China Life Insurance Company Limited, H1 2024 Earnings Call, Aug 30, 2024 - SEHK:2628

SEHK:2628

**- Welcomed participants to China Life's 2024 Interim Results Briefing

• Introduced management team members in Beijing and Hong Kong

• Outlined the agenda: presentation by management on 2024 interim results, followed by a Q&A session

• Invited President Mingguang Li to introduce the company's 2024 interim results

• Facilitated the Q&A session, inviting questions from analysts and investors in Beijing, Hong Kong, and teleconference participants

• Concluded the briefing, thanking participants for their time and directing further questions to the Investor Relations team**

Mingguang Li, President of China Life Insurance, presented the company's 2024 interim results, highlighting:

1. Performance Overview:

   • Gross written premium reached RMB 489.57 billion.
   • Total assets exceeded RMB 6.2 trillion.
   • New business value and embedded value grew rapidly, maintaining industry leadership.
   • Net profit attributable to shareholders hit RMB 38.28 billion, showing improved profitability.
   • Core and comprehensive solvency ratios remained high.
   • Ranked first in the 2023 Insurance Service Quality Index.

2. Business and Operations:

   • Expanded pension and health insurance, accumulating nearly RMB 4 trillion in pension-related insurance reserves and a 6% year-on-year increase in health insurance premiums.
   • Invested over RMB 4.2 trillion in the real economy, with RMB 720 billion in technology innovation, advanced manufacturing, and green development.
   • Proactively managed risks, maintaining industry-leading regulatory ratings for consumer protection.

3. Reforms and High-Quality Development:

   • Diversified products and improved balance among endowment, annuity, health, and whole life insurance.
   • Increased gross investment yield by 26 basis points.
   • Enhanced sales force professionalism, with per capita productivity rising by double digits.
   • Rolled out elderly care communities to 14 cities, covering major regions.
   • Advanced digitalization, storing over 130 PB of data and leveraging AI and big data.

4. Efficiency and Cost Management:

   • Reduced fees and commissions while maintaining steady gross premium growth.
   • Individual agent channel contributed RMB 29.29 billion in new business value, up 14.6%.
   • Maintained a stable sales force of 629,000 agents, with a 12.4% increase in per capita productivity.

5. Customer Experience:

   • Improved operational efficiency, reducing average claim settlement time to 0.34 days.
   • Built a service system with online and offline access, transforming over 500 traditional counters into customer experience centers.
   • Provided services to 1.56 billion people, with senior-friendly services recognized by the Insurance Association of China.

6. Future Outlook:

   • Focus on serving the overall situation, promoting steady development, and enhancing quality and efficiency.

   • Proactively respond to interest rate and customer demand changes, adhering to asset-liability alignment.

   • Deepen reforms, optimize services, promote integration, and lower costs.

   • Continue to practice a consumer-centric business philosophy and create a better customer experience.

Liu Hui, VP, Chief Investment Officer & Executive Director, presented the company's financials and investments in H1 2024:

1. Financial Indicators:

   • Total assets: CNY 6.22 trillion, up 7.2%.
   • Total liabilities: CNY 5.72 trillion, up 7.6%.
   • Net profit attributable to shareholders: CNY 38.28 billion, up 5.9% year-on-year.
   • Core solvency adequacy ratio: 151.9%.
   • Comprehensive solvency adequacy ratio: 205.23%.

2. Investment Performance:

   • Fixed Income: Allocation of offshore long-term interest rate bonds and high-grade credit bonds exceeded RMB 400 billion, with the bond allocation proportion increasing.
   • Equity Investment: Increased positions moderately in the first quarter and continued to optimize the structure, leading to improved equity asset investment returns.
   • Alternative Investment: Focused on high-quality themes and core assets, innovating investment models to stabilize allocation scale and return levels.
   • Net Investment Yield: 3.03%.
   • Gross Investment Yield: 3.59%, up 26 basis points from 2023.

3. Credit Risk Management:

   • Maintained a prudent investment philosophy and credit risk appetite.
   • Over 98% of credit bonds were externally rated AAA, and over 99% of non-standard fixed income was externally rated AAA.

4. Embedded Value:

   • Embedded value: RMB 1.4 trillion, up 11.4% from RMB 1.26 trillion at the beginning of the year.

   • New business value: RMB 32.26 billion, up 18.6% year-on-year.

   • Individual agent channel: Grew 14.6% year-on-year.

   • Bancassurance and other channels: Grew 80.6% year-on-year.

   • Active management of interest rate risk and proactive control of liability duration were effective, reducing the sensitivity of new business to investment yield and expenses.

Ying Yuan, Chief Financial Officer, addressed questions on tax and dividend payout:

1. Tax:

   • Pretax profits grew higher than tax revenues, largely due to the confirmation of income tax.
   • Income tax for the year was RMB 8.8 billion, an increase year-on-year.
   • Income tax confirmation is affected by deferred tax and other tax factors.
   • High tax-exempt income in life insurance likely results in a tax loss for the year.
   • The company estimates future income tax to determine the deductible amount for the year.
   • Deferred income tax amount increased due to multiple factors.

2. Dividend Payout:

   • Since listing, China Life has paid more than RMB 200 billion in dividends.

   • Dividend payout ratios have varied, with the highest being 65% and 58% in 2023.

   • This year, to allow investors to share more development outcomes, the company paid out dividends.

   • Future dividend payout will continue on the current path, considering regulatory requirements, performance, shareholder returns, and business development needs.