China Life Insurance Company Limited, Q3 2020 Earnings Call, Oct 28, 2020 - SEHK:2628

SEHK:2628

During the China Life Insurance Company Limited's Q3 2020 Earnings Call, Li Yinghui, who is identified as an executive, made the following statements:

1. Opening Remarks:

   • "Good evening, ladies and gentlemen. Welcome to China Life's 2020 Third Quarter Results Briefing Teleconference."
   • Introduced himself as Li Yinghui, the Securities Representative of the company.
   • Mentioned the presence of Mr. Li Mingguang, Vice President, Chief Actuary, and Board Secretary; Ms. Huang Xiumei, Vice President; Mr. Zhan Zhong, Vice President; and heads of relevant departments.
   • Outlined the agenda: a 5-minute presentation on the third quarter results followed by a Q&A session.

2. Before Grace Hou's Presentation:

   • "Let me hand over to Grace for the briefing introduction."

3. After Grace Hou's Presentation:

   • "Okay, now we're ready to take your questions, please."

4. Closing Remarks:

   • "Okay, this is the final question, and it wrapped up the Q3 results briefing today. If you have further questions, please keep in touch with our IR team."
   • "Thank you for your participation. Goodbye."

These remarks indicate that Li Yinghui played a key role in facilitating the earnings call, providing introductions and transitions, and closing the meeting.

During the earnings call transcript for China Life Insurance Company Limited's Q3 2020 results, Grace Hou, the Investor Relations Executive, provided the following statements:

1. Introduction:

   • Greeted everyone and thanked them for attending the briefing.
   • Noted that there was more time allocated for the English session.

2. Business Development:

   • Mentioned that despite a complex and severe external environment, China Life adhered to its strategic deployment of revitalization and maintained a leading market position.
   • Highlighted steady progress in business development with revenues from insurance business reaching RMB 543 billion, an increase of 9.4% year-on-year.
   • Reported that first-year regular premiums amounted to RMB 106 billion, an increase of 7.1% year-on-year, and renewal premiums amounted to RMB 368 billion, an increase of 10% year-on-year.
   • Short-term premiums amounted to RMB 66 billion, an increase of 9.3% year-on-year.

3. Business Value Growth:

   • Stated that the percentage of first-year regular premiums in premiums for new long-term issuance policies was 98%, an increase of 0.13 percentage points from the corresponding period of 2019.
   • Noted that first-year regular premiums with the payment duration of 20 years or longer amounted to RMB 48 billion, which accounted for 45.8% of first-year regular premiums.
   • Emphasized the company's focus on business value growth, with a continued acceleration of development of protection-oriented business.
   • Reported that the value of new business for the first three quarters of 2020 grew by 2.7% year-on-year, which she believed made China Life the only company with a positive result in the sector.
   • Mentioned that the surrender rate decreased to 0.85%, a decrease of 0.82 percentage points year-on-year.

4. Sales Force Stability:

   • Explained that the company maintained its sales force strategy of improving quality while expanding the size, focusing on day-to-day management and quality enhancement.
   • Noted that the total sales force was 1.66 million, including 1.58 million agents in the individual agent business sector, which remained stable.

5. Investment Capability:

   • Reported that investment assets reached RMB 3.88 trillion, an increase of 8.5% from the end of 2019.
   • Mentioned the company's deepening of market-oriented reforms of its investment management systems, coordinating asset allocation and optimizing investment strategies.
   • Highlighted that in the first three quarters, the company achieved gross investment income of RMB 147 billion, an increase of 9.3% year-on-year, and gross investment yields reached 5.36%.
   • Reported net investment income of RMB 123 billion, an increase of 7.7% year-on-year, and net investment yield reached 4.47%.

6. Financial Performance:

   • Noted that the company's net profit was RMB 47 billion, a decrease of 18% year-on-year.
   • Reported that the core solvency ratio and comprehensive ratio of the company were 255% and 264%, respectively.

7. Future Strategy:

   • Stated that the company would continue to adhere to its strategic deployment of revitalization and make proper planning for 2021.
   • Mentioned the importance of regular pandemic control and tasks of ensuring stability and security, in accordance with the requirements for high-quality development.

8. Reforms and Strategy:

   • In response to a question about the next steps for China Life revitalization, she mentioned that reforms were mainly carried out through the Dingxin Project, focusing on measures for the front end, middle end, and back end of the business.
   • Explained that at the front end, the company would deepen the integration and coordination of Yi Ti Duo Yuan, which refers to the strengthened individual channel in coordination with other channels.
   • Mentioned plans to set up a shared service center in the middle of the next year, including an integrated operation center and a finance center to serve sales channels and risk control.
   • Noted that the company would also establish an R&D subcenter to support technology applications and implement a market-oriented mechanism for the investment team.

9. Cooperation with Ant Group:

   • In response to a question about expectations for cooperation with Ant Group, she stated that both China Life Group and the listed company participated in the previous series of financing of Ant Group, and its IPO would bring substantial financial returns.
   • Mentioned the possibility of future cooperation with Ant Group due to its leading position in payment solutions and financial services.

10. Third Quarter Sales Weakness:

    • Addressed a question regarding the weakness in third-quarter sales, explaining that the common trend across the sector was weak growth in the third quarter.
    • Acknowledged that COVID-19 had a profound impact on the national economy and the life insurance industry, affecting business development and requiring exploration of new ways of development.
    • Mentioned that in the third quarter, the company focused on tidying up its team, enhancing the fundamentals of the teams, and preparing for the jump start of the next year.

11. Impairment Loss:

    • In response to a question about the RMB 6.3 billion impairment loss in the third quarter, she confirmed that it came entirely from equity investments, with no defaults on the bond portfolio.
    • Noted that China Life's standards for recording impairment losses are stricter and more prudent compared to its peers.

12. Full Year and Future Strategies:

    • In response to a question about achieving positive new business value (NBV) growth in full year 2020, she reiterated the company's focus on new business value.
    • Mentioned that the company achieved 2.7% growth in new business value for the first three quarters and that the third quarter involved reinforcing the agent team and accumulating more customer resources.
    • Emphasized that the company considered both the current year's results and preparations for the next year.

13. Conclusion:

    • Concluded the briefing by thanking everyone for their participation and inviting them to contact the IR team for further questions.

**- Xiumei Huang mentioned that China Life Group and the listed company both participated in the previous series of financing of Ant Group

• The IPO of Ant Group will bring abundant financial returns to investors like China Life

• Although the initial investment was primarily from a financial perspective, Ant Group is a leading company in payment solutions, financial services, and micro loans to companies

• There are possibilities for future cooperation between China Life and Ant Group

• China Life will proceed from the demand of its business and explore more opportunities for cooperation with Ant Group

• Regarding the impairment loss in the third quarter, all impairment losses come from equity investments

• There was no default on the bond portfolio this year

• Compared with peers, China Life's standards for recording impairment losses are stricter and more prudent**