EX-99.1 2 d870960dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

China Life Insurance Company Limited    Annual Report 2018

Contents

Prelude

     3  

Chairman’s Statement

     15  

Management Discussion and Analysis

     21  

Embedded Value

     46  

Significant Events

     54  

Corporate Governance

     74  

Other Information

     144  

Financial Report

     151  

 

1


 

2


China Life Insurance Company Limited    Annual Report 2018

Prelude

 

01 Prelude

 

Definitions and Material Risk Alert

     4  

Company Profile

     5  

Core Competitiveness

     8  

Business Highlights

     10  

Financial Summary

     11  

 

 

3


China Life Insurance Company Limited    Annual Report 2018

Prelude

 

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
China Life Capital    China Life Capital Investment Company, an indirect wholly-owned subsidiary of CLIC
CBIRC    China Banking and Insurance Regulatory Commission, the predecessors of which are China Insurance Regulatory Commission and China Banking 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 insurance business, risks relating to investment business and risks relating to network security. 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.

 

4


China Life Insurance Company Limited    Annual Report 2018

Prelude

 

Company Profile

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

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

Our products and services include individual life insurance, group life insurance, and accident and health insurance. The Company is a leading provider of individual and group life insurance, annuity products and accident and health insurance in China. As at 31 December 2018, the Company had approximately 285 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.

 

I. BASIC INFORMATION

Registered Name in Chinese

   LOGO

Registered Name in English

   China Life Insurance Company Limited (“China Life”)

Legal Representative

   Wang Bin

Registered Office Address

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

Postal Code

   100033

Current Office Address

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

Postal Code

   100033

Telephone

   86-10-63633333

Fax

   86-10-66575722

Website

   www.e-chinalife.com

Email

   ir@e-chinalife.com

Hong Kong Office Address

   16/F, Tower A, China Life Centre, One Harbour Gate, 18 Hung Luen Road, Hung Hom, Kowloon, Hong Kong

Telephone

   852-29192628

Fax

   852-29192638

 

5


China Life Insurance Company Limited    Annual Report 2018

Prelude

 

II. CONTACT INFORMATION
   Board Secretary    Securities Representative*

Name

   Li Mingguang    Li Yinghui

Office Address

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

Telephone

   86-10-63631241    86-10-63631191

Fax

   86-10-66575112    86-10-66575112

Email

   ir@e-chinalife.com    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.

 

III. INFORMATION DISCLOSURE AND PLACE FOR OBTAINING THE REPORT

 

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 of Hong Kong Exchanges and Clearing Limited at www.hkexnews.hk

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

The Company’s Annual Report may be obtained at    12/F, China Life Plaza, 16 Financial Street, Xicheng District, Beijing, P.R. China
IV. STOCK INFORMATION

Stock Type

   Exchanges on which the Stocks are Listed   Stock Short Name   Stock Code

A Share

   Shanghai Stock Exchange   China Life   601628

H Share

   The Stock Exchange of Hong Kong Limited   China Life   2628

ADR

   New York Stock Exchange     LFC

 

6


China Life Insurance Company Limited    Annual Report 2018

Prelude

 

V. OTHER RELEVANT INFORMATION

H Share Registrar and Transfer

Office

   Computershare Hong Kong Investors Services Limited   Address: Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong

Depositary of ADR

   Deutsche Bank   Address: 60 Wall Street, New York, NY 10005

Domestic Legal Adviser

   King & Wood Mallesons  

International Legal Advisers

   Latham & Watkins LLP   Debevoise & Plimpton LLP

Auditors of the Company

  

 

Domestic Auditor

  International Auditor
   Ernst & Young Hua Ming LLP  

 

Ernst & Young

  

 

Address: Level 16, Ernst &

Young Tower, Oriental Plaza,

No. 1 East Changan Avenue,

Dongcheng District, Beijing,

P.R. China

  Address: 22/F, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong
  

 

Name of the Signing Auditors:

Huang Yuedong, Wu Jun

 

7


China Life Insurance Company Limited    Annual Report 2018

Prelude

 

Core Competitiveness

 

   

Long

history

and

excellent

brand

        The predecessor of the Company, one of the first batch of enterprises to underwrite insurance business in China, was approved by the Central Government for establishment in October 1949, when the People’s Republic of China was founded. After the restructuring and reorganization, the Company was successively listed home and abroad, becoming the first financial insurance enterprise in China triple-listed on the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the New York Stock Exchange. Since its establishment, the Company has played the role of an explorer and pioneer in China’s life insurance industry, and has committed to creating a world-class financial insurance brand. Through long-term and continuous brand building, China Life has become one of the famous and strong brands in the world with growing brand value and influence. As at the end of 2018, the brand of China Life has been selected as one of the “World’s 500 Most Influential Brands” published by World Brand Lab for twelve consecutive years, ranking 139th in 2018, and was again ranked 5th on the 2018 (the 15th session) “China’s 500 Most Valuable Brands” list published by World Brand Lab.
 

    

    

    

   
       
   

Prominent

principal

business

and sound

financial

strength

        The Company sticks to its principal business, further explores the huge potentials of the life insurance market, and maintains its leading position in China’s life insurance market. In 2017, the Company’s gross written premiums exceeded RMB500,000 million, achieving a new record high. Through the long-term development and accumulation, China Life has solid financial strength comparable to world-class enterprises in the world. As at 31 December 2018, the Company’s total assets amounted to RMB3,254,403 million, leading the life insurance industry in China. As one of the largest institutional investors in China, the Company becomes one of the largest insurance asset management companies in China through its controlling shareholding in China Life Asset Management Company Limited. As at the end of 2018, the total market capitalization of the Company was USD77,524 million.
          
       
   

Well-

established

network

and leading

technologies

        The Company has a sound institutional and services network, with its business outlets and services counters covering both urban and rural areas. As at the end of the Reporting Period, the number of sales force from all channels of the Company was over 1.7 million, which forms a unique and powerful distribution and services network in China and through which, the Company becomes the life insurance service provider within the reach of customers. Moreover, the Company implemented the “Technology-driven China Life” development strategy in great depth by adhering to the leading concept of technological innovation, so as to cultivate its first-class operational management, risk control and customer services. The Company strives to establish a customer services system equipped with mobile, intelligent and social features, and leverages technologies to provide convenient insurance services to the public.
     

 

8


China Life Insurance Company Limited    Annual Report 2018

Prelude

 

Core Competitiveness

 

       
   

Profound

and extensive customer base

        The Company has an extensive customer base. As at 31 December 2018, the Company had approximately 285 million long-term individual and group life insurance policies, annuity contracts and long-term health insurance policies in force, offering insurance services for more than 500 million customers.
     
       
   

Professional

and stable

core team

        During the long course of its development, the Company has accumulated a wealth of experience in operation and management and has a stable and professional management team that is well versed in the art of management in China’s life insurance market. The Company’s core management team and key personnel comprise those who have in-depth knowledge and understanding of the life insurance market in China, including members of the Company’s senior management, experienced underwriting personnel, insurance actuaries and investment managers. During the Reporting Period, there was no movement of these personnel which might have a material impact on the Company.

 

9


China Life Insurance Company Limited    Annual Report 2018

Prelude

 

Business Highlights

 

LOGO

 

10


China Life Insurance Company Limited    Annual Report 2018

Prelude

 

Financial Summary

 

I.

MAJOR FINANCIAL DATA AND INDICATORS FOR THE PAST FIVE YEARS

 

                                        RMB million  
     Under International Financial Reporting Standards (IFRS)  

Major Financial Data1

   2018      2017      Change      2016      2015      2014  

For the year ended

                 

Total revenues

     627,419        643,355        -2.5%        540,781        507,449        440,766  

Net premiums earned

     532,023        506,910        5.0%        426,230        362,301        330,105  

Benefits, claims and expenses

     621,243        608,827        2.0%        522,794        463,492        404,275  

Insurance benefits and claims expenses

     479,219        466,043        2.8%        407,045        352,219        315,294  

Profit before income tax

     13,921        41,671        -66.6%        23,842        45,931        40,402  

Net profit attributable to equity holders of the Company

     11,395        32,253        -64.7%        19,127        34,699        32,211  

Net profit attributable to ordinary share holders of the Company

     11,011        31,873        -65.5%        18,741        34,514        32,211  

Net cash inflow/(outflow) from operating activities

     147,552        200,990        -26.6%        89,098        (18,811      78,247  

As at 31 December

                 

Total assets

     3,254,403        2,897,591        12.3%        2,696,951        2,448,315        2,246,567  

Investment assets2

     3,104,014        2,753,124        12.7%        2,573,049        2,334,814        2,145,260  

Total liabilities

     2,931,113        2,572,281        13.9%        2,389,303        2,122,101        1,959,236  

Total equity holders’ equity

     318,371        320,933        -0.8%        303,621        322,492        284,121  

Per share (RMB)

                 

Earnings per share (basic and diluted)3

     0.39        1.13        -65.5%        0.66        1.22        1.14  

Equity holders’ equity per share3

     11.26        11.35        -0.8%        10.74        11.41        10.05  

Ordinary share holders’ equity per share3

     10.99        11.08        -0.8%        10.47        11.13        10.05  

Net cash inflow/(outflow) from operating activities per share3

     5.22        7.11        -26.6%        3.15        (0.67      2.77  

Major financial ratios

                 

Weighted average ROE (%)

     3.54        10.49       
decrease of 6.95
percentage points
 
 
     6.16        11.56        12.83  

Ratio of assets and liabilities4 (%)

     90.07        88.77       
increase of 1.30
percentage points
 
 
     88.59        86.68        87.21  

Gross investment yield5 (%)

     3.29        5.16       
decrease of 1.87
percentage points
 
 
     4.69        6.42        5.51  

 

11


China Life Insurance Company Limited    Annual Report 2018

Prelude

 

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. The figures of the past years were adjusted on the same basis.

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 + Investments in associates and joint ventures

3.

In calculating “Earnings per share (basic and diluted)”, “Equity holders’ equity per share”, “Ordinary share holders’ equity per share” and “Net cash inflow/(outflow) from operating activities per share”, 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 = (Gross investment income – Interest paid for securities sold under agreements to repurchase)/ ((Investment assets at the beginning of the period – Securities sold under agreements to repurchase at the beginning of the period

    

– Derivative financial liabilities at the beginning of the period + Investment assets at the end of the period – Securities sold under agreements to repurchase at the end of the period – Derivative financial liabilities at the end of the period)/2)

 

II.

MAJOR ITEMS OF THE CONSOLIDATED FINANCIAL STATEMENTS AND THE REASONS FOR CHANGE

 

                         RMB million

Major Items of the Consolidated Statement of
Financial Position

   As at
31 December
2018
     As at
31 December
2017
     Change    

Main Reasons for Change

Term deposits

     559,341        449,400        24.5   An increase in the scale of the negotiated deposits

Held-to-maturity securities

     806,717        717,037        12.5   An increase in the allocation of government bonds

Available-for-sale securities

     870,533        810,734        7.4   An increase in the allocation of financial bonds in available-for-sale securities

Securities at fair value through profit or loss

     138,717        136,809        1.4   An increase in the scale of corporate bonds in securities at fair value through profit or loss

Securities purchased under agreements to resell

     9,905        36,185        -72.6   The needs for liquidity management

Cash and cash equivalents

     50,809        48,586        4.6   The needs for liquidity management

Loans

     450,251        383,504        17.4   An increase in the scale of policy loans and debt investments plans

Investment properties

     9,747        3,064        218.1   New investments in investment properties

Investments in associates and joint ventures

     201,661        161,472        24.9   The Company steadily increased its allocation in investments in associates and joint ventures, and the equity of such investments was increased

Deferred tax assets

     1,257        —          N/A     Affected by a decrease in the fair value of available-for-sale securities

Insurance contracts

     2,216,031        2,025,133        9.4   The accumulation of insurance liabilities from new policies and renewal business

 

12


China Life Insurance Company Limited    Annual Report 2018

Prelude

 

Major Items of the Consolidated Statement of
Financial Position

   As at
31 December
2018
     As at
31 December
2017
     Change    

Main Reasons for Change

Investment contracts

     255,434        232,500        9.9   An increase in the scale of universal insurance accounts

Securities sold under agreements to repurchase

     192,141        87,309        120.1   The needs for liquidity management

Annuity and other insurance balances payable

     49,465        44,820        10.4   An increase in maturities payable

Interest-bearing loans and other borrowingsNote

     20,150        18,794        7.2   An increase in borrowings

Deferred tax liabilities

     —          4,871        N/A     Affected by a decrease in the fair value of available-for-sale securities

Equity holders’ equity

     318,371        320,933        -0.8   Due to the combined impact of total comprehensive income and profit distribution during the Reporting Period

 

Note:

Interest-bearing loans and other borrowings include a five-year bank loan of GBP275 million with a maturity date on 17 June 2019, a three-year bank loan of USD970 million with a maturity date on 27 September 2019, a three-year bank loan of USD940 million with a maturity date on 30 September 2019, a three-year bank loan of EUR67 million with a maturity date on 18 January 2021, and a six-month bank loan of EUR127 million with a maturity date on 11 January 2019 which is automatically renewed upon maturity pursuant to the terms of the agreement. All the above are fixed rate loans. A three-year loan of EUR400 million with a maturity date on 6 December 2020, which is floating rate loan.

 

13


China Life Insurance Company Limited    Annual Report 2018

Prelude

 

For the year ended 31 December                       RMB million

Major Items of the Consolidated
Statement of Comprehensive Income

   2018      2017     

Change

  

Main Reasons for Change

Net premiums earned

     532,023        506,910      5.0%    —  

Life insurance business

     436,863        429,267      1.8%    The steady growth of life insurance business

Health insurance business

     80,279        63,323      26.8%    The expansion of health insurance business by the Company

Accident insurance business

     14,881        14,320      3.9%    The steady growth of accident insurance business

Investment income

     125,167        122,727      2.0%    Due to the combined impact of an increase in interest income from debt investment and a decrease in dividends from funds

Net realised gains on financial assets

     (19,591      42      N/A    A decrease in spread income of stocks in available-for-sale securities and an increase in equity investment assets qualified for impairment

Net fair value gains through profit or loss

     (18,278      6,183      N/A    A decrease in spread income and fair value of stocks in securities at fair value through profit or loss

Other income

     8,098        7,493      8.1%    The business growth of Pension Company

Insurance benefits and claims expenses

     479,219        466,043      2.8%    An increase in reserves for insurance liabilities

Investment contract benefits

     9,332        8,076      15.6%    An increase in the scale of universal insurance accounts

Policyholder dividends resulting from participating in profits

     19,646        21,871      -10.2%    A decrease in investment yield from participating accounts

Underwriting and policy acquisition costs

     62,705        64,789      -3.2%    A continuous increase in the percentage of renewal premiums in gross written premiums as a result of the Company’s enhanced efforts in business restructuring

Finance costs

     4,116        4,601      -10.5%    A decrease in interest paid due to the redemptions of subordinated debts

Administrative expenses

     37,486        35,953      4.3%    The growth of business

Income tax

     1,985        8,919      -77.7%    Due to the combined impact of taxable income and deferred income tax

Net profit attributable to equity holders of the Company

     11,395        32,253      -64.7%    A significant decrease in the income from open market equity investments due to the overall volatility and downward trend of the equity market

 

14


02 Chairman’s Statement

 

 

15


China Life Insurance Company Limited    Annual Report 2018

Chairman’s Statement

 

LOGO

 

16


China Life Insurance Company Limited    Annual Report 2018

Chairman’s Statement

 

The world flourishes and thrives as the spring breeze blows. In this beautiful season, I, on behalf of the Company’s board of directors (the “Board”), hereby report to shareholders and the public the Company’s achievements made in 2018, the direction for future development and the blueprint in the new era.

LOOKING BACK ON 2018, WE STRIVED AHEAD FOR DEVELOPMENT WITH CONCERTED EFFORTS.

The year of 2018 marked the 40th anniversary of China’s reform and opening-up. During this year, the whole world faced complex and austere economic and financial situations and the life insurance sector underwent proactive restructuring. Sticking to the overall keynote of making progress with stability, China Life maintained a stable development and made a sturdy beginning of high-quality development through accelerating transformation and upgrading, and guarding against operational risks. The Company was ranked 35th on the “2018 Forbes Global 2000” and listed again on the “2018 (the 15th Session) China’s 500 Most Valuable Brands” published by World Brand Lab, ranking 5th.

We adapted to new situations and forged ahead to enhance our comprehensive strengths. The Company’s gross written premiums amounted to RMB535,826 million, an increase of 4.7% year-on-year, and secured a market share2 of 20.4%, an increase of 0.7 percentage point from the end of 2017, with its market-leading position consolidated. The embedded value of the Company was RMB795,052 million, an increase of 8.3% from the end of 2017. Total assets and investment assets of the Company reached RMB3.25 trillion and RMB3.10 trillion, an increase of 12.3% and 12.7% year-on-year, respectively. The Company had sufficient cash flow and adequate solvency, with its core solvency ratio and comprehensive solvency ratio being 250.55% and 250.56%, respectively, and received one of the highest scores among all insurers during the onsite review of Solvency Aligned Risk Management Requirements and Assessment (SARMRA).

We consistently optimized our premiums payment structure and product mix to continually improve our business quality. The Company proactively reduced single premiums from the bancassurance channel. The percentage of first-year regular premiums in first-year premiums of long-term insurance was 90.16%, an increase of 26.17 percentage points from 2017, and the percentage of renewal premiums in gross written premiums was 68.06%, an increase of 11.79 percentage points from 2017, which showed the stronger driving force of the renewal business. The Company made great efforts in diversifying the product mix. The percentage of premiums of the top-five products in the first-year premiums of long-term insurance decreased by 17.86 percentage points from 2017. Moreover, the protection-oriented business developed rapidly, and the percentage of premiums from the designated protection-oriented insurance products in first-year regular premiums increased by 6.73 percentage points compared to 2017. The value of one year’s sales of the Company was RMB49,511 million, the year-on-year decline of which was narrowed by 6.02 percentage points compared with the first half of 2018, and the new business margin of one year’s sales was enhanced from 2017.

 

2 

Calculated according to the premium data of life insurance companies in 2018 released by the CBIRC.

 

17


China Life Insurance Company Limited    Annual Report 2018

Chairman’s Statement

 

We continued to implement our investment strategies of making long-term investment, value investment and prudent investment. The Company capitalized on the opportunity of the periodical interest rate hike to further increase its allocation of fixed-income assets with long duration. The allocation of fixed-income products3 for the year amounted to over RMB500 billion, with a weighted average expected return of approximately 5%. In 2018, the net investment yield of the Company was 4.64%. Due to the overall downward fluctuation of the equity market, the gross investment yield of the Company decreased to 3.29% and the net profit attributable to equity holders of the Company was RMB11,395 million, a decrease of 64.7% year-on-year.

We consistently strengthened technological innovation and strived to improve customer experience. The Company went further to implement the “Technology-driven China Life” strategy by actively integrating new technologies into operation and management in great depth. We established digital platforms to facilitate the transformation and upgrading of sales force, which greatly improved internal management efficiency of the sales team and also the service efficiency and quality, and expanded intelligent scenarios to create a new operation model with China Life characteristics that combined both online and offline operations, to realize a direct and close interaction among customers, sales force and the Company. These undertakings helped to effectively satisfy the needs of over 500 million customers for insurance coverage and services and consistently lifted customer satisfaction.

We remained true to our original aspiration, assumed social responsibilities and served the overall economic and social development. The Company proactively served in China’s key development strategy as well as transformation and upgrading by taking advantage of various forms of investment such as direct or indirect investment in equities or debts for the purpose of facilitating the development of real economy. The Company took an initiative to launch special share-pledged funds in the industry to actively assist quality listed companies in resolving short-term liquidity risk. The Company underwrote an in-force insured sum of RMB25 trillion, an increase of 40.8% year-on-year. More than 14 million claims were settled with total claims payments4 of RMB54.54 billion, an increase of 23.8% year-on-year. The Company’s supplementary major medical expenses insurance provided protection for more than 400 million urban and rural residents and provided over 11 million claims payments. The Company intensively participated in poverty alleviation programs through insurance products, business operation, e-commerce and public relief funds. The Company had a total of 37 insurance-based poverty alleviation products on sale as at the end of 2018, and made the total claims payments of more than RMB3 billion to poverty-stricken persons in relation to supplementary major medical expenses insurance and RMB1.52 billion to the registered poverty-stricken population.

During the Reporting Period, the Company completed the re-election of the Board, and elected the sixth session of the Board. I would like to express my gratitude to all directors of the fifth session of the Board for their contributions to the development of the Company. The Company has significantly improved its capability of sustainable development with remarkable results in the adjustment of its business structure, and its technology-empowered businesses, management and

 

3 

The types of allocated assets mainly include deposits, bonds, debt-type financial products, etc. (exclusive of figures of any subsidiaries).

4 

Claims payments include the payment for claims, death, disability and medical benefits.

 

18


China Life Insurance Company Limited    Annual Report 2018

Chairman’s Statement

 

services were in full swing. The Company, meanwhile, firmly held onto the bottom line of risks with its enhanced capability on risk control and prevention. All of the above were the results of the excellent leadership of the previous session of the Board and also the diligent work of all employees of the Company. On the new journey towards high-quality development, the new session of the Board will work together with the Company’s management to carry forward the business of China Life with full confidence and capability.

LOOKING FORWARD TO THE FUTURE, WE WILL REMAIN TRUE TO OUR ORIGINAL ASPIRATION AND STEP ON A NEW JOURNEY OF REVITALIZATION.

Life insurance is a business of responsibility and care. The predecessor of the Company was born in 1949, and at the date of its establishment, the Company was determined to build itself into a long-standing company to deliver insurance protection and care to millions of families. This is the original aspiration and mission of China Life and also the fundamental impetus to push forward generations of its employees.

Time and tide wait for no man. With confidence and expectations, we have entered a new era when the Chinese economy has transformed from high-speed growth to high- quality development, and the transformation and upgrading of the insurance sector is moving to a deeper level; customer demands diversify further and FinTech is reshaping the insurance landscape. Now that the relay baton is in our hands, how can we navigate China Life, an ocean liner, to ride the wind and waves to lead in the new era? How can we maintain the undertaking for which generations of China Life employees have devoted their efforts and keep it everlasting? Facing new situations and requirements for development, we have set a strategic target on “China Life Revitalization” based on the Company’s reality. Not long ago, on the “China Life 2019 Open Day”, the new session of the Company’s management released and interpreted the overall strategic planning of “China Life Revitalization”. In the future, centering on the target of “China Life Revitalization”, we will continue to focus on business value, strengthen sales force, maintain stable growth, upgrade technologies, improve customer services and safeguard against risks, and make great efforts to complete three transformations: the transformation from being sales-oriented to attaching equal importance to sales and services, the transformation from being human- driven to being human- and technology-driven, and the transformation from being scale-oriented to the coordination of scale and value. We will continue to build the four driving engines of “Talent, Mechanism, Innovation and Integration” to improve our development quality, enhance our urban market competence, expand and strengthen the sales force, reinforce the brand image and boost the spirit of China Life. This is the inheritance and development of the original aspiration and mission of the Company which is to protect the good life and strive to become a world-class life insurance company, and also the mission and responsibility of the new session of the Board and the management; more importantly, it is the solemn commitment of China Life to its investors, shareholders, customers and employees. Only in this way can we live up to the history, the era and ourselves!

A journey of a thousand miles begins with a single step. The year 2019 marks the beginning of “China Life Revitalization”, in which we will lay firm steps in market-oriented reforms, customer experience improvement, stronger competence in the large- and medium-sized cities and sales force transformations. Furthermore, we will strengthen the management of assets and liabilities, push forward the construction of a comprehensive risk management system and incorporate the compliance concept in the whole process of operations so as to lay a sound foundation for the development of world-class life insurance company.

 

19


China Life Insurance Company Limited    Annual Report 2018

Chairman’s Statement

 

“Pull together and we will conquer all difficulties”. We will remain true to our original aspiration, keep in mind our mission, work together and strive to continually create value for our shareholders and customers, with a view to writing a new chapter that lives up to our mission and the new era!

 

By Order of the Board

 

LOGO

 

Wang Bin

Chairman

Beijing, China

27 March 2019

 

20


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

03 Management Discussion and Analysis

Review of Business Operations in 2018

     22  

Business Analysis

     25  

Analysis of Specific Items

     36  

Technological Innovation and Operations and Services

     41  

Performance of the Corporate Social Responsibility

     43  

Future Prospect and Risk Analysis

     43  

 

21


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

LOGO

 

I.

REVIEW OF BUSINESS OPERATIONS IN 2018

In 2018, the macro environment was complicated and volatile, and the restructuring of the insurance sector exceeded expectation in terms of both the depth and the breadth. Due to the combined effects of multiple factors, the development of the Chinese life insurance industry was under pressure. The Company adhered to the overall keynote of making progress with stability, implemented the “new development” concepts, made efforts to meet the requirements of high-quality development, and overcame obstacles and forged ahead with concerted efforts. The Company continued to maintain the value-oriented principle, pushed forward various tasks and achieved a steady momentum of development. During the Reporting Period, the Company’s gross written premiums amounted to RMB535,826 million, an increase of 4.7% year-on-year. The Company’s market share, remaining the first place in the industry, was approximately 20.4%, an increase of 0.7 percentage point from the end of 2017. As at 31 December 2018, the embedded value of the Company reached RMB795,052 million, an increase of 8.3% from the end of 2017.

In 2018, the Chinese economy slowed down slightly, with interest rate trending down in the bond market and a decline in the stock market second only to that in 2008. The Company continued to implement its investment strategies of making long-term investment, value investment and prudent investment, and maintained a stable net investment yield by seizing the opportunity of the relatively high interest rates at certain stages and increasing allocation in long-term fixed-income assets. However, due to a significant decrease in the equity market, both the spread income and the fair value through profit or loss of stocks and funds were negative, which caused a significant year-on-year decline of the gross investment yield of the Company.

 

22


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

Key Performance Indicators

            RMB million  
     2018      2017  

Gross written premiums

     535,826        511,966  

Premiums from new policies

     171,148        223,860  

Including: First-year regular premiums

     104,419        113,121  

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

     41,635        66,003  

Renewal premiums

     364,678        288,106  

Gross investment income

     95,148        136,164  

Net profit attributable to equity holders of the Company

     11,395        32,253  

Value of one year’s sales 1

     49,511        60,117  

Including: Exclusive individual agent channel

     42,839        53,170  

Bancassurance channel

     6,357        6,536  

Group insurance channel

     314        410  

Policy Persistency Rate (14 months) (%) 2

     91.10        90.90  

Policy Persistency Rate (26 months) (%) 2

     86.00        85.70  

Surrender Rate (%) 3

     4.69        4.13  
     As at      As at  
     31 December 2018      31 December 2017  

Embedded value

     795,052        734,172  

Number of in-force policies of long-term insurance (hundred million)

     2.85        2.68  

Notes:

 

1.

Numbers may not be additive due to rounding.

2.

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

3.

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

 

23


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

During the Reporting Period, the Company continued to optimize its premiums payment structure and product mix. By significantly reducing single premiums from the bancassurance channel, first-year regular premiums amounted to RMB104,419 million, which accounted for 90.16% in long-term first-year premiums, an increase of 26.17 percentage points from 2017; single premiums were RMB11,399 million, a decrease of 82.1% year-on-year, and the percentage of single premiums in long-term first-year premiums was reduced to 9.84% from 36.01% of 2017. Renewal premiums amounted to RMB364,678 million (an increase of 26.6% year-on-year) and accounted for 68.06% of the gross written premiums (an increase of 11.79 percentage points from 2017). Renewal premiums became a more important driving factor for business growth. The Company continued to push forward diversification of its products, through which the percentage of premiums of the top-five products in long-term first-year premiums decreased by 17.86 percentage points from 2017. The protection-oriented businesses developed rapidly and the percentage of premiums from designated protection-oriented products in first-year regular premiums increased by 6.73 percentage points from 2017.

Premium breakdown

(RMB million)

LOGO

During the Reporting Period, net profit attributable to equity holders of the Company was RMB11,395 million, a decrease of 64.7% year-on-year resulting from a significant decrease in the income from open market equity investments of the Company due to the overall volatility and downward trend of the equity market. As at 31 December 2018, the embedded value of the Company was RMB795,052 million, an increase of 8.3% from the end of 2017. The value of one year’s sales was RMB49,511 million, a decrease of 17.6% from 2017, the year-on-year decline of which was narrowed by 6.02 percentage points compared to the first half of 2018, and the new business margin of one year’s sales was enhanced from 2017. The number of in-force policies of long-term insurance of the Company was 285 million, an increase of 6.3% from the end of 2017. The Policy Persistency Rates (14 months and 26 months) reached 91.10% and 86.00%, an increase of 0.20 and 0.30 percentage point compared to 2017, respectively.

Embedded value

(RMB million)

LOGO

 

24


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

II.

BUSINESS ANALYSIS

 

  (I)

Insurance Business

 

  1.

Gross written premiums categorized by business

 

For the year ended 31 December

                 RMB million  
   2018      2017      Change  

Life Insurance Business

     437,540        429,822        1.8

First-year business

     106,212        168,909        -37.1

Single

     11,378        63,653        -82.1

First-year regular

     94,834        105,256        -9.9

Renewal business

     331,328        260,913        27.0

Health Insurance Business

     83,614        67,708        23.5

First-year business

     50,705        40,845        24.1

Single

     41,275        33,124        24.6

First-year regular

     9,430        7,721        22.1

Renewal business

     32,909        26,863        22.5

Accident Insurance Business

     14,672        14,436        1.6

First-year business

     14,231        14,106        0.9

Single

     14,076        13,962        0.8

First-year regular

     155        144        7.6

Renewal business

     441        330        33.6
  

 

 

    

 

 

    

 

 

 

Total

     535,826        511,966        4.7
  

 

 

    

 

 

    

 

 

 

 

  Note:

Single premiums in the above table include premiums from short-term insurance business.

During the Reporting Period, due to a significant decrease in single premiums and the proactive restructuring of the insurance industry, gross written premiums from the life insurance business of the Company amounted to RMB437,540 million, an increase of 1.8% year-on-year. The Company made great efforts in the development of protection-oriented insurance businesses. In particular, gross written premiums from the health insurance business amounted to RMB83,614 million, an increase of 23.5% year-on-year, and gross written premiums from the accident insurance business were RMB14,672 million, an increase of 1.6% year-on-year.

 

25


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

  2.

Gross written premiums categorized by channel

 

For the year ended 31 December

   2018      RMB million
2017
 

Exclusive Individual Agent Channel

     408,278        353,668  

First-year business of long-term insurance

     79,513        90,629  

Single

     272        389  

First-year regular

     79,241        90,240  

Renewal business

     316,930        253,586  

Short-term insurance business

     11,835        9,453  

Bancassurance Channel

     76,841        113,505  

First-year business of long-term insurance

     31,881        80,731  

Single

     8,642        59,777  

First-year regular

     23,239        20,954  

Renewal business

     43,785        31,880  

Short-term insurance business

     1,175        894  

Group Insurance Channel

     26,404        26,207  

First-year business of long-term insurance

     3,487        4,368  

Single

     2,483        3,425  

First-year regular

     1,004        943  

Renewal business

     1,649        999  

Short-term insurance business

     21,268        20,840  

Other Channels1

     24,303        18,586  

First-year business of long-term insurance

     937        1,064  

Single

     2        80  

First-year regular

     935        984  

Renewal business

     2,314        1,641  

Short-term insurance business

     21,052        15,881  
  

 

 

    

 

 

 

Total

     535,826        511,966  
  

 

 

    

 

 

 

Notes:

 

1.

Other channels mainly include supplementary major medical expenses insurance, 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.

 

26


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

In 2018, economic and financial situations at home and abroad were complicated and challenging, and the insurance industry underwent proactive restructuring. The Company adhered to the operating guideline of “prioritizing value, strengthening sales force, optimizing business structure, achieving stable growth and safeguarding against risks”, proactively adjusted its business structure and pushed forward product diversification, and made great efforts on developing the designated protection-oriented businesses and short-term insurance business. The Company continually implemented the sales force development strategy of quality improvement and size expansion by focusing on quality improvement. The Company continued to optimize the structure of sales force by raising recruitment standards, tightening performance assessment, improving management and reinforcing dismissal of low-performance agents. As at the end of the Reporting Period, the total number of sales force from all channels amounted to 1.722 million and the quality of sales force was effectively improved.

Exclusive Individual Agent Channel. In 2018, the exclusive individual agent channel achieved continuous and steady growth and further optimized the business structure by focusing on business value, making efforts on sales management transformation and upgrade, strengthening the coordinated development among business, sales force and day-to-day management. During the Reporting Period, gross written premiums from the exclusive individual agent channel amounted to RMB408,278 million, an increase of 15.4% year-on-year. First-year regular premiums were RMB79,241 million, which accounted for 99.66% of long-term first-year premiums. In particular, the percentages of first-year regular premiums with a payment duration of five years or longer and first-year regular premiums with a payment duration of ten years or longer in first-year regular premiums were 61.65% and 46.35%, respectively. Renewal premiums amounted to RMB316,930 million, an increase of 25.0% year-on-year, which significantly drove the growth of gross written premiums from this channel. The new business margin of one year’s sales of the channel in the second half of 2018 increased by 15.27 percentage points compared with the same period of 2017, which narrowed the year-on-year decline in the value of one year’s sales compared with the first half of 2018. As at the end of the Reporting Period, the number of exclusive individual agents was 1.439 million. The monthly average productive agents increased by 2.6% year-on-year. Besides, the Company accelerated the systematic operation of new agent development and agent manager cultivation in order to enhance management efficiency, and actively accelerated the development of the protection-oriented business. The monthly average number of agents selling designated protection-oriented insurance products increased by 43.4% year-on-year.

Renewal Premiums from the Exclusive Individual Agent Channel

(RMB million)

 

LOGO

 

27


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

Bancassurance Channel. In 2018, the bancassurance channel made more efforts in its business restructuring, significantly reduced single premiums, focused on the development of regular premium business, constantly improved the quality of sales force, and the new business margin of one year’s sales of the channel enhanced consistently. During the Reporting Period, single premiums from the channel were significantly reduced to RMB8,642 million from RMB59,777 million of 2017, a decrease of 85.5% year-on-year. Accordingly, gross written premiums were RMB76,841 million, a decrease of 32.3% year-on-year. First-year regular premiums were RMB23,239 million (a year-on-year increase of 10.9%), which accounted for 72.89% of long-term first-year business (an increase of 46.93 percentage points from 2017). Renewal premiums were RMB43,785 million (a year-on-year increase of 37.3%) which accounted for 56.98% of the gross written premiums (a year-on-year increase of 28.89 percentage points). The new business margin of one year’s sales of the channel increased by 10.74 percentage points from 2017. As at the end of the Reporting Period, the number of sales representatives in the bancassurance channel was 0.245 million. In particular, the monthly average active insurance planners for long-term business in the bancassurance channel increased by 34.5% year-on-year.

Long-term premiums from the bancassurance channel

(RMB million)

 

LOGO

 

28


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

Group Insurance Channel. In 2018, the group insurance channel further pushed forward diversified business development, strengthened structural optimization and achieved stable development of various businesses. During the Reporting Period, gross written premiums from the group insurance channel were RMB26,404 million, an increase of 0.8% year-on-year. Short-term insurance premiums from the group insurance channel were RMB21,268 million, an increase of 2.1% year-on-year. The Company actively launched the pilot program of tax deferred individual pension insurance business and constantly promoted the tax-advantaged health insurance business. As at the end of the Reporting Period, the number of direct sales representatives reached 83,000. In particular, the number of direct sales representatives with high performance reached 54,000, an increase of 4.3% year-on-year.

 

LOGO

Other Channels. During the Reporting Period, gross written premiums from other channels reached RMB24,303 million, a rapid growth of 30.8% year-on-year. The Company actively developed the policy-oriented health insurance businesses, including supplementary major medical expenses insurance and long-term care insurance, which maintained leading positions in the market. As at the end of the Reporting Period, the Company carried out over 240 supplementary major medical expenses insurance projects, providing services for over 400 million urban and rural residents in 28 provinces, and undertook 22 long-term care insurance projects on a cumulative basis. The Company actively pushed forward the transformation and upgrade of its tele-sales channel and put great efforts in the development of online sales from the internet-sales channel.

 

29


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

  3.

Analysis of major insurance products

 

  (1)

Top-five insurance products in terms of gross written premium

 

For the year ended 31 December    RMB million  

Insurance product

   Gross written
premium
     Standard premiums
from new policies 1
    

Major sales channel

   Surrenders  

China Life Xin Fu Ying Jia Annuity Insurance
LOGO 2

     38,397        —        Mainly through the channel of exclusive individual agents      496  

China Life Sheng Shi Zhen Pin Annuity Insurance (participating insurance)
LOGO

     31,878        9,599      Mainly through the channel of exclusive individual agents      1,597  

China Life Xin Fu Nian Nian Annuity Insurance
LOGO 2

     27,120        —        Mainly through the channel of exclusive individual agents      288  

China Life Hong Fu Zhi Zun Annuity Insurance (participating insurance)
LOGO  2

     22,292        21      Mainly through the channel of exclusive individual agents      417  

China Life Xin Ru Yi Annuity Insurance (platinum version)
LOGO 2

     21,960        —        Mainly through the channel of exclusive individual agents      416  

Notes:

 

1.

Standard premiums were calculated in accordance with the calculation methods set forth in the “Notice on Establishing the Industry Standard of Standard Premiums in the Life Insurance Industry” (Bao Jian Fa [2004] No. 102) and the “Supplementary Notice of the ‘Notice on Establishing the Industry Standard of Standard Premiums in the Life Insurance Industry’ ” (Bao Jian Fa [2005] No. 25) of the former China Insurance Regulatory Commission.

2.

China Life Xin Fu Ying Jia Annuity Insurance, China Life Xin Fu Nian Nian Annuity Insurance and China Life Xin Ru Yi Annuity Insurance (platinum version) have been replaced by their upgraded products and are no longer on sale, and the gross written premiums are recorded as renewal premiums. China Life Hong Fu Zhi Zun Annuity Insurance (participating insurance) is no longer on sale, and its standard premiums from new policies are recorded as first-year reinstatement premiums from policies with monthly payment.

 

30


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

  (2)

Top-three insurance products in terms of net increase in investment contract

 

For the year ended 31 December                RMB million  

Insurance product

   Net increase     

Major sales channel

   Surrender value  

China Life Xin Account Endowment Insurance (universal insurance) (exclusive version)
LOGO

     11,332      Mainly through the channel of exclusive individual agents      214  

China Life Xin Account Endowment Insurance (universal insurance) (diamond version)
LOGO

     9,165      Mainly through the channel of exclusive individual agents      453  

China Life Xin Account Annuity Insurance (universal insurance) (excellent version)
LOGO

     8,876      Mainly through the channel of exclusive individual agents      344  

 

  4.

Insurance Contracts

 

                   RMB million  
     As at 31
December 2018
     As at 31
December 2017
     Change  

Life insurance

     2,081,822        1,914,597        8.7

Health insurance

     125,743        102,190        23.0

Accident insurance

     8,466        8,346        1.4
  

 

 

    

 

 

    

Total of insurance contracts

     2,216,031        2,025,133        9.4
  

 

 

    

 

 

    

Including: residual margin Note

     684,082        607,941        12.5

 

  Note:

The residual margin is a component of insurance contract reserve, which results in no Day 1 gain at the initial recognition of an insurance contract. The residual margin is set to zero if it is negative. The growth of residual margin arises mainly from new business.

As at the end of the Reporting Period, the reserves of insurance contracts of the Company increased by 9.4% from the end of 2017, which is primarily due to the accumulation of insurance liabilities from new policies and renewal business. As at the date of the statement of financial position, the reserves of various insurance contracts of the Company passed the adequacy test.

 

31


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

  5.

Analysis of claims and policyholder benefits

 

For the year ended 31 December                  RMB million  
   2018      2017      Change  

Insurance benefits and claims expenses

     479,219        466,043        2.8

Life insurance business

     412,876        409,410        0.8

Health insurance business

     59,689        50,624        17.9

Accident insurance business

     6,654        6,009        10.7

Investment contract benefits

     9,332        8,076        15.6

Policyholder dividends resulting from participation in profits

     19,646        21,871        -10.2

During the Reporting Period, insurance benefits and claims expenses rose by 2.8% year-on-year due to an increase in reserves for insurance liabilities. In particular, health insurance business rose by 17.9% year-on-year due to the health insurance business growth; accident insurance business rose by 10.7% year-on-year due to an increase in claims expenses of certain business. Investment contract benefits rose by 15.6% year-on-year due to an increase in the scale of the universal insurance accounts. Policyholder dividends resulting from participation in profits declined by 10.2% year-on-year due to a decrease in investment yield from participating accounts.

 

  6.

Analysis of underwriting and policy acquisition costs and other expenses

 

For the year ended 31 December                  RMB million  
   2018      2017      Change  

Underwriting and policy acquisition costs

     62,705        64,789        -3.2

Finance costs

     4,116        4,601        -10.5

Administrative expenses

     37,486        35,953        4.3

Other expenses

     7,642        6,426        18.9

Statutory insurance fund contribution

     1,097        1,068        2.7

During the Reporting Period, underwriting and policy acquisition costs decreased by 3.2% year-on-year due to the continuous increase in the percentage of renewal premiums in gross written premiums resulting from the Company’s enhanced efforts in business restructuring. Finance costs decreased by 10.5% year-on-year due to a decrease in interest paid as a result of the redemptions of subordinated debts. Administrative expenses increased by 4.3% year-on-year as a result of business growth.

 

32


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

(II)

Investment Business

In 2018, the global economic growth was differentiated, the growth rate of major economies other than that of the United States slowed down significantly and the global stock markets saw a widespread decline. The endogenetic driving force for the growth of the Chinese economy remained to be enhanced, the marginal pulling effects from external demands decreased, and the economic growth decelerated. The interest rate of domestic bond market declined in general, and the stock market plummeted. In respect of the allocation of general categories of assets, the Company continued to increase its allocation in long-term fixed-income assets at high interest rates to optimize the asset-liability matching; selected high-quality debt-type financial products and strictly controlled credit risk; and pushed forward structural adjustment of open market equity portfolio by selecting stocks with low valuations and high dividends. As at the end of the Reporting Period, the Company’s investment assets reached RMB3,104,014 million, an increase of 12.7% from the end of 2017.

 

33


China Life Insurance Company Limited    Annual Report 2018

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:

 

                         RMB million  
     As at 31 December 2018     As at 31 December 20171  

Investment category

   Amount      Percentage     Amount      Percentage  

Fixed-maturity financial assets

     2,407,236        77.55     2,094,289        76.06

Term deposits

     559,341        18.02     449,400        16.32

Bonds

     1,309,831        42.20     1,188,606        43.17

Debt-type financial products2

     351,277        11.32     301,761        10.96

Other fixed-maturity investments3

     186,787        6.01     154,522        5.61

Equity financial assets

     424,656        13.68     409,528        14.88

Common stocks

     178,710        5.76     173,450        6.31

Funds4

     106,271        3.42     101,236        3.68

Bank wealth management products

     32,854        1.06     40,327        1.46

Other equity investments5

     106,821        3.44     94,515        3.43

Investment properties

     9,747        0.31     3,064        0.11

Cash and others6

     60,714        1.96     84,771        3.08

Investments in associates and joint ventures

     201,661        6.50     161,472        5.87
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

     3,104,014        100.00     2,753,124        100.00
  

 

 

    

 

 

   

 

 

    

 

 

 

Notes:

 

1.

The figures as at the end of last year were adjusted on the same basis.

2.

Debt-type financial products include debt investment schemes, equity investment plans, trust schemes, project asset-backed plans, credit asset-backed securities, specialized asset management plans, and asset management products, etc.

3.

Other fixed-maturity investments include policy loans, statutory deposits-restricted, bank wealth management products, and interbank certificates of deposits, etc.

4.

Funds include equity funds, bond funds and money market funds, etc. In particular, the balances of money market funds as at 31 December 2018 and 31 December 2017 were RMB4,635 million and RMB6,942 million, respectively.

5.

Other equity investments include private equity funds, unlisted equities, preference shares, equity investment plans, and specialized asset management plans, etc.

6.

Cash and others include cash, cash at banks, short-term bank deposits and securities purchased under agreements to resell, etc.

 

34


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

As at the end of the Reporting Period, among the major types of investments, the percentage of investment in bonds changed to 42.20% from 43.17% as at the end of 2017, the percentage of term deposits increased to 18.02% from 16.32% as at the end of 2017, the percentage of investment in stocks and funds (excluding money market funds) changed to 9.03% from 9.73% as at the end of 2017, and the percentage of investment in debt-type financial products increased to 11.32% from 10.96% as at the end of 2017.

 

  2.

Investment Income

 

For the year ended 31 December

   2018     RMB million
2017
 

Gross investment income2

     95,148       136,164  

Net investment income3

     133,017       129,939  

Net income from fixed-maturity investments

     106,422       93,242  

Net income from equity investments

     17,776       27,939  

Net income from investment properties

     105       69  

Investment income from cash and others

     969       1,546  

Net income from investments in associates and joint ventures

     7,745       7,143  

Net realized gains on financial assets

     (19,591     42  

Net fair value gains through profit or loss

     (18,278     6,183  

Net investment yield4

     4.64     4.92

Gross investment yield5

     3.29     5.16

Notes:

 

1.

The figures for the same period of last year were adjusted on the same basis.

2.

Gross investment income = Net investment income + Net realized gains on financial assets + Net fair value gains through profit or loss

3.

Net investment income includes interest income from debt investments, interest income from deposits, dividend and bonus from equity investments, interest income from loans, net income from investment properties, and net income from investments in associates and joint ventures, etc.

4.

Net investment yield = (Net investment income – Interest paid for securities sold under agreements to repurchase)/((Investment assets at the beginning of the period – Securities sold under agreements to repurchase at the beginning of the period + Investment assets at the end of the period – Securities sold under agreements to repurchase at the end of the period)/2)

5.

Gross investment yield = (Gross investment income – Interest paid for securities sold under agreements to repurchase)/ ((Investment assets at the beginning of the period – Securities sold under agreements to repurchase at the beginning of the period – Derivatives financial liabilities at the beginning of the period + Investment assets at the end of the period – Securities sold under agreements to repurchase at the end of the period – Derivatives financial liabilities at the end of the period)/2)

 

35


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

The balances of the Company’s fixed income investment and equity investment increased along with the continuous expansion of its investment scale. In 2018, the Company’s net investment income was RMB133,017 million, an increase of RMB3,078 million from 2017 and a year-on-year increase of 2.4%. In particular, the yield-to-maturity of new fixed income investments increased significantly compared to the existing allocation, however, due to the impact of a decrease in dividends from funds, the net investment yield was 4.64%, a decrease of 0.28 percentage point from 2017. Due to the effect of a significant decline in stock market, the gross investment income of the Company was RMB95,148 million, a decrease of RMB41,016 million from 2017, and the gross investment yield was 3.29%, a decrease of 1.87 percentage points from 2017. The comprehensive investment yield taking into account the current net fair value changes of available-for-sale securities recognized in other comprehensive income5 was 3.10%, a decrease of 1.47 percentage points from 20176.

 

  3.

Major Investments

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

 

III.

ANALYSIS OF SPECIFIC ITEMS

 

  (I)

Profit before income Tax

 

                   RMB million  

For the year ended 31 December

   2018      2017      Change  

Profit before income tax

     13,921        41,671        -66.6

Life insurance business

     1,630        29,315        -94.4

Health insurance business

     4,100        3,246        26.3

Accident insurance business

     495        528        -6.3

Other businesses

     7,696        8,582        -10.3

 

5 

Comprehensive investment yield = (Gross investment income – Interest paid for securities sold under agreements to repurchase + Current net fair value changes of available-for-sale securities recognized in other comprehensive income)/((Investment assets at the beginning of the period – Securities sold under agreements to repurchase at the beginning of the period – Derivative financial liabilities at the beginning of the period + Investment assets at the end of the period – Securities sold under agreements to repurchase at the end of the period – Derivative financial liabilities at the end of the period) /2)

6 

The figure of last year was adjusted on the same basis.

 

36


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

During the Reporting Period, profit before income tax from the life insurance business decreased by 94.4% year-on-year as a result of a significant decrease in the income from open market equity investments due to the overall volatility and downward trend of the equity market. Profit before income tax from the health insurance business increased by 26.3% year-on-year primarily due to the growth and quality improvement in the short-term health insurance business. Profit before income tax from the accident insurance business decreased by 6.3% year-on-year primarily due to the fluctuation of the claims expenses of certain accident insurance business. Profit before income tax from other businesses decreased by 10.3% year-on-year primarily due to the fluctuation in exchange rate of price currency for liabilities of the Company’s subsidiaries.

 

  (II)

Analysis of Cash Flows

 

  1.

Liquidity Sources

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

Our cash and bank deposits can provide us with a source of liquidity to meet normal cash outflows. As at the end of the Reporting Period, the balance of cash and cash equivalents was RMB50,809 million. In addition, the vast majority of our term deposits in banks allow us to withdraw funds on deposits, subject to a penalty interest charge. As at the end of the Reporting Period, the amount of term deposits was RMB559,341 million.

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

 

  2.

Liquidity Uses

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

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

 

37


China Life Insurance Company Limited    Annual Report 2018

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

   2018      2017      Change    

Main Reasons for Change

Net cash inflow/(outflow) from operating activities

     147,552        200,990        -26.6   The change in the scale of securities at fair value through profit or loss

Net cash inflow/(outflow) from investing activities

     (238,373      (173,676      37.3   Uneven distribution of cash flows at maturity from investment assets for each year

Net cash inflow/(outflow) from financing activities

     92,963        (45,595      N/A     Change in account balance of securities sold under agreements to repurchase from time to time as a result of liquidity management, and the impact of the redemptions of subordinated debts in 2017

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

     81        (179      N/A    

Net increase/(decrease) in cash and cash equivalents

     2,223        (18,460      N/A    

 

38


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

  (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:

 

           RMB million  
     As at 31     As at 31  
     December 2018     December 2017  

Core capital

     761,353       706,516  

Actual capital

     761,367       706,623  

Minimum capital

     303,872       254,503  

Core solvency ratio

     250.55     277.61

Comprehensive solvency ratio

     250.56     277.65
  

 

 

   

 

 

 

 

  Note:

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

As at the end of the Reporting Period, the Company’s comprehensive solvency ratio decreased by 27.09 percentage points from the end of 2017, which was due to the impact of various factors, mainly including the business growth of the Company and an increase in the scale of investment assets.

 

  (IV)

Sale of Material Assets and Equity

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

 

39


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

  (V)

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%        10,414        9,243        1,039  

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 CBIRC      3,400       



70.74% is
held by the
Company, and
3.53% is held by
AMC
 
 
 
 
 
     4,593        3,429        352  

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 CBIRC      18,800        40%        83,561        19,907        121  

China Guangfa Bank Co., Ltd.

   The businesses approved by the CBIRC include commercial banking businesses such as public and private deposits, loans, payment and settlement, and capital business      19,687        43.686%        2,373,291        158,510        10,707  

 

Note:

For details, please refer to Note 8 and Note 34 in the Notes to the Consolidated Financial Statements in this annual report.

 

  (VI)

Structured Entities Controlled by the Company

Details of structured entities controlled by the Company is set out in the Note 41 to the Consolidated Financial Statements in this annual report.

 

40


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

IV.

TECHNOLOGICAL INNOVATION AND OPERATIONS AND SERVICES

 

  (I)

Technological Innovation

In 2018, with its advantages accumulated over years in offline channels, the Company strived to build a FinTech ecology with China Life characteristics, established a real-time and intelligent service model featuring online and offline integration and effective linkage between front and back ends, which facilitated the rapid development of its business and offered insurance products and services for the wider public.

Widespread interconnection. The Company applied Internet of Things technology in the construction of offline service outlets with digitalized operations, added 15,700 new Internet lines to extend full WIFI coverage to all service outlets, equipped with 66,000 sets of intelligent devices, and established more than 20,000 digital service outlets adaptive to multiple scenarios, intelligent and wireless interconnection, and 3,475 service command centers with real-time interaction functions. Over 80% of physical field offices and service outlets were equipped with digital devices. China Life IT Center was officially put into operation, which achieved the goal of having three multiple active data centers located in Beijing and Shanghai. The Company also built an integrated Cloud, and realized Cloud-enabled information services in all aspects, which provided accessible, mobile and convenient services to more than 500 million customers, over 1.7 million sales agents and more than 100,000 employees.

Digitalized platform. The Company built an open and digitalized platform with online and offline integration so as to provide various kinds of online services efficiently. Through the application of big data in analyzing customer demands, the Company recommended multi-level and series of insurance protection plans to customers. With the use of digital business cards and the organization of themed activities, the Company clearly presented the profiles of agents, including their service years, service records, cumulative insurance protection amounts and service quality, which enabled its customers to have a full picture of the agents and enhanced their trust and mutual interactions. The Company adopted digital team management tools, such as digital recruitment and online field office operation, to manage more than one million sales agents. 38,000 online field offices and 94,000 online teams were established. In addition, the Company built a digital ecology on the platforms through cooperation with partners, consolidating more than 3,000 types of services.

Intelligent services. The Company established five artificial intelligent platforms of big data, real-time calculation, smart voice, facial recognition and deep learning, and incorporated intelligent technologies in each operation process. The launch of an offsite electronic signature technology facilitated the rapid completion of insurance applications without limits on time and space. An intelligent insurance adjustment engine was constructed to achieve intelligent operation throughout the whole process. An intelligent electronic fast pay was launched to provide real-time transfer of funds for personal use. The Company applied smart voice technology to replace manual operation, which greatly improved service efficiency and reduced labor costs in operation. Intelligent robots were deployed in 13 cities for automatic response to questions and providing intelligent guidance at counters. An artificial intelligent model for evaluating risks relating to critical illness was established to accurately identify key risks and effectively improve risk control efficiency. The Company put more efforts in intelligent operation and maintenance and implemented anomaly detection and fault location through data analysis and machine learning models to ensure continuous and stable services protection.

 

41


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

  (II)

Operations and Services

The Company consistently adhered to the “customer-oriented” operation philosophy, promoted product diversification, and strengthened intelligent operations to meet the increasing demands of customers for insurance, with a view to offering high-quality services to customers.

Insurance product supply was constantly enriched. In 2018, the Company developed a total of 231 new products, including 52 life insurance products, 142 health insurance products, 9 accident insurance products and 28 annuity insurance products, a total of 193 protection-oriented products and 38 long-term savings products.

The efficiency of operations and services was significantly enhanced. In 2018, the Company stepped up technology empowerment, accelerated the integration between technologies and business scenarios, and provided more convenient and intelligent services to customers with fewer procedures. The utilization rate of paperless insurance application reached 90%, and the rate of automatic underwriting increased by 10 percentage points year-on-year. The rate of automatic claims settlement increased by 20 percentage points year-on-year, the time required for claims application was shortened by 46% year-on-year, and the number of claims settled through direct payment increased by more than 10 times year-on-year. Such intelligent services covered 5,000 hospitals, providing fast settlement of medical expenses. Meanwhile, the Company accelerated the upgrade of service access points and pushed forward the construction of intelligent service counters, thus facilitating the transformation of traditional to intelligent counters. Customer call centers were upgraded to multimedia coordination centers, and the telephone connection rate increased by 10 percentage points year-on-year. The voice service offered by 95519 coordination center and the online robots served 94.21 million people on a cumulative basis.

Customer experience was consistently improved. In 2018, by focusing on customer experience, the Company consistently optimized service processes and scenarios to provide more considerate services. Services offered through online channels were enhanced with a year-on-year increase of 62.9% in the number of registered online users. The claims reported through online channels increased by 46% year-on-year, and 98.6% of policy loans were processed online which helped customers to resolve their urgent needs for funds of over RMB100 billion. The Company also expanded the scope of its services and launched the services such as “A Healthy Journey of 10,000 miles”, with a view to building an innovative ecology of “Insurance + Health”. To cater to different customer groups, the Company launched four service programs, namely “Excellent Teenagers”, “Healthy Family”, “Financial Elite” and “Colorful Life”, carried out a series of online and offline customer festival activities, continued to hold the “Little Painters of China Life” activities and organized over 36,000 value-added service activities such as “China Life 700 Running”, serving 27.65 million customers. As a result, the customer satisfaction and loyalty of the Company were improved in general.

 

42


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

In addition, the Company actively promoted the construction of the “Integrated Aged-care” and “Inclusive Healthcare Service” platforms to foster new business growth drivers. The Company consistently participated in and promoted offsite settlement and reimbursement for medical expenses across provinces under the new rural cooperative medical scheme launched by the National Health Commission, with the relevant business scope expanded from the basic medical insurance to the supplementary major medical expenses insurance pilot program. The Company also accelerated the construction of a health management service platform, and added more than 40 service projects on the online platform, including health information, health self-assessment, disease encyclopedia, sports and health, express channel for critical illnesses, shepherd service for out-patient treatment and online medical consultation. The Company actively explored the innovative model of “insurance protection + healthcare services” and made preliminary achievements in offline medical resource network construction. In addition, the Company created a unique model of cooperation between basic medical care and insurance protection, making direct claims payment of basic medical insurance, supplementary major medical expenses insurance and commercial insurance. In 2018, the Company continued to push forward the ongoing “Integrated Aged-care” project, actively explored the expansion of in-home aged-care services in the community, and experimented on improving the quality of aged-care services through the combination of medical care and aged-care.

 

V.

PERFORMANCE OF THE CORPORATE SOCIAL RESPONSIBILITY

For the performance by the Company of its corporate social responsibility during the Reporting Period, please refer to the full text of the “Social Responsibility Report” separately disclosed by the Company on the website of the SSE (http://www.sse.com.cn) and the HKExnews website of the Hong Kong Exchanges and Clearing Limited (http://www.hkexnews.hk). The specific information on environment is set out in Part 4 of the “Social Responsibility Report”.

 

VI.

FUTURE PROSPECT AND RISK ANALYSIS

 

  (I)

Industry Landscape and Development Trends

Currently, under the background that insurance will return to its due role of protection, the insurance industry accelerates its transition to high-quality development and is still at an important stage full of development opportunities. In the short term, although the Chinese economy still faces downward pressure, it is still making stable progress in general and the economic performance remains within an appropriate range. Policy benefits resulting from the strategy of a “Healthy China” and changes in the population structure generate increasing health-care and pension related demands. In the near future, there are still great opportunities in the insurance industry and its development will be represented by following trends: the first trend is the transformation of overall development from high-speed growth to high-quality development. As market players deepen their perception of the essence of insurance, insurance will take advantage of long-term operation to provide customers with risk protection and financial planning that cover entire life cycles, and protection-based and long-term savings products will still be the major drivers for market growth in the future. This in turn will bring the growth of premiums, changes in product structure and premiums payment period. The second trend is the transformation of agents from size expansion to equal importance of quantity and quality. In recent years, the size of agent teams has increased significantly. However, the professional skills of some agents cannot completely cope with the individualized and diversified insurance demands of customers. It will be key in industrial competition to invest more in training and management to build a team of agents who are highly competent, well-

 

43


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

educated and highly skilled. The third trend is that technology, which used to play a supporting role, will become a more important factor for development. Currently, advanced technologies such as cloud computing, big data and artificial intelligence are booming, and many applications combining insurance and technologies have been launched successfully. With a new round of technological innovation and industrial reform emerging, it is foreseeable that FinTech will become an important driver for high-quality development of the industry by profoundly empowering each aspect of the insurance value chain such as sales services, operation and management, and risk prevention and control.

 

  (II)

Development Strategies and Business Plans

In 2019, the Company will adhere to the overall keynote of making progress with stability, closely upholding the new blueprint of “China Life Revitalization” and the operating guideline of “prioritizing value, strengthening sales force, maintaining stable growth, upgrading technologies, improving customer services and safeguarding against risks”. In particular, by adopting a “customer-oriented” approach and concentrating on local branches and field offices, the Company will focus on value and the individual insurance business, push forward the transformation from being sales-oriented to attaching equal importance to sales and services, the transformation from being human-driven to being human- and technology-driven and the transformation from being scale-oriented to the coordination of scale and value. The Company is committed to a life insurance development path with China Life characteristics. It is the mission of the Company to safeguard the happy lives of people and strive to become a world-class life insurance company.

 

  (III)

Potential Risks and Solutions

Looking forward to 2019, there will be an increasing number of risks and challenges, whether predicable or unpredictable. The Company will continue to strengthen its research and analysis of macro-economic trends and complex risk factors, and strive to maintain continuous and healthy growth of the Company. The major risk factors that may have an impact on the Company’s future development strategy and business objectives include:

Risks relating to macro trends. Since 2018, global economic growth has slowed down and external risks have increased. Facing a complex and challenging internal and external environment, it will be increasingly difficult to fulfill goals such as stable growth and risk prevention, and accomplish tasks such as economic and social development. In addition, there will be more unstable and uncertain factors in economic development. The above potential uncertainties may affect the insurance industry continuously through multiple channels such as the real economy, financial markets and consumer demands, which may in turn affect the business development of the Company in various aspects.

Risks relating to insurance business. Currently, the domestic economy faces increasing downward pressure. The growth in consumption has slowed down and the growth in effective investment is sluggish. The real economy confronts a variety of difficulties, the issues of “difficult financing” and “expensive financing” are yet to be resolved for private enterprises and small and micro businesses. There is still a gap between the actual business environment and the expectations of market players. In addition, due to the large number and wide range of its branches, personnel and business, the Company may face more uncertainties with respect to the risks in relation to funds raising fraud, sales and complaints. The above factors may have certain impacts on the stable business growth of the Company.

 

44


China Life Insurance Company Limited    Annual Report 2018

Management Discussion and Analysis

 

Risks relating to investment business. In the event that the domestic and international economies do not grow as expected, the volatility of financial markets may become greater and the market risks relating to investment portfolios and credit risk may increase. The Company will probably develop new investment channels, adopt new investment vehicles or appoint new investment managers, which may expose the Company to new risks. All of the above factors may affect the Company’s investment income and the book value of its assets. Some of the Company’s assets are held in foreign currencies, which may give rise to the risk of exchange gains and losses arising from exchange rate movements. In addition, the operational and financial risks of associated enterprises and the fluctuation in their profitability may undermine the expected returns on investment, which may impact the Company’s profitability to a certain extent.

Risks relating to network security. When any of the unsafe factors such as natural disasters, man-made disasters, criminal activities, large-scale network paralysis or any other event that are beyond the control of the Company occurs, the computer system of the Company may be interrupted or exposed to security vulnerability. The Company has adopted various security measures and backup plans to guard against or mitigate system breakdown and has so far not experienced situations where such security breakdown and vulnerability affected the Company’s operations. In the future, the Company will consistently enhance its capability of preventing and controlling network risks.

The Company will put more effort into analyzing and identifying macro-economic trends, closely monitor market developments, strengthen corporate governance in compliance with laws and regulations, and properly handle challenges from all aspects, so as to ensure a stable and healthy development of the Company. The Company will strengthen its solvency management, improve its assets and liabilities management system, and enhance the capability of comprehensive risk management and control. Also, the Company will speed up the construction of “technology-driven China Life”, promote application of technical achievements, and use the FinTech to further empower the Company.

The Company believes that it will have sufficient capital to meet its insurance business expenditures and new general investment needs in 2019. At the same time, the Company will make corresponding financing arrangements based on capital market conditions to further implement its future business development strategies.

 

45


04 Embedded Value


China Life Insurance Company Limited    Annual Report 2018

Embedded Value

 

BACKGROUND

China Life Insurance Company Limited prepares financial statements to public investors in accordance with the relevant accounting standards. An alternative measure of the value and profitability of a life insurance company can be provided by the embedded value method. Embedded value is an actuarially determined estimate of the economic value of the life insurance business of an insurance company based on a particular set of assumptions about future experience, excluding the economic value of future new business. In addition, the value of one year’s sales represents an actuarially determined estimate of the economic value arising from new life insurance business issued in one year based on a particular set of assumptions about future experience.

China Life Insurance Company Limited believes that reporting the Company’s embedded value and value of one year’s sales provides useful information to investors in two respects. First, the value of the Company’s in-force business represents the total amount of shareholders’ interest in distributable earnings, in present value terms, which can be expected to emerge over time, in accordance with the assumptions used. Second, the value of one year’s sales provides an indication of the value created for investors by new business activity based on the assumptions used and hence the potential of the business. However, the information on embedded value and value of one year’s sales should not be viewed as a substitute of financial measures under the relevant accounting basis. Investors should not make investment decisions based solely on embedded value information and the value of one year’s sales.

It is important to note that actuarial standards with respect to the calculation of embedded value are still evolving. There is still no universal standard which defines the form, calculation methodology or presentation format of the embedded value of an insurance company. Hence, differences in definition, methodology, assumptions, accounting basis and disclosures may cause inconsistency when comparing the results of different companies.

Also, the calculation of embedded value and value of one year’s sales involves substantial technical complexity and estimates can vary materially as key assumptions are changed. Therefore, special care is advised when interpreting embedded value results.

The values shown below do not consider the future financial impact of transactions between the Company and CLIC, CLI, AMC, Pension Company, CLP&C, and etc.

 

47


China Life Insurance Company Limited    Annual Report 2018

Embedded Value

 

DEFINITIONS

 OF EMBEDDED VALUE AND VALUE OF ONE YEAR’S SALES

The embedded value of a life insurer is defined as the sum of the adjusted net worth and the value of in-force business allowing for the cost of required capital.

“Adjusted net worth” is equal to the sum of:

 

 

Net assets, defined as assets less corresponding policy liabilities and other liabilities valued; and

 

 

Net-of-tax adjustments for relevant differences between the market value and the book value of assets, together with relevant net-of-tax adjustments to certain liabilities.

The market value of assets can fluctuate significantly over time due to the impact of the prevailing market environment. Hence the adjusted net worth can fluctuate significantly between valuation dates.

The “value of in-force business” and the “value of one year’s sales” are defined here as the discounted value of the projected stream of future shareholders’ interest in distributable earnings for existing in-force business at the valuation date and for one year’s sales in the 12 months immediately preceding the valuation date.

The value of in-force business and the value of one year’s sales have been determined using a traditional deterministic discounted cash flow methodology. This methodology makes implicit allowance for the cost of investment guarantees and policyholder options, asset/liability mismatch risk, credit risk, the risk of operating experience’s fluctuation and the economic cost of capital through the use of a risk-adjusted discount rate.

 

PREPARATION

AND REVIEW

The embedded value and the value of one year’s sales were prepared by China Life Insurance Company Limited in accordance with the “CAA Standards of Actuarial Practice: Appraisal of Embedded Value” issued by the China Association of Actuaries (“CAA”) in November 2016. Willis Towers Watson, an international firm of consultants, performed a review of China Life’s embedded value. The review statement from Willis Towers Watson is contained in the “Willis Towers Watson’s review opinion report on embedded value” section.

 

ASSUMPTIONS

Economic assumptions: The calculations are based upon assumed corporate tax rate of 25% for all years. The investment return is assumed to be 5% per annum. 14% grading to 18% (remaining level thereafter) of the investment return is assumed to be exempt from income tax. The investment return and tax exempt assumptions are based on the Company’s strategic asset mix and expected future returns. The risk-adjusted discount rate used is 10% per annum.

Other operating assumptions such as mortality, morbidity, lapses and expenses are based on the Company’s recent operating experience and expected future outlook.

 

48


China Life Insurance Company Limited    Annual Report 2018

Embedded Value

 

SUMMARY 

OF RESULTS

The embedded value as at 31 December 2018, the value of one year’s sales for the 12 months ended 31 December 2018, and the corresponding results as at 31 December 2017 are shown below:

Table 1

 

Components of Embedded Value and Value of One Year’s Sales      RMB million  

ITEM

   31 December
2018
     31 December
2017
 

A

  Adjusted Net Worth      386,054        370,500  

B

  Value of In-Force Business before Cost of Required Capital      454,786        398,723  

C

  Cost of Required Capital      (45,788      (35,050

D

  Value of In-Force Business after Cost of Required Capital (B + C)      408,998        363,673  

E

  Embedded Value (A + D)      795,052        734,172  

F

  Value of One Year’s Sales before Cost of Required Capital      54,728        64,627  

G

  Cost of Required Capital      (5,218      (4,510

H

  Value of One Year’s Sales after Cost of Required Capital (F + G)      49,511        60,117  

 

Note:    Numbers may not be additive due to rounding.

 

49


China Life Insurance Company Limited    Annual Report 2018

Embedded Value

 

VALUE

 OF ONE YEAR’S SALES BY CHANNEL

The value of one year’s sales for the 12 months ended 31 December 2018 by channel is shown below:

Table 2

 

Value of One Year’s Sales by Channel           RMB million  

Channel

   31 December
2018
     31 December
2017
 

Exclusive Individual Agent Channel

     42,839        53,170  

Bancassurance Channel

     6,357        6,536  

Group Insurance Channel

     314        410  

Total

     49,511        60,117  

 

Note:    Numbers may not be additive due to rounding.

The new business margin of one year’s sales for the 12 months ended 31 December 2018 by channel is shown below:

Table 3

 

New

Business Margin of One Year’s Sales by Channel

 

     By FYP     By APE  

Channel

   31 December
2018
    31 December
2017
    31 December
2018
    31 December
2017
 

Exclusive Individual Agent Channel

     42.2     47.2     42.2     47.3

Bancassurance Channel

     18.7     8.0     24.3     23.2

Group Insurance Channel

     0.8     1.1     0.9     1.1
  

 

 

   

 

 

   

 

 

   

 

 

 

 

  Note:

FYP (First Year Premium) is the written premium used for calculation of the value of one year’s sales and APE (Annual Premium Equivalent) is calculated as the sum of 100 percent of first year regular premiums and 10 percent of single premiums.

 

50


China Life Insurance Company Limited    Annual Report 2018

Embedded Value

 

MOVEMENT ANALYSIS

The following analysis tracks the movement of the embedded value from the start to the end of the Reporting Period:

Table 4

 

Analysis of Embedded Value Movement in 2018       

ITEM

   RMB million  
A    Embedded Value at the Start of Year      734,172  
B    Expected Return on Embedded Value      60,250  
C    Value of New Business in the Period      49,511  
D    Operating Experience Variance      277  
E    Investment Experience Variance      (44,462
F    Methodology, Model and Assumption Changes      (1,131
G    Market Value and Other Adjustments      8,785  
H    Exchange Gains or Losses      325  
I    Shareholder Dividend Distribution and Capital Injection      (11,690
J    Other      (986
K    Embedded Value as at 31 December 2018 (sum A through J)      795,052  

 

   Notes:    1)    Numbers may not be additive due to rounding.
     2)    Items B through J are explained below:
        B    Reflects expected impact of covered business, and the expected return on investments supporting the 2018 opening net worth.
        C    Value of one year’s sales for the 12 months ended 31 December 2018.
        D    Reflects the difference between actual operating experience in 2018 (including mortality, morbidity, lapse, and expenses etc.) and the assumptions.
        E    Compares actual with expected investment returns during 2018.
        F    Reflects the effects of appraisal methodology and model enhancement, and assumption changes.
        G    Change in the market value adjustment from the beginning of year 2018 to 31 December 2018 and other adjustments.
        H    Reflects the gains or losses due to changes in exchange rate.
        I    Reflects dividends distributed to shareholders during 2018.
        J    Other miscellaneous items.

 

51


China Life Insurance Company Limited    Annual Report 2018

Embedded Value

 

SENSITIVITY RESULTS

Sensitivity tests were performed using a range of alternative assumptions. In each of the sensitivity tests, only the assumption referred to was changed, with all other assumptions remaining unchanged. The results are summarized below:

Table 5

 

Sensitivity Results         RMB million  
    Value of
In-Force Business
after Cost of
Required  Capital
    Value of
One Year’s Sales
after Cost of
Required Capital
 

Base case scenario

    408,998       49,511  

1.

  

Risk discount rate +50bps

    390,624       47,055  

2.

  

Risk discount rate –50bps

    428,739       52,166  

3.

  

Investment return +50bps

    481,049       57,005  

4.

  

Investment return -50bps

    337,320       42,045  

5.

  

10% increase in expenses

    403,510       46,457  

6.

  

10% decrease in expenses

    414,486       52,565  

7.

  

10% increase in mortality rate for non-annuity products and 10% decrease in mortality rate for annuity products

    406,235       48,787  

8.

  

10% decrease in mortality rate for non-annuity products and 10% increase in mortality rate for annuity products

    411,761       50,236  

9.

  

10% increase in lapse rates

    408,527       48,529  

10.

  

10% decrease in lapse rates

    409,380       50,519  

11.

  

10% increase in morbidity rates

    403,733       48,090  

12.

  

10% decrease in morbidity rates

    414,391       50,936  

13.

  

Using 2017 EV appraisal assumptions

    402,007       48,946  

14.

  

Allowing for diversification in calculation of VIF

    438,900       —    

 

52


China Life Insurance Company Limited    Annual Report 2018

Embedded Value

 

WILLIS TOWERS WATSON’S REVIEW OPINION REPORT ON EMBEDDED VALUE

To The Directors of China Life Insurance Company Limited

China Life Insurance Company Limited (“China Life”) has prepared embedded value results as at 31 December 2018 (“EV Results”). The disclosure of these EV Results, together with a description of the methodology and assumptions that have been used, are shown in the Embedded Value section.

China Life has engaged Towers Watson Management Consulting (Shenzhen) Co. Ltd. Beijing Branch (“Willis Towers Watson”) to review its EV Results. This report is addressed solely to China Life in accordance with the terms of our engagement letter, and sets out the scope of our work and our conclusions. To the fullest extent permitted by applicable law, we do not accept or assume any responsibility, duty of care or liability to anyone other than China Life for or in connection with our review work, the opinions we have formed, or for any statement set forth in this report.

Scope of work

Our scope of work covered:

 

a review of the methodology used to develop the embedded value and value of one year’s sales as at 31 December 2018, in accordance with the “CAA Standards of Actuarial Practice: Appraisal of Embedded Value” issued by the China Association of Actuaries (“CAA”);

 

a review of the economic and operating assumptions used to develop the embedded value and value of one year’s sales as at 31 December 2018; and

 

a review of the results of China Life’s calculation of the EV Results.

In carrying out our review, we have relied on the accuracy of audited and unaudited data and information provided by China Life.

Opinion

Based on the scope of work above, we have concluded that:

 

 

the embedded value methodology used by China Life is in accordance with the “CAA Standards of Actuarial Practice: Appraisal of Embedded Value” issued by the CAA;

 

 

the economic assumptions used by China Life are internally consistent, have been set with regard to current economic conditions, and have made allowance for the company’s current and expected future asset mix and investment strategy;

 

 

the operating assumptions used by China Life have been set with appropriate regard to past, current and expected future experience; and

 

 

the EV Results have been prepared, in all material respects, in accordance with the methodology and assumptions set out in the Embedded Value section.

 

For and on behalf of Willis Towers Watson

Mei-Chee Shum                  Benjamin Chen

27 March 2019

 

53


China Life Insurance Company Limited    Annual Report 2018

Embedded Value

 

05 Significant Events

 

Material Litigations or Arbitrations

     55  

Major Connected Transactions

     55  

Material Contracts and Their Performance

     71  

Undertakings

     72  

Restriction on Major Assets

     73  

Targeted Poverty Alleviation

     73  

 

54


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

I.

MATERIAL LITIGATIONS OR ARBITRATIONS

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

 

II.

MAJOR CONNECTED TRANSACTIONS

 

  (I)

Continuing Connected Transactions

During the Reporting Period, the following continuing connected transactions were carried out by the Company pursuant to Rule 14A.76(2) of the Rules Governing the Listing of Securities on the HKSE (the “Listing Rules”), including the policy management agreement between the Company and CLIC, the asset management agreement between the Company and AMC, the insurance sales framework agreement between the Company and CLP&C, the framework agreements entered into by CLWM with CLIC, CLP&C, CLI, Pension Company and China Life E-commerce Company Limited (“CLEC”), respectively, the framework agreement between CLI and AMP, the framework agreements entered into by Chongqing International Trust Inc. (“Chongqing Trust”) with CLWM and AMC, respectively, and the framework agreement between the Company and China Life Capital. 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 CLI, CLEC and China Life Capital. Therefore, each of CLIC, CLP&C, CLI, CLEC and China Life Capital constitutes a connected person of the Company. AMC is held as to 60% and 40% by the Company and CLIC, respectively, and is therefore a connected subsidiary of the Company. Each of CLWM and AMP is a subsidiary of AMC, and is therefore a connected subsidiary of the Company. Chongqing Trust is an associate of CLIC and CLP&C by virtue of its acting as the trustee of a trust scheme of which CLP&C is a beneficiary, and is therefore also a connected person of the Company pursuant to Rule 14A.13(2) of the Listing Rules.

During the Reporting Period, the continuing connected transactions carried out by the Company that were subject to the reporting, announcement, annual review and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules included the framework agreements entered into by AMP with the Company, Pension Company, CLIC and CLP&C, respectively, the asset management agreement for alternative investments between the Company and CLI, and the “Framework Agreement in relation to the Subscription and Redemption of Trust Products and Other Daily Transactions” between the Company and Chongqing Trust. Such agreements and the transactions thereunder have been approved by the independent shareholders of the Company.

During the Reporting Period, the Company also carried out certain continuing connected transactions, including the asset management agreement between CLIC and AMC, and the framework agreement between the Company and CLWM, 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.

 

55


China Life Insurance Company Limited    Annual Report 2018

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 2017. The Company and CLIC entered into the 2018 policy management agreement on 26 December 2017, with a term from 1 January 2018 to 31 December 2020. Pursuant to the agreement, the Company will continue to accept CLIC’s entrustment to provide policy administration services relating to the non-transferred policies. For details as to the method of calculation of the service fee, please refer to Note 34 in the Notes to the Consolidated Financial Statements. The annual cap for the three years ending 31 December 2020 is RMB708 million.

For the year ended 31 December 2018, the service fee paid by CLIC to the Company amounted to RMB629.46 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 2016-2018 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 34 in the Notes to the Consolidated Financial Statements. The annual cap for the three years ended 31 December 2018 was RMB1,500 million. On 28 December 2018, the Company and AMC entered into the 2019-2021 asset management agreement, with a term of three years from 1 January 2019 to 31 December 2021. Pursuant to the agreement, AMC will continue to invest and manage assets entrusted to it by the Company on a discretionary basis. The annual cap for the three years ending 31 December 2021 is RMB2,000 million.

For the year ended 31 December 2018, the Company paid AMC a service fee of RMB1,325.91 million.

 

56


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

  (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 2016-2018 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 34 in the Notes to the Consolidated Financial Statements. The annual caps for the three years ended 31 December 2018 were RMB320 million, RMB310 million and RMB300 million, respectively. On 29 December 2018, CLIC and AMC entered into the 2019-2021 asset management agreement, with an entrustment term from 1 January 2019 to 31 December 2021. Pursuant to the agreement, AMC will continue to invest and manage assets entrusted to it by CLIC on a discretionary basis. The annual caps for the three years ending 31 December 2021 are RMB320 million, RMB310 million and RMB300 million, respectively.

For the year ended 31 December 2018, CLIC paid AMC a service fee of RMB99.78 million.

 

  (3)

Asset Management Agreement for Alternative Investments between the Company and CLI

Since 22 March 2013, the Company and CLI have from time to time entered into asset management agreements for alternative investments. The renewed agreement between the parties expired on 30 June 2017. As approved by the 2016 Annual General Meeting of the Company, the Company and CLI entered into the 2017-2018 asset management agreement for alternative investments on 30 June 2017, with retrospective effect from 1 January 2017 until 31 December 2018. Pursuant to the agreement, CLI agreed to invest and manage assets entrusted to it by the Company (including equity, real estate, related financial products and securitization financial products), on a discretionary basis, within the scope of utilization of insurance funds as specified by regulatory authorities and in accordance with the requirements of applicable laws and regulations and the investment guidelines given by the Company, and the Company agreed to pay CLI an investment management service fee, a floating management fee and a performance-based bonus. For details as to the method of calculation of the investment management service fee, floating management fee and performance-based bonus, please refer to Note 34 in the Notes to the Consolidated Financial Statements. In addition, the assets entrusted by the Company to CLI would also be partially used for the subscription of the related financial products established and issued by CLI or of which CLI had participated in the establishment and issuance, and such related financial products would be limited to infrastructure investment schemes and project asset-backed schemes.

 

57


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

The contractual amount of the assets entrusted by the Company to CLI for investment and management would not exceed RMB550,000 million or its equivalent in foreign currency (including the contractual amount of the assets already entrusted prior to the execution of the agreement and the contractual amount of the assets newly entrusted during the term of the agreement) as at the expiry date of the agreement. In particular, the annual cap on the contractual amount of the assets newly entrusted for investment and management for 2018 was RMB200,000 million or its equivalent in foreign currency (including the annual cap of RMB80,000 million or its equivalent in foreign currency for the subscription of the related financial products, and the annual cap of RMB100,000 million or its equivalent in foreign currency in respect of the contractual amount of the assets newly entrusted by the Company in its co-investments with CLIC and CLP&C), and the annual cap on the amount of the investment management service fee, floating management fee and performance-based bonus was RMB990 million or its equivalent in foreign currency.

As approved by the 2017 Annual General Meeting of the Company, the Company and CLI entered into the 2019 asset management agreement for alternative investments on 31 December 2018. Pursuant to the agreement, CLI will continue to invest and manage assets entrusted to it by the Company, and the Company will pay CLI the investment management service fee, floating management fee, performance-based bonus and real estate operation management service fee in respect of the investment and management services provided by CLI to the Company. The agreement took effect from 1 January 2019, with a term of two years. Unless a party serves the other party a written notice for non-renewal prior to 90 working days before the expiry date of the agreement, the agreement will be automatically renewed for one year from the expiry date thereof.

 

58


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

For the three years ending 31 December 2021, the annual caps on the contractual amount of assets newly entrusted by the Company to CLI for investment and management, as well as the annual caps on the amount of the investment management service fee, floating management fee, performance-based bonus and real estate operation management service fee payable by the Company to CLI are as follows:

 

    

Amount of Assets Newly

Entrusted for Investment

and Management during the

Period (Including the Amount for
Subscription of the Related

Financial Products)

(RMB million or its equivalent in

foreign currency)

   Amount of the Investment
Management Service Fee,
Floating Management
Fee, Performance-based
Bonus and Real Estate
Operation Management
Service Fee

(RMB million or its
equivalent in foreign
currency)
 

For the year ending

   200,000      1,391  

31 December 2019

   (including the amount for the subscription of the related financial products: 100,000)   

For the year ending

   200,000      1,982  

31 December 2020

   (including the amount for the subscription of the related financial products: 100,000)   

For the year ending

   200,000      2,266  

31 December 2021

   (including the amount for the subscription of the related financial products: 100,000)   

The above amount of assets entrusted by the Company to CLI for investment and management for the year ending 31 December 2019 will also include the amount of subscription of the fund products by the Company under the cooperation framework agreement for investment management with insurance funds between the Company and China Life Capital for the year ending 31 December 2019 (for details, please refer to the section headed “(4) Cooperation Framework Agreement for Investment Management with Insurance Funds between the Company and China Life Capital” below).

 

59


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

For the year ended 31 December 2018, the investment management service fee, floating management fee and performance-based bonus paid by the Company to CLI amounted to RMB528.58 million. As at 31 December 2018, the contractual amount of the assets entrusted by the Company to CLI for investment and management was RMB297,636.67 million, among which, the contractual amount of the assets newly entrusted by the Company in 2018 was RMB61,146.28 million (including the contractual amount of RMB4,600 million for the subscription of the related financial products established and issued by CLI or of which CLI had participated in the establishment and issuance, and the contractual amount of the assets newly entrusted by the Company of RMB0 million in its co-investment with CLIC and CLP&C).

 

  (4)

Cooperation Framework Agreement for Investment Management with Insurance funds between the Company and China Life Capital

The Company entered into the “Cooperation Framework Agreement for Investment Management with Insurance Funds” with China Life Capital on 7 June 2018, with a term from 7 June 2018 to 31 December 2019. Pursuant to the agreement, the Company will subscribe in the capacity of the limited partner for the fund products of which China Life Capital or any of its subsidiaries serves (including individually and jointly with third parties) as the general partner, and/ or the fund products of which China Life Capital serves as the manager (including the fund manager and co-manager). For the two years ending 31 December 2019, the annual cap for the subscription by the Company in the capacity of the limited partner of the fund products of which China Life Capital or any of its subsidiaries serves as the general partner is RMB5,000 million, and the annual caps for the management fee charged by China Life Capital as the general partner or the manager of the fund products are RMB150 million and RMB200 million, respectively.

For the year ended 31 December 2018, the amount of the subscription by the Company in the capacity of the limited partner of the fund products of which China Life Capital or any of its subsidiaries served as the general partner was RMB0 million, and the management fee charged by China Life Capital as the general partner or the manager of the fund products was RMB11.75 million.

 

  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 2018. The Company and CLP&C entered into the 2018 insurance sales framework agreement on 31 January 2018, with a term of three years from 8 March 2018 to 7 March 2021. Pursuant to the agreement, CLP&C will continue to entrust the Company to act as an agent to sell selected insurance products within the authorized regions, and 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 34 in the Notes to the Consolidated Financial Statements. The annual caps for the three years ending 31 December 2020 are RMB4,260 million, RMB5,540 million and RMB7,050 million, respectively.

For the year ended 31 December 2018, CLP&C paid the Company an agency service fee of RMB2,958.77 million.

 

60


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

  4.

Framework Agreements with AMP

 

  (1)

Framework Agreement between the Company and AMP

The Company and AMP entered into the “Framework Agreement in relation to Subscription and Redemption of Fund Products, Sale of Funds, Asset Management for Specific Clients and Other Daily Transactions” on 30 May 2014. The agreement expired on 31 December 2016. As approved by the First Extraordinary General Meeting 2016 of the Company, the 2017-2019 framework agreement was entered into between the Company and AMP on 30 December 2016 for a term of three years from 1 January 2017 to 31 December 2019. Pursuant to the agreement, the Company and AMP will continue to conduct certain daily transactions, including subscription and redemption of fund products, sales agency services, asset management for specific clients and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending 31 December 2019, the annual cap of the subscription price and corresponding subscription fee for the subscription of fund products is RMB72,600 million; the annual cap of the redemption price and corresponding redemption fee for the redemption of fund products is RMB72,600 million; the annual caps of the sales commission fee and client maintenance fee payable by AMP are RMB700 million, RMB800 million and RMB900 million, respectively; the annual caps of the management fee and performance-based fee payable by the Company for the asset management for specific clients are RMB300 million, RMB400 million and RMB500 million, respectively; and the annual cap of the fees for other daily transactions is RMB100 million.

For the year ended 31 December 2018, the subscription price and corresponding subscription fee for the subscription of fund products was RMB2,187.00 million, the redemption price and corresponding redemption fee for the redemption of fund products was RMB3,514.50 million, the sales commission fee and client maintenance fee paid by AMP was RMB0 million, the management fee and performance-based fee paid by the Company for the asset management for specific clients was RMB27.85 million, and the fees for other daily transactions were RMB1.96 million.

 

61


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

  (2)

Framework Agreement between Pension Company and AMP

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

For the year ended 31 December 2018, the subscription price and corresponding subscription fee for the subscription of fund products was RMB773.27 million, the redemption price and corresponding redemption fee for the redemption of fund products was RMB601.77 million, the sales commission fee and client maintenance fee paid by AMP was RMB0 million, the management fee and performance-based fee paid by Pension Company for the asset management for specific clients was RMB0 million, and the fees for other daily transactions were RMB0 million.

 

  (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 expired on 31 December 2016. As approved by the First Extraordinary General Meeting 2016 of the Company, the 2017-2019 framework agreement was entered into between CLIC and AMP on 16 December 2016 for a term of three years from 1 January 2017 to 31 December 2019. Pursuant to the agreement, CLIC and AMP will continue to conduct certain daily transactions, including subscription and redemption of fund products and asset management for specific clients. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending 31 December 2019, the annual cap of the subscription price and corresponding subscription fee for the subscription of fund products is RMB10,000 million; the annual cap of the redemption price and corresponding redemption fee for the redemption of fund products is RMB10,000 million; and the annual cap of the management fee and performance-based fee payable by CLIC for the asset management for specific clients is RMB100 million.

 

62


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

For the year ended 31 December 2018, the subscription price and corresponding subscription fee for the subscription of fund products was RMB1,500 million, the redemption price and corresponding redemption fee for the redemption of fund products was RMB1,156.47 million, and the management fee and performance-based fee paid by CLIC for the asset management for specific clients was RMB24.81 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 expired on 31 December 2016. As approved by the First Extraordinary General Meeting 2016 of the Company, the 2017-2019 framework agreement was entered into between CLP&C and AMP on 22 December 2016 for a term of three years from 1 January 2017 to 31 December 2019. Pursuant to the agreement, CLP&C and AMP will continue to conduct certain daily transactions, including subscription and redemption of fund products, sales agency services, asset management for specific clients and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending 31 December 2019, the annual cap of the subscription price for the fund products is RMB10,000 million; the annual cap of the redemption price for the fund products is RMB10,000 million; the annual cap of the subscription fee for the fund products is RMB100 million; the annual cap of the redemption fee for the fund products is RMB100 million; the annual cap of the sales commission fee and client maintenance fee payable by AMP is RMB100 million; the annual cap of the management fee and performance-based fee payable by CLP&C for the asset management for specific clients is RMB100 million; and the annual cap of the fees for other daily transactions is RMB100 million.

For the year ended 31 December 2018, the subscription price for the fund products was RMB0 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, the management fee and performance-based fee paid by CLP&C for the asset management for specific clients was RMB4.51 million, and the fees for other daily transactions were RMB0.08 million.

 

63


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

  (5)

Framework Agreement between CLI and AMP

CLI and AMP entered into the “Framework Agreement in relation to Subscription and Redemption of Fund Products, Asset Management for Specific Clients and Other Daily Transactions” on 20 December 2017. The agreement became effective upon signing by the parties and will expire on 31 December 2019. Pursuant to the agreement, CLI and AMP will conduct certain daily transactions, including the subscription and redemption of fund products, asset management for specific clients and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending 31 December 2019, the annual caps of the subscription price and corresponding subscription fee for the subscription of fund products are RMB5,000 million, RMB7,000 million and RMB7,000 million, respectively; the annual caps of the redemption price and corresponding redemption fee for the redemption of fund products are RMB5,000 million, RMB7,000 million and RMB7,000 million, respectively; the annual cap of the management fee and performance-based fee payable by CLI for the asset management for specific clients is RMB50 million; and the annual cap of the fees for other daily transactions is RMB50 million.

For the year ended 31 December 2018, the subscription price and corresponding subscription fee for the subscription of fund products was RMB539.36 million, the redemption price and corresponding redemption fee for the redemption of fund products was RMB591.71 million, the management fee and performance-based fee paid by CLI for the asset management for specific clients was RMB0 million, and the fees for other daily transactions were RMB0 million.

 

  5.

Framework Agreements with CLWM

 

  (1)

Framework Agreement between the Company and CLWM

The “Framework Agreement in relation to Asset Management Services and Other Daily Transactions” dated 30 December 2015 entered into between the Company and CLWM expired on 31 December 2017. The Company and CLWM entered into the 2018 framework agreement on 28 December 2017, pursuant to which the Company will continue to conduct certain transactions with CLWM during the period from 1 January 2018 to 31 December 2020, including the asset management services, the sales agency services for asset management products and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending 31 December 2020, the annual cap of the management fee payable by the Company for the asset management services is RMB240 million; the annual cap of fees in connection with the sales agency services payable by CLWM, including the sales commission fee, client maintenance fee, handling fee and intermediary fee, is RMB100 million; and the annual cap of the fees for other daily transactions is RMB100 million.

For the year ended 31 December 2018, the management fee paid by the Company for the asset management services was RMB3.60 million, the fees in connection with the sales agency services paid by CLWM, including the sales commission fee, client maintenance fee, handling fee and intermediary fee, were RMB0 million, and the fees for other daily transactions were RMB12.27 million.

 

64


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

  (2)

Framework Agreement between CLIC and CLWM

The “Framework Agreement in relation to Asset Management Services” dated 26 January 2016 entered into between CLIC and CLWM expired on 31 December 2017. CLIC and CLWM entered into the 2018 framework agreement on 27 December 2017, pursuant to which CLIC will continue to conduct certain transactions with CLWM during the period from 1 January 2018 to 31 December 2020, including the asset management services and advisory services. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending 31 December 2020, the annual caps of the management fee payable by CLIC for the asset management services are RMB50 million, RMB120 million and RMB180 million, respectively; and the annual caps of the advisory fee payable by CLIC for the advisory services are RMB50 million, RMB80 million and RMB120 million, respectively.

For the year ended 31 December 2018, the management fee paid by CLIC for the asset management services was RMB1.35 million, and the advisory fee paid by CLIC for the advisory services was RMB2.98 million.

 

  (3)

Framework Agreement between CLP&C and CLWM

The “Framework Agreement in relation to Asset Management Services and Other Daily Transactions” dated 9 March 2016 entered into between CLP&C and CLWM expired on 31 December 2017. CLP&C and CLWM entered into the 2018 framework agreement on 29 December 2017, pursuant to which CLP&C will continue to conduct certain transactions with CLWM during the period from 1 January 2018 to 31 December 2020, including the asset management services, advisory services and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending 31 December 2020, the annual caps of the management fee payable by CLP&C for the asset management services are RMB50 million, RMB150 million and RMB240 million, respectively; the annual caps of the advisory fee payable by CLP&C for the advisory services are RMB40 million, RMB80 million and RMB120 million, respectively; and the annual caps of the fees for other daily transactions are RMB150 million, RMB400 million and RMB700 million, respectively.

For the year ended 31 December 2018, the management fee paid by CLP&C for the asset management services was RMB0.56 million, the advisory fee paid by CLP&C for the advisory services was RMB4.79 million, and the fees for other daily transactions were RMB0.01 million.

 

65


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

  (4)

Framework Agreement between CLI and CLWM

The “Framework Agreement in relation to Asset Management Services and Other Daily Transactions” dated 3 February 2016 entered into between CLI and CLWM expired on 31 December 2017. CLI and CLWM entered into the 2018 framework agreement on 20 December 2017, pursuant to which CLI will continue to conduct certain transactions with CLWM during the period from 1 January 2018 to 31 December 2020, including the asset management services, advisory services and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending 31 December 2020, the annual caps of the management fee for the asset management services are RMB40 million, RMB80 million and RMB120 million, respectively; the annual caps of the advisory fee for the advisory services are RMB40 million, RMB80 million and RMB120 million, respectively; and the annual caps of the fees for other daily transactions are RMB20 million, RMB80 million and RMB160 million, respectively.

For the year ended 31 December 2018, the management fee for the asset management services was RMB0.01 million, the advisory fee for the advisory services were RMB0 million, and the fees for other daily transactions were RMB0 million.

 

  (5)

Framework Agreement between Pension Company and CLWM

Pension Company and CLWM entered into the “Framework Agreement in relation to Daily Connected Transactions” on 26 March 2018, pursuant to which Pension Company will conduct certain transactions with CLWM during the period from 1 January 2018 to 31 December 2020, including the asset management services, advisory services and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending 31 December 2020, the annual caps of the management fee payable by Pension Company for the asset management services are RMB100 million, RMB150 million and RMB200 million, respectively; the annual caps of the advisory fee payable by Pension Company for the advisory services are RMB40 million, RMB80 million and RMB90 million, respectively; and the annual caps of the fees for other daily transactions are RMB90 million, RMB180 million and RMB270 million, respectively.

For the year ended 31 December 2018, the management fee paid by Pension Company for the asset management services was RMB0 million, the advisory fee paid by Pension Company for the advisory services was RMB0.24 million, and the fees for other daily transactions were RMB0 million.

 

66


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

  (6)

Framework Agreement between CLEC and CLWM

CLEC and CLWM entered into the “Framework Agreement in relation to Daily Connected Transactions” on 29 December 2017, pursuant to which CLEC will conduct certain transactions with CLWM during the period from 1 January 2018 to 31 December 2020, including the asset management services, advisory services and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending 31 December 2020, the annual caps of the management fee payable by CLEC for the asset management services are RMB5 million, RMB10 million and RMB15 million, respectively; the annual caps of the advisory fee payable by CLEC for the advisory services are RMB5 million, RMB10 million and RMB15 million, respectively; and the annual caps of the fees for other daily transactions are RMB200 million; RMB300 million and RMB400 million, respectively.

For the year ended 31 December 2018, there was no relevant transaction between CLEC and CLWM.

 

  6.

Framework Agreements with Chongqing Trust

 

  (1)

Framework Agreement between the Company and Chongqing Trust

As approved by the 2016 Annual General Meeting of the Company, the Company and Chongqing Trust entered into the “Framework Agreement in relation to the Subscription and Redemption of Trust Products and Other Daily Transactions” on 21 June 2017. The agreement became effective upon signing by the parties and will expire on 31 December 2019. Pursuant to the agreement, the Company and Chongqing Trust will conduct the subscription and redemption of trust products and other daily transactions permitted by laws and regulations in their ordinary course of business and on normal commercial terms. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending 31 December 2019, the annual cap of the subscription amount of the trust products is RMB50,000 million (including the trustee’s remuneration of no more than RMB500 million per year to be received by Chongqing Trust from the trust assets); the annual cap of the redemption amount of the trust products is RMB4,500 million; and the annual cap of the fees for other daily transactions is RMB100 million.

For the year ended 31 December 2018, the subscription amount of the trust products was RMB11,439.89 million (including the trustee’s remuneration of RMB4.92 million received by Chongqing Trust from the trust assets), the redemption amount of the trust products was RMB0 million, and the fees for other daily transactions were RMB0 million.

 

67


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

  (2)

Framework Agreement between CLWM and Chongqing Trust

CLWM and Chongqing Trust entered into the “Framework Agreement in relation to Daily Connected Transactions” on 29 December 2017, with a term from 1 January 2018 to 31 December 2019. Pursuant to the agreement, CLWM and Chongqing Trust will conduct the subscription of trust products, asset management services, advisory services and other daily transactions permitted by laws and regulations in their ordinary course of business and on normal commercial terms. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to industry practices. For the two years ending 31 December 2019, the annual cap of the subscription amount of the trust products is RMB10,000 million (including the trustee’s remuneration of no more than RMB150 million per year to be received by Chongqing Trust from the trust assets); the annual cap of the management fee for the asset management services is RMB150 million; the annual cap of the advisory fee for the advisory services is RMB150 million; and the annual cap of the fees for other daily transactions is RMB100 million.

For the year ended 31 December 2018, there was no relevant transaction between CLWM and Chongqing Trust.

 

  (3)

Framework Agreement between AMC and Chongqing Trust

AMC and Chongqing Trust entered into the “Framework Agreement in relation to Daily Connected Transactions” on 7 November 2018. The agreement became effective upon signing by the parties and will expire on 31 December 2019. Pursuant to the agreement, AMC and Chongqing Trust will conduct the subscription of trust products, asset management services and other daily transactions permitted by laws and regulations in their ordinary course of business and on normal commercial terms. Pricing of the transactions under the agreement shall be determined by the parties through arm’s length negotiations with reference to industry practices. For the two years ending 31 December 2019, the annual caps of the subscription amount of the trust products are RMB1,200 million and RMB1,800 million, respectively (including the trustee’s remuneration of no more than RMB100 million and RMB150 million, respectively, per year to be received by Chongqing Trust from the trust assets); the annual caps of the management fee for the asset management services are RMB100 million and RMB150 million, respectively; and the annual cap of the fees for other daily transactions is RMB100 million.

For the year ended 31 December 2018, there was no relevant transaction between AMC and Chongqing Trust.

 

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China Life Insurance Company Limited    Annual Report 2018

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.

 

69


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

  (II)

Other Major Connected Transactions

 

  1.

Acquisition of Properties by the Company and CLP&C

As approved by the 15th meeting of the fifth session of the Board of Directors of the Company, Tianjin Branch of the Company and Tianjin Branch of CLP&C jointly acquired properties located at the business center district in Tianjin, the PRC. On 18 March 2018, Tianjin Branch of the Company and Tianjin Tiantai Property Development Co., Ltd. (“Tiantai Property”) entered into the “Agreement for the Sale and Purchase of Commodity Housing in Tianjin”, pursuant to which Tianjin Branch of the Company agreed to acquire the property located at 7-25 floors and 31-47 floors, Office Tower, No. 38 Qufu Road, Heping District, Tianjin, the PRC, with a gross floor area of 72,855.08 square meters, from Tiantai Property at a consideration of RMB1,912,088,604. The property is used as office premises and part of it is for leasing purpose. Tiantai Property handed over the property to Tianjin Branch of the Company on 28 June 2018, and assisted Tianjin Branch of the Company in completing the registration of ownership of the property.

 

  2.

Capital Injection to CLP&C

On 7 May 2018, the Company, CLIC and CLP&C entered into the “Capital Injection Contract of China Life Property and Casualty Insurance Company Limited”, pursuant to which the Company and CLIC agreed CLP&C to convert its undistributed profits into share capital. As a result, the registered capital of CLP&C increased from RMB15 billion to RMB18.8 billion, and its total number of shares increased from 15 billion shares to 18.8 billion shares. In particular, the number of shares of CLP&C held by the Company and CLIC increased by 1.52 billion shares and 2.28 billion shares, respectively, and their capital injection amounts were RMB1.52 billion and RMB2.28 billion, respectively. As the capital increase was made by way of capitalization of CLP&C’s undistributed profits, none of the Company or CLIC was required to make any cash payment in respect of the capital injection. After the completion of the capital injection, CLP&C continues to be held as to 40% by the Company and 60% by CLIC.

 

  3.

Formation of Partnerships

 

  (1)

The Company and Shandong New Kinetic Energy Fund Management Company Limited (“Shandong New Kinetic Energy”), each as a limited partner, entered into a partnership agreement with China Life Xinchuang (Shandong) Investment Company Limited (“China Life Xinchuang”), as the general partner, on 28 December 2018 for the formation of a partnership. The total capital contribution by all partners of the partnership shall be RMB5,000,000,000, of which RMB3,950,000,000 shall be contributed by the Company, RMB1,000,000,000 shall be contributed by Shandong New Kinetic Energy, and RMB50,000,000 shall be contributed by China Life Xinchuang. China Life Capital acted as the manager of the partnership. The partnership intends to invest mainly in equity projects of excellent quality involving mixed ownership reforms and strategic emerging industries and to focus on the “top ten” industries in Shandong Province, including but not limited to strategic emerging industries such as the new generation of information technology, manufacturing of high-end equipment, and new materials, as well as the industries of excellent quality for key development in Shandong Province such as tourism and leisure, culture, and modern finance.

 

70


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

  (2)

The Company, as the limited partner, entered into a partnership agreement with China Life Properties Investment Management Company Limited (“China Life Properties”), as the general partner, on 29 December 2018 for the formation of a partnership. The total initial capital amount of the partnership shall be RMB2,001,000,000, of which RMB2,000,000,000 shall be contributed by the Company, and RMB1,000,000 shall be contributed by China Life Properties. China Life Capital acted as the manager of the partnership. The initial capital amount of the partnership will be used for investing in the projects of Aviation Industry Corporation of China Ltd. and its subsidiaries concerning aviation development, mixed ownership reforms, structural adjustment, system transformation of scientific research institutes, private placement of listed companies, as well as other projects approved by the investment decision committee.

Each of China Life Xinchuang, China Life Properties and China Life Capital is an indirect wholly-owned subsidiary of CLIC, and therefore a connected person of the Company. The transactions described above constituted connected transactions of the Company that were subject to the reporting and announcement requirements but were exempt from the independent shareholders’ approval requirement under Rule 14A.76(2) of the Listing Rules. The Company has complied with the disclosure requirements under Chapter 14A of the Listing Rules in respect of such connected transactions.

 

  (III)

Statement on Claims, Debt Transactions and Guarantees etc. of a Non-operating Nature with Related Parties

During the Reporting Period, the Company was not involved in claims, debt transactions or guarantees of a non-operating nature with related parties.

 

  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.

 

71


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

  3.

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

 

  4.

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

 

  IV.

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

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

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

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

 

72


China Life Insurance Company Limited    Annual Report 2018

Significant Events

 

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.

 

  V.

RESTRICTION ON MAJOR ASSETS

The major assets of the Company are financial assets. During the Reporting Period, there was no major asset of the Company being seized, detained or frozen that is subject to the disclosure requirements.

 

  VI.

TARGETED POVERTY ALLEVIATION

For the performance by the Company of its social responsibility for poverty alleviation during the Reporting Period, please refer to Part 3 of the full text of the “Social Responsibility Report” separately disclosed by the Company on the website of the SSE (http://www.sse.com.cn) and the HKExnews website of the Hong Kong Exchanges and Clearing Limited (http://www.hkexnews.hk).

 

73


China Life Insurance Company Limited    Annual Report 2018

06 Corporate Governance

 

Report of the Board of Directors

     75  

Report of the Board of Supervisors

     84  

Changes in Ordinary Shares and Shareholders Information

     87  

Directors, Supervisors, Senior Management and Employees

     91  

Report of Corporate Governance

     109  

 

74


China Life Insurance Company Limited    Annual Report 2018

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

   Wang Bin (Chairman)   (appointed on 3 December 2018)
   Su Hengxuan   (appointed as a Non-executive Director on 11 July 2018 and re-designated as an Executive Director on 20 December 2018)
   Xu Haifeng  
   Yang Mingsheng   (resigned on 13 November 2018 due to the reason of age)
   Lin Dairen   (resigned on 19 December 2018 due to the reason of age)
   Xu Hengping   (resigned on 24 January 2019 due to the reason of age)

Non-executive Directors

   Yuan Changqing   (appointed on 11 February 2018)
   Liu Huimin  
   Yin Zhaojun  
   Wang Sidong   (resigned on 12 January 2018 due to adjustment of work arrangements)

Independent Directors

   Chang Tso Tung Stephen  
   Robinson Drake Pike  
   Tang Xin  
   Leung Oi-Sie Elsie  

 

75


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

I.

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.

 

II.

BUSINESS REVIEW

 

  (I)

Overall operation of the Company during the Reporting Period

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

 

  (II)

Environmental policies and performance of the Company

The development of ecological civilization is a millennium strategy of the Chinese nation for its sustainable development. Being a non-manufacturing financial insurance company with low energy consumption and light pollution, the Company paid attention to cultivating green and environmental protection culture in its daily operation, and complied with applicable laws and regulations such as the “Environmental Protection Law of the People’s Republic of China”, the “Energy Conservation Law of the People’s Republic of China”, and the “‘13th Five-Year’ Energy Saving and Emission Reduction Comprehensive Work Plan” in a serious manner. The Company also actively launched electronic services, promoted the green office concept, stepped up its efforts in the conservation of energy resources, and encouraged employees to go for green travel in a bid to mitigate any impacts on the environment resulting from its daily operation.

Based on the principles of “participation by all employees, use with great care, driven by professional, environmental protection with low carbon, costs control, conservation and efficiency improvement”, the Company pushed forward the implementation of energy saving and emission reduction. With the introduction of energy conservation servers, the power consumption of every single server decreased from 10 kWh to 0.7 kWh. The Company recycled hazardous wastes, including discarded toner cartridge and ink cartridge. Further, the Company promoted the construction of green buildings, and received a T4 accreditation certificate for its data room in China Life Science and Technology Park from UPTIME of the United States.

The Company expanded the presence of its intelligent mobile service network, launching the innovative services of paperless insurance application, online preservation, mobile counter and mobile claim. As at the end of 2018, the number of paperless insurance applications reached 13.89 million, the business volume of online preservation amounted to 37.54 million, and the number of claims processed via mobile channels were nearly 3.56 million, which was estimated to have saved nearly 1,000 tonnes of paper on a cumulative basis.

 

  (III)

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

The Company adhered to the code of conduct of “being trustworthy, assuming risks, emphasizing on services and being legal compliant” and promoted the compliance culture and concepts of “being compliant on a voluntary basis, and creating value from compliance”, thereby creating the compliance environment of “starting from the top level and having responsibility for all to be compliant”. The Company strictly observed and effectively implemented applicable laws and regulations and regulatory requirements, such as the Insurance Law, the Company Law and the “Regulations for the Administration of Insurance Companies”, and implemented the spirit and requirements of major regulatory documents on product development and design, sales management, investment supervision and corporate governance, etc., as released by the CBIRC in a stringent manner for the purpose of further carrying

 

76


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

out compliance management responsibilities at all levels and in various lines. The Company consistently improved the compliance management framework of “three lines of defense” in business, compliance and audit to ensure that the three lines of defense performed their own functions and collaborated with each other, which formed a joint force in compliance management. The Company also consolidated its foundation in all aspects for its steady and healthy development and firmly defended the bottom line of the systematic risk, which guaranteed the healthy and high-quality development of the Company on an ongoing basis.

 

  (IV)

Relationship between the Company and its customers

With adherence to the customer-oriented approach all along, the Company is committed to offering high-quality services to its customers on a continuous basis, which made customer satisfaction and customer experience as the basic standards for assessing its services. The Company has provided insurance policy services and value-added services for more than 500 million customers. In 2018, the evaluation results of customer satisfaction and customer loyalty increased by 1.44% and 3.60% year-on-year, respectively, reaching a new record high.

Subject to the widespread provision of counter services, the Company built a service line consisting of “product + telephone + internet” by actively applying technologies such as cloud computing, big data and artificial intelligence, and accomplished the goal of synergy effect and mutual sharing brought by the Company’s subscribers, customers, services and products through 95519 multi-media customer contact center, China Life “Life Insurance APP” and the WeChat official account, etc., which constantly optimized customer experience. In addition, the Company attached great importance to the protection of the rights and interests of insurance customers, and consistently commenced the comprehensive governance for customer complaints so as to further improve and optimize services. In 2018, the total number of complaints received by the Company decreased by 35.71% year on year, and the quantitative management indicators in connection with the supervision of complaints were positive when compared with last year.

The Company strived to satisfy customers’ demands, expand the scope of value-added services, enhance and optimize customer perception, and maintain good interaction with its customers. The Company organized the customer festival activities of “Hand-in-Hand with China Life for the Creation of the Future” through online and offline platforms, held 36,000 value-added service activities with the theme of health, sports and parent-child activities for the year, and offered quality services that satisfied the needs of high net-worth customers, such as exclusive insurance policy and exclusive healthcare.

 

  (V)

Relationship between the Company and its employees

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

 

77


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

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 the Company. Its head office and provincial branches have fully established the system of employee representative meetings, organized their respective employees to perform democratic management and supervisory role according to law, and inspected and monitored the implementation of 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. The first meeting of the first session of the member representative meeting of the trade union of the Company was held in Zhejiang on 22 October 2018, which put into practice the election system of the Company for trade union and promoted such system in trade unions at all levels within the Company.

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 headed “Directors, Supervisors, Senior Management and Employees” in this annual report.

 

III.

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;

 

  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 in recent three years;

 

  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 CBIRC 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.

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  (III)

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

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

 

  (IV)

Profit distribution plan and public reserves capitalization plan

 

  1.

Profit distribution plan or public reserves capitalization plan for the year of 2018

In accordance with the profit distribution plan for the year 2018 approved by the Board on 27 March 2019, with the appropriation to its discretionary surplus reserve fund of RMB1,275 million (10% of the net profit for 2018), the Company, based on 28,264,705,000 shares in issue, proposed to distribute cash dividends amounting to RMB4,522 million to all shareholders of the Company at RMB0.16 per share (inclusive of tax). The foregoing profit distribution plan is subject to the approval by the 2018 Annual General Meeting to be held on 30 May 2019 (Thursday). 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 opinions in this regard.

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  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
 

2018

     —          1.6        —          4,522        11,395        40

2017

     —          4.0        —          11,306        32,253        35

2016

     —          2.4        —          6,784        19,127        35

 

IV.

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.

 

V.

RESERVES

Details of the reserves of the Company are set out in Note 37 in the Notes to the Consolidated Financial Statements in this annual report.

 

VI.

CHARITABLE DONATIONS

The total amount of charitable donations made by the Company during the Reporting Period was approximately RMB198 million.

 

VII.

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.

 

VIII.

SHARE CAPITAL

Details of the movement in share capital of the Company are set out in Note 35 in the Notes to the Consolidated Financial Statements in this annual report.

 

IX.

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 14 June 2018 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 6 June 2018 for the information on income tax in respect of the dividend distributed to H Share shareholders during the Reporting Period.

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

X.

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.

 

XI.

H SHARE STOCK APPRECIATION RIGHTS

No H Share stock appreciation rights of the Company were granted or exercised in 2018. The Company will deal with such rights and related matters in accordance with the PRC governmental policies.

 

XII.

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 “Report of Corporate Governance” in this annual report.

 

XIII.

DIRECTORS’ AND SUPERVISORS’ SERVICE CONTRACTS

None of the Directors or Supervisors has entered into any service contracts 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).

 

XIV.

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.

 

XV.

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.

 

XVI.

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

As at the end of the Reporting Period, none of the Directors, Supervisors and the chief executive of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “SFO”)) that were required to be recorded in the register of the Company required to be kept pursuant to Section 352 of the SFO or which had to be notified to the Company and the HKSE pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix 10 to the Listing Rules. In addition, the Board has created a code of conduct in relation to the sale and purchase of the Company’s securities by Directors and Supervisors, which is no less stringent than the Model Code. Upon specific inquiry by the Company, the Directors and Supervisors have confirmed observation of the Model Code and the Company’s own code of conduct in the year of 2018.

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

XVII.

PRE-EMPTIVE RIGHTS AND ARRANGEMENTS FOR SHARE OPTIONS

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

 

XVIII.

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.

 

XIX.

MATERIAL GUARANTEES

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

 

  1.

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

 

  2.

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

 

  3.

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

 

XX.

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.

 

XXI.

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 2018.

 

XXII.

MAJOR CUSTOMERS

In 2018, 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.

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

XXIII.

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 (27 March 2019), 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.

 

XXIV.

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.

 

XXV.

AUDITORS

A resolution was passed at the 2017 Annual General Meeting to engage Ernst & Young Hua Ming LLP as the PRC auditor and the auditor for US Form 20-F of the Company for the year 2018, and Ernst & Young as the Hong Kong auditor of the Company for the year 2018, who will hold office until the conclusion of the 2018 Annual General Meeting. Ernst & Young Hua Ming LLP and Ernst & Young have been serving as the Company’s auditors for six consecutive years.

Remuneration paid by the Company to the auditors is subject to the 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 2018 was as follows:

 

Service/Nature

   Fees (RMB million)  

Audit, review and agreed-up procedures fee

     59.63  

Including: Internal control audit fee

     11.14  

Non-audit services fee

     4.88  

Total

     64.51  

At the 2018 Annual General Meeting to be held on 30 May 2019, 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 2019, and Ernst & Young as the Hong Kong auditor of the Company for the year 2019.

 

   

By Order of the Board

Wang Bin

Chairman

   

Beijing, China

27 March 2019

 

83


China Life Insurance Company Limited    Annual Report 2018

Report of the Board of Supervisors

 

LOGO

 

I.

ACTIVITIES OF THE BOARD OF SUPERVISORS

 

  (I)

Currently, the sixth session of the Board of Supervisors comprises Mr. Jia Yuzeng, Mr. Luo Zhaohui, Mr. Tang Yong, Mr. Song Ping and Mr. Huang Xin, with Mr. Jia Yuzeng acting as the Chairman of the Board of Supervisors. Of the members of the Board of Supervisors, Mr. Jia Yuzeng, Mr. Luo Zhaohui and Mr. Tang Yong are Non-employee Representative Supervisors, and Mr. Song Ping and Mr. Huang Xin are Employee Representative Supervisors. In January 2018, Mr. Li Guodong resigned from his position as an Employee Representative Supervisor due to adjustment of work arrangements. In February 2018, Ms. Xiong Junhong resigned from her position as a Non-employee Representative Supervisor due to adjustment of work arrangements. In June 2018, Mr. Miao Ping and Ms. Wang Cuifei retired from their positions as Supervisors of the Company due to the expiry of the term of the fifth session of the Board of Supervisors. In February 2019, Mr. Shi Xiangming resigned from his position as a Supervisor of the Company due to adjustment of work arrangements.

 

  (II)

Attending meetings of the Board of Supervisors 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 the Board of Supervisors’ Meetings” of the Company, and in accordance with the work arrangement of the Board of Supervisors, the Board of Supervisors 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, etc. The fifth session of the Board of Supervisors and the sixth session of the Board of Supervisors held six meetings in total, 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.

 

  (III)

Attending and participating in corporate governance meetings and actively exercising their supervisory role. In 2018, the Board of Supervisors attended the 2017 Annual General Meeting and the First Extraordinary General Meeting 2018 of the Company, and participated in the regular meetings of

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  the Board. All members of the Board of Supervisors participated in the meetings of the Nomination and Remuneration Committee, the Risk Management Committee, and the Strategy and Assets and Liabilities Management Committee, respectively, in accordance with the work allocation among Supervisors determined by the Board of Supervisors, with a focus on the meetings of the Audit Committee. By attending these meetings, all Supervisors diligently discharged their duties, oversaw the procedures for convening meetings, carefully listened to the matters considered at the meetings, and participated in discussions when necessary, thus bringing positive effects on further enhancement of corporate governance.

 

  (IV)

Supervising and evaluating the performance of duties by Directors. In 2018, the Company formulated the “Provisional Measures for Evaluating the Performance of Duties by Directors” and commenced the evaluation of the performance of duties by Directors for the first time in accordance with the requirements such as the “Measures for the Administration of Independent Directors of Insurance Institutions” issued by the CBIRC and the “Operational Guidance for Evaluating the Performance of Duties by Directors of Insurance Companies” issued by the Insurance Association of China and after taking into account the actual situation of its corporate governance. Based on the performance of duties by Directors in 2018 and by reference to the information obtained during their participation of meetings of the Board and various special committees, the members of the Board of Supervisors evaluated and scored the Directors of the Company and formed evaluation opinions on them, which therefore improved the mechanism for the supervision and evaluation of duty performance of Directors.

 

  (V)

Actively conducting research and investigation activities and examining and understanding the business operation of local branches. In November 2018, Mr. Jia Yuzeng, the Chairman of the Board of Supervisors, and Mr. Luo Zhaohui and Mr. Huang Xin, members of the Board of Supervisors, carried out investigation and research on Hainan Branch of the Company, successively listened to business reports from Hainan Branch, Haikou Sub-branch and Qionghai Sub-branch of the Company, and exchanged opinions in great depth with the person-in-charge, management cadres and sales representatives from the local branches during seminars. Through investigation and research, the Board of 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.

 

  (VI)

Attending training courses as well as assessment and selection activities, and constantly enhancing performance of duties by the Supervisors. In 2018, Mr. Luo Zhaohui and Mr. Song Ping, members of the Board of Supervisors, attended the 4th and 5th special training courses of 2018 for directors and supervisors of listed companies within Beijing as organized by the Listed Companies Association of Beijing, which gave them the opportunity to learn and understand the regulatory overview of listed companies within Beijing, cases of non-compliance of listed companies and their related entities, and measures adopted to prevent the occurrence of such non-compliance. All members of the Board of Supervisors attended the special training courses for the performance of duties by directors, supervisors and senior management officers and the training programs on anti-money laundering as organized by the Company. Pursuant to the regulatory requirements of the industry, the new Supervisors of the Company sat for the examinations of the CBIRC regarding the approval of qualifications of new directors, supervisors and senior management officers of insurance institutions as organized by the CBIRC. The Board of Supervisors of the Company participated in the activity of “Research on Topics in relation to the Board of Supervisors of Listed Companies” as organized by the China Association for Public Companies and was awarded the “Outstanding Award for Research on Special Topics”.

 

85


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

II.

INDEPENDENT OPINION OF THE BOARD OF SUPERVISORS ON CERTAIN MATTERS

During the Reporting Period, the Board of Supervisors 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 the Board of Supervisors’ Meetings”.

 

  (I)

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

 

  (II)

The authenticity of the financial report. The Company’s annual financial report truly and completely reflected the Company’s financial position and operating results. Ernst & Young Hua Ming LLP and Ernst & Young have performed audits and have issued standard and unqualified auditors’ reports in respect of the financial statements for the year 2018 in accordance with the China Standards on Auditing of PRC Certified Public Accountants and the International Standards on Auditing, respectively.

 

  (III)

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

 

  (IV)

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

 

  (V)

Internal control system and self-evaluation report on internal control. During the Reporting Period, the Company sought to improve its internal control system, and continued to improve the effectiveness of such system. The Board of Supervisors of the Company reviewed the self-evaluation report on the Company’s internal control system 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 Board of Supervisors

Jia Yuzeng

Chairman of the Board of Supervisors

   

Beijing, China

27 March 2019

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

Changes in Ordinary Shares and Shareholders Information

 

I.

CHANGES IN SHARE CAPITAL

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

 

II.

ISSUE AND LISTING OF SECURITIES

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

 

III.

INFORMATION ON SHAREHOLDERS AND EFFECTIVE CONTROLLER

 

  (I)

Total Number of Shareholders and Their Shareholdings

 

Total number of ordinary share shareholders as at the end of the Reporting Period    No. of A Share shareholders: 134,023 No. of H Share shareholders: 27,923   

Total number of ordinary

share shareholders as at the

end of the month prior to the

disclosure of the annual report

  

No. of A Share shareholders: 114,811

No. of H Share shareholders: 27,841

 

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        0        —          —    

HKSCC Nominees Limited

   Overseas legal person      25.90     7,320,297,655        +1,061,195        —          —    

China Securities Finance Corporation Limited

   State-owned legal person      2.56     723,937,634        +129,435,132        —          —    

Central Huijin Asset Management Limited

   State-owned legal person      0.42     119,719,900        0        —          —    

Hong Kong Securities Clearing Company Limited

   Overseas legal person      0.11     30,709,362        +7,733,175        —          —    

China International Television Corporation

   State-owned legal person      0.07     18,452,300        0        —          —    

Industrial and Commercial Bank of China Limited – SSE 50 Exchange Traded Index Securities Investment Fund

   Other      0.06     18,175,923        +5,387,586        —          —    

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        0        —          —    

China National Nuclear Corporation

   State-owned legal person      0.04     12,400,000        0        —          —    

National Social Security Fund Portfolio 407

   State-owned legal person      0.04     10,949,667        +8,396,936        —          —    

 

87


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  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.    Industrial and Commercial Bank of China Limited – SSE 50 Exchange Traded Index 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.

 

  (II)

Information Relating to the Controlling Shareholder and Effective Controller

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

 

Name of company    China Life Insurance (Group) Company
Legal representative    Wang Bin
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 former China Insurance Regulatory Commission 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 application 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 2018, CLIC held 1,785,098,644 H shares of Town Health International Medical Group Limited, representing 23.72% of its total shares.

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

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 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.

 

IV.

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

So far as is known to the Directors, Supervisors and the chief executive of the Company, as at 31 December 2018, the following persons (other than the Directors, Supervisors and the chief executive of the Company) had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO, or as otherwise notified to the Company and the HKSE:

 

Name of substantial shareholder

   Capacity   

Class of shares

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

China Life Insurance (Group)
Company

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

BlackRock, Inc. (Note 1)

   Interest in controlled
corporation
   H Shares      591,071,341  (L)      7.94      0.02
        5,623,000  (S)      0.08      0.02

JPMorgan Chase & Co. (Note 2)

   Interest in controlled
corporation,

investment manager,
person having

a security interest in
shares/approved
lending agent

   H Shares      443,651,525  (L)      5.96      1.57
       

49,562,790 

220,178,742 

(S) 

(P) 

   

0.66

2.95


    

0.18

0.78


          
          
          
          

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

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

(Note 1):

BlackRock, Inc. was interested in a total of 591,071,341 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 3,975,000 H Shares, 10,255,000 H Shares, 149,397,927 H Shares, 236,713,000 H Shares, 1,174,000 H Shares, 24,758,829 H Shares, 1,183,000 H Shares, 4,201,000 H Shares, 24,592,064 H Shares, 1,024,000 H Shares, 1,101,000 H Shares, 2,315,700 H Shares, 56,896,088 H Shares, 4,621,975 H Shares, 28,483,338 H Shares, 479,000 H Shares, 27,401,787 H Shares, 12,143,619 H Shares, 48,000 H Shares, and 307,014 H Shares, respectively. All of these entities are either controlled or indirectly controlled subsidiaries of BlackRock, Inc. Of these 591,071,341 H Shares, 193,000 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 5,623,000 H Shares (0.08%). Of these 5,623,000 H Shares, 2,222,000 H Shares were cash settled unlisted derivatives.

 

(Note 2):

JPMorgan Chase & Co. was interested in a total of 443,651,525 H Shares in accordance with the provisions of Part XV of the SFO. Of these shares, JPMorgan Chase Bank, N.A.-Taipei Branch, J.P. Morgan Bank Luxembourg S.A.-Amsterdam Branch, J.P. Morgan Bank Luxembourg S.A.-Stockholm Bankfilial, J.P. Morgan Securities LLC, JPMORGAN CHASE BANK, N.A.-LONDON BRANCH, J.P. Morgan Whitefriars LLC, J.P. Morgan Investment Management Inc., JPMorgan Asset Management (Taiwan) Limited, JPMORGAN ASSET MANAGEMENT (UK) LIMITED, J.P. Morgan Europe Limited, Oslo Branch, J.P. Morgan Europe (UK), Copenhagen Br, filial af J.P. Morgan Europe Ltd, Storbritannien, J.P. Morgan Bank Luxembourg, Copenhagen Br, filial af J.P. Morgan Bank Luxembourg S.A., JPMorgan Chase Bank, N.A.-Sydney Branch, J.P. Morgan Europe Limited (UK), Stockholm Bankfilial, J.P. Morgan Bank Luxembourg S.A., JPMorgan Chase Bank, National Association, JPMorgan Chase Bank, N.A.-Hong Kong Branch, JF Asset Management Limited, J.P. Morgan (Suisse) SA and J.P. MORGAN SECURITIES PLC were interested in 2,955,000 H Shares, 323,100 H Shares, 2,201,019 H Shares, 4,816,830 H Shares, 42,166,976 H Shares, 1,000,000 H Shares, 49,598,361 H shares, 1,800,000 H shares, 18,546,000 H shares, 289,240 H shares, 369,000 H shares, 62,000 H Shares, 3,390,000 H Shares, 2,110,636 H Shares, 10,612,000 H Shares, 151,504,952 H Shares, 8,141,503 H Shares, 38,019,000 H Shares, 5,173,316 H Shares and 100,572,592 H Shares, respectively. All of these entities are either controlled or indirectly controlled subsidiaries of JPMorgan Chase & Co.

Included in the 443,651,525 H Shares are 220,178,742 H Shares (2.95%), 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 443,651,525 H Shares, 9,701,000 H Shares were physically settled listed derivatives, 41,000 H Shares were cash settled listed derivatives, 2,283,278 H Shares were physically settled unlisted derivatives and 9,503,000 H Shares were cash settled unlisted derivatives.

JPMorgan Chase & Co. held a short position as defined under Part XV of the SFO in 49,562,790 H Shares (0.66%). Of these 49,562,790 H Shares, 6,992,000 H Shares were physically settled listed derivatives, 6,181,000 H Shares were cash settled listed derivatives, 18,922,056 H Shares were physically settled unlisted derivatives. 11,882,008 H Shares were cash settled unlisted derivatives and 1 H Share was convertible instruments listed derivatives.

Save as disclosed above, the Directors, Supervisors and the chief executive of the Company are not aware of any other party who, as at 31 December 2018, had an interest or short position in the shares and underlying shares of the Company which was recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO.

 

90


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

Directors, Supervisors, Senior Management and Employees

 

I.

DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

 

  (I)

CURRENT DIRECTORS

 

Name

 

Position

   Gender     Date of Birth     Term     Number
of shares
held at
the
beginning
of the
year
    Number
of
shares
held at
the end
of the
year
    Reason
for
changes
    Salary/
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
emolument
from
connected
parties of the
Company

Wang Bin

  Chairman of the Board, Executive Director      Male       November 1958      
Since
3 December 2018
 
 
    0       0       /       0     0     0     Yes

Su Hengxuan

  Executive Director      Male       February 1963      
Since
20 December 2018
 
 
    0       0       /       0     0     0     Yes

Xu Haifeng

  Executive Director      Male       May 1959      
Since
11 July 2015
 
 
    0       0       /       143.20     23.24     166.44     No

Yuan Changqing

  Non-executive Director      Male       September 1961      
Since
11 February 2018
 
 
    0       0       /       0     0     0     Yes

Liu Huimin

  Non-executive Director      Male       June 1965      
Since
31 July 2017
 
 
    0       0       /       0     0     0     Yes

Yin Zhaojun

  Non-executive Director      Male       July 1965      
Since
31 July 2017
 
 
    0       0       /       0     0     0     Yes

Chang Tso Tung Stephen

  Independent Director      Male       November 1948      

Since

20 October 2014

 

 

    0       0       /       32.00     0     32.00     Yes

Robinson Drake Pike

  Independent Director      Male       October 1951      
Since
11 July 2015
 
 
    0       0       /       32.00     0     32.00     No

Tang Xin

  Independent Director      Male       September 1971      
Since
7 March 2016
 
 
    0       0       /       32.00     0     32.00     Yes

Leung Oi-Sie Elsie

  Independent Director      Female       April 1939      

Since

20 July 2016

 

 

    0       0       /       30.00     0     30.00     Yes
 

 

  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

   

 

Total

 

/

     /       /       /       0       0       /       /    

/

    292.44    

/

Notes:

 

1.

According to the “Procedural Rules for Board Meetings of China Life Insurance Company Limited”, Directors serve for a term of three years and may be re-elected. However, Independent Directors may not serve for more than six years.

2.

The positions of the Directors in this annual report reflect their positions as at the submission date of this annual report. The emoluments are calculated based on their terms of office during the Reporting Period.

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.

At the 2017 Annual General Meeting held on 6 June 2018, the sixth session of the Board of Directors of the Company was elected. At the first meeting of the sixth session of the Board of Directors held on the same date, Mr. Yang Mingsheng was elected as the Chairman of the sixth session of the Board of Directors of the Company. Due to the reason of age, Mr. Yang Mingsheng resigned from his positions of Executive Director and Chairman of the Board of Directors of the Company on 13 November 2018. At the First Extraordinary General Meeting 2018 held on 13 November 2018, Mr. Wang Bin was elected as an Executive Director of the Company. At the seventh meeting of the sixth session of the Board of Directors held on the same date, Mr. Wang Bin was elected as the Chairman of the sixth session of the Board of Directors of the Company. Upon the approval by the CBIRC, the appointment of Mr. Wang Bin became effective on 3 December 2018.

5.

Following the election at the 2017 Annual General Meeting of the Company and upon the approval by the CBIRC, Mr. Su Hengxuan became a Non-executive Director of the Company on 11 July 2018. After the consideration and approval by the ninth meeting of the sixth session of the Board of Directors of the Company, Mr. Su Hengxuan was re-designated from a Non-executive Director to an Executive Director on 20 December 2018. Following the election at the First Extraordinary General Meeting 2017 and upon the approval by the CBIRC, Mr. Yuan Changqing became a Non-executive Director of the Company on 11 February 2018.

 

91


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  (II)

CURRENT SUPERVISORS

 

Name

  

Position

  

Gender

   Date of Birth     

Term

   Number
of shares
held at
the
beginning
of the
year
     Number
of
shares
held at
the end
of the
year
     Reason
for
changes
     Salary/
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
emolument
from
connected
parties
of the
Company

Jia Yuzeng

   Chairman of the Board of Supervisors    Male      June 1962      Since 11 July 2018      0        0        /        62.65      11.90      74.55      No

Luo Zhaohui

   Supervisor    Male      March 1974      Since 11 February 2018      0        0        /        0      0      0      Yes

Tang Yong

   Supervisor    Male      July 1972      Since 2 February 2019      0        0        /        /      /      /      No

Song Ping

   Employee Representative Supervisor    Male      June 1964      Since 15 March 2018      0        0        /        40.29      26.75      67.04      No

Huang Xin

   Employee Representative Supervisor    Male      February 1974      Since 20 June 2018      0        0        /        28.20      19.01      47.21      No
  

 

  

 

  

 

 

    

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

  

 

 

    

 

Total

   /    /      /      /      0        0        /        /      /      188.80      /
  

 

  

 

  

 

 

    

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

  

 

 

    

 

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 Board of Supervisors and the Supervisors is currently subject to review and approval. The result of the review will be disclosed when the final amount is confirmed.

4.

At the 2017 Annual General Meeting held on 6 June 2018, the sixth session of the Board of Supervisors of the Company was elected. Following the election at the 2017 Annual General Meeting of the Company and upon the approval by the CBIRC, Mr. Jia Yuzeng became a Non-employee Representative Supervisor of the Company on 11 July 2018. At the first meeting of the sixth session of the Board of Supervisors held on 20 July 2018, Mr. Jia Yuzeng was elected as the Chairman of the sixth session of the Board of Supervisors of the Company.

5.

Following the election at the First Extraordinary General Meeting 2017 of the Company and upon the approval by the CBIRC, Mr. Luo Zhaohui became a Non-employee Representative Supervisor of the fifth session of the Board of Supervisors of the Company on 11 February 2018. Following the election at the sixth extraordinary meeting of the second session of the employee representative meeting and upon the approval by the CBIRC, Mr. Song Ping became an Employee Representative Supervisor of the fifth session of the Board of Supervisors of the Company on 15 March 2018. At the second extraordinary meeting of the second session of the employee representative meeting held on 14 May 2018, Mr. Song Ping and Mr. Huang Xin were elected as Employee Representative Supervisors of the sixth session of the Board of Supervisors of the Company. Upon the approval by the CBIRC, the appointment of Mr. Huang Xin as a Supervisor became effective on 20 June 2018. Following the election at the First Extraordinary General Meeting 2018 of the Company and upon the approval by the CBIRC, Mr. Tang Yong became a Non-employee Representative Supervisor of the Company on 2 February 2019.

 

92


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  (III)

CURRENT SENIOR MANAGEMENT

 

Name

  

Position

 

Gender

 

Date of Birth

 

Term

  Number
of share
held at the

beginning
of the year
    Number
of share

held at
the end
of the
year
    Reason
for
changes
    Salary 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
emolument
from connected
parties of the
Company

Su Hengxuan

   President (the qualification is still subject to the approval by the CBIRC)   Male   February 1963   refer to the notes     0       0       /       0     0     0      Yes

Xu Haifeng

   Vice President   Male   May 1959   Since November 2014     0       0       /       143.20     23.24     166.44      No

Li Mingguang

   Vice President, Chief Actuary, Board Secretary   Male   July 1969   Appointed as Vice President since November 2014, Chief Actuary since March 2012, Board Secretary since June 2017     0       0       /       143.20     23.36     166.56      No

Zhao Lijun

   Vice President   Male   July 1963   Since July 2016     0       0       /       143.20     23.29     166.49      No

Xiao Jianyou

   Vice President   Male   September 1968   Since October 2016     0       0       /       125.30     23.29     148.59      No

Zhao Peng

   Vice President   Male   April 1972   Since March 2018     0       0       /       124.55     23.34     147.89      No

Ruan Qi

   Vice President   Male   July 1966   Since April 2018     0       0       /       123.81     23.93     147.74      No

Zhan Zhong

   Marketing Director   Male   April 1968   Since August 2017     0       0       /       107.40     31.57     138.97      No

Yang Hong

   Operation Director   Female   February 1967   Since March 2018     0       0       /       89.50     26.28     115.78      No

Xu Chongmiao

   Compliance Officer   Male   October 1969   Since July 2018     0       0       /       25.28     16.38     41.66      No
  

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    

 

Total

   /   /   /   /     0       0       /       /     /     1,240.12      /
  

 

 

 

 

 

 

 

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    

 

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.

After the consideration and approval by the ninth meeting of the sixth session of the Board of Directors of the Company, Mr. Su Hengxuan was appointed as the President of the Company and the qualification of his appointment is still subject to the approval by the CBIRC. After the consideration and approval by the ninteenth meeting of the fifth session of the Board of Directors of the Company, Mr. Zhao Peng was appointed as the Vice President of the Company on 2 March 2018, and Ms. Yang Hong was appointed as the Operation Director of the Company on 2 March 2018. After the consideration and approval by the ninteenth meeting of the fifth session of the Board of Directors of the Company and upon the approval by the CBIRC, Mr. Ruan Qi was appointed as the Vice President of the Company on 8 April 2018. After the consideration and approval by the twenty-fourth meeting of the fifth session of the Board of Directors of the Company and upon the approval by the CBIRC, Mr. Xu Chongmiao was appointed as the Compliance Officer of the Company on 17 July 2018.

 

93


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  (IV)

RESIGNATION AND RETIREMENT OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

 

Name

  

Previous Position

  

Gender

  

Date of Birth

  

Term

   Number
of share
held at
the
beginning
of the
year
     Number
of share
held at the
end
of the year
     Reason
for changes
     Salary/
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
emolument
received
from the
Company
during the
Reporting
Period in
RMB ten
thousands
(before tax)
    

Whether
received
emolument
from
connected
parties of the
Company

  

Reason
for changes

Yang Mingsheng

   Chairman of the Board, Executive Director    Male    August 1955    22 May 2012-13 November 2018      0        0        /        0        0        0      Yes    Resigned due to the reason of age

Lin Dairen

   Executive Director President    Male    June 1958    27 October 2008- 19 December 2018 April 2014 –December 2018      0        0        /        179.00        23.46        202.46      No    Resigned due to the reason of age

Xu Hengping

   Executive Director Vice President    Male    November 1958    11 July 2015 – 24 January 2019 November 2014-January 2019      0        0        /        143.20        23.24        166.44      No    Resigned due to the reason of age

Wang Sidong

   Non-executive Director    Male    December 1961    24 July 2012-12 January 2018      0        0        /        0        0        0      Yes    Resigned due to the adjustment of work arrangements

Xiong Junhong

   Supervisor    Female    December 1968    20 October 2014-23 February 2018      0        0        /        0        0        0      Yes    Resigned due to the adjustment of work arrangements

Li Guodong

   Employee Representative Supervisor    Male    April 1965    31 August 2017-2 January 2018      0        0        /        /        /        /      No    Resigned due to the adjustment of work arrangements

Miao Ping

   Chairman of the Board of Supervisors    Male    April 1958    11 July 2015-6 June 2018      0        0        /        71.60        11.33        82.93      No    Retired due to the expiry of the fifth session of the Board of Supervisors

Wang Cuifei

   Employee Representative Supervisor    Female    January 1964    11 July 2015-6 June 2018      0        0        /        27.72        16.56        44.28      No    Retired due to the expiry of the fifth session of the Board of Supervisors

Shi Xiangming

   Supervisor    Male    November 1959    25 May 2009 – 18 February 2019      0        0        /        59.38        30.89        90.27      No    Resigned due to the adjustment of work arrangements
  

 

  

 

  

 

  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

  

 

Total

   /    /    /    /      0        0        /        /        /        586.38      /    /
  

 

  

 

  

 

  

 

  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

  

 

Notes:

 

1.

This table sets out the information of Directors, Supervisors and Senior Management who resigned or retired during the period from the beginning of the Reporting Period to the submission date of this annual report.

2.

The emoluments are calculated based on the terms of office of the resigned and retired Directors, Supervisors and Senior Management during the Reporting Period.

3.

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.

 

94


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

 

   DIRECTORS
LOGO   

Mr. Wang Bin, born in 1958, Chinese

 

Mr. Wang is the Chairman of the Board of Directors of the Company, the Chairman of the Board of Directors and the Secretary to the Party Committee of China Life Insurance (Group) Company, the Chairman of the Board of Directors of China Life Asset Management Company Limited, the Chairman of the Board of Directors of China Life Insurance (Overseas) Company Limited, and a Director and the Chairman of the Board of Directors of China Guangfa Bank Co., Ltd. Mr. Wang has successively been employed by government authorities and financial institutions, with nearly 30 years of experience in financial management. He worked at the People’s Bank of China, participating in the preparation and establishment of Agricultural Development Bank of China as an important member. Mr. Wang served as the General Manager of Jiangxi Branch of Agricultural Development Bank of China, and the President of Tianjin Branch and Beijing Branch of the Bank of Communications Co., Ltd. (the “Bank of Communications”). He served as the Vice President of the Bank of Communications from 2005 to 2012 and concurrently served as an Executive Director of the Bank of Communications from 2010 to 2012. From March 2012 to August 2018, he served as the Chairman of the Board of Directors and the Secretary to the Party Committee of China Taiping Insurance Group Ltd. Mr. Wang holds a doctoral degree in economics. He is a researcher, a delegate to the 19th National Congress of the Communist Party of China, and a member of the 12th and 13th National Committee of the Chinese People’s Political Consultative Conferences.

LOGO   

Mr. Su Hengxuan, born in 1963, Chinese

 

Mr. Su became an Executive Director of the Company in December 2018. He was appointed by the Board of Directors as the President of the Company in December 2018 (the qualification of his appointment is still subject to the approval by the CBIRC). He served as the Vice President of China Life Insurance (Group) Company since December 2017. He was the President of China Life Pension Company Limited from March 2015 to February 2018. Mr. Su served various positions in the Company from 2000 to 2015, including the Deputy General Manager of Henan Branch, the General Manager of the Individual Insurance Department of the Company, the General Manager of the Individual Insurance Sales Department of the Company, an Assistant to the President and the Vice President of the Company. Mr. Su graduated from Wuhan University and the University of Science and Technology of China and obtained a doctoral degree in management science and engineering from the University of Science and Technology of China in 2011. Mr. Su, a senior economist, has over 35 years of experience in the operation and management of life insurance business.

 

95


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

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 E-commerce Company Limited from January 2015 to January 2017. He served as the Business Controller of the Company from February to November 2014, during which he concurrently served as the General Manager of Hebei Branch of the Company. Mr. Xu served as the General Manager of Beijing Branch and the General Manager of Hebei Branch of the Company from 2006 to 2014. Prior to that, Mr. Xu served as the Deputy General Manager and General Manager of Linyi Branch in Shandong Province and the General Manager of the Business Management Department in Shandong Branch of the Company, the General Manager of Jinan Branch and the Deputy General Manager of Beijing Branch of the Company. Mr. Xu graduated from Linyi Foreign Language Normal University in 1982, from Shandong Provincial Party School majoring in economic management in 1996, and obtained a master’s degree in business administration from Zhongnan University of Economics and Law in 2007. Mr. Xu, a senior economist, has over 30 years of experience in the operation of life insurance business and insurance management.

LOGO

  

Mr. Yuan Changqing, born in 1961, Chinese

 

Mr. Yuan became a Non-executive Director of the Company in February 2018. He is the Vice Chairman, President and Deputy Secretary to the Party Committee of China Life Insurance (Group) Company. Mr. Yuan served as the Chairman of the Supervisory Committee and the Deputy Secretary to the Party Committee of Agricultural Bank of China Limited from April 2015 to May 2017. He served as the Deputy General Manager and the Secretary to the Discipline Inspection Committee of China Everbright Group Corporation Limited from November 2014 to April 2015, the Secretary to the Discipline Inspection Committee of China Everbright Group Limited from December 2008 to August 2012, and an Executive Director, the Deputy General Manager and the Secretary to the Discipline Inspection Committee of China Everbright Group Limited from August 2012 to November 2014, during which he concurrently acted as the Chairman of Everbright Securities Company Limited. During the period from 1995 to 2008, he served as the Vice President, President and Secretary to the Party Committee of Xinjiang Branch, the President and Secretary to the Party Committee of Henan Branch, and the Director of the Organization Department of the Party Committee and the General Manager of the Human Resources Department of the head office of Industrial and Commercial Bank of China Limited. During the period from 1981 to 1995, he held various professional and management positions in branch offices of the People’s Bank of China and Industrial and Commercial Bank of China. Mr. Yuan, a senior economist, graduated from the University of Hong Kong, majoring in international business administration with a master’s degree in business administration.

 

96


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

LOGO   

Mr. Liu Huimin, born in 1965, Chinese

 

Mr. Liu became a Non-executive Director of the Company in July 2017. He has been the Vice President of China Life Insurance (Group) Company since September 2013. He served as the Vice President of China Life Asset Management Company Limited from 2004, and the President and a Director of the same company from 2006, during which he concurrently served as the Chairman of China Life Franklin Asset Management Company Limited and the Chairman of China Life AMP Asset Management Co., Ltd., etc. Mr. Liu graduated from the Peking University with a doctoral degree in international law. Before that, he graduated from the School of Social Sciences of the University of Sussex in the United Kingdom with a master’s degree in development economics and the Peking University with a bachelor’s degree in national economic management, respectively.

LOGO   

Mr. Yin Zhaojun, born in 1965, Chinese

 

Mr. Yin became a Non-executive Director of the Company in July 2017. He has been the Vice President of China Life Insurance (Group) Company since October 2016. He joined the Bank of Communications in July 1990, and consecutively served as an Assistant to the President of Beijing branch and the Vice President of Shanxi branch of the Bank of Communications from 2005, and the President of Shanxi branch, Hebei branch and Beijing branch of the Bank of Communications from 2011. Mr. Yin graduated from the China University of Political Science and Law with a master’s degree in public administration. Before that, he graduated from the Faculty of Accounting of the Beijing College of Finance and Commerce with a bachelor’s degree in economics.

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’s degree of science from the University of London, and is a fellow member of the Institute of Chartered Accountants in England and Wales.

 

 

97


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

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 has over 30 years of experience in the Asian financial industry with a focus on risk management and China’s banking industry. He holds a bachelor’s degree of arts in Chinese Language and Literature from Yale University and a master’s degree of public affairs in development economics from Princeton University’s Woodrow Wilson School.

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.

 

 

98


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

LOGO   

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

 

Ms. Leung became an Independent Director of the Company in July 2016. She was the first Secretary for Justice of Hong Kong, a member of the Executive Council of Hong Kong, the Deputy Director of the Hong Kong Basic Law Committee of the Standing Committee of the 2nd, 3rd and 4th 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 PetroChina Company Limited since June 2017.

 

99


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

 

   SUPERVISORS
LOGO   

Mr. Jia Yuzeng, born in 1962, Chinese

 

Mr. Jia became the Chairman of the Board of Supervisors of the Company in July 2018. During the period from 2006 to March 2018, he served as a Supervisor, the General Manager of the Human Resources Department, an Assistant to the President, the Vice President, the Board Secretary, an Executive Director and the Compliance Officer of China Life Pension Company Limited. During the period from 2004 to 2006, he served as the General Manager of the Work Department of the Trade Union, the Executive Deputy Director of the Trade Union and a Supervisor of the Company. During the period from 1988 to 2004, he successively served as the Division Head of the General Office and a secretary (at the deputy director level) of the PRC Ministry of Supervision, the Deputy Director (responsible for daily operation) of the Minister Office of the General Supervision Office under the Supervision Department of the Central Commission for Discipline Inspection, and an inspector (at the director level), supervisor, inspector (at the deputy bureau chief level) and special supervisor of the General Office of the Central Commission for Discipline Inspection. Mr. Jia graduated from the Open University of Hong Kong in 2003, majoring in business administration with a master’s degree in business administration.

LOGO   

Mr. Luo Zhaohui, born in 1974, Chinese

 

Mr. Luo became a Supervisor of the Company in February 2018. Mr. Luo worked at the Risk Management Department of China Life Insurance Company and the General Office of China Life Insurance (Group) Company from August 2002 to August 2013, and was appointed as the Senior Manager of the Comprehensive Information Division of the General Office of China Life Insurance (Group) Company in May 2009 and an Assistant to the General Manager of the Strategic Planning Department of China Life Insurance (Group) Company in August 2013. Mr. Luo was seconded to Shijiazhuang Branch of the Company in Hebei Province as the Deputy General Manager during the period from November 2013 to October 2015, and was then appointed as the Deputy General Manager of the Strategic Planning Department of China Life Insurance (Group) Company in July 2016. Mr. Luo has been involved in strategic management related work for a long time, with considerable working experience in such aspects as risk management, market analysis and research, life insurance operation, as well as strategic planning and management. Mr. Luo, a senior economist, graduated from Peking University, majoring in finance with a doctoral degree.

 

100


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

LOGO   

Mr. Tang Yong, born in 1972, Chinese

 

Mr. Tang became a Supervisor of the Company in February 2019. He is the Deputy General Manager of the Supervision Department of the Company, who is responsible for the daily operation of the Supervision Department. From October 2016 to August 2018, he served as an Assistant to the General Manager and the Deputy General Manager of the Human Resources Department of the Company. From 2011 to 2016, Mr. Tang served as the Division Chief of the System Staff Management Division of the Human Resources Department, the General Manager of the Human Resources Department of Jiangxi Branch, and the Division Chief of the Planning Division of the Human Resources Department of the Company. From 2006 to 2011, he served as the Senior Supervisor and the Deputy Division Chief of the Organization Division, and the Deputy Division Chief of the System Staff Management Division of the Human Resources Department of the Company. From 2004 to 2006, he served as the Secretary at the level of battalion commander and the Secretary at the level of deputy regimental commander of the General Office of the General Political Department of the Chinese People’s Liberation Army. Mr. Tang graduated from the Party School of the Central Committee of the Chinese Communist Party majoring in political science and law in December 1998 and from Tianjin Normal University majoring in Chinese language and literature in June 2006.

LOGO

  

Mr. Song Ping, born in 1964, Chinese

 

Mr. Song became a Supervisor of the Company in March 2018. He has been the General Manager of the Administration Office of the Company since January 2017. From 2006 to 2017, he successively served as an Assistant to the General Manager of the Development and Reform Department, an Assistant to the General Manager of Beijing Branch, the Deputy General Manager of the Legal and Compliance Department, the Deputy General Manager of the Human Resources Department, and the General Manager of the E-Commence Department of the Company. From 1999 to 2006, he successively served as the Division Chief of the Agents Management Department, the Individual Insurance Department and the Group Insurance Department of the Company. Mr. Song graduated from Peking University in July 1987, majoring in Chinese language and literature with a bachelor’s degree of arts.

LOGO

  

Mr. Huang Xin, born in 1974, Chinese

 

Mr. Huang became a Supervisor of the Company in June 2018. He served as the General Manager of the Human Resources Department of the Company from March 2018 to December 2018. He served as the Deputy General Manager of the Human Resources Department of the Company from August 2014 to March 2018. From December 2010 to August 2014, Mr. Huang successively served as an Assistant to the General Manager and the Deputy General Manager of the Human Resources Department of China Life Insurance (Group) Company, during which he was seconded to the Shijiazhuang Branch of the Company in Hebei Province as the Deputy General Manager from February 2011 to February 2013. From 2004 to 2010, he successively served as the Deputy Division Chief of the Labour and Wages Division, and the Deputy Division Chief and Division Chief of the Performance and Remuneration Management Division of the Human Resources Department of China Life Insurance (Group) Company. Mr. Huang graduated from Central University of Finance and Economics in July 1996 majoring in taxation with a bachelor’s degree in economics, and is a senior economist and PRC certified public accountant.

 

 

 

101


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

 

 

   SENIOR MANAGEMENT
   Please refer to the section “Directors” for the profiles of Mr. Su Hengxuan and Mr. Xu Haifeng.
LOGO   

Mr. Li Mingguang, born in 1969, Chinese

 

Mr. Li became the Vice President of the Company in November 2014. He has been the Chief Actuary of the Company since March 2012 and the Board Secretary of the Company since June 2017. Mr. Li joined the Company in 1996 and subsequently served as the Deputy Division Chief, the Division Chief, an Assistant to the General Manager of the Product Development Department, the Responsible Actuary of the Company and the General Manager of the Actuarial Department. He graduated from Shanghai Jiaotong University with a bachelor’s degree in computer science in 1991, Central University of Finance and Economics majoring in monetary banking (actuarial science) with a master’s degree in 1996 and Tsinghua University with an EMBA in 2010, and also studied in University of Pennsylvania in the United States in 2011. Mr. Li is a Fellow of the China Association of Actuaries (FCAA) and a Fellow of the Institute and Faculty of Actuaries (FIA). He was the Chairman of the first session of the China Actuarial Working Committee and the Secretary-general of both the first and the second sessions of the China Association of Actuaries. He is currently an Executive Director of the China Association of Actuaries, a member of the China National Master of Insurance Education Supervisory Committee and the Vice Chairman of the second session of the Professional Committee of Assets and Liabilities Management of the Insurance Asset Management Association of China.

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 Division Chief, the Division Chief and an Assistant to the General Manager of the Planning & Finance Department of China Life Insurance Company. Mr. Zhao graduated from the Accounting Department of Anhui Finance & Trade College with a bachelor’s degree in industrial accounting and finance in 1987, and from Tsinghua University with an EMBA in 2010. Mr. Zhao is a senior accountant.

 

102


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

LOGO   

Mr. Xiao Jianyou, born in 1968, Chinese

 

Mr. Xiao became the Vice President of the Company in October 2016. He served as an Assistant to the President of the Company from July 2015 to October 2016 and has been a Non-executive Director of China Life Property and Casualty Insurance Company Limited since September 2015. He served as the General Manager of Jiangsu Branch of the Company from January 2014 to July 2015 and the Deputy General Manager (responsible for daily operation) of Jiangsu Branch of the Company 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.

LOGO   

Mr. Zhao Peng, born in 1972, Chinese

 

Mr. Zhao became the Vice President of the Company in March 2018. He served as an Assistant to the President of the Company from October 2017 to March 2018 and the General Manager of Zhejiang Branch of the Company from January 2015 to October 2017. From 2014 to 2015, he successively served as the Deputy General Manager (at the general manager level of the provincial branches) and the person-in-charge of Zhejiang Branch of the Company. From 2003 to 2014, he successively held various positions in China Life Insurance (Group) Company, including the Division Chief of the Capital Management Division of the Finance Department, an Assistant to the General Manager and the Division Chief of the Capital Management Division of the Finance Department, an Assistant to the General Manager, the Deputy General Manager and the General Manager of the Finance and Accounting Department, and the General Manager of the Finance Department. From 1995 to 2003, Mr. Zhao successively served as a staff member of the Capital Division, a staff member of the Financial Management Division, the Deputy Division Chief and the Division Chief of the Capital Division of the Planning and Finance Department of China Life Insurance Company. Mr. Zhao graduated from Hunan College of Finance and Economics in July 1995, majoring in actuarial science with a bachelor’s degree in economics, from Central University of Finance and Economics in June 2002, majoring in finance with a master’s degree in economics, and from Tsinghua University in January 2007, majoring in business administration with a master’s degree in business administration.

 

103


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

LOGO   

Mr. Ruan Qi, born in 1966, Chinese

 

Mr. Ruan became the Vice President of the Company in April 2018. He served as the Chief Information Technology Officer of the Company from January 2018 to April 2018. Mr. Ruan served as the Chief Information Technology Officer and the General Manager of the Information Technology Department of the Company from October 2016 to January 2018. He served as the General Manager (at the general manager level of the provincial branches) of the Information Technology Department of the Company from March 2016 to October 2016. He served as the General Manager of China Life Data Center and the General Manager (at the general manager level of the provincial branches) of the Information Technology Department of the Company from 2014 to 2016, and the Deputy General Manager and the General Manager of the Information Technology Department of the Company from 2004 to 2014. He successively served as the Deputy Division Chief of the Computer Division of Fujian Branch, and the Deputy Manager (responsible for daily operation) and the Manager of the Information Technology Department of the Company from 2000 to 2004. Mr. Ruan, a senior engineer, graduated from Beijing Institute of Posts and Telecommunications in August 1987, majoring in computer science and communications with a bachelor’s degree in engineering and from Xiamen University with a master’s degree in business administration for senior management (EMBA) in December 2007.

LOGO   

Mr. Zhan Zhong, born in 1968, Chinese

 

Mr. Zhan became the Marketing Director of the Company in August 2017. He has been the General Manager (as the general manager level of the provincial branches) of the Individual Insurance Division of the Company since July 2014, and was an Employee Representative Supervisor of the Company from July 2015 to August 2017. Mr. Zhan served as the Deputy General Manager (responsible for daily operations) and the General Manager of the Company’s Qinghai branch from 2013 to 2014. From 2009 to 2013, Mr. Zhan successively served as the Deputy General Manager (responsible for daily operations) and the General Manager of the Individual Insurance Division of the Company. From 2005 to 2009, he successively served as the General Manager of the Individual Insurance Division of the Company’s Guangdong Branch and an Assistant to the General Manager of the Company’s Guangdong Branch. From 1996 to 2005, he successively served as the Director of the Marketing Department of Chengdu High-tech Sub-branch of Zhongbao Life Insurance Company, an Assistant to the Manager and the Manager of the Marketing Department of Chengdu Branch, and the Deputy General Manager of Chengdu Branch of Taikang Life Insurance Company. Mr. Zhan graduated from Kunming Institute of Technology in July 1989, majoring in industrial electric automation with a bachelor’s degree in engineering.

 

104


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

LOGO   

Ms. Yang Hong, born in 1967, Chinese

 

Ms. Yang became the Operation Director of the Company in March 2018. She has been the General Manager of the Operation Service Center of the Company since January 2018. Ms. Yang successively served as the Deputy General Manager (responsible for daily operations) and General Manager of the Research and Development Center, the General Manager (at the general manager level of the provincial branches) of the Business Management Department and the General Manager (at the general manager level of the provincial branches) of the Business Process Management Department of the Company from 2011 to 2018. From 2002 to 2011, she successively served as an Assistant to the General Manager and the Deputy General Manager of the Business Management Department, and the General Manager of the Customer Service Department of the Company. Ms. Yang graduated from the Computer Science Department of Jilin University in 1989, majoring in system structure with a bachelor’s degree of science, and from the School of Economics and Management of Tsinghua University in 2013 with a master’s degree in business administration for senior management.

LOGO   

Mr. Xu Chongmiao, born in 1969, Chinese

 

Mr. Xu became the Compliance Officer of the Company in July 2018. He has been the General Manager of the Legal and Compliance Department and the Legal Officer of the Company since September 2014. From 2006 to 2014, he successively served as the Deputy General Manager of the Legal Affairs Department, the Deputy General Manager of the Legal and Compliance Department and the Legal Officer at the general manager level of the Company. From 2000 to 2006, he successively served as the Deputy Division Chief of the Regulations Division of the Development and Research Department and a senior regulations researcher of the Legal Affairs Department of the Company. Mr. Xu graduated from Fudan University in August 1991, majoring in economic law with a bachelor’s degree in law, and from Renmin University of China in July 1996 and July 2005, respectively, majoring in economic law with master’s and doctorate degrees in law. Mr. Xu is admitted as a lawyer and certified public accountant in the PRC.

   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 15 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 CIMC-Tian Da Holdings Company Limited (formerly: China Fire Safety Enterprise Group Limited), Lee & Man Chemical Company Limited, Matrix Holdings Limited, Best Food Holding Company Limited and SCUD Group Limited, all of which are listed on the main board of the HKSE.

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

II.

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

 

Name

  

Name of shareholders

  

Position

  

Term

Wang Bin    China Life Insurance (Group) Company    Chairman    Since August 2018
Su Hengxuan    China Life Insurance (Group) Company    Vice President    Since December 2017
Yuan Changqing    China Life Insurance (Group) Company    Vice Chairman, President    Since May 2017
Liu Huimin    China Life Insurance (Group) Company    Vice President    Since September 2013
Yin Zhaojun    China Life Insurance (Group) Company    Vice President    Since October 2016
Luo Zhaohui    China Life Insurance (Group) Company   

Deputy General Manager of Strategic Planning Department

   Since July 2016

 

III.

Remuneration of Directors, Supervisors and Senior Management

 

1.

Decision-making procedures for the remuneration of Directors, Supervisors and senior management: The remuneration of Directors and Supervisors is subject to approval by shareholders at general meetings, whereas the remuneration of senior management is subject to approval by the Board of Directors.

 

2.

Basis for determination of the remuneration of Directors, Supervisors and senior management: The remuneration of Directors, Supervisors and senior management is determined based on the operating results of the Company and the performance appraisal conducted by the Board of Directors, and in accordance with the measures for the administration of remunerations of the Company.

 

3.

Actual payment of remuneration to Directors, Supervisors and senior management: During the Reporting Period, the remuneration actually received by all Directors, Supervisors and senior management (including the resigned Directors, Supervisors and senior management) from the Company totaled RMB21.413 million. In accordance with the relevant requirements of the measures for the administration of remuneration of the Company, the standard for performance-based bonus (as part of the compensation) payable to Directors, Supervisors and senior management of the Company in 2018 has not yet been determined.

 

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

IV.

EMPLOYEES

 

  (I)

Employees

 

Number of employees of the Company

     101,335  

Number of employees of the Company’s major subsidiaries

     1,482  

Employees in total

     102,817  

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

     22  

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

     23,166  

Sales and sales management

     40,194  

Finance and auditing

     5,140  

Insurance verification, claim processing and customer services

     26,695  

Other expertise and technicians

     4,274  

Others

     3,348  
  

 

 

 

Total

     102,817  
  

 

 

 

 

  2.

Education Level

 

Education Level

   Number of Employees  

Master or above

     4,670  

Bachelor

     62,639  

College Diploma

     30,053  

Secondary School

     2,123  

Others

     3,332  
  

 

 

 

Total

     102,817  
  

 

 

 

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  (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 2018, the Company implemented the work requirements of “close to the frontline, close to the practice and adapt to the era” for education and training in great depth, and pushed forward employees’ trainings to local branches and frontline business management teams for further in-depth development under the guideline of “prioritizing value, strengthening sales force, achieving stable growth, optimizing business structure, and safeguarding against risks”. 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 works in business development, team building, cultural cultivation, service improvement, efficiency optimization and risk prevention in 2018.

 

108


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

Report of Corporate Governance

 

I.

OVERVIEW OF CORPORATE GOVERNANCE

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

 

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 Board of Supervisors 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.

 

  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

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  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 Assets and Liabilities Management 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 Board of Supervisors of the Company has carried out its work and performed its duties in accordance with the Articles of Association and the “Procedural Rules for Board of Supervisors Meetings”. Members of the Board of Supervisors attended the shareholders’ general meetings and the Board of Supervisors 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.

The Company carried out the procedures relating to the election, resignation, retirement and appointment of Directors and Supervisors and the procedures for the change of the senior management in compliance with the regulatory requirements of its listed jurisdictions and the provisions of its Articles of Association. During the process, the Company strictly carried out the procedures and elected all members of the sixth session of the Board of Directors and the Board of Supervisors of the Company at the shareholders’ general meeting and the Employee Representative Meeting through widespread solicitation, stringent selection and full deliberation.

 

  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 consistently made improvements to its systems relating to corporate governance. Pursuant to the regulatory requirements such as the “Guidelines on the Articles of Association of Insurance Companies” and the “Measures for the Administration of Independent Directors of Insurance Institutions” published by the CBIRC, and the “Code of Corporate Governance for Listed Companies” recently revised by the CSRC, and after taking into account its actual operation, the Company has commenced the amendments to the Articles of Association in 2018. The key amendments include the incorporation of the provisions relating to the establishment of the Party Committee into the Articles of Association, addition of new requirements for special matters of corporate governance, improvement of the requirements concerning major governance matters of the Company (including the rights of shareholders, the Board and Independent Directors, major investment and share repurchase), and revision of some provisions of the Articles of Association according to regulatory regulations. The amendments to the Articles of Association are still subject to the approval of the shareholders of the Company and the approval of the CBIRC.

 

  8.

The Board of Directors and the Board of Supervisors of the Company have conducted extensive investigation and research activities. The members of the Board successively carried out investigation and research on and on-site project inspection of China Life IT Center, Suzhou Branch of the Company, China Life Jiayuan Yajing (the senior living community) and Beijing Branch of the Company for the purpose of understanding the operation of the local branches and their implementation of decisions of the Board and the management. The members of the Board of Supervisors carried out investigation and research on Hainan Branch of the Company for the purpose of examining the effectiveness of the implementation of decisions of the Board and the management, which thus enhanced the legal compliance and risk prevention of the Company in a practical manner.

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  9.

The Company has actively organized Directors and Supervisors to attend various training courses and examinations. All Independent Directors of the Company attended special training courses on the business development of the Company, regulations on connected transactions, online sales process, and impact from key changes of new individual income tax law and corresponding measures as organized by the departments of the Company such as the Investment Management Department and the E-commerce Department. Mr. Xu Haifeng, an Executive Director of the Company, and Mr. Luo Zhaohui and Mr. Song Ping, the Supervisors of the Company, respectively attended the 4th and 5th special training courses of 2018 for directors and supervisors of listed companies within Beijing as organized by the Listed Companies Association of Beijing. All members of the Audit Committee under the Board of the Company attended the 2nd training course of 2018 for the audit committee of listed companies and the exchange class for enhancement of duty performance capability as organized by the China Association for Public Companies. All Directors and Supervisors of the Company attended the special training courses for the performance of duties by directors, supervisors and senior management officers and the training programs on anti-money laundering as organized by the Company. Pursuant to the regulatory requirements of the industry, the new Directors and Supervisors of the Company sat for the examinations of the CBIRC regarding the approval of qualifications of new directors, supervisors and senior management officers of insurance institutions as organized by the CBIRC.

 

  10.

During the Reporting Period, the Company was awarded the title of the “2017 Listed Company Most Respected by Investors” in the assessment and selection organized by the China Association for Public Companies. Mr. Li Mingguang, the Board Secretary of the Company, was awarded the “Best Board Secretary of Listed Companies” in the “2018 China Securities Golden Bauhinia Awards” organized by Hong Kong Ta Kung Wen Wei Media Group. The Company was awarded the “Outstanding Award for Research on Special Topics” in the assessment and selection of outstanding papers for theoretical research on the system of the board of supervisors as organized by the China Association for Public Companies.

 

II.

SHAREHOLDERS’ GENERAL MEETING

The shareholders’ general meeting, as an organ of the highest authority of the Company, exercises its duties and functions in accordance with relevant laws. Its duties and powers include the election, appointment and removal of Directors and Non-employee Representative Supervisors, review and approval of the reports of the Board of Directors and the Board of Supervisors, 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.

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  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

2017 Annual General Meeting

   6 June 2018   

http://www.sse.com.cn

http://www.hkexnews.hk

http://www.e-chinalife.com

   6 June 2018

First Extraordinary General Meeting 2018

   13 November 2018   

http://www.sse.com.cn

http://www.hkexnews.hk

http://www.e-chinalife.com

   13 November 2018

Twenty-three proposals including: the “Proposal in relation to the Report of the Board of Directors of the Company for the Year 2017”, the “Proposal in relation to the Report of the Board of Supervisors of the Company for the Year 2017”, the “Proposal in relation to the Financial Report of the Company for the Year 2017”, the “Proposal in relation to the Profit Distribution Plan of the Company for the Year 2017”, the “Proposal in relation to the Remuneration of Directors and Supervisors of the Company”, the proposals in relation to the election of Executive Directors, Non-executive Directors and Independent Directors of the sixth session of the Board of Directors of the Company, the proposals in relation to the election of Non-employee Representative Supervisors of the sixth session of the Board of Supervisors of the Company, the “Proposal in relation to the Remuneration of Auditors of the Company for the Year 2017 and the Appointment of Auditors of the Company for the Year 2018”, the “Proposal in relation to the General Mandate for the Issuance of H Shares by the Company” and the “Proposal in relation to the Renewal of the Asset Management Agreement for Alternative Investments between the Company and China Life Investment Holding Company Limited” 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 2017” and the “Report on the Status of Connected Transactions and the Execution of Connected Transactions Management System of the Company for the Year 2017” were received and reviewed at the 2017 Annual General Meeting held in Beijing on 6 June 2018.

Four proposals including: the “Proposal in relation to the Election of Mr. Wang Bin as an Executive Director of the Sixth Session of the Board of Directors of the Company”, the “Proposal in relation to the Election of Mr. Tang Yong as a Non-employee Representative Supervisor of the Sixth Session of the Board of Supervisors of the Company”, the “Proposal in relation to the Remuneration of Directors and Supervisors of the Company for the Year 2017” and the “Proposal in relation to the Debt Financing for Replenishment of Capital of the Company” were considered and approved by a combination of on-site and online voting at the First Extraordinary General Meeting 2018 held in Beijing on 13 November 2018.

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  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
attended
in person
     Number of
meetings
absent
     Attendance
rate
 

Wang Bin

   Executive Director    0      —          —          —    

Su Hengxuan

   Executive Director    1      1        0        100

Xu Hengping Note

   Executive Director    2      2        0        100

Xu Haifeng

   Executive Director    2      2        0        100

Yuan Changqing

   Non-executive Director    2      0        2        0  

Liu Huimin

   Non-executive Director    2      1        1        50

Yin Zhaojun

   Non-executive Director    2      0        2        0  

Chang Tso Tung Stephen

   Independent Director    2      1        1        50

Robinson Drake Pike

   Independent Director    2      2        0        100

Tang Xin

   Independent Director    2      2        0        100

Leung Oi-Sie Elsie

   Independent Director    2      2        0        100

Note: Mr. Xu Hengping resigned from his position as an Executive Director of the Company on 24 January 2019.

 

  3.

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
attended
in person
     Number of
meetings
absent
     Attendance
rate
 

Yang Mingsheng

   Executive Director    2      0        2        0  

Lin Dairen

   Executive Director    2      1        1        50

Wang Sidong

   Non-executive Director    0      —          —          —    

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

III.

BOARD

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

Currently, the Board comprises ten members, including three 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 of Directors, the Board of Supervisors or the senior management, including between the Chairman of the Board (including Mr. Yang Mingsheng, the former Chairman of the Board and Mr. Wang Bin, the current Chairman of the Board) and the President of the Company (including Mr. Lin Dairen, the former President, and Mr. Su Hengxuan, the current President).

In 2018, Independent Directors of the Company possessed extensive experience in various fields, such as macro-economics, finance and insurance, legal compliance, accounting and auditing. The Company also complies with the requirement of the Listing Rules of the HKSE that at least one of its Independent Directors has appropriate professional qualifications or accounting qualifications or related financial management expertise. As required under the Listing Rules of the SSE and the HKSE, the Company has obtained a written confirmation from each of its Independent Directors in respect of their independence, and the Company is of the opinion that all of the Independent Directors are independent of the Company and strictly perform their duties as Independent Directors. Pursuant to the Articles of Association, Directors shall be elected at the shareholders’ general meeting for a term of three years and may be re-elected on expiry of the three-year term. However, Independent Directors may not serve for more than six years.

 

114


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

Meetings of the Board are held both on a regular and an ad-hoc basis. Regular meetings are convened at least five 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 2018, 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 Board of Supervisors, more than two Independent Directors, the Chairman of the Board or the President of the Company. If the resolution to be considered at such ad-hoc Board meetings has been circulated to all the Directors and more than half of the Directors having voting rights approve such resolution by signing the resolution in writing, the ad-hoc Board meeting need not be physically convened and such resolution in writing shall become an effective resolution.

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

Currently, the sixth session of the Board comprises the following members: Mr. Wang Bin, Mr. Su Hengxuan and Mr. Xu Haifeng, all being Executive Directors, Mr. Yuan Changqing, Mr. Liu Huimin and Mr. Yin Zhaojun, all being Non-executive Directors, and Mr. Chang Tso Tung Stephen, Mr. Robinson Drake Pike, Mr. Tang Xin and Ms. Leung Oi-Sie Elsie, all being Independent Directors, with Mr. Wang Bin as the Chairman of the Board. In January 2018, Mr. Wang Sidong resigned from his position as a Director due to adjustment of work arrangements. Mr. Yang Mingsheng, Mr. Lin Dairen and Mr. Xu Hengping resigned from their positions as Directors in November 2018, December 2018 and January 2019, respectively, due to the reason of age.

The Board of the Company have conducted extensive investigation and research activities. The members of the Board carried out investigation and research on China Life IT Center, Suzhou Branch of the Company, China Life Jiayuan Yajing (the senior living community), and Fuchengmen Sub-branch under Beijing Branch of the Company for the purpose of understanding the operation of the local branches and their implementation of decisions of the Board and the management.

 

115


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

During 2018, all Independent Directors of the Company attended special training courses on the business development of the Company, regulations on connected transactions, online sale process, and impact from key changes of new individual income tax law and corresponding measures as organized by the departments of the Company such as the Investment Management Department and the E-Commerce Department. Mr. Xu Haifeng, an Executive Director, attended the 4th special training course of 2018 for directors and supervisors of listed companies within the territory of Beijing as organized by the Listed Companies Association of Beijing. All members of the Audit Committee under the Board of the Company attended the 2nd training course of 2018 for the audit committee of listed companies and the exchange class for enhancement of duty performance capability as organized by the China Association for Public Companies. All Directors of the Company attended the special training courses for the performance of duties by directors, supervisors and senior management officers and the training programs on anti-money laundering as organized by the Company. Pursuant to the regulatory requirements of the industry, the new Directors of the Company sat for the examinations of the CBIRC regarding the approval of qualifications of new directors, supervisors and senior management officers of insurance institutions as organized by the CBIRC.

The Company has consistently improved its corporate governance structure, regulated the acts of Directors in performing their duties, and optimized the mechanism for supervising and evaluating the performance of duties by Directors. Pursuant to the “Measures for the Administration of Independent Directors of Insurance Institutions” published by the CBIRC, the “Operational Guidance for Evaluating the Performance of Duties by Directors of Insurance Companies” and other requirements, and after taking into account the actual situation of its corporate governance, the Company formulated the “Provisional Measures for Evaluating the Performance of Duties by Directors” in 2018, which included the general provisions, and the scope, method and application of the evaluation on the performance of duties by directors, etc. Based on the self-assessment of Directors and the evaluation of the Board of Supervisors, all members of the Board of the Company were evaluated as competent in their performance of duties in 2018.

 

116


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  1.

Meetings and attendance

In 2018, two regular Board meetings and six ad-hoc Board meetings were held by the fifth session of the Board. The attendance records of individual Directors are as follows:

 

Name of Director

  Type of Director   Number of
meetings the
Director was
required to
attend
    Number of
meetings
attended
in person
    Number of
meetings
attended
by proxies
    Number of
meetings
absent
    Rate of
attendance
in person
    Whether the
Directors failed
to attend two
consecutive
meetings in
person
 

Yang Mingsheng

  Executive Director     8       5       3  Note 1       0       62.5     Yes  

Lin Dairen

  Executive Director     8       8       0       0       100     No  

Xu Hengping

  Executive Director     8       8       0       0       100     No  

Xu Haifeng

  Executive Director     8       8       0       0       100     No  

Yuan Changqing

  Non-executive Director     6       4       2  Note 2       0       66.7     No  

Liu Huimin

  Non-executive Director     8       7       1  Note 3       0       87.5     No  

Yin Zhaojun

  Non-executive Director     8       6       2  Note 4       0       75     No  

Chang Tso Tung Stephen

  Independent Director     8       7  Note 5       1  Note 6       0       87.5     No  

Robinson Drake Pike

  Independent Director     8       7       1  Note 7       0       87.5     No  

Tang Xin

  Independent Director     8       8       0       0       100     No  

Leung Oi-Sie Elsie

  Independent Director     8       8  Note 8       0       0       100     No  

Notes:

 

1.

At the nineteenth meeting of the fifth session of the Board held on 2 March 2018, Mr. Yang Mingsheng gave written authorization for Mr. Lin Dairen to act as his proxy to attend, vote at and chair the meeting; at the twentieth meeting of the fifth session of the Board held on 22 March 2018, Mr. Yang Mingsheng gave written authorization for Mr. Lin Dairen to act as his proxy to attend, vote at and chair the meeting; at the twenty-first meeting of the fifth session of the Board held on 26 April 2018, Mr. Yang Mingsheng gave written authorization for Mr. Lin Dairen to act as his proxy to attend, vote at and chair the meeting.

2.

At the twentieth meeting of the fifth session of the Board held on 22 March 2018, Mr. Yuan Changqing gave written authorization for Mr. Chang Tso Tung Stephen to act as his proxy to attend and vote at the meeting; at the twenty-fourth meeting of the fifth session of the Board held on 5 June 2018, Mr. Yuan Changqing gave written authorization for Mr. Robinson Drake Pike to act as his proxy to attend and vote at the meeting.

3.

At the twentieth meeting of the fifth session of the Board held on 22 March 2018, Mr. Liu Huimin gave written authorization for Mr. Yin Zhaojun to act as his proxy to attend and vote at the meeting.

4.

At the twenty-first meeting of the fifth session of the Board held on 26 April 2018, Mr. Yin Zhaojun gave written authorization for Mr. Xu Hengping to act as his proxy to attend and vote at the meeting; at the twenty-fourth meeting of the fifth session of the Board held on 5 June 2018, Mr. Yin Zhaojun gave written authorization for Mr. Liu Huimin to act as his proxy to attend and vote at the meeting.

5.

At the nineteenth meeting of the fifth session of the Board held on 2 March 2018, Mr. Chang Tso Tung Stephen attended the meeting by telephony.

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

6.

At the twenty-fourth meeting of the fifth session of the Board held on 5 June 2018, Mr. Chang Tso Tung Stephen gave written authorization for Mr. Tang Xin to act as his proxy to attend and vote at the meeting.

7.

At the nineteenth meeting of the fifth session of the Board held on 2 March 2018, Mr. Robinson Drake Pike gave written authorization for Mr. Tang Xin to act as his proxy to attend and vote at the meeting.

8.

At the nineteenth meeting of the fifth session of the Board held on 2 March 2018, Ms. Leung Oi-Sie Elsie attended the meeting by telephony.

The fifth session of the Board of the Company did not convene any meeting during the period from 1 January 2018 to the resignation date of Mr. Wang Sidong. Therefore, there was no meeting of the Board that required Mr. Wang Sidong to attend in 2018.

In 2018, three regular Board meetings and six ad-hoc Board meetings were held by the sixth session of the Board. The attendance records of individual Directors are as follows:

 

Name of Director

   Type of Director    Number of
meetings the
Director was
required to
attend
     Number of
meetings
attended
in person
    Number of
meetings
attended
by proxies
    Number of
meetings
absent
     Rate of
attendance
in person
    Whether the
Directors failed
to attend two
consecutive
meetings

in person
 

Wang Bin

   Executive Director      1        0       1  Note 1      0        0       No  

Su Hengxuan

   Executive Director      7        7       0       0        100     No  

Xu Hengping

   Executive Director      9        9       0       0        100     No  

Xu Haifeng

   Executive Director      9        9       0       0        100     No  

Yuan Changqing

   Non-executive Director      9        6       3  Note 2      0        66.7     No  

Liu Huimin

   Non-executive Director      9        9       0       0        100     No  

Yin Zhaojun

   Non-executive Director      9        7       2  Note 3      0        77.8     No  

Chang Tso Tung Stephen

   Independent Director      9        8  Note  4      1  Note 5      0        88.9     No  

Robinson Drake Pike

   Independent Director      9        9  Note 6      0       0        100     No  

Tang Xin

   Independent Director      9        9       0       0        100     No  

Leung Oi-Sie Elsie

   Independent Director      9        8  Note 7      1  Note 8      0        88.9     No  

Notes:

 

1.

At the ninth meeting of the sixth session of the Board held on 20 December 2018, Mr. Wang Bin gave written authorization for Mr. Su Hengxuan to act as his proxy to attend, vote at and chair the meeting.

2.

At the first meeting of the sixth session of the Board held on 6 June 2018, Mr. Yuan Changqing gave written authorization for Mr. Robinson Drake Pike to act as his proxy to attend and vote at the meeting; at the sixth meeting of the sixth session of the Board held on 25 October 2018, Mr. Yuan Changqing gave written authorization for Mr. Su Hengxuan to act as his proxy to attend and vote at the meeting; at the ninth meeting of the sixth session of the Board held on 20 December 2018, Mr. Yuan Changqing gave written authorization for Mr. Liu Huimin to act as his proxy to attend and vote at the meeting.

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

  3.

At the first meeting of the sixth session of the Board held on 6 June 2018, Mr. Yin Zhaojun gave written authorization for Mr. Liu Huimin to act as his proxy to attend and vote at the meeting; at the sixth meeting of the sixth session of the Board held on 25 October 2018, Mr. Yin Zhaojun gave written authorization for Mr. Liu Huimin to act as his proxy to attend and vote at the meeting.

  4.

At the fifth meeting of the sixth session of the Board held on 25 September 2018, Mr. Chang Tso Tung Stephen attended the meeting by telephony.

  5.

At the first meeting of the sixth session of the Board held on 6 June 2018, Mr. Chang Tso Tung Stephen gave written authorization for Mr. Tang Xin to act as his proxy to attend and vote at the meeting.

  6.

At the fifth meeting of the sixth session of the Board held on 25 September 2018, Mr. Robinson Drake Pike attended the meeting by telephony.

  7.

At the fourth meeting of the sixth session of the Board held on 23 August 2018, Ms. Leung Oi-Sie Elsie attended the meeting by telephony; at the fifth meeting of the sixth session of the Board held on 25 September 2018, Ms. Leung Oi-Sie Elsie attended the meeting by telephony.

  8.

At the ninth meeting of the sixth session of the Board held on 20 December 2018, Ms. Leung Oi-Sie Elsie gave written authorization for Mr. Chang Tso Tung Stephen to act as her proxy to attend and vote at the meeting.

In 2018, the attendance records of the resigned Directors of the sixth session of the Board of the Company at the Board Meetings are as follows:

 

Name of Director

   Type of Director      Number of
meetings the
Director was
required to
attend
     Number of
meetings
attended
in person
     Number of
meetings
attended by
proxies
    Number of
meetings
absent
     Rate of
attendance
in person
    

Whether the
Director failed
to attend two
consecutive
meetings
in person

Yang Mingsheng

     Executive Director        6        4        Note      0        66.7    Yes

Lin Dairen

     Executive Director        8        8        0       0        100    No

 

Note:

At the fifth meeting of the sixth session of the Board held on 25 September 2018, Mr. Yang Mingsheng gave written authorization for Mr. Lin Dairen to act as his proxy to attend, vote at and chair the meeting; at the sixth meeting of the sixth session of the Board held on 25 October 2018, Mr. Yang Mingsheng gave written authorization for Mr. Lin Dairen to act as his proxy to attend, vote at and chair the meeting.

 

  2.

Performance of duties by Independent Directors

In 2018, 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.

 

119


China Life Insurance Company Limited    Annual Report 2018

Corporate Governance

 

All Independent Directors diligently fulfilled their responsibilities and faithfully performed their duties by attending meetings of the Board and the specialized Board committees in 2018, examining and approving the Company’s business development, its financial management and connected transactions, focusing on the necessity and compliance of the Company’s connected transactions and the fairness of their pricing when reviewing the proposals in relation to the connected transactions, participating in the establishment of specialized Board committees, providing professional and constructive advice in respect of major decisions of the Company, seriously listening to the reports from relevant personnel, understanding the daily operation and any possible operational risks of the Company in a timely manner, and expressing their opinions and exercising their functions and powers at Board meetings, thus actively performing their duties as Independent Directors in an effective manner. At the annual special meeting between the Chairman and the Non-executive Directors and Independent Directors, all Independent Directors put forward their own views and opinions on various aspects such as the macro-environment, global capital market development, balance between investment returns and risks, etc., and gave advices and recommendations on matters including the development strategy of the Company, corporate governance, operation and management, financial management, risk control, team building of sales force and training for Directors. 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 2018, the Company provided various materials to Independent Directors, which facilitated them to comprehend information associated with the insurance industry. All Independent Directors obtained information relating to the operation and management of the Company through various channels, which therefore formed the basis of their scientific and prudent decisions.

In 2018, the Independent Directors of the Company and the representatives from the external auditors (Ernst & Young Hua Ming LLP and Ernst & Young) convened three special meetings to communicate and discuss on matters including annual audit, audit on alternative investment, and challenges currently faced by the Company. The Independent Directors also met with the person-in-charge of the relevant departments, such as the Investment Management Department, the Strategy and Marketing Department, the Actuarial Department and the Audit Department of the Company, to discuss business development, strategic and asset allocation and work relating to the audit of the Company.

In April 2018, Mr. Chang Tso Tung Stephen, Mr. Robinson Drake Pike and Ms. Leung Oi-Sie Elsie, all being Independent Directors of the Company, carried out investigation and research on China Life IT Center for the purpose of understanding the construction and operation of its infrastructures, listened to the presentation given by the scientific management office and the research and development center in respect of the construction and operation of China Life IT Center and the overall operation and management of the research and development center, and exchanged opinions in great depth with respect to the issues such as business development and risk control of China Life IT Center and the research and development center. In August 2018, Mr. Chang Tso Tung Stephen, Mr. Robinson Drake Pike and Mr. Tang Xin, all being Independent Directors of the Company, carried out investigation and research on and on-site project inspection of Suzhou Branch of the Company and China Life Jiayuan Yajing (the senior living community), listened to work reports from Suzhou Branch of the Company and Changshu Sub-branch of the Company, visited the customer service center and individual insurance workplace of the local sub-branches, and exchanged opinions in great depth with the person-in-charge of the local branch during seminars. In October 2018, Ms. Leung Oi-Sie Elsie, an Independent Director, carried out investigation and research on Beijing Branch of the Company for the purpose of understanding the situation of the local sub-branch in business sales and team building and the issues about products and customer services. By carrying out the investigation and research, the Board understood the work of local branches in great depth, and examined the effectiveness of the implementation of decisions of the Board, which thus enhanced the legal compliance and risk prevention of the Company in a practical manner.

 

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China Life Insurance Company Limited    Annual Report 2018

Corporate Governance