

Other expertise and technicians

     3,488  

Others

     4,647  
  

 

 

 

Total

     99,739  
  

 

 

 

 

78


China Life Insurance Company Limited    Annual Report 2016

Directors, Supervisors, Senior Management and Employees

 

  2. Education Level

 

Education Level

   Number of Employees  

Master or above

     3,733  

Bachelor

     54,731  

College Diploma

     33,448  

Secondary School

     2,640  

Others

     5,187  
  

 

 

 

Total

     99,739  
  

 

 

 

 

  (II) Remuneration Policy for Employees

The Company has established a remuneration and incentive system with reference to employee’s positions, the Company’s performance and market conditions.

 

  (III) Training Plans

Adhering to the philosophy of “people-oriented and both capability and integrity being equally important”, the Company has been promoting the unity between the growth of the Company and its employees in a harmonious way. In 2016, the Company implemented the work requirements of “close to the frontline, close to the practice and adapt to the era” in great depth and pushed forward employees’ trainings to local branches and frontline business management teams for further in-depth development under the direction of its “innovation-driven growth” strategy. The Company also strengthened training supports for its key personnel (including local management teams, sales management teams and key personnel in all professional sectors), focused on personnel reserve and education of companies at all levels, thus facilitating the transformation of training results into operating performance. The Company actively broadened its horizon for trainings, enriched training methods, injected training resources and introduced advanced training technologies, which constantly improved the training system for the entire career development of employees. Through the implementation of a series of training programs with prominent themes and clear objectives, the Company effectively promoted its relevant work in business development, team building, cultural cultivation, service improvement, efficiency optimization and risk prevention in 2016.

 

79


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

OVERVIEW OF CORPORATE GOVERNANCE

The Company implements good corporate governance policies and strongly believes that through fostering sound corporate governance, further enhancing its transparency and establishing effective system of accountability, the Company can operate in a more systematic manner, make decisions in a more scientific way, and boost the confidence of investors.

 

LOGO

(Corporate Governance Structure Chart)

With the establishment of a corporate governance system with reasonably designed structure, well-developed mechanism, strict rules and regulations, as well as high efficiency in operation as its core objectives, the Company continues to promote development of its corporate governance framework, strictly perform its obligation of information disclosure, enhance its transparency and actively serve the interest of public investors so as to enhance its image and position in the capital market.

 

1. The Company has set up a corporate governance structure with well-defined duties and responsibilities strictly in accordance with relevant laws, regulations and regulatory requirements, including the Company Law and the Securities Law of the PRC. The corporate governance structure of the Company generally meets the regulatory requirements of its listed jurisdictions and the relevant provisions. The Company has carried out its corporate governance procedures strictly in accordance with relevant laws, regulations and regulatory requirements, including the Company Law and the Securities Law of the PRC, as well as the requirements of its Articles of Association and procedural rules. Shareholders’ general meetings, Board meetings and Supervisory Committee meetings of the Company have been functioning independently and coordinately.

 

2. In accordance with the regulatory requirements of its listed jurisdictions and the relevant provisions of its Articles of Association, the Company has continuously improved the decision-making mechanism of the Board. The Board is accountable to shareholders of the Company with respect to the assets and resources entrusted to it by the shareholders, and performs its duties on corporate governance. All members of the Board have taken initiatives to look into the Company’s affairs and have had a comprehensive understanding of the Company’s businesses. They have devoted sufficient time in performing their duties as Directors with due care and in a diligent and efficient manner. By setting up mechanisms including regular reporting of business development strategies and marketing tactics, the management of the Company can periodically report the business operation, development strategies and marketing tactics to the Board, which provides a basis for the Board’s decision-making.

 

80


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

3. The Company has actively promoted the establishment of corporate governance, continuously improved its corporate governance structure and enhanced its scientific decision-making ability. In order to improve the decision-making efficiency of the specialized Board committees, the Board has established four specialized Board committees, i.e. the Audit Committee, the Nomination and Remuneration Committee, the Risk Management Committee, and the Strategy and Investment Decision Committee. These specialized Board committees conduct studies on specific matters, hold meetings on both regular and ad-hoc basis, communicate with the management, provide advice and recommendations for the Board’s consideration, and deal with matters entrusted or authorized by the Board, for the purpose of improving the Board’s efficiency and intensifying the Board’s functions.

 

4. The Supervisory Committee of the Company has carried out its work and performed its duties in accordance with the Articles of Association and the “Procedural Rules for Supervisory Committee Meetings”. Members of the Supervisory Committee attended the shareholders’ general meetings and the Supervisory Committee meetings, participated in the Board meetings and the meetings of the specialized Board committees based on their work allocation, and conducted investigations on local branches to have an in-depth understanding of the implementation of the decisions made by the Board, so as to diligently perform their role of supervision.

 

5. During the Reporting Period, the Company carried out the procedures relating to the resignation, retirement and appointment of Directors in compliance with the regulatory requirements of its listed jurisdictions and the provisions of its Articles of Association. Mr. Huang Yiping resigned from the Board pursuant to the relevant policies, Mr. Zhang Xiangxian resigned from the Board due to age reason and Mr. Anthony Francis Neoh retired from the Board due to the expiry of his term of office. Following the election at the First Extraordinary General Meeting 2015 of the Company and upon the approval by the CIRC, the appointment of Mr. Tang Xin as a Director of the Company became effective from 7 March 2016. Following the election at the 2015 Annual General Meeting of the Company and upon the approval by the CIRC, the appointment of Ms. Leung Oi-Sie Elsie as a Director of the Company became effective from 20 July 2016. The Company has complied with the corporate governance system and has strictly carried out all governance procedures.

 

6. The Company has made information disclosure in a timely, open and transparent manner pursuant to the requirements of the listing rules of its listed jurisdictions. The Company has continuously improved its management of investor relations and enhanced its communication with investors in both form and substance, thus ensuring that all shareholders enjoy equal rights and have access to information about the Company in an open, fair, true and accurate manner.

 

7. The Company has continued to optimize its system relevant to the corporate governance. In accordance with the latest amendments to the Corporate Governance Code as contained in Appendix 14 to the Listing Rules of the HKSE, as well as the requirements of the CIRC with respect to the risk assessment on C-ROSS, the Company revised the “Procedural Rules for Board of Directors Meetings” with reference to its actual operation.

 

8. The Board and the Supervisory Committee of the Company have conducted extensive investigation and research activities. Mr. Robinson Drake Pike and Mr. Tang Xin, both being Independent Directors, carried out investigation and research on local branches of the Company in Gansu Province, Wuwei City, Zhangye City and Lanzhou City for the purpose of inspecting the internal audit and business development of the local branches. Mr. Miao Ping, the Chairman of the Supervisory Committee, and Mr. Shi Xiangming, Ms. Xiong Junhong and Ms. Wang Cuifei, all being Supervisors, carried out investigation and research on local branches of the Company in Guizhou Province and southeast Guizhou Province, as well as a local sub-branch of the Company in Tianzhu County for the purpose of understanding the business development and internal supervision of the local branches. Through the investigation and research, Directors and Supervisors comprehended the working situation of local branches in great depth and examined the effectiveness of the implementation of decisions of the Board and the management, thus enhancing the legal compliance and risk prevention of the Company in a practical manner.

 

81


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

9. The Company has actively organized Directors and Supervisors to attend various training courses. The members of the Board and the Supervisory Committee attended special training courses for directors and supervisors of listed companies as organized by the Listed Companies Association of Beijing. The Independent Directors of the Company attended a training course for new directors, supervisors and senior management of insurance institutions as organized by the CIRC and a training course on the qualifications of independent directors of listed companies as organized by the SSE. They attended training courses for a total of 13 person-times.

SHAREHOLDERS’ GENERAL MEETING

The shareholders’ general meeting, as an organ of the highest authority of the Company, exercises its duties and functions in accordance with relevant laws. Its duties and powers include the election, appointment and removal of Directors and Non Employee Representative Supervisors, review and approval of the reports of the Board and the Supervisory Committee, review and approval of the annual budget and final accounts of the Company, and any other matters required by the Articles of Association to be approved by way of resolution of the shareholders’ general meeting. The Company ensures that all shareholders are equally treated so as to ensure that the rights of all shareholders are protected, including the right of access to information in relation to, and the right to vote in respect of, major matters of the Company. The Company has the ability to operate and manage its business autonomously, and is separate and independent from its controlling shareholder in its business operations, personnel, assets and financial matters.

 

1. Shareholders’ general meetings convened during the Reporting Period are as follows:

 

Session of the meeting

 

Date of the meeting

 

Index for websites on which
resolutions were published

 

Date of publication

of resolutions

2015 Annual General Meeting

  30 May 2016   http://www.sse.com.cn

http://www.hkexnews.hk

http://www.e-chinalife.com

  31 May 2016

First Extraordinary General Meeting 2016

  27 December 2016   http://www.sse.com.cn

http://www.hkexnews.hk

http://www.e-chinalife.com

  28 December 2016

Eleven proposals including: the “Proposal in relation to the Report of the Board of Directors of the Company for the Year 2015”, the “Proposal in relation to the Report of the Supervisory Committee of the Company for the Year 2015”, the “Proposal in relation to the Financial Report of the Company for the Year 2015”, the “Proposal in relation to the Profit Distribution Plan of the Company for the Year 2015”, the “Proposal in relation to the Election of Ms. Leung Oi-Sie Elsie as an Independent Director of the Fifth Session of the Board of Directors of the Company” and the “Proposal in relation to the Appointment of Auditors of the Company for the Year 2016”, etc. were considered and approved by a combination of on-site and online voting, and the “Duty Report of the Independent Directors of the Board of Directors of the Company for the Year 2015” and the “Report on the Status of Connected Transactions and the Execution of Connected Transactions Management System of the Company for the Year 2015” were received and reviewed at the 2015 Annual General Meeting held in Beijing on 30 May 2016.

 

82


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

Five proposals including: the “Proposal in relation to the Outline of the ‘13th Five-Year’ Development Plan of the Company”, the “Proposal in relation to the Change of the Auditor for US Form 20-F of the Company for the Year 2016”, the “Proposal in relation to the Renewal of the ‘Framework Agreement for Daily Connected Transactions’ by each of the Company and Pension Company with AMP”, the “Proposal in relation to the Renewal of the ‘Framework Agreement for Daily Connected Transactions’ by each of CLIC and CLP&C with AMP” and the “Proposal in relation to the Renewal of the ‘Framework Agreement for Daily Connected Transactions’ between the Company and China Guangfa Bank Co., Ltd.” were considered and approved by a combination of on-site and online voting at the First Extraordinary General Meeting 2016 held in Beijing on 27 December 2016.

 

2. Attendance records of Directors at the shareholders’ general meetings convened during the Reporting Period:

 

Name of Director

   Type of Director    Number of
shareholders’
general meetings
the Director was
required to attend
during the  year
     Number of
meetings
physically
attended
     Number of
meetings
attended by
telephony
     Number of
meetings
attended by

proxies
     Number of
meetings
absent
     Attendance
rate
 

Yang Mingsheng

   Executive Director      2        1        0        0        1        50

Lin Dairen

   Executive Director      2        2        0        0        0        100

Xu Hengping

   Executive Director      2        0        0        0        2        0  

Xu Haifeng

   Executive Director      2        2        0        0        0        100

Miao Jianmin

   Non-executive Director      2        2        0        0        0        100

Wang Sidong

   Non-executive Director      2        1        0        0        1        50

Liu Jiade

   Non-executive Director      2        1        0        0        1        50

Chang Tso Tung Stephen

   Independent Director      2        2        0        0        0        100

Robinson Drake Pike

   Independent Director      2        1        0        0        1        50

Tang Xin

   Independent Director      2        2        0        0        0        100

Leung Oi-Sie Elsie

   Independent Director      1        0        0        0        1        0  

Attendance records of the resigned Directors at the shareholders’ general meetings convened during the Reporting Period:

 

Name of Director

   Type of Director    Number of
shareholders’
general meetings
the Director was
required to attend
during the year
     Number of
meetings
physically
attended
     Number of
meetings
attended by
telephony
     Number of
meetings
attended
by proxies
     Number of
meetings

absent
     Attendance
rate
 

Zhang Xiangxian

   Non-executive Director      1        0        0        0        1        0  

Anthony Francis Neoh

   Independent Director      1        1        0        0        0        100

Huang Yiping

   Independent Director      0        0        0        0        0        0  

 

83


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

BOARD

The Board is the standing decision-making body of the Company and its main duties include: performing the function of corporate governance of the Company, convening shareholders’ general meetings, implementing resolutions passed at such meetings, improving the Company’s corporate governance policies, approving the Company’s development strategies and operation plans, formulating and supervising the Company’s financial policies, annual budgets and financial reports, providing an objective evaluation on the Company’s operating results in its financial reports and other disclosure documents, dealing with senior management personnel matters, arranging for Directors and senior management to attend various training courses, attaching importance to the enhancement of their professional quality, reviewing the compliance policies of the Company, and assessing the internal control systems of the Company. The day-to-day management and operation of the Company are delegated to the management. The responsibilities of Non-executive Directors and Independent Directors include, without limitation, regularly attending meetings of the Board and the specialized Board committees of which they are members, providing opinions at meetings of the Board and the specialized Board committees, resolving any potential conflict of interest, serving on the Audit Committee, the Nomination and Remuneration Committee and other specialized Board committees, and inspecting, supervising and reporting on the performance of the Company. The Board is accountable to the shareholders of the Company and reports to them.

Currently, the Board comprises eleven members, including four Executive Directors, three Non-executive Directors and four Independent Directors. The number of Independent Directors complies with the minimum requirement of three Independent Directors and the requirement that at least one-third of the Board be represented by Independent Directors under the Listing Rules of the HKSE. All members of the Board have devoted sufficient time in dealing with the affairs of the Board and attended the relevant training courses organized by external regulatory authorities and the Company according to regulatory requirements. They have referred to regulatory documents on a regular basis so as to keep themselves informed of the regulatory development in a timely manner. The Company has purchased director’s liability insurances for its Directors, which provide protection to Directors for liabilities that might arise in the course of their performance of duties according to law and facilitate Directors to fully perform their duties. So far as the Company is aware, no financial, business, family or other material relationship exists among members of the Board, the Supervisory Committee or the senior management, including between the Chairman of the Board, Mr. Yang Mingsheng, and the President of the Company, Mr. Lin Dairen.

In 2016, Independent Directors of the Company possessed extensive experience in various fields, such as macro-economics, finance and insurance, legal compliance, accounting and auditing. The Company also complies with the requirement of the Listing Rules of the HKSE that at least one of its Independent Directors has appropriate professional qualifications or accounting qualifications or related financial management expertise. As required under the Listing Rules of the SSE and the HKSE, the Company has obtained a written confirmation from each of its Independent Directors in respect of their independence, and the Company is of the opinion that all of the Independent Directors are independent from the Company and strictly perform their duties as Independent Directors. Pursuant to the Articles of Association, Directors shall be elected at the shareholders’ general meeting for a term of three years and may be re-elected on expiry of the three-year term. However, Independent Directors may not serve for more than six years.

 

84


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

Meetings of the Board are held both on a regular and an ad-hoc basis. Regular meetings are convened at least four times a year for the examination and approval of proposals, such as annual report, interim report, quarterly reports, related financial reports, and major business operations of the year. Meetings are convened by the Chairman of the Board and a notice is given to all Directors 14 days before such meetings. Agendas and related documents are sent to the Directors at least three days prior to such meetings. In 2016, all notices, agendas and related documents in respect of such regular Board meetings were sent in compliance with the above requirements. By fully reviewing all the relevant proposals, the Board has confirmed that the information contained in its periodic reports and financial reports is true, accurate and complete and contains no false representations, misleading statements or material omissions, and no event or situation which would have material adverse impacts on the Company’s ongoing operation has been found.

Regular Board meetings are held mainly to review the quarterly, interim or annual reports of the Company and to deal with other related matters. The practice of obtaining Board consent through the circulation of written resolutions does not constitute a regular Board meeting. An ad-hoc Board meeting may be convened in urgent situations if requisitioned by any of the following: shareholders representing over one-tenth of voting shares, Directors constituting more than one-third of the total number of Directors, the Supervisory Committee, more than two Independent Directors, the Chairman of the Board or the President of the Company. If the resolution to be considered at such ad-hoc Board meetings has been circulated to all the Directors and more than half of the Directors having voting rights approve such resolution by signing the resolution in writing, the ad-hoc Board meeting need not be physically convened and such resolution in writing shall become an effective resolution.

If a Director is materially interested in a matter to be considered by the Board, the Director having such conflict of interest shall have no voting right on the matter to be considered and shall not be counted in the quorum for the Board meeting. All Directors shall have access to the advice and services of the Board Secretary and the Company Secretary. Detailed minutes of Board meetings regarding matters considered by the Board and decisions reached, including any concerns raised by Directors or dissenting views expressed, are kept by the Board Secretary. Minutes of Board meetings are available upon reasonable notice for inspection and comment upon by Directors.

At present, the fifth session of the Board comprises the following members: Mr. Yang Mingsheng, Mr. Lin Dairen, Mr. Xu Hengping and Mr. Xu Haifeng, all being Executive Directors, Mr. Miao Jianmin, Mr. Wang Sidong and Mr. Liu Jiade, all being Non-executive Directors, and Mr. Chang Tso Tung Stephen, Mr. Robinson Drake Pike, Mr. Tang Xin and Ms. Leung Oi-Sie Elsie, all being Independent Directors, with Mr. Yang Mingsheng as the Chairman of the Board. Mr. Huang Yiping resigned from his position as a Director pursuant to the relevant policies, Mr. Zhang Xiangxian resigned from his position as a Director due to age reason, and Mr. Anthony Francis Neoh retired from his position as a Director due to the expiry of his term of office. The Company has continued to optimize its system relevant to the corporate governance. In accordance with the latest amendments to the Corporate Governance Code as contained in Appendix 14 to the Listing Rules of the HKSE, as well as the requirements of the CIRC with respect to the risk assessment on C-ROSS, the Company revised the “Procedural Rules for Board of Directors Meetings” with reference to its actual operation.

During 2016, the Board constantly monitored the system on risk management and internal control of the Company to ensure that the financial, operational and compliance control of the Company and its subsidiaries operated effectively, and the Company considered that such system was effective and sufficient. The Board also ensured that the Company had injected sufficient resources in accounting, internal review and financial reporting.

 

85


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

During 2016, the members of the Board attended special training courses of 2016 for directors and supervisors of listed companies within the territory of Beijing as organized by the Listed Companies Association of Beijing, a training course of 2016 for new directors, supervisors and senior management of insurance institutions as organized by the CIRC and a training course on the qualifications of independent directors of listed companies as organized by the SSE. Pursuant to the regulatory requirements, the Independent Directors of the Company passed the examination of the CIRC regarding the approval of qualifications of independent directors and the examination of the SSE on the qualifications of independent directors.

 

1. Meetings and attendance

In 2016, six regular Board meetings were held by the fifth session of the Board, all of which were physical meetings. The attendance records of individual Directors are as follows:

 

Name of Director

 

Type of Director

  Number of
meetings the
Director was
required to
attend during
the year
    Number of
meetings
physically
attended
    Number of
meetings
attended by
telephony
    Number of
meetings
attended
by proxies
    Number of
meetings
absent
    Attendance
rate
    Whether the
Director failed
to attend two
consecutive
meetings
in person
 

Yang Mingsheng

  Executive Director     6       5       0       1  Note 1      0       83     No  

Lin Dairen

  Executive Director     6       6       0       0       0       100     No  

Xu Hengping

  Executive Director     6       6       0       0       0       100     No  

Xu Haifeng

  Executive Director     6       6       0       0       0       100     No  

Miao Jianmin

  Non-executive Director     6       5       0       1  Note 2      0       83     No  

Wang Sidong

  Non-executive Director     6       4       0       2  Note 3      0       67     No  

Liu Jiade

  Non-executive Director     6       5       1       0       0       100     No  

Chang Tso Tung Stephen

  Independent Director     6       5       1       0       0       100     No  

Robinson Drake Pike

  Independent Director     6       4       1       1  Note 4      0       83     No  

Tang Xin

  Independent Director     5       4       0       1  Note 5      0       80     No  

Leung Oi-Sie Elsie

  Independent Director     3       3       0       0       0       100     No  

Notes:

 

1. At the ninth meeting of the fifth session of the Board held on 27 October 2016, Mr. Yang Mingsheng, the Chairman of the Board, gave written authorization for Mr. Lin Dairen to act as his proxy to attend, vote and chair the meeting;
2. At the ninth meeting of the fifth session of the Board held on 27 October 2016, Mr. Miao Jianmin gave written authorization for Mr. Wang Sidong to act as his proxy to attend and vote at the meeting;
3. At the sixth meeting of the fifth session of the Board held on 23 March 2016, Mr. Wang Sidong gave written authorization for Miao Jianmin to act as his proxy to attend and vote at the meeting; at the tenth meeting of the fifth session of the Board held on 20 December 2016, Mr. Wang Sidong gave written authorization for Mr. Miao Jianmin to act as his proxy to attend and vote at the meeting;
4. At the ninth meeting of the fifth session of the Board held on 27 October 2016, Mr. Robinson Drake Pike gave written authorization for Mr. Chang Tso Tung Stephen to act as his proxy to attend and vote at the meeting;
5. At the sixth meeting of the fifth session of the Board held on 23 March 2016, Mr. Tang Xin gave written authorization for Mr. Anthony Francis Neoh to act as his proxy to attend and vote at the meeting.

 

86


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

In 2016, the attendance records of the resigned Directors at the Board Meetings are as follows:

 

Name of Director

  

Type of Director

  Number of
meetings the
Director was
required to
attend during
the year
    Number of
meetings
physically
attended
    Number of
meetings
attended by
telephony
    Number of
meetings
attended by
proxies
    Number of
meetings
absent
    Attendance
rate
    Whether the
Director failed
to attend two
consecutive
meetings
in person
 

Zhang Xiangxian

   Non-executive Director     3       3       0       0       0       100     No  

Anthony Francis Neoh

   Independent Director     3       3       0       0       0       100     No  

Huang Yiping

   Independent Director     1       0       0       1  Note      0       0       No  

 

Note: At the fifth meeting of the fifth session of the Board held on 29 February 2016, Mr. Huang Yiping gave written authorization for Mr. Anthony Francis Neoh to act as his proxy to attend and vote at the meeting.

 

2. Performance of duties by Independent Directors

In 2016, all Independent Directors of the Company possessed extensive experience in various fields, such as macro-economics, finance and insurance, legal compliance, accounting and auditing. They satisfied the criteria for Independent Directors under the regulatory rules of the Company’s listed jurisdictions. The Independent Directors of the Company performed their duties pursuant to the Articles of Association and the provisions and requirements of the listing rules of the Company’s listed jurisdictions.

All Independent Directors diligently fulfilled their responsibilities and faithfully performed their duties by attending meetings of the Board and the specialized Board committees in 2016, examining and approving the Company’s business development, its financial management, the necessity of its connected transactions and the fairness of the pricing of the connected transactions, participating in the establishment of specialized Board committees, providing professional and constructive advice in respect of major decisions of the Company, seriously listening to the reports from relevant personnel, understanding the daily operation and any possible operational risks of the Company in a timely manner, and expressing their opinions and exercising their functions and powers at Board meetings, thus actively performing their duties as Independent Directors in an effective manner. At the annual special meeting among the Chairman of the Board, Non-executive Directors and Independent Directors, all Independent Directors made recommendations in various aspects, such as the development of the global capital market, return on investment and balance of risks, and gave constructive advice on corporate governance, business operation and management, risk management and control, directors’ training and collaborative development with bancassurance, etc. The Board attached great importance to opinions and advice from Independent Directors, actively strengthened its communication with them and adopted their advice after careful deliberation and discussion. In 2016, the Company provided various materials to Independent Directors, which facilitated them to comprehend information associated with the insurance industry. All Independent Directors obtained information relating to the operation and management of the Company through various channels, which therefore formed the basis of their scientific and prudent decisions.

 

87


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

In 2016, the Independent Directors of the Company and the representatives from the external auditors (Ernst & Young Hua Ming LLP and Ernst & Young) convened two special meetings to discuss on matters including the audit for the year 2015, the annual financial reports, and the impact of the implementation of the C-ROSS on the Company, and also discussed the work relating to the audit of the Company. The Independent Directors of the Company convened a special meeting with the person-in-charge of each of the Legal and Compliance Department and the Risk Management Department to discuss the matters on legal compliance and risk management of the Company.

From 18 to 23 August 2016, Mr. Robinson Drake Pike and Mr. Tang Xin, both being Independent Directors, carried out investigation and research on local branches of the Company in Gansu Province, Wuwei City, Zhangye City and Lanzhou City, listened to the work reports of local branches in Gansu Province, Wuwei City and Zhangye City, held in-depth conferences with their respective key management, conducted an on-site investigation and research on counters of the Liangzhou District business department of Wuwei local branch, counters of the Ganzhou District business department of Zhangye local branch and the business premises of Lanzhou local branch for the purpose of understanding the business development and risk control of the local branches. Through the investigation and research, the Independent Directors comprehended the working situation of local branches in great depth and examined the implementation of the Company’s internal audit and business development.

During the Reporting Period, no Independent Director has raised any objection against the proposals and matters considered by the Board of the Company.

CHAIRMAN AND PRESIDENT

During the Reporting Period, Mr. Yang Mingsheng served as the Chairman of the Board of Directors of the Company. The Chairman of the Board is the legal representative of the Company, primarily responsible for convening and presiding over Board meetings, ensuring the implementation of Board resolutions, attending annual general meetings and arranging attendance by Chairmen of Board committees to answer questions raised by shareholders, signing securities issued by the Company and other important documents, providing leadership for the Board to ensure that the Board works effectively and performs its responsibilities, encouraging all Directors to make a full and active contribution to the Board’s affairs, promoting a culture of openness and debate, convening special meetings with Non-executive Directors and Independent Directors, and exercising other rights conferred on him by the Board. The Chairman of the Board is accountable to and reports to the Board. Mr. Lin Dairen was the President of the Company. The President is responsible for the day-to-day operations of the Company, including implementing strategies, policies, operation plans and investment schemes approved by the Board, formulating the Company’s internal management structure and fundamental management policies, drawing up basic rules and regulations of the Company, submitting to the Board requests for appointment or removal of senior management officers and exercising other rights granted to him under the Articles of Association and by the Board. The President is fully accountable to the Board for the operations of the Company.

SUPERVISORY COMMITTEE

Pursuant to the Company Law and the Articles of Association, the Company has established a Supervisory Committee. The Supervisory Committee performs the following duties in accordance with the Company Law, the Articles of Association and the “Procedural Rules for Supervisory Committee Meetings”: to examine the finances of the Company; to monitor whether the Directors, President, Vice Presidents and other senior management officers of the Company have acted in contravention of laws, regulations, the Articles of Association and resolutions of the shareholders’ general meetings when discharging their duties; to review the financial information of the Company such as financial reports, results reports and profit distribution plans to be approved by the Board; to propose the convening of extraordinary shareholders’ general meetings, to propose resolutions at shareholders’ general meetings and to perform any other duties under the laws, regulations and regulatory rules of the Company’s listed jurisdictions.

 

88


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

The Supervisory Committee consists of Non Employee Representative Supervisors, such as shareholder representatives, and Employee Representative Supervisors, of which the Employee Representative Supervisors shall not be less than one-third of the Supervisory Committee. Non Employee Representative Supervisors, such as shareholder representatives, shall be elected and removed by a shareholders’ general meeting while Employee Representative Supervisors shall be elected and removed by employees of the Company in a democratic manner.

The Supervisory Committee is accountable to the shareholders and reports its work to the shareholders’ general meeting according to relevant laws. It is also responsible for appraising the Company’s operations, financial reports, connected transactions and internal control, etc. during the Reporting Period.

Meetings of the Supervisory Committee are convened by the Chairman of the Supervisory Committee. According to the Articles of Association, the Company formulated the “Procedural Rules for Supervisory Committee Meetings” and established protocols for Supervisory Committee meetings. Supervisory Committee meetings are categorized as regular or ad-hoc meetings in accordance with the degree of pre-planning involved. There are at least three regular meetings each year, mainly to adopt and review financial reports and periodic reports, and examine the financial condition and internal control of the Company. Ad-hoc meetings are convened when necessary.

The fifth session of the Supervisory Committee of the Company comprises Mr. Miao Ping, Mr. Shi Xiangming and Ms. Xiong Junhong, all being Non Employee Representative Supervisors, and Mr. Zhan Zhong and Ms. Wang Cuifei, both being Employee Representative Supervisors, with Mr. Miao Ping acting as the Chairman of the Supervisory Committee.

 

1. Meetings and attendance

In 2016, five meetings were held by the fifth session of the Supervisory Committee. Attendance records of individual Supervisors are as follows:

 

Name of Supervisor

   Number of meetings attended     Attendance rate  

Miao Ping

     4/5  Note      80

Shi Xiangming

     5/5       100

Xiong Junhong

     5/5       100

Zhan Zhong

     5/5       100

Wang Cuifei

     5/5       100

 

Note:   At the sixth meeting of the fifth session of the Supervisory Committee held on 28 April 2016, Mr. Miao Ping gave written authorization for Mr. Shi Xiangming to act as his proxy to attend, vote and chair the meeting.

 

2. The Supervisory Committee had no objection in respect of any matters under its supervision during the Reporting Period.

 

3. Activities of the Supervisory Committee during the Reporting Period

For the activities carried out by the Supervisory Committee during the Reporting Period, please refer to the “Report of the Supervisory Committee” in this annual report.

 

89


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

AUDIT COMMITTEE

The Company established its Audit Committee on 30 June 2003. In 2016, the Audit Committee comprised only Independent Directors of the Company. At present, the Audit Committee of the fifth session of the Board comprises the Independent Directors, Mr. Robinson Drake Pike, Mr. Chang Tso Tung Stephen and Mr. Tang Xin, with Mr. Robinson Drake Pike acting as the Chairman. Mr. Huang Yiping resigned from his position as a member of the Audit Committee of the fifth session of the Board of the Company pursuant to the relevant policies.

All members of the Audit Committee have extensive experience in financial matters. The principal duties of the Audit Committee are to review and supervise the preparation of the Company’s financial reports, assess the effectiveness of the Company’s internal control system, supervise the Company’s internal audit system and its implementation, and recommend the engagement or replacement of external auditors. The Audit Committee is also responsible for communications between the internal and external auditors and the establishment of the internal reporting mechanism of the Company.

 

1. Meetings and attendance

In 2016, five regular meetings were held by the Audit Committee of the fifth session of the Board. Attendance records of individual members are as follows:

 

Name of member

 

Position

   Number of meetings attended     Attendance rate  

Robinson Drake Pike

  Independent Director, Chairman of the Audit Committee of the fifth session of the Board      4/5  Note      80

Chang Tso Tung Stephen

  Independent Director, member of the Audit Committee of the fifth session of the Board      5/5       100

Tang Xin

  Independent Director, member of the Audit Committee of the fifth session of the Board      5/5       100

 

  Note: At the eighth meeting of the Audit Committee of the fifth session of the Board held on 27 October 2016, Mr. Robinson Drake Pike gave written authorization for Mr. Chang Tso Tung Stephen to act as his proxy to attend, vote and chair the meeting.

In 2016, attendance records of the resigned Director at the Audit Committee meetings are as follows:

 

Name of member

 

Position

   Number of meetings attended     Attendance rate  

Huang Yiping

  Independent Director, member of the Audit Committee of the fifth session of the Board      0/1  Note      0  

 

  Note: At the fourth meeting of the Audit Committee of the fifth session of the Board held on 29 February 2016, Mr. Huang Yiping gave written authorization for Mr. Chang Tso Tung Stephen to act as his proxy to attend and vote at the meeting.

 

90


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

2. Performance of duties by the Audit Committee

In 2016, the Audit Committee performed its relevant duties and functions in strict compliance with the “Procedural Rules for Audit Committee Meetings”. All members of the Audit Committee attended meetings in a timely manner for the purpose of reviewing the proposals in relation to the audit of the Company, its financial reports, connected transactions, internal control and legal compliance. During meetings of the Audit Committee, all members actively participated in discussions and gave guiding opinions on any proposals considered and discussed at the meetings.

 

  (1) Reviewing and approving financial reports. The Audit Committee, according to its duties, reviewed and approved annual, interim and quarterly financial reports of the Company. The Audit Committee was of the view that the financial reports of the Company reflected the overall situation of the Company in a true, accurate and complete manner, and gave its written opinion in this regard. By reviewing and monitoring the completeness of financial reports, annual report and accounts, interim report and quarterly report of the Company, and examining significant matters such as financial statements and reports, the Audit Committee guaranteed the accuracy and completeness of the financial information disclosed by the Company and the consistency of its financial reports. Prior to the audit conducted by the accounting firm and the review of the annual report, the Audit Committee communicated the relevant situations with the auditors and listened to the report in connection with the arrangement of the audit. After a preliminary opinion on audit was issued by the accounting firm, the Audit Committee commenced in-depth communications with it so as to understand whether there were any issues arisen during the audit.

 

  (2) Reviewing connected transactions. In 2016, the Audit Committee reviewed the “Proposal in relation to the Renewal of the ‘Framework Agreement for Daily Connected Transactions’ by each of the Company and Pension Company with AMP”, the “Proposal in relation to the Renewal of the ‘Framework Agreement for Daily Connected Transactions’ by each of China Life Insurance (Group) Company and CLP&C with AMP” and the “Proposal in relation to the Renewal of the ‘Framework Agreement for Daily Connected Transactions’ between the Company and China Guangfa Bank Co., Ltd.”, and submitted them to the Board and shareholders’ general meeting for approval; and listened to the report on the list of connected persons of the Company on a regular basis. The Audit Committee reviewed the audit report on connected transactions for conscientiously implementation of laws and regulations with respect to connected transactions. The Company entered into written agreements in respect of all new connected transactions, the formalities of which were fully completed. The contents of the agreements were in compliance with law, and their approval and disclosure procedures were in compliance with the regulatory requirements. Hence, the Company better performed its obligations as a listed company pursuant to the regulatory requirements of its listed jurisdictions.

 

  (3) Reviewing the change of the auditor for US Form 20-F of the Company for the year 2016. In 2016, the “Proposal in relation to the Change of the Auditor for US Form 20-F of the Company for the Year 2016” was considered and approved at the eighth meeting of the Audit Committee of the fifth session of the Board of Directors and then submitted to the Board and shareholders’ general meeting for approval.

 

91


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

  (4) Assessing the work of and strengthening communications with external auditors. Besides regular meetings, the Audit Committee convened communication meetings in advance with the relevant departments of the Company and external auditors for several times so as to discuss the annual audit plan of the Company, determine the service scope of the annual audit and to listen to the report given by the auditors with respect to the results of the audit on and review of periodic financial reports of the Company. Through communications, the Audit Committee enhanced the effectiveness of the internal control of the Company and further supervised the performance of duties by the external auditors in a diligent and responsible way.

 

  (5) Assessing the effectiveness of internal control and monitoring the operation of the Company to be in compliance with law. The Audit Committee provided guidance to the Company on the management of internal control, devised the working plan for internal control assessment, reviewed the work report on assessment of internal control, and inspected the rectification of problems identified in the internal control pursuant to Section 404 of the U.S. Sarbanes-Oxley Act. The Audit Committee earnestly performed its duties and responsibilities and monitored the Company to carry out its work in compliance with laws and regulations pursuant to the relevant requirements of the CIRC, the SSE and the HKSE. As required by its duties and responsibilities, the Audit Committee reviewed the annual and half-year compliance reports of the Company to ensure that its work was conducted strictly according to the relevant regulatory requirements in a reasonable and efficient manner.

 

  (6) Examining the internal audit functions of the Company. The Audit Committee reviewed proposals including the “Proposal on the 2015 Internal Audit Summary and the 2016 Internal Audit Work Plan and Budget of the Costs of the Company” and the “Proposal on the Internal Audit Summary for the First Half of 2016 and the Internal Audit Work Plan for the Second Half of 2016”, in order to facilitate the communication between the Company’s internal audit department and the independent auditors, and confirmed that the Company’s internal audit function was effective.

 

  (7) Conducting investigation and research of local branches. From 18 to 23 August 2016, Mr. Robinson Drake Pike, the Chairman of the Audit Committee, and Mr. Tang Xin, a member of the Audit Committee, carried out investigation and research on local branches of the Company in Gansu Province, Wuwei City, Zhangye City and Lanzhou City, and examined the implementation of internal audit of Gansu local branch.

NOMINATION AND REMUNERATION COMMITTEE

The Company established the Management Training and Remuneration Committee on 30 June 2003. On 16 March 2006, the Board resolved to change the name of the Management Training and Remuneration Committee to the Nomination and Remuneration Committee, with a majority of Independent Directors on the committee. The Nomination and Remuneration Committee is mainly responsible for reviewing the structure of the Board, its number of members and composition and drawing up plans for the appointment, succession and appraisal criteria of Directors and senior management. The committee is also responsible for formulating training and remuneration policies for the senior management of the Company.

 

92


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

At present, the Nomination and Remuneration Committee of the fifth session of the Board comprises Mr. Chang Tso Tung Stephen and Mr. Robinson Drake Pike, the Independent Directors, and Mr. Miao Jianmin, a Non-executive Director, with Mr. Chang Tso Tung Stephen acting as the Chairman. The Nomination and Remuneration Committee, as an advisor to the Board on the nomination of Directors, shall first discuss and agree on the list of candidates to be nominated as new Directors, following which such candidates are recommended to the Board. The Board shall then determine whether such candidates’ appointments should be proposed for approval at the shareholders’ general meeting. The major criteria considered by the Nomination and Remuneration Committee and the Board are educational background, management and research experience in the insurance industry, and the candidates’ commitment to the Company. As to the nomination of Independent Directors, the Nomination and Remuneration Committee will give special consideration to the independence of the relevant candidates.

The Nomination and Remuneration Committee determines, with delegated responsibility, the remuneration packages of all Executive Directors and senior management officers. The fixed salary of the Executive Directors and other members of senior management are determined in accordance with market levels and their respective positions, and the amount of their performance-related bonuses is determined according to the results of performance appraisals. Directors’ fees and the volume of share appreciation rights to be granted are determined with reference to market levels and the actual circumstances of the Company.

 

1. Meetings and attendance

In 2016, five regular meetings were held by the Nomination and Remuneration Committee of the fifth session of the Board. Attendance records of individual members are as follows:

 

Name of member

 

Position

  Number of meetings attended     Attendance rate  

Chang Tso Tung Stephen

  Independent Director, Chairman of the Nomination and Remuneration Committee of the fifth session of the Board     5/5       100

Robinson Drake Pike

  Independent Director, member of the Nomination and Remuneration Committee of the fifth session of the Board     5/5       100

Miao Jianmin

  Non-executive Director, member of the Nomination and Remuneration Committee of the fifth session of the Board     5/5       100

 

2. Performance of duties by the Nomination and Remuneration Committee

In 2016, the Nomination and Remuneration Committee reviewed the proposal on the remuneration of Directors, Supervisors and senior management, candidates for Directors, nomination of senior management officers, business objectives and appraisal results. Pursuant to the requirements of the procedural rules for meetings, the Nomination and Remuneration Committee reviewed the report on the duty performance of the Audit Committee and the Nomination and Remuneration Committee. During meetings of the Nomination and Remuneration Committee, all members actively participated in discussions and gave professional opinions on the proposals considered and discussed at the meetings.

 

93


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

  (1) Proposed appointment of Directors and senior management officers of the Company. In accordance with the “Procedural Rules for Nomination and Remuneration Committee Meetings” and the Board diversity policy, the Nomination and Remuneration Committee carefully reviewed the structure of the Board, its number of members and composition (taking into account diversity factors, including gender, age, cultural and educational background, skills, knowledge and experience), fully reviewed the professional qualifications and industrial background of Mr. Liu Huimin and Mr. Yin Zhaojun, both being the candidates for Directors, and the independence of Ms. Leung Oi-Sie Elsie, a candidate for Independent Director, and submitted the opinions in relation thereto to the Board, conducted a careful assessment on the qualifications, skills, knowledge and experience of candidates for senior management officers so as to ensure that the candidates met the requirements set by the Company. The Nomination and Remuneration Committee also issued a review opinion to the Board and agreed to submit such proposals to the Board for approval.

 

  (2) Proposed remuneration policy of Directors, Supervisors and senior management officers of the Company. The Nomination and Remuneration Committee took into account various factors such as business development management, strategic investment decisions, and corporate governance management and control, carefully examined and determined the specific remuneration packages of all Executive Directors and senior management officers, approved the terms of service contracts between the Company and each of the Executive Directors, Non-executive Directors and Independent Directors and pushed forward the signing of service contracts between the Company and all Directors, defined the rights, obligations and remunerations of Directors, and seriously appraised the performance of Directors in the discharge of their duties. According to the requirements of the CIRC, the Nomination and Remuneration Committee reviewed and approved the report for the management of the Company’s annual remuneration, conducted a self-assessment on the remuneration management system of the Company and agreed to submit such proposal to the Board for approval.

 

  (3) Carrying out the performance appraisal of senior management officers. The Nomination and Remuneration Committee reviewed the “Proposal on the Results of Performance Appraisal of Senior Management Officers for 2015 and the Performance Target Contract for 2016”, and the “Proposal on the Amendment to the Performance Target Contract for 2016 of Certain Senior Management Officers”, and made recommendations to the Board in respect of matters such as the determination of performance target, performance appraisal procedures and results.

 

  (4) Revising the system on performance appraisal and remuneration management of Directors, Supervisors and senior management officers. In 2016, the Nomination and Remuneration Committee reviewed and approved the “Proposal in relation to the Amendment to the System on Performance Appraisal and Remuneration Management of Directors, Supervisors and Senior Management Officers” for the purposes of further standardizing the performance appraisal and remuneration management of Directors, Supervisors and senior management officers, establishing a well-developed incentive and restraint mechanism and facilitating the standardized operation and healthy development of the Company, and revised the “Provisional Measures on the Performance Appraisal of Directors, Supervisors and Senior Management Officers” and the “Provisional Measures on the Remuneration Management of Directors, Supervisors and Senior Management Officers” in accordance with the relevant policies and requirements and based on the actual situation of the Company.

 

94


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

RISK MANAGEMENT COMMITTEE

The Company established its Risk Management Committee on 30 June 2003. The Risk Management Committee is mainly responsible for formulating the Company’s system of risk control benchmarks, discussing with the management and assisting them in establishing well-developed risk management and internal control system, examining and reviewing the Company’s risk preference and risk tolerance, formulating the Company’s risk management policy, reviewing the assessment reports in relation to the Company’s risk management and internal control, studying major investigation findings on risk management and internal control matters as delegated by the Board or on its own initiative and the management’s response to these findings, and dealing with major risk emergency events or crisis events or major disagreement in risk management.

At present, the Risk Management Committee of the fifth session of the Board comprises Ms. Leung Oi-Sie Elsie, an Independent Director, Mr. Liu Jiade, a Non-executive Director, and Mr. Xu Hengping, an Executive Director, with Ms. Leung Oi-Sie Elsie acting as the Chairperson. Mr. Anthony Francis Neoh retired from his position as the Chairman of the Risk Management Committee of the fifth session of the Board due to the expiry of his term of office. Mr. Zhang Xiangxian resigned from his position as a member of the Risk Management Committee of the fifth session of the Board due to age reason.

 

1. Meetings and attendance

In 2016, three regular meetings were held by the Risk Management Committee of the fifth session of the Board. Attendance records of individual members are as follows:

 

Name of member

 

Position

  Number of meetings attended     Attendance rate  

Leung Oi-Sie Elsie

  Independent Director, Chairperson of the Risk Management Committee of the fifth session of the Board     1/1       100

Liu Jiade

  Non-executive Director, member of the Risk Management Committee of the fifth session of the Board     3/3       100

Xu Hengping

  Executive Director, member of the Risk Management Committee of the fifth session of the Board     3/3       100

In 2016, attendance records of the resigned Directors at the Risk Management Committee meetings are as follows:

 

Name of member

 

Position

  Number of meetings attended     Attendance rate  

Anthony Francis Neoh

  Independent Director, Chairman of the Risk Management Committee of the fifth session of the Board     2/2       100

Zhang Xiangxian

  Non-executive Director, member of the Risk Management Committee of the fifth session of the Board     2/2       100

 

95


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

2. Performance of duties by the Risk Management Committee

In 2016, the Risk Management Committee performed its duties and functions in strict compliance with the “Procedural Rules for Risk Management Committee Meetings”. All members performed their obligations in a responsible manner, and gave guiding opinions on proposals in relation to the internal control system of the Company, risk management and construction in compliance with law.

 

  (1) Reviewing the risks on major matters concerning the business operation and management of the Company. In 2016, the Risk Management Committee reviewed the risk analysis on major matters concerning the business operation and management of the Company, and reviewed and approved the “Proposal in relation to the Financial Budget of the Company for the Year 2017” and the “Proposal in relation to the Risk Analysis on the Investment Plan of the Company for the Year 2017” in accordance with the regulatory requirements of the CIRC on C-ROSS.

 

  (2) Attending meetings of the Risk Management Committee of the Board and providing guidance on the risk management of the Company. In 2016, all members of the Risk Management Committee diligently performed their duties, attended all meetings in a timely manner, and reviewed the proposals on risk management and internal control of the Company. During meetings of the Risk Management Committee, all members actively participated in discussions and gave guiding opinions on any proposals considered and discussed at the meetings.

 

  (3) Providing its opinions for the review of the proposals on risk management to the Board. In 2016, the Risk Management Committee closely monitored and controlled and effectively prevented internal and external risks of the Company, assisted the Board in establishing a well-developed internal control system of the Company, formulated an operational risk management policy of the Company, and reviewed the assessment reports on business risk and internal control of the Company according to the regulatory requirements in the PRC and overseas. The Risk Management Committee provided its opinions for the review of the proposals on risk management such as the work summary on anti-money laundering for the year 2015 and the work plan for the year 2016, the risk appetite statement of the Company for the year 2016, and the audit report on the solvency risk management system of the Company for the year 2016, which offered professional support to the Board’s decision-making in a scientific manner.

 

  (4) Convening special meetings by the Chairman of the Risk Management Committee. On 26 October 2016, Ms. Leung Oi-Sie Elsie, the Chairperson of the Risk Management Committee, convened special meetings with the person-in-charge of each of the Legal and Compliance Department and the Risk Management Department, discussing matters on legal compliance and risk management of the Company.

STRATEGY AND INVESTMENT DECISION COMMITTEE

The Company established the Strategy Committee on 30 June 2003. In October 2010, the proposal to establish the Strategy and Investment Decision Committee on the basis of the Strategy Committee was reviewed and approved at the ninth meeting of the third session of the Board. The Strategy and Investment Decision Committee is mainly responsible for the drawing-up of long-term development strategies and significant investment or financing plans of the Company, proposing significant projects of capital operation and assets management, and conducting studies and making recommendations on other important matters affecting the development of the Company.

 

96


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

At present, the Strategy and Investment Decision Committee of the fifth session of the Board comprises Mr. Tang Xin and Ms. Leung Oi-Sie Elsie, the Independent Directors, Mr. Wang Sidong, a Non-executive Director, Mr. Lin Dairen and Mr. Xu Haifeng, the Executive Directors, with Mr. Tang Xin acting as the Chairman. Mr. Huang Yiping resigned from his position as the Chairman of the Strategy and Investment Decision Committee of the fifth session of the Board of the Company pursuant to the relevant policies, and Mr. Anthony Francis Neoh retired from his position as a member of the Strategy and Investment Decision Committee of the fifth session of the Board due to the expiry of his term of office.

 

1. Meetings and attendance

In 2016, six regular meetings were held by the Strategy and Investment Decision Committee of the fifth session of the Board. Attendance records of individual members are as follows:

 

Name of member

 

Position

  Number of meetings attended     Attendance rate  

Tang Xin

  Independent Director, Chairman of the Strategy and Investment Decision Committee of the fifth session of the Board     5/5       100

Lin Dairen

  Executive Director, member of the Strategy and Investment Decision Committee of the fifth session of the Board     6/6       100

Wang Sidong

  Non-executive Director, member of the Strategy and Investment Decision Committee of the fifth session of the Board     5/6  Note      83

Xu Haifeng

  Executive Director, member of the Strategy and Investment Decision Committee of the fifth session of the Board     6/6       100

Leung Oi-Sie Elsie

  Independent Director, member of the Strategy and Investment Decision Committee of the fifth session of the Board     3/3       100

 

  Note: At the ninth meeting of the Strategy and Investment Decision Committee of the fifth session of the Board held on 20 December 2016, Mr. Wang Sidong gave written authorization for Mr. Lin Dairen to act as his proxy to attend and vote at the meeting.

In 2016, attendance records of the resigned Directors at the Strategy and Investment Decision Committee meetings are as follows:

 

Name of member

 

Position

  Number of meetings attended     Attendance rate  

Huang Yiping

  Independent Director, Chairman of the Strategy and Investment Decision Committee of the fifth session of the Board     0/1  Note      0  

Anthony Francis Neoh

  Independent Director, member of the Strategy and Investment Decision Committee of the fifth session of the Board     2/2       100

 

  Note: At the fourth meeting of the Strategy and Investment Decision Committee of the fifth session of the Board held on 29 February 2016, Mr. Huang Yiping gave written authorization for Mr. Anthony Francis Neoh to act as his proxy to attend, vote and chair the meeting.

 

97


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

2. Performance of duties by the Strategy and Investment Decision Committee

In 2016, all members of the Strategy and Investment Decision Committee attended meetings in a timely manner, reviewed the proposals on the application of the Company’s insurance capital, annual investments, major strategic projects and related annual reports. Members of the Strategy and Investment Committee diligently performed their duties. During meetings of the Strategy and Investment Decision Committee, all members actively participated in discussions and gave professional advices on any proposals considered and discussed at the meetings.

 

  (1) Discussing major strategic projects of the Company. In 2016, the Strategy and Investment Decision Committee reviewed major strategic projects of the Company, such as the acquisition by the Company of the shares of CGB from Citigroup and IBM Credit, the investment by the Company in China Life Chengda (Shanghai) Healthcare Equity Investment Center and the investment by the Company in Chongqing Trust – Collective Fund Trust Scheme for the PPP Project for Qingdao Metro Line 4, fully discussed the necessity, feasibility and risks of the project proposals and made recommendations to the Board.

 

  (2) Reviewing annual investment plans and entrusted investments of the Company. In 2016, the Strategy and Investment Decision Committee carefully reviewed the proposals on investment plans and authorization of investments, fully reviewed the proposals such as the “Proposal in relation to the Investment Plan of the Company for the Year 2017”, the “Proposal in relation to the Authorization of Investment in Non Self-use Real Estate of the Company for the Year 2017”, the “Proposal in relation to the Investment Plan and the Authorization of Investment in Self-use Real Estate of the Company for the Year 2017”, and the “Proposal in relation to the Authorization of Investment in the Equity Investment Fund of the Company for the Year 2017”, and submitted its opinions to the Board in this regard. The Strategy and Investment Decision Committee carefully reviewed the proposals of the Company such as the annual investment management guidelines, reviewed and approved the “Proposal in relation to the ‘Management Guidelines on the Investment Made by China Life Asset Management Company Limited under the Entrustment of the Company (2017)’”, the “Proposal in relation to the ‘Management Guidelines on the Investment Made by China Life Franklin Asset Management Company Limited under the Entrustment of the Company (2017)’” and the “Proposal in relation to the ‘Management Guidelines on the Investment Made by China Life Investment Holding Company Limited under the Entrustment of the Company (2017)’”, and agreed to submit the above proposals to the Board for review and approval.

 

  (3) Finalizing the Company’s development plans and reports. In 2016, the Strategy and Investment Decision Committee discussed and reviewed the assessment report for the outline of the “12th Five-year” development plan for the year 2015 and at the end of the planning period, and the outline of the “13th Five-year” development plan of the Company, and submitted its opinions to the Board.

 

98


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

INDEPENDENCE OF THE COMPANY FROM ITS CONTROLLING SHAREHOLDER

Employees: The Company is independent in the aspects of employment, human resources and remuneration management.

Assets: The Company owns all assets relating to the operation of its principal business. At present, the Company does not provide any guarantee for its shareholders. The Company’s assets are independent, complete, and independent from the shareholders of the Company and other related parties.

Finance: The Company has established a separate financial department, and an independent financial accounting system and financial management system; further, the Company makes financial decisions on its own; it employs separate financial personnel, opens separate accounts with banks and does not share bank accounts with CLIC; the Company, as a separate taxpayer, pays taxes individually according to law.

Organization: The Company has established a well-developed organizational system, under which internal bodies such as the Board and the Supervisory Committee operate separately. There is no subordinate relationship between such internal bodies and the functional departments of the Company’s controlling shareholder.

Business operations: The Company independently develops personal insurance businesses, including life insurance, health insurance and accident insurance businesses, reinsurance relating to the above insurance businesses, use of funds permitted by applicable PRC laws and regulations or the State Council, as well as its all types of personal insurance services, consulting business and agency business, sale of securities investment funds, and other businesses permitted by insurance administrative and regulatory authorities of the PRC. The Company currently possesses the “Insurance Company Legal Person Permit” (Number: 000005) issued by the CIRC. The Company is independently engaged in the businesses as prescribed in its business scope according to law, has separate sales and agency channels and is licensed to use licensed trademarks without consideration. The completeness and independence of the Company’s business operations will not be adversely affected by its relationship with related parties.

PERFORMANCE APPRAISAL AND INCENTIVES FOR SENIOR MANAGEMENT

The Company implements a term-of-service and target-related responsibility system for senior management. At the beginning of each year, performance target contracts will be entered into between the Chairman of the Board and the President, and between the President and other senior management of the Company. The performance target contract system is an important tool in disassembling the strategic goals of the Company in a scientific manner, which is conducive towards the breakdown of targets and transmission of responsibility, enhancing the implementation capacity of the Company and ensuring the successful completion of its annual business targets. The performance appraisal criteria listed in the individual performance target contracts of senior management are partially linked to the business targets of the Company and partially formulated with reference to the duties and functions of their respective positions.

The remuneration for senior management mainly comprises position compensation, performance rewards, welfare benefits and medium and long term incentives.

 

99


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

SHAREHOLDERS’ INTERESTS

To safeguard shareholders’ interests, in addition to the right to participate in the Company’s affairs by attending shareholders’ general meetings, shareholders have the right to convene extraordinary shareholders’ general meetings under certain circumstances.

If the number of Directors is less than the number stipulated in the Company Law or two-thirds of the number specified by the Articles of Association, or the uncovered losses incurred amount to one-third of the Company’s total share capital or if the Board or the Supervisory Committee deems necessary, or more than half of the Directors (including at least two Independent Directors) request, or shareholders holding 10% or more shares of the Company make a requisition, the Board shall convene an extraordinary shareholders’ general meeting within two months. Where shareholders holding 10% or more shares request an extraordinary shareholders’ general meeting, such shareholders shall make a request in writing to the Board with a clear agenda. The Board shall, upon receipt of such a written request, convene a meeting as soon as possible. If the Board fails to convene a meeting within 30 days of the receipt of such a written request, shareholders making such a request may convene a meeting by themselves at the cost of the Company within four months of the receipt by the Board of such a written request.

In accordance with the Articles of Association, when the Company convenes the shareholders’ general meeting, shareholders individually or in aggregate holding 3% or more of the shares of the Company shall have the right to submit proposals to the Company. The Company should include such matters that fall into the scope of the functions and powers of the shareholders’ general meeting in the agenda of the meeting. Shareholders individually or in aggregate holding 3% or more of the shares of the Company may submit provisional proposals in writing to the convenor sixteen days prior to the shareholders’ general meeting. The provisional proposals shall fall into the scope of the functions and powers of the shareholders’ general meeting and specify explicit topics and specific resolution matters.

Shareholders may put forward enquiries to the Board through the Board Secretary or the Company Secretary, or put forward proposals at shareholders’ general meetings through their proxies. The Company has made available its contact details in its correspondence with shareholders to enable such enquiries or proposals to be properly directed.

INFORMATION DISCLOSURE AND INVESTOR RELATIONS

The Company has established a well-developed and practical information disclosure system in strict compliance with the laws and regulations of its listed jurisdictions and continued to improve the quality of its information disclosure so as to ensure that domestic and overseas investors obtain true, accurate and complete information. The Company has proactively developed investor relations and strengthened its contact and communication with domestic and overseas investors, and addressed hot issues as earlier as possible, which enabled domestic and overseas investors to understand the business operations of the Company in a timely manner.

 

100


China Life Insurance Company Limited    Annual Report 2016

Corporate Governance

 

In 2016, the Company continued to strengthen the construction of its information disclosure system and implement the regulatory requirements relating to information disclosure in a practical manner in order to ensure the timeliness, fairness, truthfulness, accuracy and completeness of information disclosure. The Company constantly enhanced the quality of information disclosure, actively studied and improved the method of disclosure of key information from the perspective of investors, in particular medium and small investors, to enable them to have a deeper understanding of the development strategies, business operations and major issues of the Company, and extended the scope and depth of information disclosure of periodic reports and special reports, so as to ensure investors to obtain timely and accurate information affecting its decisions. The Company also regularly organized internal training courses relating to information disclosure, carried out timely study and promotion of new regulatory rules of its listed jurisdictions in the PRC and overseas, and explained the key points and difficulties of information disclosure. The Company also strictly implemented the registration and filing procedures of persons who have knowledge of inside information, strengthened the confidentiality of the Company’s inside information, and safeguarded the legitimate rights and interests of investors, with a view to maintaining the fairness, impartiality and openness of the information disclosure of the Company.

In 2016, the Company continuously improved and strengthened its relations with investors, which mainly included holding the Annual General Meeting, holding results release conferences, embarking on global non-deal roadshows, meeting and holding conference calls with investors and analysts, attending investors’ meetings, frequently updating information on its investor relations website, and timely responding to enquiries from investors and analysts. The Company attached great importance to the innovation of investor relations, and kept abreast with the development pace of technology era. In the third quarter of 2016, the Company held a global conference call in relation to the release of its operating results for the first time since its listing to convey the message of the management directly to the capital market. Looking back to 2016, the Company communicated with more than 3,000 investors and analysts through different channels, including the reception at the Company of 110 groups of investors and analysts consisting of over 850 individuals in total, communicating with more than 1,000 investors by participating in 16 investors’ meetings held locally or internationally, and meeting and visiting more than 130 investors in roadshows. In addition, the Company kept in close contact with investors by phone and email, communicated with them through more than 1,500 emails, and answered their calls and emails for more than 300 person-times.

In the assessment and selection of the “Gold Bull Award for the PRC Listed Companies in 2015” held by China Securities Journal in 2016, the Company was awarded the titles of the “Gold Bull Award for Top 100 Listed Companies in 2015” and the “Gold Bull Award for the Most Profitable Companies in 2015”. In the assessment and selection of the “Golden Governance-Outstanding Board Secretaries of Listed Companies in 2015” held by Shanghai Securities News in 2016, Mr. Zheng Yong, the Board Secretary, was awarded the title of the “Golden Governance-Board Secretary for Information Disclosure”.

CHANGES OF THE ARTICLES OF ASSOCIATION

With the approval at the 2014 Annual General Meeting held on 28 May 2015, the Company included the “fund sales business” into its business scope as stipulated in the Articles of Association and amended certain articles pursuant to the regulatory requirements. For details of such amendment, please refer to the Supplemental Notice of Annual General Meeting published by the Company on the HKExnews website of the Hong Kong Exchanges and Clearing Limited on 8 May 2015. The amendment was approved by the CIRC on 20 April 2016.

 

101


China Life Insurance Company Limited    Annual Report 2016

Internal Control and Risk Management

 

1. INTERNAL CONTROL

The Company has been devoting significant effort towards the promotion of internal control and the establishment of internal control related systems. In accordance with the requirements of the “Standard Regulations on Corporate Internal Control”, the “Implementation Guidelines for Corporate Internal Control”, the “Guidance on Internal Control for Companies Listed on the Shanghai Stock Exchange”, the “Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited”, and the “Basic Standards of Internal Control for Insurance Companies” issued by the CIRC, the Company has carried out a lot of work on its internal control system establishment, rules implementation and risk management by strictly following its corporate governance structure. The Company has also formulated and issued the “Internal Control Implementation Manual of China Life Insurance Company Limited (2016 Edition)” to strengthen the implementation of internal control standards and internal control assessments, and actively promoted the culture and philosophy of internal control, thereby continuously enhancing the internal control of the Company.

Pursuant to the requirements of the “Notice on the Proper Preparation for Disclosure of 2016 Annual Reports of Listed Companies” promulgated by the SSE, the Company shall release an Internal Control Self-assessment Report simultaneously with the publication of its 2016 annual report. The Company, as an overseas private issuer, was required to provide a specific assessment report on its internal control system relating to financial reporting for the year ended 31 December 2016 in its Form 20-F (U.S. Annual Report) submitted to the U.S. Securities and Exchange Commission (the “SEC”) in accordance with Section 404 of the U.S. Sarbanes-Oxley Act. In accordance with the requirements of laws and regulations relating to internal control of the jurisdictions where the Company is listed, the Company has completed internal control self-assessments in relation to the requirements of Section 404 of the U.S. Sarbanes-Oxley Act and the SSE for the year ended 31 December 2016 in two stages, namely, interim assessment and supplementary test, and confirmed after the assessments that its internal controls were effective. The Company has also received from its independent auditors an unqualified opinion on the effectiveness of its internal control in relation to financial reporting as at 31 December 2016. The Company’s assessment report and the report of its independent auditors will be included as an attachment to its annual report submitted to the SSE and its Form 20-F submitted to the SEC.

It is the responsibility of the Board of the Company to establish and effectively implement well-established internal control systems, assess their effectiveness and disclose the report on the internal control assessment. The Board and the Audit Committee are responsible for leading the implementation of internal control measures of the Company, and the Supervisory Committee supervises the internal control assessments performed by the Board. The Company has established Risk Management Department in its headquarters and branches. The Company also conducts tests on the management level, assesses the effectiveness of the established and implemented internal control systems in accordance with the regulatory requirements of the jurisdictions where the Company is listed, and reports to the Board, the Audit Committee and the management.

In compliance with regulatory requirements and having considered the characteristics of its business and management requirements, the Company has established and implemented a series of internal control measures and procedures with respect to currency and funds, insurance operations, external investments, physical assets, information technology, financial reporting and information disclosure to ensure the safety and integrity of its assets. By complying with relevant PRC laws and regulations as well as the internal rules and regulations of the Company, the quality of accounting information has been improved.

 

102


China Life Insurance Company Limited    Annual Report 2016

Internal Control and Risk Management

 

A relatively well-developed internal control system has been established in terms of team-building, sales and operations, and system management for the sales channels, such as individual insurance, group insurance, bancassurance, health insurance and e-commerce. This internal control system regulates the relevant authorizations and operational workflows, and effectively adopts the measures to prevent and manage risks relating to the operation of exclusive agents. The Company has promulgated clear regulations for the workflows and authorizations relating to the verification of insurance policies, insurance claims and insurance preservation. The Company has also formulated business operation standards and service quality standards, developed systems of business, document and file management, and further regulated the management of business approval authority to strengthen its control over business risk and improve the quality of its services.

In accordance with relevant laws and regulations such as the “Accounting Law of the People’s Republic of China” and the “Enterprise Accounting Standards” and taking into account the needs of the Company for its business development, operation and management, the Company has formulated and issued the “Accounting System of China Life Insurance Company Limited” and the “Accounting Practices of China Life Insurance Company Limited”. The accounting units of the Company at all levels have implemented them in strict compliance with the requirements of the accounting system and various basic systems to regulate works relating to financial accounting and preparation of financial reports. The accounting units of the Company at all levels have assigned positions in a reasonable manner, clearly defined duties and responsibilities of such positions and their scope of authority on management, and strictly prohibited employees from serving incompatible positions concurrently, thus exercising the control over financial risks in an efficient manner.

The Company has formulated the “Measures on the Administration of the Accountability System for Major Errors in Periodic Report Disclosures of China Life Insurance Company Limited”, which set forth provisions governing the basic responsibilities of periodic report disclosures, the major errors in periodic report disclosures and the responsibility attribution. As at 31 December 2016, there has been no major error in periodic report disclosures of the Company. In order to enhance the confidentiality of its inside information and regulate the collection, management and reporting of its material information, the Company has formulated the “Measures for the Administration of Persons Who Have Knowledge of Inside Information of China Life Insurance Company Limited” and the “System of Internal Reporting of Material Information of China Life Insurance Company Limited”. In particular, the internal report on material information has been included in the indicator system under the internal control report of the Company. Persons responsible for reporting material information (including all departments, branches, subsidiaries and affiliates of the Company, the controlling shareholder and the shareholders holding over 5% of shares of the Company) obtain and identify potential material information at the level of operation and management by making use of various information technologies, and submit and report such information to the President and the Board of the Company as earlier as possible. The Board then makes the final decision on whether to release the material information, and discloses the same to such extent as it considers reasonable and practicable.

 

103


China Life Insurance Company Limited    Annual Report 2016

Internal Control and Risk Management

 

The Company has established a well-developed system relating to investment decisions in accordance with the relevant laws and regulations and based on the actual situation of investment management. The system defines the approval and decision-making authority, authorization mechanism and specific decision-making procedures for investment management. All major investment decisions shall be approved at an appropriate level and their actual implementation shall be in strict compliance with the relevant requirements of the investment management system. The Investment Decisions Committee is a permanent body of the Company for investment decisions, which is responsible for reviewing major investments and providing support to any investment decisions made by the management.

Under the management of a unified system, the Company has established a comprehensive information technology system and formed a closed-loop mechanism focusing on centralized review and publication, periodic inspection and continuous improvement. Further, the Company has promoted the construction of an information safety system, and formulated and implemented a series of effective internal control measures in the course of system development and testing and day-to-day operation and management, thereby strengthening the information safety control and improving the information safety management of the Company.

The Risk Management Department, Audit Department and Supervision Department of the Company are responsible for overseeing the implementation of its internal control policies. The Risk Management Department identifies issues in the areas of system design, control implementation and risk management in a timely manner through the adoption of various measures such as walk-through test, control test and risk analysis. It also eliminates loopholes, guards against risks and reduces losses by adopting various measures to improve systems, enhances legal compliance and pursues responsible persons. With the active implementation of the requirements of regulatory departments and the management of the Company and the adherence to the risk-oriented principle, the Audit Department has carried out routine audits and a variety of ad-hoc audits, covering the management of orphan policies, key city projects, supplementary major medical insurance, information system security, solvency risk management system, internal control of capital application, subsequent audit, connected transactions and anti-money laundering. These routine and ad-hoc audits enabled the Company to identify potential risks in a timely manner and promote the business operation of the Company in compliance with applicable laws and regulations through improving the supervision and remedial mechanisms, strengthening the implementation of rectification measures and enhancing the application of audit results. The Company has formulated regulations with respect to the reporting, investigation, handling of and responsibility attribution for cases involving any violations of laws, disciplinary rules and regulations by employees, each being implemented by the Supervision Department, which ensures that cases involving any violations of laws, disciplinary rules and regulations by employees are handled in a timely manner, and the persons involved will be attributed to proper responsibility. The Supervision Department reports the cases involving insurance agents (which specifically refer to judicial cases) and manages the responsibility attribution of such cases in accordance with regulations such as the “Notice on the Establishment of a Reporting System of Judicial Cases involving Insurance Industry” issued by the CIRC and internal policies such as the “Implementing Rules for Responsibility Attribution of Cases”, and constantly optimizes the relevant internal policies pursuant to the standards for administration of cases of insurance institutions promulgated by the competent authorities in charge of supervision of the insurance industry.

 

104


China Life Insurance Company Limited    Annual Report 2016

Internal Control and Risk Management

 

II. RISK MANAGEMENT

The Company has established a 5-tier organizational structure with the ultimate responsibility assumed by the Board, under the direct leadership of the management, having reliance on the risk management departments and with the close cooperation among the relevant functional departments. The first tier is the corporate governance level, including the Board, the Supervisory Committee, and the Risk Management Committee and the Audit Committee under the Board. The second tier is the headquarter level. The President’s Office of the Company has set up the Risk Management Committee, under which several functional departments, such as the Risk Management Department, the Legal and Compliance Department, the Supervision Department, the Audit Department, and the departments in charge of finance and business administration, are established. The third tier is the provincial branches level. The General Manager’s Office of the Company has set up the Risk Management Committee, under which several functional departments, such as the Risk Management Department, the Supervision Department, and the departments in charge of finance and business administration, are established. The fourth tier is the local or city branches level, including Supervision (Legal and Compliance) Departments and related functional departments. The fifth tier is the county sub-branches level, the persons responsible for internal control and risk management of which have been determined. By establishing the organizational structure of risk control, the Company has gradually established a criss-cross network of risk control system, with the risk management departments at all levels as leading bodies, the relevant functional departments as main bodies, the vertical decision-making control system and horizontal interactive collaboration mechanism as supporting systems and the comprehensive risk management as focus, thus laying a strong foundation for the Company to achieve a comprehensive risk management system with full coverage, all-employee participation and effective workflows.

In 2016, the Company consistently reinforced the construction of its risk management system. Pursuant to the requirements of the CIRC on the C-ROSS, the Company established a risk management system, with the “Rules for the Management of Comprehensive Risks” as the general outline, the risk management systems on seven types of risks (including insurance risk, market risk, etc.) as the focus, and the implementing rules for series of business as the base, so as to form a fundamental system and standard on the risk control of the Company. The Company actively pushed forward the adjustment to the organizational structure of risk management by appointing the chief risk officer, regulating the establishment of risk management departments and creating additional divisions and offices with relevant functions. The Company also consistently optimized its mechanism for the formation, transmission and application of risk preference, and applied such risk preference to the work such as budget, assets allocation and strategic planning.

The Company conducts a self-assessment on solvency risk management capability every year pursuant to the requirements of the CIRC on the C-ROSS so as to assess all work in relation to risk management at two levels: the soundness of the system and the effectiveness of its implementation. From October to November 2016, the CIRC conducted an inspection on the solvency risk management of the Company. According to the feedback given by the CIRC, the Company received a leading score among its peers in the life insurance industry in the “C-ROSS Solvency Risk Management Assessment” (“SARMRA”) of the CIRC in 2016. The Company conducts a risk assessment on seven types of risks (including insurance risk, market risk, credit risk, operational risk, strategic risk, reputational risk and liquidity risk) at least once every six months, and reports the same to the senior management. Based on the assessment, the overall risk of the Company is within a controllable range.

For an analysis and management of the major risk factors of the Company, please refer to Note 4 in the Notes to the Consolidated Financial Statements of this annual report.

It should be noted that the risk management and internal control of the Company are designed with the objectives to reasonably ensure the legal compliance of business operation and management, safety of assets, truthfulness and completeness of financial reports and relevant information, improvement of operating efficiency and effect, and accomplishment of development strategy. Given the inherent limitations on risk management and internal control, the Company can only provide reasonable assurance with respect to the accomplishment of the above objectives.

 

105


China Life Insurance Company Limited    Annual Report 2016

Honors and Awards

 

“Forbes”    “2016 Forbes Global 2000”, ranking No. 49
“FORTUNE China”    “2016 Top 500 Chinese Enterprises”, ranking No. 12
Hexun.com – the “14th China’s Financial Annual Champion Awards of 2016”    “2016 Most Influential Life Insurance Company”
“The Asset” magazine    “The Asset Triple A Country Awards: Best Transaction of the Year in China/Best Bonds of the Year in China”
   “The Asset Triple A Regional Awards: Best Bonds of Fixed Income Assets”
Millward Brown    “2016 BrandZ Top 100 Global Most Valuable Brands”, ranking No. 59
“Financial Times” – “2016 Gold Medal List of Chinese Financial Institutions (the 9th Session)”    “2016 Golden Dragon Award – Best Life Insurance Company of the Year”
“National Business Daily” – Assessment and Selection of the “Golden Tripod Award” (the 7th Session)    “2016 Excellent Customer Service Award”
“21st Century Business Herald” – “Assessment and Selection of the Competitiveness of Asian Financial Enterprises in 2016”    “2016 Best Life Insurance Company in Asia”
“Assessment and Selection of the Supervisory Committees of Listed Companies with the Best Practice” jointly organized by the Listed Companies Association of the PRC, the Shanghai Stock Exchange and the Shenzhen Stock Exchange    “Top 20 Supervisory Committees of Listed Companies with the Best Practice”
China Association for Quality Promotion – “2nd Chinese Conference on Services”    “Five-star Award of the China Service Stars”
China Association for Quality Promotion – “3.15 Themed Activities on Consumption and Right Protection of China Association for Quality Promotion in 2016”    “Service Quality and Innovation Award”
China Philanthropy Times – “2016 China Charity Annual Conference”    “2016 China Charitable Enterprise”

 

106


China Life Insurance Company Limited    Annual Report 2016

Independent Auditor’s Report

 

 

 

LOGO

To the shareholders of China Life Insurance Company Limited

(Incorporated in the People’s Republic of China with limited liability)

OPINION

We have audited the consolidated financial statements of China Life Insurance Company Limited (the “Company”) and its subsidiaries (the “Group”) set out on pages 113 to 226, which comprise the consolidated statement of financial position as at 31 December 2016, and the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2016, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”) and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (“ISAs”) issued by the International Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the Code of Ethics for Professional Accountants (the “Code”) issued by the Hong Kong Institute of Certified Public Accountants, and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

 

107


China Life Insurance Company Limited    Annual Report 2016

Independent Auditor’s Report

 

To the shareholders of China Life Insurance Company Limited

(Incorporated in the People’s Republic of China with limited liability)

 

KEY AUDIT MATTERS (continued)

 

Key audit matter

Valuation of insurance contract liabilities

The Group had significant insurance contract liabilities stated at RMB1,847.99 billion as at 31 December 2016, representing 77.34% of the Group’s total liabilities. This is an area that involves significant judgement over uncertain future outcomes, including primarily the timing and amount of ultimate full settlement of policyholder liabilities. Actuarial models are used to support the calculation of insurance contract liabilities. The complexity of the models may give rise to errors as a result of inaccurate/incomplete data or the design or application of the models. Assumptions used in actuarial models, such as mortality, morbidity, expenses, lapse rates, and so on, are set up applying estimates and judgements based on the experience analysis and future expectations by management.

The Group’s disclosures about valuation of insurance contract liabilities are included in Note 3.1, which specifically explains the uncertainty of key assumptions applied in the valuation. Please also refer to Note 4.1.3 for the sensitivity analysis of the impact of key assumptions changes on the performance of the Group.

How our audit addressed the key audit matter

In our audit, we involved our internal actuarial specialists to assist us in performing the following audit procedures in this area, which included among others:

 

  Assessing the design and testing the operating effectiveness of internal controls over the insurance contract liabilities’ processes including management’s determination and approval processes for experience analysis and setting of assumptions, calculation processes for actuarial estimation and actual result, and so on;

 

  Assessing the assumptions by reference to the industry data, and considering both historical experience and business expectation of the Group;

 

  Establishing models independently to test the valuation of liabilities for selected insurance products; and

 

  Analysing the movement of these liabilities considering the changes in actuarial assumptions of the reporting period.

We tested the underlying data used in the valuation of these liabilities, and compared it with original documents. By applying our insurance industry knowledge and experience, we compared the methodology, models and assumptions used by the Group against recognised actuarial practices.

 

 

108


China Life Insurance Company Limited    Annual Report 2016

Independent Auditor’s Report

 

To the shareholders of China Life Insurance Company Limited

(Incorporated in the People’s Republic of China with limited liability)

 

KEY AUDIT MATTERS (continued)

 

Key audit matter

The impairment test for investment in an associate

The Group held material investment in an associate, Sino-Ocean Group Holding Limited (“Sino-Ocean”), a company listed on the Stock Exchange of Hong Kong Limited, with a carrying value of RMB12.68 billion as at 31 December 2016. As the quoted market price of this investment had been below its carrying value for more than one year, the Group performed an impairment test with the assistance from an external valuer in 2015, based on which an impairment loss of RMB1.01 billion was recorded as at 31 December 2015. During 2016, the quoted market price of this investment was still below its carrying value, and the Group performed an impairment test with the assistance from an external valuer at the year end of 2016 as well, with the result that no further impairment loss needed to be recorded. In the assessment of the value in use of this investment, business assumptions for the projection of future cash flows and the determination of the discount rate were made by management based on their analysis of the historical operating results and the estimation of future expectations.

Disclosure of the impairment of this investment is disclosed in Note 8.

How our audit addressed the key audit matter

In our audit, our internal valuation specialists were involved to assist us in reviewing the technique and the discount rate used in the impairment test with reference to valuation guidelines and industry practices, which including:

 

  Assessing the comparable companies selected to generate certain inputs in calculating the Weighted Average Cost of Capital by reference to the financial and operational information of those companies and the Group; and

 

  Calculating the Weighted Average Cost of Capital using the Capital Asset Pricing Model.

We assessed the objectivity and capability of the external valuer. We compared the selling prices of development properties and rentals of investment properties with the historical business performance of Sino-Ocean and industry data to review the assumptions used in the cash flow projection of the external valuer.

 

 

Fair value of financial assets

 

The Group held material investments in certain financial assets such as private equity funds, preference shares, other equity and debt investments, which are accounted for as available-for-sale securities at fair value and securities at fair value through profit or loss with the total amount of RMB91.24 billion as at 31 December 2016. These investments are classified as level 3 in the fair value hierarchy, as their fair value are measured using valuation techniques with unobservable significant inputs. Fair value measurement can be a subjective area and more so for areas of the market reliant on model based valuation or with weak liquidity and price discovery. The selection of valuation techniques for these financial assets can be subjective and is so for assumptions. The use of different valuation techniques and assumptions could produce significantly different estimates of fair value.

Note 4.3 discloses the balance of these investments, the valuation techniques and significant unobservable inputs used in the measurement of the fair value of these investments.

Our internal valuation specialists were involved to assist us to assess the valuation techniques against industry practice and valuation guidelines, compare assumptions used against industry benchmarks, investigate significant differences and perform our own independent valuations where applicable.

We tested valuation, verification and model approval processes, and evaluated the design and operating effectiveness of the internal controls over those processes.

 

 

109


China Life Insurance Company Limited    Annual Report 2016

Independent Auditor’s Report

 

To the shareholders of China Life Insurance Company Limited

(Incorporated in the People’s Republic of China with limited liability)

 

KEY AUDIT MATTERS (continued)

 

Key audit matter

How our audit addressed the key audit matter

 

 

Valuation of identifiable intangible assets generated from an acquisition

 

On 29 August 2016, the Group completed the acquisition of an additional 23.686% equity interest in an existing associate, China Guangfa Bank Co., Ltd. (“CGB”), which remained an associate accounted for under the equity method. The Group performed a purchase price allocation exercise that involved valuing the identifiable net assets of CGB, especially for the identifiable intangible assets which are mainly the core deposit intangibles and the credit card client relationship arising from the acquisition. The Group engaged an external valuer to perform the valuation of the identifiable intangible assets, as the valuation involved complex assumptions and judgements, the change to which can have a material impact on the valuation adopted in the financial statements.

Please refer to Note 3.3 for the key assumptions involved in the valuation.

Our internal valuation specialists were involved to assist us to review the valuation methodologies and key valuation assumptions used by management, and the procedures included among others:

 

  Assessing the methodology of the valuation of the intangible assets;

 

  Testing the cash flow projection by comparing the key assumptions it based on against the historical business data and market practice; and

 

  Assessing the discount rate by verifying the selection of comparable companies based on bank industry experience and performing a corroborative analysis using the Capital Asset Pricing Model independently.

We assessed the objectivity and capability of the external valuer and tested the historical financial information, from which the assumptions for the cash flow projection were generated.

 

 

OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT

The directors of the Company are responsible for the other information. The other information comprises the information included in the Annual Report, other than the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

 

110


China Life Insurance Company Limited    Annual Report 2016

Independent Auditor’s Report

 

To the shareholders of China Life Insurance Company Limited

(Incorporated in the People’s Republic of China with limited liability)

 

RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with IFRSs issued by the IASB and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors of the Company either intend to liquidate the Company or to cease operations or have no realistic alternative but to do so.

The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Our report is made solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

 

  Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 

  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

 

  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

 

111


China Life Insurance Company Limited    Annual Report 2016

Independent Auditor’s Report

 

To the shareholders of China Life Insurance Company Limited

(Incorporated in the People’s Republic of China with limited liability)

 

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

  Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

 

  Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

  Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Ng Chi Keung.

Ernst & Young

Certified Public Accountants

Hong Kong

23 March 2017

 

112


China Life Insurance Company Limited    Annual Report 2016

Consolidated Statement of Financial Position

As at 31 December 2016

 

     Notes      As at 31
December
2016

RMB million
     As at 31
December
2015
RMB million
 

ASSETS

        

Property, plant and equipment

     6        30,389        26,974  

Investment properties

     7        1,191        1,237  

Investments in associates and joint ventures

     8        119,766        47,175  

Held-to-maturity securities

     9.1        594,730        504,075  

Loans

     9.2        226,573        207,267  

Term deposits

     9.3        538,325        562,622  

Statutory deposits – restricted

     9.4        6,333        6,333  

Available-for-sale securities

     9.5        766,423        770,516  

Securities at fair value through profit or loss

     9.6        209,124        137,990  

Securities purchased under agreements to resell

     9.7        43,538        21,503  

Accrued investment income

     9.8        55,945        49,552  

Premiums receivable

     11        13,421        11,913  

Reinsurance assets

     12        2,134        1,420  

Other assets

     13        22,013        23,642  

Cash and cash equivalents

        67,046        76,096  
     

 

 

    

 

 

 

Total assets

        2,696,951        2,448,315  
     

 

 

    

 

 

 

 

The notes on pages 120 to 226 form an integral part of these consolidated financial statements.

113


China Life Insurance Company Limited    Annual Report 2016

Consolidated Statement of Financial Position

As at 31 December 2016

 

     Notes      As at 31
December
2016

RMB million
     As at 31
December
2015
RMB million
 

LIABILITIES AND EQUITY

        

Liabilities

        

Insurance contracts

     14        1,847,986        1,715,985  

Investment contracts

     15        195,706        84,106  

Policyholder dividends payable

        87,725        107,774  

Interest-bearing loans and borrowings

     16        16,170        2,643  

Bonds payable

     17        37,998        67,994  

Financial liabilities at fair value through profit or loss

        2,031        856  

Securities sold under agreements to repurchase

     18        81,088        31,354  

Annuity and other insurance balances payable

        39,038        30,092  

Premiums received in advance

        35,252        32,266  

Other liabilities

     19        36,836        26,514  

Deferred tax liabilities

     28        7,768        16,953  

Current income tax liabilities

        1,214        5,347  

Statutory insurance fund

     20        491        217  
     

 

 

    

 

 

 

Total liabilities

        2,389,303        2,122,101  
     

 

 

    

 

 

 

Equity

        

Share capital

     34        28,265        28,265  

Other equity instruments

     35        7,791        7,791  

Reserves

     36        145,007        163,381  

Retained earnings

        122,558        123,055  
     

 

 

    

 

 

 

Attributable to equity holders of the Company

        303,621        322,492  
     

 

 

    

 

 

 

Non-controlling interests

        4,027        3,722  
     

 

 

    

 

 

 

Total equity

        307,648        326,214  
     

 

 

    

 

 

 

Total liabilities and equity

        2,696,951        2,448,315  
     

 

 

    

 

 

 

Approved and authorised for issue by the Board of Directors on 23 March 2017.

 

        Yang Mingsheng        

  

        Lin Dairen        

Director    Director

The notes on pages 120 to 226 form an integral part of these consolidated financial statements.

 

114


China Life Insurance Company Limited    Annual Report 2016

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2016

 

     Notes      2016
RMB million
    2015
RMB million
 

REVENUES

       

Gross written premiums

        430,498       363,971  

Less: premiums ceded to reinsurers

        (1,758     (978
     

 

 

   

 

 

 

Net written premiums

        428,740       362,993  

Net change in unearned premium reserves

        (2,510     (692
     

 

 

   

 

 

 

Net premiums earned

        426,230       362,301  
     

 

 

   

 

 

 

Investment income

     21        109,147       97,582  

Net realised gains on financial assets

     22        6,038       32,297  

Net fair value gains/(losses) through profit or loss

     23        (7,094     10,209  

Other income

        6,460       5,060  
     

 

 

   

 

 

 

Total revenues

        540,781       507,449  
     

 

 

   

 

 

 

BENEFITS, CLAIMS AND EXPENSES

       

Insurance benefits and claims expenses

       

Life insurance death and other benefits

     24        (253,157     (221,701