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Form 6-K CHINA LIFE INSURANCE CO For: Mar 24

March 24, 2022 4:06 PM EDT

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Commission File Number 001-31914

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of the

Securities Exchange Act of 1934

March 24, 2022

 

 

China Life Insurance Company Limited

(Translation of registrant’s name into English)

16 Financial Street

Xicheng District

Beijing 100033, China

Tel: (86-10) 6363-3333

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:

Form 20-F ..X…     Form 40-F ……

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):___________

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ___________

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes ..... No ..X..

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- __________


Commission File Number 001-31914

On March 24, 2022, China Life Insurance Company Limited issued an Announcement of Results for the year ended December 31, 2020, a copy of which is attached as Exhibit 99.1 hereto.

Certain statements contained in this announcement may be viewed as “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual performance, financial condition or results of operations of the Company to be materially different from any future performance, financial condition or results of operations implied by such forward-looking statements. Further information regarding these risks, uncertainties and other factors is included in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2019 filed with the U.S. Securities and Exchange Commission, or SEC, on April 29, 2020 and in the Company’s other filings with the SEC. You should not place undue reliance on these forward-looking statements. All information provided in this announcement is as of the date of this announcement, unless otherwise stated, and we undertake no duty to update such information, except as required under applicable law. Unless otherwise indicated, the Chinese insurance market information set forth in this announcement is based on public information released by the China Banking and Insurance Regulatory Commission.

EXHIBIT LIST

 

Exhibit    Description
99.1    Announcement, dated March 24, 2022


Commission File Number 001-31914

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

     China Life Insurance Company Limited
     (Registrant)
                  By:   

/s/ Su Hengxuan

 

     (Signature)

 

March 24, 2022     Name:   Su Hengxuan
    Title:   President and Executive Director

EXHIBIT 99.1

Commission File Number 001-31914

 

LOGO

中國人壽保險股份有限公司

CHINA LIFE INSURANCE COMPANY LIMITED

(A joint stock limited company incorporated in the People’s Republic of China with limited liability)

(Stock Code: 2628)

ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED

31 DECEMBER 2021

LETTER TO SHAREHOLDERS

The year 2021 marked a starting point for China to build a new development landscape. Being committed to the new development concept at a new development stage, the Company fully implemented the national strategy and deployment, and made its contributions to the new development landscape. With stability as the top priority, we worked hard and overcame many difficulties to push forward the high-quality development of the Company, achieving steady progress and setting up a good start for the 14th Five-Year Plan period.

During the Reporting Period, the Company’s gross written premiums amounted to RMB618,327 million, and the embedded value reached RMB1,203,008 million, maintaining the leading position in the industry in both business scale and value. Our total assets were RMB4,891,085 million, increasing by 15.0% from the end of 2020. Net profit attributable to equity holders of the Company was RMB50,921 million, an increase of 1.3% year on year. As at the end of the Reporting Period, the core solvency ratio and the comprehensive solvency ratio were 253.70% and 262.41%, respectively, which remained at a high level. The Board has proposed to distribute an annual cash dividend of RMB0.65 per share (inclusive of tax), and such proposal will be submitted to the 2021 Annual General Meeting for review and discussion.

 

1


Looking back at 2021, the domestic economy was facing several challenges, such as a complicated and severe international environment and sporadic outbreaks of the pandemic, and development of the insurance industry saw great pressure with the release of demands for insurance consumption slowing down, and the industry still in the throes of transformation and upgrade. China Life, being people-centered, actively responded to major challenges by focusing on its principal businesses, made arduous efforts in coordinating pandemic prevention and control as well as operation management, and achieved prominent progress in a variety of fields, such as serving the overall national development, business performance, transformation and innovation and risk control, etc., which further enhanced the Company’s comprehensive strengths. In the evaluation of operations of insurance companies by the Insurance Association of China, the Company was awarded Grade A for six consecutive years. In 2021, the Company ranked 49th and 8th in the Forbes Global 2000 and the Fortune China 500, respectively, and received many honors, such as “Best Listed Company and Listed Company with the Best Investment Value for the 14th Five-Year Plan Period” from the 11th China Securities 2021 “Golden Bauhinia” Awards and “Most Respected Enterprise in Asia (insurance industry)” from the Institutional Investor.

We proactively leveraged advantages of our principal businesses to serve the overall national development. We firmly took the responsibility of serving the overall interests of national development, and acted as a main force in implementing the national strategies of Healthy China program and proactively responding to population aging. We actively participated in the construction of a multi-level social security system. The supplementary major medical expenses insurance programs covered over 350 million people, the long-term care insurance programs covered 23 million people, the city-customized commercial medical insurance programs covered over 10 million people, and the pilot programs for the exclusive commercial pension insurance were carried out in an orderly manner. By sticking to the role of the financial industry in serving the real economy, the Company focused on major national strategies and continuously improved the quality and efficiency of its services. Our investments in the real economy in aggregate have exceeded RMB2.7 trillion, with new investments during the Reporting Period amounting to nearly RMB770 billion. Investments in serving the national strategy for regional developments have exceeded RMB1.4 trillion in total. Our green investments have accumulatively exceeded RMB300 billion, aiming at facilitating the green development strategy of “peak carbon emissions and carbon neutrality”. With the establishment of a green investment standard system, China Life Asset Management Company Limited (“AMC”), the Company’s non-wholly owned subsidiary, has launched the first ESG bond index and ESG equity index in the domestic insurance asset management industry. We fully advanced rural revitalization strategy, optimizing the rural revitalization-related insurance product supply and consistently supporting the development of key regions in need of assistance in China.

 

2


We demonstrated strong resilience and consistently maintained industry leadership in both business scale and value. In 2021, the insurance industry developed under multiple challenges. Prioritizing business value creation, the Company’s gross written premiums reached a new high after exceeding RMB600 billion in 2020, and the embedded value increased by 12.2% after exceeding RMB1 trillion, both maintaining its leading position in the industry. Due to the overall transformation of the industry, the value of one year’s sales of the Company decreased from the high base to RMB44,780 million, and the decline was within a reasonable range, which was a hard-won result. The Company consistently optimized the investment fund allocation towards major assets categories and the assets and liabilities were well coordinated. During the Reporting Period, the Company achieved a gross investment income of RMB214,057 million, an increase of 7.8% year on year, and realized a gross investment yield of 4.98%.

We focused on enhancing the growth drivers through continuously deepening reforms and innovation. We maintained strategic consistency and implemented the “Dingxin Project” in greater depth, laying a solid foundation for the steady development of the Company at a new stage. As the sales deployment of “Yi Ti Duo Yuan” was further deepened, we actively explored on the sales system reform and firmly promoted the transformation of the largest sales force in the industry to become more professional and specialized. The number of our high-performance agents was stable, and the foundation of our sales force remained solid. The market-oriented incentive, assessment and restraint mechanism was further promoted, and the Company’s investment center witnessed prominent results in its market-oriented reforms. Being customer-centric, we proceeded with the reform in insurance product supply to improve the multi-dimensional and multi-level product system. We strengthened service innovation and centralized operations, and continuously improved our customer experience with “convenient, quality and caring” services, with the proportion of highly satisfied customers remained at a high level. The Company constantly implemented the strategy of “Inclusive Healthcare” and “Integrated Aged-care” to expand new development space for long-term deployment.

We enhanced technology-driven development and the digital transformation was further advanced. In the digital era, we constantly strengthened the driving and supporting role of technology innovation, accelerated the digital transformation under the principle of “Collective Wisdom, Agility, and Iteration”, enhanced the technology-empowered value creation and proceeded with creating a digital insurance ecosystem to facilitate the construction of Digital China Life. We comprehensively upgraded the technological architecture, reinforced the integration of technology and business operations, and pushed forward the whole process of operation and management to be more digitalized and intelligent. Our technological adaptability was greatly improved with technology empowerment becoming increasingly prominent. Our capacity of data governance and security management was also firmly enhanced.

 

3


We coordinated development and security and consistently strengthened our risk management and control. We upheld a systematic concept to strengthen asset-liability management, adhered to robust and prudent operations and firmly held on to the bottom line of no systematic financial risks. By strictly implementing the regulatory requirements, optimizing the enterprise-wide risk management system and improving the risk management mechanism, we consistently strengthened our risk control measures and risk management capability. In the integrated risk rating for insurance industry conducted by China Banking and Insurance Regulatory Commission (the “CBIRC”), the Company has received the rating of Class A for 15 consecutive quarters.

As a company listed in three listing venues, China Life committed to the best practices of corporate governance, and a sound and effective corporate governance structure has played an important role in promoting the steady operation and development of the Company. During the Reporting Period, we successfully completed the election of and formed the seventh session of the Board of Directors and the Board of Supervisors, further improving the governance structure and effectiveness. China Life will continue to push forward the construction of a corporate governance system well aligned with the characteristics of Chinese state-owned financial enterprises and put into more efforts to promote the high-quality development of the Company.

2022 is an important year for fully building a modern socialist country and marching towards the second Centenary Goal. At present, China’s economic development faces triple pressures of shrinking demands, supply disruption, and weakened expectations of growth, which are also seen in the life insurance industry to some extent. Despite complicated situations, we firmly believe that the long-term positive fundamentals of China’s life insurance industry remain unchanged. From the perspective of macro environment, China’s economy will maintain the sound development momentum in the long-term, and the overall social situation will remain stable. As the financial reform and opening up is accelerated in all aspects, high-quality development has become the key for the life insurance industry to achieve new progresses. With the in-depth development of the insurance supply, China will remain as one of the largest incremental markets of life insurance around the world. From the perspective of public demands, as awareness of insurance increases and consumption demands are upgraded, the demands for risk management, wealth management and health management will continue to expand, and the life insurance industry will open up a broader development space. The life insurance industry is still at an important stage full of strategic opportunities, and the long-term development situation remains promising.

“To see a thousand miles afar, we should ascend a higher mountain”. China Life and its predecessor are the participants, who witnessed and promoted the commencement, development and progress of China’s insurance industry, and grow together with the industry. Standing at a new starting point, we will strengthen our judgement on the current situation and future trend, and properly analyze challenges and opportunities. With the focus on serving the national development and the goal of “Protecting People’s Good Life”, we will seize strategic development opportunities and carry out various tasks in a down-to-earth manner. By sticking to the original role of insurance, we will consistently deepen the supply-side reforms and improve our capacity of insurance service supply with steady progress. Besides, we will lead the high-quality development of the industry with our own high-quality development, aiming to building a world-class life insurance company and rewarding the shareholders and people from all walks of life with satisfactory operating performances.

 

4


FINANCIAL SUMMARY

 

I.

Major Financial Data and Indicators for the Past Five Years1

RMB million

Major Financial Data    Under International Financial Reporting Standards (IFRS)  
   2021      2020      Change      2019      2018      2017  

For the year ended

                 

Total revenues

     824,930        805,049        2.5%        729,499        627,472        643,379  

Net premiums earned

     611,251        604,666        1.1%        560,278        532,023        506,910  

Benefits, claims and expenses

     784,763        758,239        3.5%        677,722        621,310        608,855  

Insurance benefits and claims expenses

     618,754        580,801        6.5%        509,467        479,219        466,043  

Profit before income tax

     50,495        54,476        -7.3%        59,788        13,907        41,667  

Net profit attributable to equity holders of the Company

     50,921        50,257        1.3%        58,281        11,382        32,249  

Net profit attributable to ordinary share holders of the Company

     50,921        50,056        1.7%        57,887        10,998        31,869  

Net cash inflow/(outflow) from operating activities

     286,448        304,019        -5.8%        286,028        147,551        200,990  

As at 31 December

                                                     

Total assets

     4,891,085        4,252,466        15.0%        3,726,791        3,254,460        2,897,656  

Investment assets2

     4,716,401        4,095,491        15.2%        3,573,199        3,104,065        2,753,176  

Total liabilities

     4,404,427        3,795,529        16.0%        3,317,432        2,931,146        2,572,308  

Total equity holders’ equity

     478,585        450,056        6.3%        403,779        318,393        320,967  

Per share (RMB)

                                                     

Earnings per share (basic and diluted)3

     1.80        1.77        1.7%        2.05        0.39        1.13  

Equity holders’ equity per share3

     16.93        15.92        6.3%        14.29        11.26        11.36  

Ordinary share holders’ equity per share3

     16.93        15.92        6.3%        14.01        10.99        11.08  

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

     10.13        10.76        -5.8%        10.12        5.22        7.11  

Major financial ratios

                                                     

Weighted average ROE (%)

     10.97        11.83       


decrease
of 0.86
percentage
point
 
 
 
 
     16.47        3.54        10.49  

Gearing ratio4 (%)

     90.05        89.25       


increase
of 0.80
percentage
point
 
 
 
 
     89.02        90.07        88.77  

Gross investment yield5 (%)

     4.98        5.30       


decrease
of 0.32
percentage
point
 
 
 
 
     5.24        3.29        5.16  

 

5


Notes:

 

  1.

The financial data of previous years for this report have been restated due to a business combination under common control this year.

 

  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 + Derivative financial assets + Securities purchased under agreements to resell + Loans + Statutory deposits-restricted + Investment properties + Investments in associates and joint ventures

 

  3.

In calculating the percentage change of the “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.

Gearing ratio = Total liabilities/Total assets

 

  5.

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


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

2021

    

As at 31
December

2020

       Change      Main Reasons for Change

Term deposits

     529,488        545,678          -3.0%      –  

Held-to-maturity securities

     1,533,753        1,189,369          29.0%      An increase in the allocation of government bonds

Available-for-sale securities

     1,429,287        1,215,603          17.6%      An increase in the allocation of bonds in available-for-sale securities

Securities at fair value through profit or loss

     206,771        161,570          28.0%      An increase in the allocation of debt-type assets in securities at fair value through profit or loss

Securities purchased under agreements to resell

     12,915        7,947          62.5%      The needs for liquidity management

Cash and cash equivalents

     60,440        56,655          6.7%      The needs for liquidity management

Investments in associates and joint ventures

     257,953        239,584          7.7%      New investments in associates and joint ventures and an increase in the equity of associates and joint ventures

Insurance contracts

     3,419,899        2,973,225          15.0%      The accumulation of insurance liabilities from new policies and renewals

Investment contracts

     313,594        288,212          8.8%      An increase in the scale of universal insurance accounts

 

7


Major Items of the
Consolidated Statement of
Financial Position
  

As at 31
December

2021

  

As at 31
December

2020

   Change    Main Reasons for Change

Securities sold under agreements to repurchase

   239,446    122,249    95.9%    The needs for liquidity management

Annuity and other insurance

   56,818    55,031    3.2%    An increase in maturities payable

balances payable

           

Interest-bearing loans and other borrowingsNote

   18,686    19,556    -4.4%    The fluctuation of exchange rate

Deferred tax liabilities

   7,481    15,286    -51.1%    The change in fair value of financial assets

Equity holders’ equity

   478,585    450,056    6.3%    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 three-year bank loan of EUR330 million with a maturity date on 8 September 2023, a five-year bank loan of GBP275 million with a maturity date on 25 June 2024, a five-year bank loan of USD860 million with a maturity date on 16 September 2024, and a six-month bank loan of EUR127 million with a maturity date on 13 January 2022, which is automatically renewed upon maturity pursuant to the terms of the agreement, and a six-month bank loan of EUR78 million with a maturity date on 5 January 2022, which is automatically renewed upon maturity pursuant to the terms of the agreement. All the above are fixed rate bank loans. Interest-bearing loans and other borrowings also include a five-year bank loan of USD970 million with a maturity date on 27 September 2024, and an eighteen-month bank loan of EUR110 million with a maturity date on 9 March 2022, both of which are floating rate loans.

 

8


For the year ended 31 December                      RMB million
Major Items of the
Consolidated Statement of
Comprehensive Income
   2021      2020        Change      Main Reasons for Change

Net premiums earned

     611,251        604,666          1.1%     

    Life insurance business

     480,214        479,600          0.1%     

    Health insurance business

     114,549        109,091          5.0%      Great efforts made by the Company in the development of health insurance business

    Accident insurance business

     16,488        15,975          3.2%     

Investment income

     178,387        154,497          15.5%      An increase in interest income from debt-type investments

Net realised gains on financial assets

     20,344        14,583          39.5%      An increase in spread income of stocks in available-for-sale securities

Net fair value gains through profit or loss

     4,943        21,900          -77.4%      Due to the market value fluctuation of securities at fair value through profit or loss and investment operations

Net gains on investments of associates and joint ventures

     10,328        7,666          34.7%      An increase in the profits of certain associates

Other income

     10,005        9,403          6.4%      An increase in the income of management service fees by subsidiaries

Insurance benefits and claims expenses

     618,754        580,801          6.5%      An increase in the change of insurance contract liabilities

 

9


Major Items of the
Consolidated Statement of
Comprehensive Income
   2021        2020        Change    Main Reasons for Change

Investment contract benefits

     10,628          9,846        7.9%    An increase in the scale of universal insurance accounts

Policyholder dividends resulting from participation in profits

     26,511          28,279        -6.3%    A decrease in investment income from the participating accounts

Underwriting and policy acquisition costs

     65,744          84,361        -22.1%    A decrease in regular premiums of new policies

Finance costs

     5,598          3,747        49.4%    An increase in interest paid for securities sold under agreements to repurchase

Administrative expenses

     40,808          37,706        8.2%    Due to the expiration of policies on temporary expenses deduction

Income tax

     (1,917        3,103        N/A    Due to the combined impact of income tax payable and deferred income tax

Net profit attributable to equity holders of the Company

     50,921          50,257        1.3%    Due to the stable and sound business operations of the Company, satisfactory results in investment, and updated discount rate assumptions for reserves of traditional insurance contracts based on market information as at the date of the statement of financial position

 

10


MANAGEMENT DISCUSSION AND ANALYSIS

 

I.

Review of Business Operations in 2021

In 2021, the worldwide COVID-19 pandemic continued to evolve, and the domestic economy was facing triple pressures of shrinking demands, supply disruption, and weakened expectations of growth amid a complicated and challenging international environment. Under the unprecedented pressures, such as the decelerated release of insurance demands and decline of sales force, the growth of life insurance industry further slowed down in terms of premiums. In addition, the insurance industry regulator continued to promote the return to its original role by the insurance sector, further improved system building, and bolstered regulations in the areas of insurance product management, sales channel development, market behaviors, operations and services as well as corporate governance, with an aim at the high-quality development of the industry.

During the Reporting Period, the Company adhered to the strategic core of “Three Major Transformations, Dual Centers and Dual Focuses, Asset-liability Interaction,” and upheld the operational guideline of “prioritizing business value, strengthening sales force, achieving stable growth, upgrading technology, optimizing customer services and guarding against risks.” By concentrating efforts and overcoming difficulties with strong resilience, the Company steadfastly promoted its high-quality development while proceeding with routine pandemic prevention and control, and achieved stable and sound business operations as a whole, with its market leading position further solidified. The quality and efficiency of its operations and services were significantly improved, digital transformation was sped up, and its comprehensive strengths were greatly enhanced.

The Company pushed forward the “Dingxin Project” in greater depth and made breakthroughs in several aspects. The optimization of business modes achieved remarkable results. As the customer-centric sales deployment of “Yi Ti Duo Yuan” was further deepened, the individual agent business sector consistently prioritized business value and made great efforts in improving the quality of its sales force. The diversified business sector further optimized its business modes, which saw improved capability of business value creation. The achievements of market-oriented reforms were continuously consolidated. The market-oriented investment management system was further advanced, the classification management system of branches was continuously improved, and intensified efforts were made in promoting the assessment, incentive and restraint mechanisms for managers in key cities with optimized human resource management. The efficiency of technology empowerment continued to improve. The management system based on tech products was comprehensively implemented to facilitate the integration of technology and business operations, and digital transformation was pushed forward continuously. China Life “Internet of Things” fully covered all business units and sales outlets across China, and technology empowerment demonstrated significant effectiveness. The upgrading of operation model achieved remarkable results. Key breakthroughs were made for the operation model of “multiple accesses at the front-end, intelligent centralization at the headquarters and comprehensive sharing for operations”, and the service efficiency and experience, operation control foundation and operational risk control capability were significantly enhanced.

 

11


Key Performance Indicators of 2021

RMB million

     
    

2021

 

            

2020

 

 

Gross written premiums

     618,327           612,265  

Premiums from new policies

     175,864           193,939  

Including: First-year regular premiums

     98,410           115,421  

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

     41,682           56,398  

Renewal premiums

     442,463           418,326  

Gross investment income

     214,057           198,596  

Net profit attributable to equity holders of the Company

     50,921           50,257  

Value of one year’s sales

     44,780           58,373  

Including: Individual agent business sector

     42,945           57,669  

Policy Persistency Rate (14 months)1 (%)

     80.50           85.70  

Policy Persistency Rate (26 months)1 (%)

     81.10           82.40  

Surrender Rate2 (%)

     1.20           1.09  
    

As at 31

December 2021

            

As at 31

December 2020

 

Embedded value

     1,203,008                  1,072,140  

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

     3.23           3.17  

Notes:

 

  1.

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.

 

  2.

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

 

12


During the Reporting Period, while the life insurance industry was under pressure and the growth of premiums continued to slow down, the Company prioritized business value and pushed forward transformation and upgrade, and maintained the industry leadership position in both business scale and value. In 2021, the Company’s gross written premiums amounted to RMB618,327 million, an increase of 1.0% year on year, and renewal premiums reached RMB442,463 million, an increase of 5.8% year on year. As at the end of the Reporting Period, the embedded value of the Company reached RMB1,203,008 million, an increase of 12.2% from the end of 2020. Due to the impact of the pandemic and the slowdown in the release of demands for insurance consumption, premiums from new policies were RMB175,864 million, a decrease of 9.3% year on year. The first-year regular premiums were RMB98,410 million, a decrease of 14.7% year on year; in particular, first-year regular premiums with a payment duration of ten years or longer were RMB41,682 million, a decrease of 26.1% year on year. In 2021, the value of one year’s sales of the Company was RMB44,780 million, a decrease of 23.3% year on year. The number of long-term in-force policies was 323 million, an increase of 1.9% from the end of 2020. The surrender rate was 1.20%, an increase of 0.11 percentage point year on year.

During the Reporting Period, in the face of a complex and changing market situation, the Company always maintained its strategic consistency, reinforced asset-liability management, firmly implemented its medium- to long-term strategic plan of asset allocation, and continuously optimized its allocation management by centering on the investment value creation chain. In 2021, the Company flexibly made tactical allocations in response to the market change, taking into account short-term income stability, prevention of key risks, and long-term opportunities. The gross investment income amounted to RMB214,057 million, an increase of 7.8% year on year, and the gross investment yield was 4.98%.

In 2021, the Company maintained stable and sound business operations and achieved satisfactory results in investment. It updated the discount rate assumptions for reserves of traditional insurance contracts based on market information as at the date of the statement of financial position. Taking the above factors into account, net profit attributable to equity holders of the Company was RMB50,921 million, an increase of 1.3% year on year.

 

13


II.

Business Analysis

 

  (I)

Figures of Gross Written Premiums

 

  1.

Gross written premiums categorized by business

 

For the year ended 31 December

                

 

RMB million

 

 

 

         
    

 

2021

 

 

 

             

 

2020

 

 

 

             

 

Change

 

 

 

Life Insurance Business

     481,311           480,593           0.1%  

First-year business

     86,882           108,205           -19.7%  

First-year regular

     84,820           106,001           -20.0%  

Single

     2,062           2,204           -6.4%  

Renewal business

     394,429           372,388           5.9%  

Health Insurance Business

     120,609           115,089           4.8%  

First-year business

     73,120           69,722           4.9%  

First-year regular

     13,579           9,408           44.3%  

Single

     59,541           60,314           -1.3%  

Renewal business

     47,489           45,367           4.7%  

Accident Insurance Business

     16,407           16,583           -1.1%  

First-year business

     15,862           16,012           -0.9%  

First-year regular

     11           12           -8.3%  

Single

     15,851           16,000           -0.9%  

Renewal business

     545           571           -4.6%  

Total

             618,327                   612,265           1.0%  
                                

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

During the Reporting Period, gross written premiums from the life insurance business of the Company amounted to RMB481,311 million, rising by 0.1% year on year, gross written premiums from the health insurance business reached RMB120,609 million, rising by 4.8% year on year, and gross written premiums from accident insurance business were RMB16,407 million, a year-on-year decrease of 1.1%.

 

14


  2.

Gross written premiums categorized by channel

 

For the year ended 31 December                  RMB million  
     
    

2021

 

            

2020

 

 

Individual Agent Business Sector1

     509,489           511,044  

First-year business of long-term insurance

     82,514           99,838  

First-year regular

     82,254           99,555  

Single

     260           283  

Renewal business

     407,973           391,272  

Short-term insurance business

     19,002           19,934  

Bancassurance Channel

     49,326           41,240  

First-year business of long-term insurance

     16,123           15,757  

First-year regular

     16,110           15,748  

Single

     13           9  

Renewal business

     32,792           25,109  

Short-term insurance business

     411           374  

Group Insurance Channel

     29,162           28,872  

First-year business of long-term insurance

     1,846           2,040  

First-year regular

     44           110  

Single

     1,802           1,930  

Renewal business

     1,622           1,862  

Short-term insurance business

     25,694           24,970  

Other Channels2

     30,350           31,109  

First-year business of long-term insurance

     28           188  

First-year regular

     2           8  

Single

     26           180  

Renewal business

     76           83  

Short-term insurance business

     30,246           30,838  

Total

             618,327           612,265  
                    

Notes:

 

  1.

Premiums of individual agent business sector included premiums acquired by the general sales team and the upsales team.

 

  2.

Premiums of other channels mainly included premiums of government-sponsored health insurance business and online sales, etc.

 

15


  (II)

Insurance Business

 

  1.

Analysis of insurance business

In 2021, facing persistent impacts of the COVID-19 pandemic and a challenging market environment, the industry faced unprecedented pressure for transformation. The Company continued to deepen the customer-centric sales deployment of “Yi Ti Duo Yuan”, focusing on business restructuring and making breakthroughs, and stressing precise allocation of resources on the basis of standardized management. The individual agent business sector consistently prioritized business value and further promoted operation differentiation between sales teams. The diversified business sector achieved progress while maintaining stability and coordinated effectively with the individual agent business sector by concentrating on specialized operations, quality and efficiency enhancement, and transformation and innovation. As at the end of the Reporting Period, the number of total sales force of the Company was approximately 890,000.

Individual Agent Business Sector

The individual agent business sector pursued high-quality development, consistently deepened business restructuring, and achieved steady business development. During the Reporting Period, gross written premiums from the sector were RMB509,489 million, a decrease of 0.3% year on year. Renewal premiums amounted to RMB407,973 million, an increase of 4.3% year on year. First-year regular premiums were RMB82,254 million, a decrease of 17.4% year on year, of which first-year regular premiums with a payment duration of ten years or longer were RMB41,580 million, a decrease of 26.0% year on year. In 2021, the value of one year’s sales of the sector was RMB42,945 million, a decrease of 25.5% year on year, and new business margin of one year’s sales by annual premium equivalent was 42.2%, a decrease of 5.9 percentage points year on year.

Affected by sporadic outbreaks of the pandemic and the challenging market environment, the whole industry had difficulties in agent recruitment and retention, and the size of sales force consequently declined to a certain extent. The Company adhered to the sales force development strategy of improving quality with stabilised quantity, and made great efforts in enhancing its quality. As at the end of the Reporting Period, the number of agents of the sector was 820,000, including 519,000 agents from the general sales team and 301,000 agents from the upsales team. The monthly average productive agents decreased compared with the previous year, however, the number of high-performance agents was stable, and the foundation of sales force remained solid. Although the sector’s development was under pressure, the Company adhered to the strategy of “productive agents-driven business” and made solid stride in business restructuring. The 4.0 version of the regular agent management system was fully promoted and implemented, and transformation of sales team was pushed forward aiming at becoming more specialized and professional.

 

16


Diversified Business Sector

Pushing forward “Dingxin Project” deployment in great depth, the diversified business sector concentrated on professional operation as well as quality and efficiency enhancement, and actively developed the bancassurance, group insurance, and health insurance businesses.

Bancassurance Channel    With equal emphasis on business scale and value, the bancassurance channel consistently pushed forward sound and healthy development. During the Reporting Period, gross written premiums from the channel amounted to RMB49,326 million, an increase of 19.6% year on year. First-year regular premiums were RMB16,110 million, an increase of 2.3% year on year; in particular, first-year regular premiums with a payment duration of five years or longer were RMB6,743 million, an increase of 35.3% year on year. Renewal premiums amounted to RMB32,792 million (a year-on-year increase of 30.6%), accounting for 66.48% of gross written premiums from the channel (a year-on-year increase of 5.59 percentage points). The bancassurance channel constantly enhanced the professional service support capability of the sales team, and the quality of which was steadily improved. As at the end of the Reporting Period, the number of the channel’s account managers was 25,000, the quarterly average active managers remained stable, and the productivity per manager increased continuously.

Group Insurance Channel    The group insurance channel insisted on the coordination of business scale and profitability and achieved stable development in all business lines. During the Reporting Period, gross written premiums from the channel were RMB29,162 million, an increase of 1.0% year on year. Short-term insurance premiums from the channel were RMB25,694 million, an increase of 2.9% year on year. As at the end of the Reporting Period, the number of group insurance sales representatives was 45,000, among which the high-performance personnel increased by 13.0% from the end of 2020.

Other Channels    In 2021, gross written premiums from other channels were RMB30,350 million, a decrease of 2.4% year on year. The Company proactively participated in a variety of government-sponsored health insurance businesses. As at the end of the Reporting Period, the Company carried out over 200 supplementary major medical expenses insurance programs, covering 350 million people. It also undertook over 400 health care entrusted programs, providing services to more than 100 million people; 61 long-term care insurance programs in 17 provinces and cities, covering 23 million people; and 170 supplementary medical insurance programs in 22 provinces and cities, covering 91 million people. The Company also participated in the construction of a multi-level social security system and implemented 54 city-customized commercial medical insurance projects in 15 provinces and cities, covering more than 10 million people.

 

17


In addition, the Company greatly developed the online insurance business and provided customers with high-quality service experience through online-to-offline sales and online direct sales. In full compliance with the regulatory requirements of the CBIRC with respect to the online insurance business, the Company optimized its online organization and business system, featuring centralized operation and unified management, and offered a variety of products for different scenarios and customers. During the Reporting Period, the Company’s online insurance business grew rapidly, which was mostly achieved through online-to-offline integration with sales channels of individual agents, bancassurance and group insurance. Total premiums1 under the CBIRC caliber were RMB34,969 million, reaching a record high once again. In the future, the Company will further strengthen the online-to-offline integration of its online insurance business, actively explore on the dedicated online life insurance business, and provide customers with more convenient online insurance services.

Integrated Financial Sector

Being customer-centric, the Company fully leveraged the resource advantages of the fellow members of China Life Insurance (Group) Company and actively engaged in the construction of a “Life Insurance plus” integrated financial ecosystem, turning the integrated financial advantages into a driving force for the high-quality development of the Company. In 2021, due to the impact of the comprehensive reform on auto insurance and the slower growth of this sector, premiums from China Life Property and Casualty Insurance Company Limited (“CLP&C”) cross-sold by the Company were RMB21,107 million, with the number of insurance policies increased by 18.0% year on year. Additional first-year receipts of enterprise annuity funds and pension security products of China Life Pension Company Limited cross-sold by the Company were RMB28,197 million. The Company entrusted China Guangfa Bank Co. Ltd. (“CGB”) to sell its bancassurance products, with the first-year regular premiums recording a relatively stable growth. The number of new debit cards and credit cards jointly issued by the Company and CGB reached 1,224,000. Meanwhile, in order to satisfy the diverse needs of its customers, the Company worked with CGB and CLP&C to carry out various operation activities to provide customers with a series of quality financial and insurance service solutions.

 

 

 

1 

Including premiums from online insurance business acquired by different sales channels of the Company.

 

18


By integrating online and offline as well as internal and external healthcare resources, the Company improved its health management and service capabilities and actively participated in the Healthy China program. China Life Inclusive Healthcare Service Platform continued to diversify its services while upgrading its system functions. As at the end of the Reporting Period, more than a hundred types of services were available on the platform, and the size of the accumulated registered users of the platform led the industry with an increase of over 35% from the end of 2020. The Company continued to formulate the China Life aged care system and deployed towards high-quality resources in the aged care industry such as rehabilitation, medical care, hospital, health care big data, and health industrial parks through the China Life Integrated Aged Care Fund. In 2021, the China Life Integrated Aged Care Fund reserved a batch of pension and retirement projects that could meet the diversified and multi-level demands of customers in strategic regions such as Beijing-Tianjin-Hebei, the Yangtze River Economic Belt, and the Guangdong-Hong Kong-Macao Greater Bay Area.

 

  2.

Analysis of insurance products

Adhering to the customer-centric product development concept and the original role of insurance, the Company fully implemented major national strategies including “Healthy China” program, proactively responding to population aging and rural revitalization, accelerated insurance product innovation and advanced the supply-side reform of insurance products to create a diversified product system.

By closely integrating the Healthy China program with its own business development, the Company consistently optimized and upgraded its health insurance products and strengthened the innovative research and development of illness insurance products and medical insurance products, etc., in terms of the insured customer group, scope of cover, and protection functions, so as to offer diversified health protections. The Company actively served the national strategy of responding to population aging and deepened its research in insurance coverage and benefits. By leveraging the advantages of the long-term risk protection of insurance products and the long-term application of insurance fund, the Company launched the exclusive commercial pension insurance and special annuity insurance products for the elderly customers. It also developed exclusive insurance products to facilitate rural revitalization strategy, proactively playing its role in protecting people’s well-being.

In 2021, the Company newly developed and upgraded a total of 160 products, including 12 life insurance products, 138 health insurance products, two accident insurance products, and eight annuity insurance products. Out of these products, 144 were protection-oriented insurance products, and 16 were long-term savings insurance products.

 

19


  (1)

Top five insurance products in terms of gross written premiums

 

    For the year ended 31 December

   RMB million  

 

 

 
Insurance product   

Gross

written

premiums

     Standard
premiums
from new
policies1
     Major sales channel   

Surrender  

payment  

 

 

 

China Life Xin Xiang Zhi Zun Annuity Insurance (Celebration Version)
(國壽鑫享至尊年金保險
(慶典版))

     40,851        75      Mainly through the channel of exclusive individual agents      834    

China Life Xin Yao Dong Fang Annuity Insurance
( 國壽鑫耀東方年金保險)

     39,573        11,908      Mainly through the channel of exclusive individual agents      293    

China Life Xin Xiang Jin Sheng Annuity Insurance (Type A)
( 國壽鑫享金生年金保險
A 款))2

     34,094             Mainly through the channel of exclusive individual agents      586    

China Life Critical Illness Group Health Insurance for Rural and Urban Citizens (Type A)
( 國壽城鄉居民大病團體醫療保險(A 型))

     25,112        25,112      Through other channels      –    

China Life Xin Fu Ying Jia Annuity Insurance
( 國壽鑫福贏家年金保險)2

     23,114             Mainly through the channel of exclusive individual agents      1,231    

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 Xiang Jin Sheng Annuity Insurance (Type A) and China Life Xin Fu Ying Jia Annuity Insurance have been replaced by their upgraded products and are no longer on sale, and premiums from insurance business were recorded as renewal premiums.

 

20


  (2)

Top three insurance products in terms of net increase in investment contracts

 

    For the year ended 31 December

   RMB million    

 

 

 
Insurance product    Net increase
in investment
contracts
     Major sales channel   

Surrender  

payment  

 

 

 

China Life Xin Account Endowment Insurance (universal insurance) (exclusive version)
(國壽鑫賬戶兩全保險(萬能型)(尊享版))

     12,580      Mainly through the channel of exclusive individual agents      156    

China Life Xin Account Endowment Insurance (universal insurance) (diamond version)
(國壽鑫賬戶兩全保險(萬能型)(鑽石版))

     7,858      Mainly through the channel of exclusive individual agents      419    

China Life Xin Zun Bao Whole Life Insurance (universal insurance) (celebration version) (國壽鑫尊寶終身壽險(萬能型)(慶典版))

     3,718      Mainly through the channel of exclusive individual agents      20    

 

 

 

  3.

Insurance contracts

 

    

RMB million

 

 
    

As at
31 December

2021

 

    

As at
31 December

2020

 

    

        Change

 

 

Life insurance

     3,180,931        2,767,642        14.9%  

Health insurance

     228,899        195,487        17.1%  

Accident insurance

     10,069        10,096        -0.3%  
  

 

 

    

 

 

    

 

 

 

Total of insurance contracts

     3,419,899        2,973,225        15.0%  
  

 

 

    

 

 

    

 

 

 
  

 

 

    

 

 

    

 

 

 

  Including: Residual marginNote

     835,400        837,293        -0.2%  

 

  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.

As at the end of the Reporting Period, the reserves of insurance contracts of the Company were RMB3,419,899 million, 15.0% up from RMB2,973,225 million as at the end of 2020, primarily due to the accumulation of insurance liabilities from new policies and renewals. As at the date of the statement of financial position, the reserves of various insurance contracts of the Company passed the liability adequacy test.

 

21


  4.

Analysis of claims and policyholder benefits

 

For the year ended 31 December                                  RMB million
     2021              2020            Change

Insurance benefits and claims expenses

         618,754           580,801         6.5%

Life insurance business

     527,863           490,994         7.5%

Health insurance business

     83,688           82,146         1.9%

Accident insurance business

     7,203           7,661         -6.0%

Investment contract benefits

     10,628           9,846         7.9%

Policyholder dividends resulting from participation in profits

     26,511                 28,279         -6.3%
  

 

 

       

 

 

       

 

During the Reporting Period, insurance benefits and claims expenses rose by 6.5% year on year due to an increase in the change of insurance contract liabilities. In particular, due to steady growth of life insurance business, insurance benefits and claims expenses of life insurance business rose by 7.5% year on year. Insurance benefits and claims expenses of health insurance business rose by 1.9% year on year, and insurance benefits and claims expenses of accident insurance business declined by 6.0% year on year. Investment contract benefits rose by 7.9% year on year due to an increase in the scale of the universal insurance accounts. Policyholder dividends resulting from participation in profits declined by 6.3% year on year due to a decrease in investment income from the participating accounts.

 

  5.

Analysis of underwriting and policy acquisition costs and other expenses

 

For the year ended 31 December                                    RMB million  
     2021              2020              Change  

Underwriting and policy acquisition costs

     65,744           84,361           -22.1%  

Finance costs

     5,598           3,747           49.4%  

Administrative expenses

             40,808                   37,706           8.2%  

Other expenses

     15,467           12,270           26.1%  

Statutory insurance fund contribution

     1,253           1,229           2.0%  
  

 

 

       

 

 

       

 

 

 

During the Reporting Period, underwriting and policy acquisition costs declined by 22.1% year on year due to a decrease in regular premiums from new policies. Finance costs rose by 49.4% year on year due to an increase in interest paid for securities sold under agreements to repurchase. Administrative expenses rose by 8.2% year on year due to the expiration of policies on temporary expenses deduction.

 

22


  (III)

Investment Business

In 2021, domestic bond yields fluctuated within a tight range, which rose at first and then fell down, and the interest rate pivot trended downwards on the whole. The A-share market was volatile, with significant sector divergence. The Company always adhered to its strategic consistency, prioritized asset-liability management in using insurance funds, firmly implementing its medium- to long-term strategic plan of asset allocation, and making flexible tactical allocations in response to the market change. Firstly, the Company seized the opportunity of a relatively high interest rate in the first half of 2021 and increased allocation to assets with long durations such as government bonds to further narrow the duration gap. Secondly, the Company prudently controlled equity risk exposures in open market to reduce portfolio volatility and secure the investment gains. Thirdly, the Company strengthened the innovation in alternative investment models, and positioned for sectors with prime prospects to establish a diversified investment portfolio.

 

  1.

Investment portfolios

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

 

              RMB million  

Investment category

     As at 31 December 2021        As at 31 December 2020  
   Amount      Percentage      Amount      Percentage  

Fixed-maturity financial assets

     3,672,262        77.86%        3,076,340        75.12%  

Term deposits

     529,488        11.23%        545,678        13.32%  

Bonds

     2,273,425        48.20%        1,718,639        41.97%  

Debt-type financial products1

     443,784        9.41%        453,641        11.08%  

Other fixed-maturity investments2

     425,565        9.02%        358,382        8.75%  

Equity financial assets

     699,457        14.83%        700,748        17.10%  

Common stocks

     302,090        6.41%        350,107        8.55%  

Funds3

     112,689        2.39%        114,311        2.79%  

Other equity investments4

     284,678        6.03%        236,330        5.76%  

Investment properties

     13,374        0.28%        14,217        0.35%  

Cash and others5

     73,355        1.56%        64,602        1.58%  

Investments in associates and joint ventures

     257,953        5.47%        239,584        5.85%  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     4,716,401        100.00%        4,095,491        100.00%  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

23


Notes:

 

  1.

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

 

  2.

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

 

  3.

Funds include equity funds, bond funds and money market funds, etc. In particular, the balances of money market funds as at 31 December 2021 and 31 December 2020 were RMB1,961 million and RMB1,206 million, respectively.

 

  4.

Other equity investments include private equity funds, unlisted equities, preference shares, equity investment plans and bank wealth management products, etc.

 

  5.

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

As at the end of the Reporting Period, the Company’s investment assets reached RMB4,716,401 million, an increase of 15.2% from the end of 2020. Among the major types of investments, the percentage of investment in bonds rose to 48.20% from 41.97% as at the end of 2020, the percentage of term deposits changed to 11.23% from 13.32% as at the end of 2020, the percentage of investment in debt-type financial products changed to 9.41% from 11.08% as at the end of 2020, and the percentage of investment in stocks and funds (excluding money market funds) changed to 8.75% from 11.31% as at the end of 2020.

 

24


  2.

Investment income

 

For the year ended 31 December            RMB million  
     2021      2020  

Gross investment income

     214,057        198,596  

Net investment income

     188,770        162,783  

Net income from fixed-maturity investments

     148,453        127,673  

Net income from equity investments

     28,718        24,983  

Net income from investment properties

     55        (50

Investment income from cash and others

     1,216        1,841  

Share of profit of associates and joint ventures

     10,328        8,336  

Net realised gains on financial assets

     20,344        14,583  

Net fair value gains through profit or loss

     4,943        21,900  

Disposal gains and impairment losses of associates and joint ventures

            (670

Net investment yield1

     4.38%        4.34%  

Gross investment yield2

             4.98%        5.30%  
  

 

 

    

 

 

 

Notes:

 

  1.

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

 

  2.

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

 

25


In 2021, the Company’s net investment income was RMB188,770 million, rising by 16.0% year on year, an increase of RMB25,987 million from 2020. Since the Company consistently increased its allocation to bonds with long durations in recent years, and the income from investments in associates and joint ventures also increased, the net investment yield was 4.38% for 2021, up by 4 basis points from 2020. The gross investment income of the Company reached RMB214,057 million, rising by 7.8% year on year, an increase of RMB15,461 million from 2020. Gross investment yield was 4.98%, down by 32 basis points from 2020. Affected by the fluctuation in the equity market, the comprehensive investment yield2 taking into account the current net fair value changes of available-for-sale securities recognized in other comprehensive income was 4.87%, down by 146 basis points from 2020.

 

  3.

Credit risk management

The Company’s credit asset investments mainly included credit bonds and debt-type financial products, which concentrated on sectors such as banking, transportation, non-banking finance, public utilities, and energy, and the financing entities were primarily large central-owned enterprises and state-owned enterprises. As at the end of the Reporting Period, over 97% of the credit bonds and over 99% of the debt-type financial products held by the Company were rated AAA by external rating institutions. In general, the asset quality of the Company’s credit investment products was in good condition, and the credit risks were well controlled.

The Company insisted on a prudent investment philosophy and carried out comprehensive risk management to prevent various investment risks. Based on a disciplined and scientific internal rating system and a multi-dimensional management mechanism of risk limits, the Company scrutinized credit profiles of targets and risk exposure concentration before investment in a prudent manner and carried out ongoing tracking after investment, effectively managing the credit risks through early identification, early warning, and early disposal. Under a market environment where credit default events occurred frequently, no credit default event occurred for the Company in 2021.

 

 

2 

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

 

26


  4.

Major investments

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

 

III.

Analysis of Specific Items

 

  (I)

Profit before Income Tax

 

For the year ended 31 December                    RMB million  
     2021      2020      Change  

Profit before income tax

     50,495        54,476        -7.3%  

Life insurance business

     22,771        28,073        -18.9%  

Health insurance business

     8,599        11,611        -25.9%  

Accident insurance business

     1,682        572        194.1%  

Other businesses

             17,443                14,220                22.7%  
  

 

 

    

 

 

    

 

 

 

During the Reporting Period, profit before income tax from the life insurance business decreased by 18.9% year on year. The change in investment yield, and the change in accrued cost of reserve as a result of business accumulation, etc., contributed to the above result comprehensively. Profit before income tax from the health insurance business decreased by 25.9% year on year due to an increase in claims expenses of certain insurance businesses. Profit before income tax from the accident insurance business increased by 194.1% due to business quality improvement. Profit before income tax from other businesses increased by 22.7%, primarily due to an increase in the profits of certain associates.

 

27


  (II)

Analysis of Cash Flows

 

  1.

Liquidity sources

The Company’s 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. The Company closely monitors and manages these risks.

The Company’s cash and bank deposits can provide it 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 RMB60,440 million. In addition, the vast majority of its term deposits in banks allow it 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 RMB529,488 million.

The Company’s investment portfolio also provides it with a source of liquidity to meet unexpected cash outflows. It is also subject to market liquidity risk due to the large size of its investments in some of the markets in which it invests. In some circumstances, some of its holdings of investment securities may be large enough to have an influence on the market value. These factors may adversely affect its ability to sell these investments or sell them at a fair price.

 

  2.

Liquidity uses

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

The Company believes that its sources of liquidity are sufficient to meet its current cash requirements.

 

28


  3.

Consolidated cash flows

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

 

For the year ended 31 December                   RMB million
           2021        2020          Change       Main Reasons for Change                             

Net cash inflow/ (outflow) from operating activities

     286,448        304,019      -5.8%   The change of allocation in securities at fair value through profit or loss

Net cash inflow/ (outflow) from investing activities

     (393,731)        (292,799)      34.5%   The needs for investment management

Net cash inflow/ (outflow) from financing activities

     111,139        (7,760)      N/A   The needs for liquidity management

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

     (71)        (144)      -50.7%  

Net increase in cash and cash equivalents

     3,785        3,316      14.1%  

 

29


  (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 the Company’s solvency ratios as at the end of the Reporting Period:

 

     RMB million  
     As at
31 December
2021
     As at
31 December
2020
 

Core capital

     1,020,756        1,031,947  

Actual capital

     1,055,768        1,066,939  

Minimum capital

     402,341        396,749  

Core solvency ratio

     253.70%        260.10%  

Comprehensive solvency ratio

     262.41%        268.92%  
  

 

 

    

 

 

 

 

  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 6.51 percentage points from the end of 2020, primarily due to the continuous growth of insurance business and investment assets, dividends payment, and a decline of discount rate in solvency reserve.

 

  (IV)

Sale of Material Assets and Equity

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

 

30


  (V)

Major Subsidiaries and Associates of the Company

 

                                         

RMB million  

 

Company Name     

Major Business Scope

   Registered
Capital
     Shareholding    Total
Assets
     Net
Assets
    

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%      16,658        14,324      2,760  

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

     8,305        5,889      1,158  

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 businesses permitted by the CBIRC

     18,800      40%      120,178        25,422      621  

 

31


                                         

RMB million  

 

Company Name     

Major Business Scope

   Registered
Capital
     Shareholding    Total
Assets
     Net
Assets
    

Net  

Profit  

China Guangfa Bank Co., Ltd.

  

Taking public deposits; granting short-term, mid-term and long-term loans; handling settlements in and out of China; honoring bills and offering discounting services; issuing financial bonds; issuing, paying for and underwriting government bonds as an agent; sales and purchases of negotiable securities such as government bonds and financial bonds; engaging in inter-bank borrowings; providing letters of credit service and guarantee; engaging in bank card business; acting as payment and receipt agent and insurance agent; providing safe deposit box services; taking deposits and granting loans in foreign currency; foreign currency remittance; foreign currency exchange; international settlements; foreign exchange settlements and sales; inter-bank foreign currency borrowings; honoring bills of exchange and offering discounting services in foreign currency; granting foreign currency loans; granting foreign currency guarantees; sales and purchases of negotiable securities other than shares in a foreign currency for itself and as an agent; issuing negotiable securities other than shares in a foreign currency for itself and as an agent; sales and purchases of foreign exchange on its own account and on behalf of its customers; issuing and making payments for foreign credit card as an agent; offshore financial operations; assets and credit verification, consultation and notarization businesses; other businesses approved by the CBIRC and other relevant authorities

     19,687      43.686%      3,359,985        234,501      17,476  

 

32


IV.

Technology Empowerment and Operations and Services

 

  (I)

Technology Empowerment

In 2021, the Company accelerated technological innovation, strengthened digital-driven operations, deepened technology-empowered value creation, continued to build a digital insurance ecosystem, and promoted the integration of technologies with business operations. The leading and supporting role of its technological innovation was continuously enhanced.

Technological innovation, leading to the upgrade of technology architecture as a whole. With the support of the strong computing power of China Life Hybrid Cloud and the openness and compatibility of the digital platform, the Company fulfilled the upgrade to a distributed architecture for all core systems, from computing, storage, database and middleware to application software. Its technology-supporting capacity realised a leap-forward development with the data processing capacity improved by 10 times and the elastic capacity scaling time of computing resources reduced to minute level.

Agile delivery, significantly enhancing the response to changes by technology. The Company widely implemented the tech products-based management system, and facilitated the comprehensive circulation of technology-based operations with a digital operation mechanism featuring full data and full chain tracing. More updated functions and services were launched at a high frequency, and technology products were iterated and optimized more than 40 times on a daily basis to quickly respond to market changes, offering more accurate and efficient services to customers.

Intelligence upgrading, further enhancing technology empowerment. China Life “Internet of Things” covered all business units and scales outlets of the Company across China and technology services were accessible to the frontline. It fulfilled centralized management and control of 240,000 electronic appliances in 12 categories throughout the Company with the establishment of an online Digital Twin, and its service efficiency was improved by 70% compared with 2020. The “China Life ‘Internet of Things’ — Edge Computing, Intelligent Perception and Digital Presentation” won the 2021 FinTech and Digital Transformation Innovation award. The Company also comprehensively developed its intelligent services, with its intelligent robots serving in various business fields, such as sales, services, operations, finance, risk control, and among others. Its big data-empowered scenarios were increased by 84% compared with 2020 and the daily average intelligent services reached more than 5 million person-times.

 

33


Interactive traffic, constantly amplifying the digital ecological effects. The online socialized collaboration system, which seamlessly connected with mobile phones, desktops, large screens and various digital applications, comprehensively improved the communication and interaction experience of the customers, salespersons, and employees of the Company. The Company enriched its digital insurance ecosystem continuously, releasing 3,256 standardized services in total on its digital platform, a year-on-year increase of 92%, launched nearly 1,000 ecological applications, and carried out nearly 400,000 services and activities with different cooperative institutions.

 

  (II)

Operations and Services

In 2021, being customer-centric, the Company adhered to the operational objectives of “efficiency first, technology-driven, value increase and first-class customer experience”, accelerated the transformation of operations and services to be more Internet-based and intelligent, and continued to provide customers with high-quality and “convenient, quality and caring” services. As a result, its customer experience continued to be improved and customer appraisal remained at a high level.

Online services were growing rapidly. The Company upgraded various online service points of contact, with the registered users of China Life Insurance APP reaching 112 million, a year-on-year increase of 21%, and the monthly average active users increasing by 18.1% year on year. The online processing rate of policy administration and claims settlement for individual insurance rose to 88.3% and 98.7%, respectively. More than 780 million electronic notification messages were sent, services provided by Online Customer Service Agent increased by nine folds year on year, and the average waiting time for customers over the counter was shortened significantly year on year.

Intelligent service capacity was significantly enhanced. The Company upgraded and promoted its intelligent business models so that the service efficiency for new policies of long-term individual insurance was improved by 37.2% year on year, and the intelligent approval rates of underwriting, policy administration and claims settlement reached 93.4%, 99.1% and 73.1%, respectively. Application scenarios of Internet-based intelligent customer services were expanded, and services provided by intelligent robots reached over 75 million times. As the digital services were fully implemented, percentage of non-manual customer services in the contact center reached 88.9%.

 

34


Customer experience was further improved. Claims settlement services provided by the Company were efficient and warm. In 2021, “Direct Claims Payment” provided claims payments to over six million customers. “Claims Settlement for Critical Illness within One Day” benefited 170,000 customer-times, with payment amount up by 32.3% year on year. Door-to-door services were provided to more than 117,000 customers difficult to reaching the counters. Scenario-based services benefited various groups of customers. The Company also led the industry to launch the senior-friendly version of China Life App, and introduced several senior-oriented services, such as the “sit and wait” service over the counters. The Company carried out a variety of value-added services continuously, such as “Immunity Enhancement Program”, “Little Painters of China Life” and “Customer Festival”, etc., all themed on “health, parent-child education and enjoying life”.

 

V.

FUTURE PROSPECT

 

  (I)

Industry Landscape and Development Trends

Overall, the life insurance industry in China is still at an important stage full of strategic opportunities with the high-quality development as its key development theme. At present and in the near future, China’s economy remains resilient, and the long-term positive economic fundamentals featuring ample development potential and room to maneuver will remain unchanged. With the promotion of common prosperity, the size of China’s middle class will continue to grow, meaning more effective demands for the life insurance market. The consistent promotion of the Healthy China program and the national strategy of proactively responding to population aging will also provide broader space for the development of the industry. With market players speeding up their reform and transformation, the foundation for the high-quality development of the industry will be further consolidated. Meanwhile, the industry has witnessed continuous breakthroughs in technological innovations with the accelerated digital transformation of the industry. Technologies such as cloud computing, big data, artificial intelligence, and the “Internet of Things” has greatly empowered various aspects of the value chain, such as sales service, operation management, and risk prevention and control, etc. With domestic insurance industry consistently promoting its opening up, it will see more diversified industry players, and the market sophistication will be improved further.

 

  (II)

Development Strategies and Business Plans of the Company

In 2022, the Company will uphold the guideline of making progress while maintaining stability and adhere to the original function of insurance, constantly deepen the supply-side reforms, give full play to the protection role of insurance, and continue to pursue the high-quality development of the Company by enhancing its capability of value creation, digital operations, innovation of insurance products and services as well as risk prevention and control.

 

35


  (III)

Potential Risks

The internal and external environment has become more complex, challenging and uncertain since unprecedented global changes and the impact of the global pandemic continue to evolve. China’s economy is facing triple pressures of shrinking demands, supply disruption, and weakened expectations of growth, which also bring challenges to the steady development of the insurance industry. As the impact of the COVID-19 pandemic still exists, various regions and cities have taken more stringent prevention and control measures, which have restricted the on-site marketing and training activities and will thus greatly affect business development and agent recruitment and management. Since the traditional sales force-driven business development mode has encountered difficulties, market players are actively seeking transformation by making unremitting efforts in adjusting business structure and improving the quality of the sales force, and the industry will be still under pressure in the short term. The Company will take a variety of measures to actively respond to such risks and challenges. It will adhere to the principle of making progress while maintaining stability, continue to push forward reform and transformation, and strive to improve the quality of its business operation and management. As to the capital market, with market interest rate trending downwards and the volatility in the equity market increasing, credit default events occur frequently and the investment income of insurance funds will be likely subject to higher fluctuation in the short term. The Company will continue to prioritize asset-liability management, deepen its research on specialized investment, further optimize its asset allocation mix and flexibly adjust its investment strategies to respond to market changes. Furthermore, the Company will continuously focus on and enhance the analysis of the related complex risk factors and make great stride in pursuing its high-quality development.

The Company believes that it will have sufficient capital to meet its insurance business expenditures and new general investment needs in 2022. At the same time, the Company will make corresponding financing arrangements based on capital market conditions if it plans to implement any business development strategies in the future.

 

36


ANNUAL RESULTS3

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2021

 

     Notes     

2021

RMB million

   

2020

RMB million

 
                  (Restated)  

REVENUES

       

Gross written premiums

        618,327       612,265  

Less: premiums ceded to reinsurers

        (8,015     (6,053
     

 

 

   

 

 

 

Net written premiums

        610,312       606,212  

Net change in unearned premium reserves

        939       (1,546
     

 

 

   

 

 

 

Net premiums earned

        611,251       604,666  
     

 

 

   

 

 

 

Investment income

     1        178,387       154,497  

Net realised gains on financial assets

     2        20,344       14,583  

Net fair value gains through profit or loss

     3        4,943       21,900  

Other income

        10,005       9,403  
     

 

 

   

 

 

 

Total revenues

        824,930       805,049  
     

 

 

   

 

 

 

BENEFITS, CLAIMS AND EXPENSES

       

Insurance benefits and claims expenses

       

    Life insurance death and other benefits

     4        (121,354     (113,609

    Accident and health claims and claim adjustment expenses

     4        (55,030     (52,395

    Increase in insurance contract liabilities

     4        (442,370     (414,797

Investment contract benefits

     5        (10,628     (9,846

Policyholder dividends resulting from participation in profits

        (26,511     (28,279

Underwriting and policy acquisition costs

        (65,744     (84,361

Finance costs

     6        (5,598     (3,747

Administrative expenses

        (40,808     (37,706

Statutory insurance fund contribution

     7        (1,253     (1,229

Other expenses

        (15,467     (12,270
     

 

 

   

 

 

 

Total benefits, claims and expenses

        (784,763     (758,239
     

 

 

   

 

 

 

Net gains on investments of associates and joint ventures

     8        10,328       7,666  

    Including: share of profit of associates and joint ventures

        10,328       8,336  
     

 

 

   

 

 

 

Profit before income tax

     9        50,495       54,476  

Income tax

     10        1,917       (3,103
     

 

 

   

 

 

 

Net profit

        52,412       51,373  
     

 

 

   

 

 

 
     

 

 

   

 

 

 

Attributable to:

       

    – Equity holders of the Company

        50,921       50,257  

    – Non-controlling interests

        1,491       1,116  

Basic and diluted earnings per share

     11        RMB1.80       RMB1.77  
     

 

 

   

 

 

 
     

 

 

   

 

 

 

 

 

3 

The “Group” refers to China Life Insurance Company Limited and its subsidiaries in this part. A business combination under common control occurred this year and China Life Insurance Sales Company became a subsidiary of the Company. The financial data of previous year for this report have been restated.

 

37


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (continued)

For the year ended 31 December 2021

 

     Notes     

2021

RMB million

   

2020

RMB million

 
                  (Restated)  

Other comprehensive income

       

Other comprehensive income that may be reclassified to profit or loss in subsequent periods:

       

Fair value gains on available-for-sale securities

        17,065       52,547  

Amount transferred to net profit from other comprehensive income

        (21,722     (14,386

Portion of fair value changes on available-for-sale securities attributable to policyholders equity

        (1,793     (3,959

Share of other comprehensive income of associates and joint ventures under the equity method

        1,260       672  

Exchange differences on translating foreign operations

        (398     (986

Income tax relating to components of other comprehensive income

     10        1,098       (8,482
     

 

 

   

 

 

 

Other comprehensive income that may be reclassified to profit or loss in subsequent periods

        (4,490     25,406  
     

 

 

   

 

 

 

Other comprehensive income that will not be reclassified to profit or loss in subsequent periods:

       

Share of other comprehensive income of associates and joint ventures under the equity method

        (59     344  
     

 

 

   

 

 

 

Other comprehensive income for the year, net of tax

        (4,549     25,750  
     

 

 

   

 

 

 

Total comprehensive income for the year, net of tax

        47,863       77,123  
     

 

 

   

 

 

 
     

 

 

   

 

 

 

Attributable to:

    – Equity holders of the Company

        46,358       75,956  

    – Non-controlling interests

        1,505       1,167  
     

 

 

   

 

 

 

 

38


Notes:

 

1

INVESTMENT INCOME

 

         For the year ended 31 December  
    

2021

RMB million

 

 

    

2020

    RMB million

 

 

Debt securities

     

    – held-to-maturity securities

     56,830        44,757  

    – available-for-sale securities

     29,491        22,695  

    – at fair value through profit or loss

     4,079        3,482  

Equity securities

     

    – available-for-sale securities

     27,806        24,185  

    – at fair value through profit or loss

     912        798  

Bank deposits

     25,949        25,860  

Loans

     32,970        31,948  

Securities purchased under agreements to resell

     350        772  
  

 

 

    

 

 

 

Total

     178,387        154,497  
  

 

 

    

 

 

 
  

 

 

    

 

 

 

For the year ended 31 December 2021, the interest income included in investment income was RMB149,669 million (2020: RMB129,514 million). Interest income was mainly accrued using the effective interest method.

 

2

NET REALISED GAINS ON FINANCIAL ASSETS

 

         For the year ended 31 December  
    

2021

RMB million

 

 

   

2020

    RMB million

 

 

Debt securities

    

    Realised gains (i)

     198       1,287  

    Impairment (ii)

     (1,359     288  
  

 

 

   

 

 

 

Subtotal

     (1,161     1,575  
  

 

 

   

 

 

 

Equity securities

    

    Realised gains (i)

     42,867       24,925  

    Impairment (ii)

     (21,362     (11,917
  

 

 

   

 

 

 

Subtotal

     21,505       13,008  
  

 

 

   

 

 

 

Total

     20,344       14,583  
  

 

 

   

 

 

 
  

 

 

   

 

 

 

 

  (i)

Realised gains were generated mainly from available-for-sale securities.

 

  (ii)

During the year ended 31 December 2021, the Group recognised an impairment charge of RMB8 million on available-for-sale funds (2020: RMB111 million); an impairment charge of RMB21,354 million on available-for-sale stock securities (2020: RMB11,732 million); no impairment charge on available-for-sale other equity securities (2020: RMB74 million); an impairment reversal of RMB17 million on available-for-sale debt securities (2020: an impairment reversal of RMB16 million); an impairment charge of RMB1,376 million on loans (2020: RMB nil); no impairment reversal of loans (2020: an impairment reversal of RMB275 million) and no impairment charge of held-to-maturity securities (2020: RMB3 million).

 

39


3

NET FAIR VALUE GAINS THROUGH PROFIT OR LOSS

 

         For the year ended 31 December  
    

2021

RMB million

 

 

    

2020

    RMB million

 

 

Debt securities

     1,069        (583

Equity securities

     3,470        22,997  

Stock appreciation rights

     202        255  

Financial liabilities at fair value through profit or loss

     202        (648

Derivative financial instruments

            (121
  

 

 

    

 

 

 

Total

     4,943        21,900  
  

 

 

    

 

 

 
  

 

 

    

 

 

 

 

4

INSURANCE BENEFITS AND CLAIMS EXPENSES

 

     Gross      Ceded     Net  
         RMB million          RMB million         RMB million  

For the year ended 31 December 2021

       

Life insurance death and other benefits

     125,998        (4,644     121,354  

Accident and health claims and claim adjustment expenses

     56,327        (1,297     55,030  

Increase in insurance contract liabilities

     443,053        (683     442,370  
  

 

 

    

 

 

   

 

 

 

Total

     625,378        (6,624     618,754  
  

 

 

    

 

 

   

 

 

 
  

 

 

    

 

 

   

 

 

 

For the year ended 31 December 2020

       

Life insurance death and other benefits

     117,129        (3,520     113,609  

Accident and health claims and claim adjustment expenses

     53,073        (678     52,395  

Increase in insurance contract liabilities

     415,186        (389     414,797  
  

 

 

    

 

 

   

 

 

 

Total

     585,388        (4,587     580,801  
  

 

 

    

 

 

   

 

 

 
  

 

 

    

 

 

   

 

 

 

 

5

INVESTMENT CONTRACT BENEFITS

Benefits of investment contracts are mainly the interest credited to investment contracts.

 

40


6

FINANCE COSTS

 

         For the year ended 31 December  
    

2021

RMB million

 

 

    

2020

    RMB million

 

 

Interest expenses for securities sold under agreements to repurchase

     3,523        1,565  

Interest expenses for bonds payable

     1,500        1,503  

Interest expenses for interest-bearing loans and borrowings

     479        566  

Interest on lease liabilities

     96        113  
  

 

 

    

 

 

 

Total

     5,598        3,747  
  

 

 

    

 

 

 
  

 

 

    

 

 

 

 

7

STATUTORY INSURANCE FUND

As required by the CIRC Order [2008] No. 2, “Measures for Administration of Statutory Insurance Fund”, all insurance companies have to pay the statutory insurance fund contribution from 1 January 2009. The Group is subject to the statutory insurance fund contribution, (i) at 0.15% and 0.05% of premiums and accumulated policyholder deposits from life policies with guaranteed benefits and life policies without guaranteed benefits, respectively; (ii) at 0.8% and 0.15% of premiums from short-term health policies and long-term health policies, respectively; (iii) at 0.8% of premiums from accident insurance contracts, at 0.08% and 0.05% of accumulated policyholder deposits from accident investment contracts with guaranteed benefits and without guaranteed benefits, respectively. When the accumulated statutory insurance fund contributions reach 1% of total assets, no additional contribution to the statutory insurance fund is required.

 

8

INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

 

    

2021

    RMB million

 

 

   

2020

    RMB million

 

 

As at 1 January

     239,584       222,983  

Change of the cost

     11,400       13,997  

Share of profit or loss

     10,328       8,336  

Declared dividends

     (4,480     (5,253

Other equity movements

     1,121       228  

Impairment

           (707
  

 

 

   

 

 

 

As at 31 December

     257,953       239,584  
  

 

 

   

 

 

 
  

 

 

   

 

 

 

 

41


                     Movement                    
     Accounting
method
  Cost     As at
31 December
2020
    Change of
the cost
    Share of
profit or loss
   

Declared

dividends

    Other
equity
movements
    Provision of
impairment
    As at
31 December
2021
    Percentage
of equity
interest
    Accumulated
amount of
impairment
RMB Million
 
         RMB Million        

Associates

                      

CGB (i)

   Equity Method     45,176       79,974       -       5,819       (662     1,048       -       86,179       43.686%       -  

Sino-Ocean Group Holding Limited (“Sino-Ocean”) (ii)

   Equity Method     11,245       11,285       -       589       (271     296       -       11,899       29.59%       (3,217

CLP&C

   Equity Method     6,000       10,620       -       272       (214     (527     -       10,151       40.00%       -  

COFCO Futures Company Limited (“COFCO Futures”)

   Equity Method     1,339       1,612       -       98       (15     (3     -       1,692       35.00%       -  

Sinopec Sichuan to East China Gas Pipeline Co., Ltd. (“Pipeline Company”)

   Equity Method     20,000       20,676       -       1,335       (608     35       -       21,438       43.86%       -  

China United Network Communications Limited (“China Unicom”) (iii)

   Equity Method     21,801       22,433       -       602       (369     (22     -       22,644       10.29%       -  

Others (iv)

   Equity Method     48,001       41,555       5,610       3,022       (1,042     (130     -       49,015         -  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Subtotal

       153,562       188,155       5,610       11,737       (3,181     697       -       203,018         (3,217
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Joint ventures
Joy City Commercial Property Fund L.P. (“Joy City”)

   Equity Method     6,281       5,779       -       111       (354     10       -       5,546       66.67%       -  

Mapleleaf Century Limited (“MCL”)

   Equity Method     7,656       4,736       -       (1,004     -       505       -       4,237       75.00%       -  

Others (iv)

   Equity Method     48,576       40,914       5,790       (516     (945     (91     -       45,152         -  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Subtotal

       62,513       51,429       5,790       (1,409     (1,299     424       -       54,935         -  
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total

       216,075       239,584       11,400       10,328       (4,480     1,121                   -       257,953         (3,217
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

 

  (i)

The 2020 final dividend of RMB0.077 in cash per ordinary share was approved and declared in the Annual General Meeting of CGB on 30 June 2021. The Company received a cash dividend of RMB662 million.

 

  (ii)

The 2020 final dividend of HKD0.09 in cash per ordinary share was approved and declared in the Annual General Meeting of Sino-Ocean on 21 May 2021. The Company received a cash dividend equivalent to RMB168 million. The 2021 interim dividend of HKD0.055 in cash per ordinary share was approved and declared by the Board of Directors of Sino-Ocean on 19 August 2021. The Company received a cash dividend equivalent to RMB103 million.

 

 

42


   

Sino-Ocean, the Group’s associate is listed in Hong Kong. On 31 December 2021, the stock price of Sino-Ocean was HKD1.82 per share. As at 31 December 2020, the cumulative impairment loss of RMB3,217 million for the investment in Sino-Ocean had been recognised by the Group. The Group performed an impairment test to this investment valued using the discounted future cash flow method on 31 December 2021 and no further impairment loss should be made. The impairment test involved significant assumptions including selling prices of properties under development, rental prices of investment properties and discount rates, and the Group used 10% as the discount rate of cash flow for properties under development and investment properties (As at 31 December 2020: 10% for properties under development and investment properties).

 

  (iii)

On 31 December 2021, the stock price of China Unicom was RMB3.93 per share.

 

   

The 2020 final dividend of RMB0.0669 in cash per ordinary share was approved and declared in the Annual General Meeting of China Unicom on 11 May 2021. The Company received a cash dividend of RMB213 million. The 2021 interim dividend of RMB0.0488 in cash per ordinary share was approved and declared by the Board of Directors of Unicom on 23 September 2021. The Company received a cash dividend equivalent to RMB156 million.

 

  (iv)

The Group invested in real estate, industrial logistics assets and other industries through these enterprises.

 

  (v)

There is no significant restriction for the Group to dispose of its other associates and joint ventures.

As at 31 December 2021, the major associates and joint ventures of the Group are as follows:

 

Name

 

  

Place of incorporation

 

    

Percentage of equity interest held

 

 

Associates

       

CGB

   PRC        43.686%  

Sino-Ocean

   Hong Kong, PRC        29.59%  

CLP&C

   PRC        40.00%  

COFCO Futures

   PRC        35.00%  

Pipeline Company

   PRC        43.86%  

China Unicom

   PRC        10.29%  

Joint ventures

       

Joy City

   The British Cayman Islands        66.67%  

MCL

   The British Virgin Islands        75.00%  

As at 31 December 2020, the major associates and joint ventures of the Group are as follows:

 

Name

 

  

Place of incorporation

 

    

Percentage of equity interest held

 

 

Associates

       

CGB

   PRC        43.686%  

Sino-Ocean

   Hong Kong, PRC        29.59%  

CLP&C

   PRC        40.00%  

COFCO Futures

   PRC        35.00%  

Pipeline Company

   PRC        43.86%  

China Unicom

   PRC        10.29%  

Joint ventures

       

Joy City

   The British Cayman Islands        66.67%  

MCL

   The British Virgin Islands        75.00%  

 

43


The following table illustrates the financial information of the Group’s major associates and joint ventures as at 31 December 2021 and for the year ended 31 December 2021:

 

   

CGB

RMB million

   

Sino-
Ocean

RMB million

   

CLP&C

RMB million

   

COFCO

Futures

RMB million

    Pipeline
Company
RMB million
    China
Unicom
RMB million
   

Joy City

RMB million

   

MCL

RMB million

 

Total assets

    3,359,985       281,252       120,178       25,153       37,099       593,284       10,258       24,195  

Total liabilities

    3,125,484       204,805       94,756       21,868       1,476       257,074       232       13,035  

Total equity

    234,501       76,447       25,422       3,285       35,623       336,210       10,026       11,160  

Total equity attributable to equity holders of the associates and joint ventures

    189,510       55,074       25,422       3,277       35,623       149,217       10,026       11,160  

Total adjustments (i)

    464       (7,257     -       -       405       16,509       (1,707     (5,511

Total equity attributable to equity holders of the associates and joint ventures after adjustments

    189,974       47,817       25,422       3,277       36,028       165,726       8,319       5,649  

Proportion of the Group’s ownership

    43.686%       29.59%       40.00%       35.00%       43.86%       10.29%       66.67%       75.00%  

Gross carrying value of the investments

    86,179       15,116       10,151       1,692       21,438       22,644       5,546       4,237  

Impairment

    -       (3,217     -       -       -       -       -       -  

Net carrying value of the investments

    86,179       11,899       10,151       1,692       21,438       22,644       5,546       4,237  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

    74,905       68,645       82,549       6,846       5,583       331,665       352       897  

Net profit/(loss)

    17,476       5,091       621       281       3,081       14,416       333       28  

Other comprehensive income

    2,416       (35     (766     (8     -       (27     15       447  

Total comprehensive income

    19,892       5,056       (145     273       3,081       14,389       348       475  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

44


The following table illustrates the financial information of the Group’s major associates and joint ventures as at 31 December 2020 and for the year ended 31 December 2020:

 

   

CGB

RMB million

   

Sino-
Ocean

RMB million

   

CLP&C

RMB million

   

COFCO

Futures

RMB million

    Pipeline
Company
RMB million
    China
Unicom
RMB million
   

Joy City

RMB million

   

MCL

RMB million

 

Total assets

    3,027,972       263,528       106,930       20,567       34,933       582,475       10,306       24,196  

Total liabilities

    2,809,822       193,806       80,379       17,512       1,068       251,001       85       13,342  

Total equity

    218,150       69,722       26,551       3,055       33,865       331,474       10,221       10,854  

Total equity attributable to equity holders of the associates and joint ventures

    173,159       52,273       26,551       3,048       33,865       147,709       10,221       10,854  

Total adjustments (i)

    2,612       (6,528     -       -       427       16,981       (1,552     (4,540

Total equity attributable to equity holders of the associates and joint ventures after adjustments

    175,771       45,745       26,551       3,048       34,292       164,690       8,669       6,314  

Proportion of the Group’s ownership

    43.686     29.59     40.00     35.00     43.86     10.29     66.67     75.00

Gross carrying value of the investments

    79,974       14,502       10,620       1,612       20,676       22,433       5,779       4,736  

Impairment

    -       (3,217     -       -       -       -       -       -  

Net carrying value of the investments

    79,974       11,285       10,620       1,612       20,676       22,433       5,779       4,736  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

    80,525       61,271       77,990       2,193       5,259       306,490       360       853  

Net profit/(loss)

    13,812       4,675       1,730       208       2,823       12,525       339       185  

Other comprehensive income

    (1,944     630       1,991       (5     -       (1,706     (25     650  

Total comprehensive income

    11,868       5,305       3,721       203       2,823       10,819       314       835  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

  (i)

Including adjustments for the difference of accounting policies, fair value and others.

 

45


The Group had no contingent liabilities with the associates and joint ventures as at 31 December 2021 and 31 December 2020. The Group had a capital contribution commitment of RMB20,730 million with associates and joint ventures as at 31 December 2021 (as at 31 December 2020: RMB25,364 million).

 

9

PROFIT BEFORE INCOME TAX

Profit before income tax is stated after charging/(crediting) the following:

 

     For the year ended 31 December  
    

2021

        RMB million

   

2020

        RMB million

 

Employee salaries and welfare costs

     20,928       19,534  

Housing benefits

     1,412       1,318  

Contribution to the defined contribution pension plan

     3,273       2,455  

Depreciation and amortisation

     5,287       5,162  

Foreign exchange gains

     (645     (119

Remuneration in respect of audit services provided by auditors

     53       63  
  

 

 

   

 

 

 
  

 

 

   

 

 

 

 

10

TAXATION

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax relates to the same tax authority.

 

  (a)

The amount of taxation charged to net profit represents:

 

     For the year ended 31 December  
    

2021

        RMB million

   

2020

        RMB million

 

Current taxation – Enterprise income tax

     4,824       6,588  

Deferred taxation

     (6,741     (3,485
  

 

 

   

 

 

 

Total tax charges

     (1,917     3,103  
  

 

 

   

 

 

 
  

 

 

   

 

 

 

 

46


  (b)

The reconciliation between the Group’s effective tax rate and the statutory tax rate of 25% in the PRC (2020: same) is as follows:

 

     For the year ended 31 December  
    

2021

            RMB million

   

2020

            RMB million

 

Profit before income tax

     50,495       54,476  

Tax computed at the statutory tax rate

     12,624       13,619  

Adjustment on current income tax of previous period

     (412     (464

Non-taxable income (i)

     (14,425     (10,787

Expenses not deductible for tax purposes (i)

     276       202  

Unused tax losses

     27       498  

Others

     (7     35  
  

 

 

   

 

 

 

Income tax at the effective tax rate

     (1,917     3,103  
  

 

 

   

 

 

 
  

 

 

   

 

 

 

 

  (i)

Non-taxable income mainly includes interest income from government bonds, dividend income from applicable equity securities, etc. Expenses not deductible for tax purposes mainly include donations and other expenses that do not meet the criteria for deduction according to the relevant tax regulations.

 

  (c)

As at 31 December 2021 and 31 December 2020, the amounts of deferred tax assets and liabilities are as follows:

 

     As at
31 December
    As at
31 December
 
    

2021

        RMB million

   

2020

        RMB million

 

Deferred tax assets

     22,354       17,174  

Deferred tax liabilities

     (29,714     (32,373
  

 

 

   

 

 

 
  

 

 

   

 

 

 

Net deferred tax assets

     121       87  

Net deferred tax liabilities

     (7,481     (15,286
  

 

 

   

 

 

 
  

 

 

   

 

 

 

 

47


As at 31 December 2021 and 31 December 2020, deferred income tax was calculated in full on temporary differences under the liability method using the principal tax rate of 25%. The movements in net deferred income tax assets and liabilities during the period were as follows:

Net deferred tax assets/(liabilities)

 

    

Insurance

 

RMB million

    

Investments

 

RMB million

   

Others

 

RMB million

   

Total

 

RMB million

 
     (i)      (ii)     (iii)        

As at 1 January 2020

     1,557        (14,673     2,914       (10,202

(Charged)/Credited to net profit

     1,787        1,759       (61     3,485  

(Charged)/Credited to other comprehensive income

         

Available-for-sale securities

            (9,446           (9,446

– Portion of fair value changes on available-for-sale securities attributable to participating policyholders

     990                    990  

– Others

            (26           (26
  

 

 

    

 

 

   

 

 

   

 

 

 

As at 31 December 2020

     4,334        (22,386     2,853       (15,199
  

 

 

    

 

 

   

 

 

   

 

 

 

As at 1 January 2021

     4,334        (22,386     2,853       (15,199

(Charged)/Credited to net profit

     2,862        3,534       345       6,741  

(Charged)/Credited to other comprehensive income

         

Available-for-sale securities

            677             677  

– Portion of fair value changes on available-for-sale securities attributable to participating policyholders

     448                    448  

– Others

            (27           (27
  

 

 

    

 

 

   

 

 

   

 

 

 

As at 31 December 2021

     7,644        (18,202     3,198       (7,360
  

 

 

    

 

 

   

 

 

   

 

 

 

 

  (i)

The deferred tax liabilities arising from the insurance category are mainly related to the change of long-term insurance contract liabilities at 31 December 2008 as a result of the first time adoption of IFRSs in 2009 and the temporary differences of short-term insurance contract liabilities and policyholder dividends payable.

 

  (ii)

The deferred tax arising from the investments category is mainly related to the temporary differences of unrealised gains/(losses) on available-for-sale securities, securities at fair value through profit or loss, and others.

 

  (iii)

The deferred tax arising from the others category is mainly related to the temporary differences of employee salaries and welfare costs payable.

Unrecognised deductible tax losses of the Group amounted to RMB3,173 million as at 31 December 2021 (as at 31 December 2020: RMB3,300 million). Unrecognised deductible temporary differences of the Group amounted to RMB1 million as at 31 December 2021 (as at 31 December 2020: RMB1 million).

 

48


  (d)

The analysis of net deferred tax assets and deferred tax liabilities is as follows:

 

    

As at

 

31 December

 

2021

 

RMB million

   

As at

 

31 December

 

2020

 

RMB million

 

Deferred tax assets:

    

    – deferred tax assets to be recovered after 12 months

     14,695       10,882  

    – deferred tax assets to be recovered within 12 months

     7,659       6,292  
  

 

 

   

 

 

 

Subtotal

             22,354               17,174  
  

 

 

   

 

 

 

Deferred tax liabilities:

    

    – deferred tax liabilities to be settled after 12 months

     (26,850     (28,107

    – deferred tax liabilities to be settled within 12 months

     (2,864     (4,266
  

 

 

   

 

 

 

Subtotal

     (29,714     (32,373
  

 

 

   

 

 

 

Net deferred tax liabilities

     (7,360     (15,199
  

 

 

   

 

 

 

 

11

EARNINGS PER SHARE

There is no difference between the basic and diluted earnings per share. The basic and diluted earnings per share for the year ended 31 December 2021 are calculated based on the net profit for the year attributable to ordinary equity holders of the Company and the weighted average of 28,264,705,000 ordinary shares (2020: same).

 

12

DIVIDENDS

Pursuant to the shareholders’ approval at the Annual General Meeting on 30 June 2021, a final dividend of RMB0.64 (inclusive of tax) per ordinary share totalling RMB18,089 million in respect of the year ended 31 December 2020 was declared and paid in 2021. The dividend has been recorded in the consolidated financial statements for the year ended 31 December 2021.

Pursuant to a resolution passed at the meeting of the Board of Directors on 24 March 2022, a final dividend of RMB0.65 (inclusive of tax) per ordinary share totalling approximately RMB18,372 million for the year ended 31 December 2021 was proposed for shareholders’ approval at the forthcoming Annual General Meeting. The dividend has not been recorded in the consolidated financial statements for the year ended 31 December 2021.

 

49


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2021

 

     Note     

As at

31 December
2021
RMB million

    

As at

31 December
2020
RMB million

 
                   (Restated)  

ASSETS

        

Property, plant and equipment

        54,398        52,747  

Right-of-use assets

        2,518        3,076  

Investment properties

        13,374        14,217  

Investments in associates and joint ventures

     8        257,953        239,584  

Held-to-maturity securities

        1,533,753        1,189,369  

Loans

        666,087        658,535  

Term deposits

        529,488        545,678  

Statutory deposits – restricted

        6,333        6,333  

Available-for-sale securities

        1,429,287        1,215,603  

Securities at fair value through profit or loss

        206,771        161,570  

Securities purchased under agreements to resell

        12,915        7,947  

Accrued investment income

        51,097        45,200  

Premiums receivable

        20,361        20,730  

Reinsurance assets

        6,630        6,095  

Other assets

        39,559        29,040  

Deferred tax assets

        121        87  

Cash and cash equivalents

        60,440        56,655  
     

 

 

    

 

 

 

Total assets

        4,891,085        4,252,466  
     

 

 

    

 

 

 

 

50


CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)

As at 31 December 2021

 

    

As at

31 December
2021
RMB million

    

As at

31 December
2020
RMB million

 
            (Restated)  

LIABILITIES AND EQUITY

     

Liabilities

     

Insurance contracts

     3,419,899        2,973,225  

Investment contracts

     313,594        288,212  

Policyholder dividends payable

     124,949        122,510  

Interest-bearing loans and borrowings

     18,686        19,556  

Lease liabilities

     2,182        2,664  

Bonds payable

     34,994        34,992  

Financial liabilities at fair value through profit or loss

     3,416        3,732  

Securities sold under agreements to repurchase

     239,446        122,249  

Annuity and other insurance balances payable

     56,818        55,031  

Premiums received in advance

     48,699        53,021  

Other liabilities

     133,676        104,476  

Deferred tax liabilities

     7,481        15,286  

Current income tax liabilities

     248        191  

Statutory insurance fund

     339        384  
  

 

 

    

 

 

 

Total liabilities

     4,404,427        3,795,529  
  

 

 

    

 

 

 

Equity

     

Share capital

     28,265        28,265  

Reserves

     249,055        237,935  

Retained earnings

     201,265        183,856  
  

 

 

    

 

 

 

Attributable to equity holders of the Company

     478,585        450,056  
  

 

 

    

 

 

 

Non-controlling interests

     8,073        6,881  
  

 

 

    

 

 

 

Total equity

     486,658        456,937  
  

 

 

    

 

 

 

Total liabilities and equity

     4,891,085        4,252,466  
  

 

 

    

 

 

 

 

51


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2021

 

     Attributable to equity holders of the Company    

Non-
controlling

interests

    Total  
     Share
capital
RMB million
     Other
equity
instruments
RMB million
   

Reserves

RMB million

    Retained
earnings
RMB million
    RMB million     RMB million  

As at 1 January 2020

             

    (Restated)

     28,265        7,791       197,266       170,458       5,580       409,360  

Net profit

                        50,257       1,116       51,373  

Other comprehensive income

                  25,699             51       25,750  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

                  25,699       50,257       1,167       77,123  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners

             

Appropriation to reserves

                  16,025       (16,025            

Dividends paid

                        (20,834           (20,834

Dividends to non-controlling interests

                              (174     (174

Others

            (7,791     (1,055           308       (8,538
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners

            (7,791     14,970       (36,859     134       (29,546
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As at 31 December 2020

     28,265              237,935       183,856       6,881       456,937  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As at 1 January 2021

     28,265              237,935       183,856       6,881       456,937  

Net profit

                        50,921       1,491       52,412  

Other comprehensive income

                  (4,608           14       (4,594
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

                  (4,608     50,921       1,505       47,818  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transactions with owners

             

Appropriation to reserves

                  15,378       (15,378            

Dividends paid

                        (18,089           (18,089

Dividends to non-controlling interests

                              (359     (359

Reserves to retained earnings

                  45       (45            

Others

                  305             46       351  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total transactions with owners

                  15,728       (33,512     (313     (18,097
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As at 31 December 2021

     28,265              249,055       201,265       8,073       486,658  
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

52


CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2021

 

     2021
RMB million
    2020
RMB million
 
           (Restated)  

CASH FLOWS FROM OPERATING ACTIVITIES

    

Profit before income tax

     50,495       54,476  

Adjustments for:

    

Investment income

     (178,387     (154,497

Net realised and unrealised gains on financial assets

     (25,287     (36,483

Insurance contracts

     445,472       419,866  

Depreciation and amortisation

     5,287       5,162  

Foreign exchange losses/(gains)

     (645     (119

Net gains on investments of associates and joint ventures

     (10,328     (7,666

Changes in operating assets and liabilities:

    

Increase in securities at fair value through profit or loss, net

     (44,527     (21,954

Financial liabilities at fair value through profit or loss

     (1,478     3,004  

Receivables and payables

     47,129       40,598  

Income tax paid

     (5,862     (3,263

Interest received – securities at fair value through profit or loss

     3,753       4,120  

Dividends received – securities at fair value through profit or loss

     826       775  
  

 

 

   

 

 

 

Net cash inflow/(outflow) from operating activities

     286,448       304,019  
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

    

Disposals and maturities:

    

Disposals of debt investments

     37,708       36,774  

Maturities of debt investments

     196,596       198,640  

Disposals of equity investments

     385,308       308,406  

Disposals of property, plant and equipment

     341       57  

Disposals of subsidiaries

     559       2,175  

Purchases:

    

Debt investments

     (745,973     (593,917

Equity investments and subsidiaries

     (409,676     (338,306

Property, plant and equipment

     (5,475     (7,469

Investments in associates and joint ventures

     (7,072     (14,942

Decrease/(Increase) in term deposits, net

     17,748       (10,947

Increase in securities purchased under agreements to resell, net

     (2,804     (3,850

Interest received

     142,311       126,848  

Dividends received

     32,177       29,590  

Increase in policy loans, net

     (35,479     (25,858
  

 

 

   

 

 

 

Net cash inflow/(outflow) from investing activities

     (393,731     (292,799
  

 

 

   

 

 

 

 

53


CONSOLIDATED STATEMENT OF CASH FLOWS (continued)

For the year ended 31 December 2021

 

     2021     2020  
     RMB million     RMB million  
           (Restated)  

CASH FLOWS FROM FINANCING ACTIVITIES

    

Increase in securities sold under agreements to repurchase, net

     117,211       4,912  

Interest paid

     (8,194     (3,779

Repayment of borrowings

           (6,505

Dividends paid to equity holders of the Company

     (18,089     (20,834

Dividends paid to non-controlling interests

     (372     (161

Cash received from borrowings

           6,822  

Payment of lease liabilities

     (1,517     (1,478

Cash paid for redemption of other equity instruments

           (9,060

Capital injected into subsidiaries by non-controlling interests

     22,850       22,846  

Cash received related to other financing activities

           1,069  

Cash paid related to other financing activities

     (750     (1,592
  

 

 

   

 

 

 

Net cash inflow/(outflow) from financing activities

     111,139       (7,760
  

 

 

   

 

 

 

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

     (71     (144
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     3,785       3,316  
  

 

 

   

 

 

 

Cash and cash equivalents Beginning of the year

     56,655       53,339  
  

 

 

   

 

 

 

End of the year

     60,440       56,655  
  

 

 

   

 

 

 

Analysis of balances of cash and cash equivalents

Cash at banks and in hand

     60,256       56,536  

Short-term bank deposits

     184       119  
  

 

 

   

 

 

 

 

54


SEGMENT INFORMATION

 

  1

Operating segments

The Group operates in four operating segments:

 

  (i)

Life insurance business (Life)

Life insurance business relates primarily to the sale of life insurance policies, including those life insurance policies without significant insurance risk transferred.

 

  (ii)

Health insurance business (Health)

Health insurance business relates primarily to the sale of health insurance policies, including those health insurance policies without significant insurance risk transferred.

 

  (iii)

Accident insurance business (Accident)

Accident insurance business relates primarily to the sale of accident insurance policies.

 

  (iv)

Other businesses (Others)

Other businesses relate primarily to income and cost of the agency business in respect of transactions with CLIC, etc., net share of profit of associates and joint ventures, income and expenses of subsidiaries, and unallocated income and expenditure of the Group.

 

  2

Allocation basis of income and expenses

Investment income, net realised gains on financial assets, net fair value gains through profit or loss and foreign exchange gains/(losses) within other expenses are allocated among segments in proportion to the respective segments’ average liabilities of insurance contracts and investment contracts at the beginning and end of the year. Administrative expenses are allocated among segments in proportion to the unit cost of respective products in the different segments. Unallocated other income and other expenses are presented in the “Others” segment directly. Income tax is not allocated.

 

  3

Allocation basis of assets and liabilities

Financial assets, securities sold under agreements to repurchase and derivative financial liabilities are allocated among segments in proportion to the respective segments’ average liabilities of insurance contracts and investment contracts at the beginning and end of the year. Insurance and investment contract liabilities are presented under the respective segments. The remaining assets and liabilities are not allocated.

 

55


     For the year ended 31 December 2021  
     Life     Health     Accident     Others     Elimination     Total  
     RMB million  

Revenues

            

Gross written premiums

     481,311       120,609       16,407                   618,327  

– Term life

     2,501                                  

– Whole life

     69,923                              

– Endowment

     97,791                              

– Annuity

     311,096                                  

Net premiums earned

     480,214       114,549       16,488                   611,251  

Investment income

     160,204       10,831       496       6,856             178,387  

Net realised gains on financial assets

     18,768       1,256       58       262             20,344  

Net fair value gains through profit or loss

     2,795       187       9       1,952             4,943  

Other income

     1,228       85             11,826       (3,134     10,005  

Including: inter-segment revenue

                       3,134       (3,134      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment revenues

     663,209       126,908       17,051       20,896       (3,134     824,930  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Benefits, claims and expenses

            

Insurance benefits and claims expenses

            

Life insurance death and other benefits

     (114,657     (6,656     (41                 (121,354)  

Accident and health claims and claim adjustment expenses

           (48,076     (6,954                 (55,030)  

Increase in insurance contract liabilities

     (413,206     (28,956     (208                 (442,370)  

Investment contract benefits

     (10,223     (405                       (10,628)  

Policyholder dividends resulting from participation in profits

     (26,367     (144                       (26,511)  

Underwriting and policy acquisition costs

     (38,290     (21,021     (4,835     (1,598           (65,744)  

Finance costs

     (4,608     (308     (14     (668           (5,598)  

Administrative expenses

     (23,339     (11,069     (2,948     (3,452           (40,808)  

Statutory insurance fund contribution

     (787     (367     (99                 (1,253)  

Other expenses

     (8,961     (1,307     (270     (8,063     3,134       (15,467)  

Including: inter-segment expenses

     (2,929     (196     (9           3,134        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment benefits, claims and expenses

     (640,438     (118,309     (15,369     (13,781     3,134       (784,763)  

Net gains on investments of associates and joint ventures

                       10,328             10,328  

Including: share of profit of associates and joint ventures

                       10,328             10,328  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment results

     22,771       8,599       1,682       17,443             50,495  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income tax

               1,917  
            

 

 

 

Net profit

               52,412  
            

 

 

 

Attributable to

            

– Equity holders of the Company

               50,921  

Non-controlling interests

               1,491  

Other comprehensive income attributable to equity holders of the Company

     (5,290     (354     (16     1,097             (4,563)  

Depreciation and amortisation

     2,919       1,359       368       641             5,287  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

56


 

     As at 31 December 2021  
     Life      Health      Accident      Others      Elimination      Total  
     RMB million  

Assets

                 

Financial assets

     4,001,202        259,618        11,668        223,824               4,496,312  

Others

     9,893        16,044        569        257,953               284,459  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Segment assets

     4,011,095        275,662        12,237        481,777               4,780,771  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Unallocated

Property, plant and equipment

                    54,398  

Others

                    55,916  
                 

 

 

 

Total

                    4,891,085  
                 

 

 

 

Liabilities

                 

Insurance contracts

     3,180,931        228,899        10,069                      3,419,899  

Investment contracts

     296,104        17,490                             313,594  

Securities sold under agreements to repurchase

     217,288        14,536        672        6,950               239,446  

Others

     87,371        5,276        379        22,102               115,128  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Segment liabilities

     3,781,694        266,201        11,120        29,052               4,088,067  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
                 

Unallocated

Others

                    316,360  
                 

 

 

 

Total

                    4,404,427  
                 

 

 

 

 

57


     For the year ended 31 December 2020  
     Life     Health     Accident     Others     Elimination     Total  
     RMB million  

Revenues

            

Gross written premiums

     480,593       115,089       16,583                   612,265  

– Term life

     2,674                                  

– Whole life

     73,747                              

– Endowment

     109,275                              

– Annuity

     294,897                                  

Net premiums earned

     479,600       109,091       15,975                   604,666  

Investment income

     140,963       9,202       462       3,870             154,497  

Net realised gains on financial assets

     13,523       877       44       139             14,583  

Net fair value gains through profit or loss

     17,727       1,148       58       2,967             21,900  

Other income

     1,284       75             10,492       (2,448     9,403  

Including: inter-segment revenue

                       2,448       (2,448      
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment revenues

     653,097       120,393       16,539       17,468       (2,448     805,049