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
August 30, 2005
China Life Insurance Company Limited
(Translation of registrant’s name into English)
16 Chaowai Avenue
Chaoyang District
Beijing 100020, China
Tel: (86-10) 8565-9999
(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 August 30, 2005, China Life Insurance Company Limited issued an announcement, copy of which is attached as Exhibit 99.1 hereto.
EXHIBIT LIST
Exhibit | Description | |
99.1 | Announcement, dated August 29, 2005 |
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/ Miao Fuchun | |||
(Signature) | ||||
August 30, 2005 | Name: | Miao Fuchun | ||
Title: | Director and Vice President |
EXHIBIT 99.1
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 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005
Chairman’s Statement
For the first half of 2005, the national economy maintained a rapid growth, leading to an increase in the residents’ income levels and in consumption demand. All these factors created a relatively favorable environment for the development of the life insurance industry in Mainland China.
For the first half of 2005, China Life Insurance Company Limited (“the Company”) continued to implement its four principles of restructuring business mix, improving its operational efficiency, maintaining steady and profitable growth and effecting full legal compliance. As a result, the Company achieved stable growth in business and maintained its leading market position. By continuing to implement its business mix restructuring strategy the Company’s financial position strengthened, and distribution channels remained stable. Meanwhile, the Company further enhanced its corporate governance, internal control and risk management.
Steady growth in written premiums and policy fees
For the six months ended 30 June 2005, the Company’s gross written premiums and policy fees amounted to RMB42,607 million, representing an increase of 22.9% from RMB34,668 million in the corresponding period in 2004. Gross written premiums and policy fees from individual life insurance amounted to a total of RMB36,613 million, representing a 27.3% increase from RMB28,762 million in the corresponding period in 2004. Gross written premiums and policy fees from group life insurance amounted to a total of RMB637 million, representing a 97.2% increase from RMB323 million in the corresponding period in 2004. Accident and health insurance business premiums were RMB5,357 million.
Maintaining the leading market position
For the first half of 2005, despite the increase in the number of market participants, intensifying market competition and the Company’s continued focus on business mix restructuring, the Company maintained its leading position in the life insurance industry in Mainland China whilst maintaining its leading market position. The Company also focused on the restructuring of its business mix and enhancement of operational efficiency.
Further restructuring of business mix
For the first half of 2005, the Company’s gross written premiums amounted to RMB38,994 million, representing an increase of 24.2% from the RMB31,390 million in the corresponding period in 2004. The gross written premiums accounted for 91.5% of the total gross written premiums and policy fees for the first half of 2005, one percentage point increase from the 90.5% in the corresponding period in 2004. First-year gross written premiums amounted to RMB11,061 million, representing a decrease of 12% from the RMB12,565 million recorded in the corresponding period
Commission File Number 001-31914
in 2004. The total amount of first-year regular gross written premiums was RMB10,345 million, representing a decrease of 3.9% from the RMB10,765 million in the corresponding period in 2004. The first-year regular gross written premiums accounted for 93.5% of the total amount of first-year gross written premiums in the first half of 2005, while it accounted for 85.7% in the corresponding period in 2004. Despite the decrease in first-year gross written premiums and first-year regular gross written premiums compared with the figures in the corresponding period in 2004, the significant increase in the proportion of regular premiums had a positive impact on the improvement in profitability during the reporting period. The Company will continue to implement its business mix restructuring strategy.
Sound financial status and solvency position
For the first half of 2005, the Company had total revenues of RMB49,418 million, of which net investment income was RMB7,794 million. For the said period, the payments made by the Company on benefits, claims and expenses totaled RMB42,783 million, of which RMB32,966 million was for insurance benefits and claims (including life insurance death and other benefits, accident and health claims and claim adjustment expenses, increase in liability of long-term traditional insurance contracts and interest credited to long-term investment type insurance contracts), representing an increase of 24.7% from the corresponding period in 2004. The Company’s operating expenses (including amortization of deferred policy acquisition costs, underwriting and policy acquisition costs and administrative expenses), amounted to RMB7,876 million representing an increase of 11.4% from the corresponding period in 2004. Net profit attributable to shareholders of the Company for the six months ended 30 June 2005 was RMB5,208 million, representing an increase of RMB2,396 million or 85.2% from the corresponding period in 2004. As at 30 June 2005, the Company had total assets of RMB501,783 million, representing an increase of RMB68,112 million or 15.7% from the beginning of 2005.
The Company’s strong capital base contributes to its sound solvency position. As at 30 June 2005, the Company’s actual solvency level was 289% of the minimum regulatory requirement, which should support sustainable development of the Company in the near future.
Stable distribution channels
As at 30 June 2005, the Company had approximately 663,000 exclusive agents, a slight decrease from 668,000 exclusive agents as at 30 June of 2004. Its direct sales team comprised of approximately 12,000 full-time direct sales representatives, maintaining the same number as at 30 June of 2004, and it has over 88,200 intermediaries and distribution networks (including non-dedicated agencies such as commercial banks, post offices and savings cooperatives), showing a decrease of 3.1% from the number as at 30 June 2004. Although the respective numbers of exclusive agents and intermediaries slightly decreased due to rigorous market competition and the increase of competitors, the distribution channels maintained basic stability.
The exclusive agent team is the core of the Company’s distribution channels. The Company’s “Jin Ding Project”, aiming to improve the exclusive agents’ sales skills and their management, has achieved satisfactory results in improvement of exclusive agent team management, enhancement of sales results and restructuring of business mix. The Company also provides various training programmes to agents in order to improve their productivity and performance.
Commission File Number 001-31914
Corporate Governance
On 16 June 2005, the 2004 Directors’ Report and Supervisors’ Report was considered and approved and special resolutions relating to the amendments of the Articles of Association of the Company and the granting of a general mandate for the Board of Directors to issue and allot new shares were passed at the 2004 annual general meeting. On 29 July 2005, the resolution relating to the appointment of Mr. Yang Chao as the Company’s director was considered and approved in the extraordinary general meeting of the Company.
On 29 July 2005, at the seventeenth meeting of the first session of the Board, the Board approved Mr. Wang Xianzhang’s request for resignation from his position as Director and Chairman, and Mr. Fan Yingjun’s request for resignation from his position as the independent non-executive director. At the same session, Mr. Yang Chao was appointed Chairman. At the same meeting, the Board also approved the complaint handling process under the framework of the Audit Committee, which came into effect on the same day.
Future Prospects
While growth momentum remains strong in Mainland China’s life insurance industry, expected capital market volatility, foreign exchange mechanism reform and intensifying competition may add uncertainty to business operation and operating results in the second half of 2005. Business development, new fund investment and existing fund reinvestment may be more challenging, and the Company may meet more pressure on maintaining the consolidated cost control level of the first half of 2005. Bearing these factors in mind, the Company expects, however, to continue to strengthen its leading position in the life insurance market in Mainland China by continuing to restructure its business mix, consolidate its distribution channels, increase investment returns, and strengthen risk and cost control in the second half of 2005.
Management Discussion and Analysis
Summary
For the first half of 2005, the Company’s total revenues accounted for RMB49,418 million (RMB38,945 million for the corresponding period in 2004), representing an increase of 26.9% from the corresponding period in 2004. Net profit attributable to shareholders of the Company for this financial period amounted to RMB5,208 million (RMB2,812 million for the corresponding period in 2004), representing an increase of 85.2% from the corresponding period in 2004. The growth in total revenues of the Company was primarily attributable to the increase of gross written premiums and the significant rise in investment income.
The Company has adopted the new/revised Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards (“new HKFRS”) which have become effective for accounting periods commencing on or after 1 January 2005. Other than reclassification in certain investments and insurance accounts, the adoption of the new HKFRS had no material impact on the shareholders’ equity and net profit.
For the first half of 2005, the Company’s basic and diluted earnings per share was RMB0.19, growing at the same rate as the increase in net profit attributable to shareholders of the Company.
As at 30 June 2005, the number of employees of the Company was 74,646.
Comparison between the six months ended 30 June 2005 and the six months ended 30 June 2004
Commission File Number 001-31914
Consolidated Revenues
Net premiums earned and policy fees of the Company for the six months ended 30 June 2005 totaled RMB42,061 million (RMB33,937 million for the corresponding period in 2004), representing an increase of 23.9% over the corresponding period in 2004. This growth was mainly due to the increase in individual life insurance business and group life insurance business, representing an increase of 27.1% and 96.3% respectively over the corresponding period in 2004.
Net investment income for the six months ended 30 June 2005 was RMB7,794 million (RMB5,018 million for the corresponding period in 2004), representing an increase of 55.3% from the corresponding period in 2004. This growth was primarily attributable to the growth in investment assets, increase in base interest rates, as well as increase in investment yield as a result of adjustments to the investment portfolio.
For the six months ended 30 June 2005, net realised loss on financial assets amounted to RMB383 million (net realised loss on investments amounted to RMB63 million for the corresponding period in 2004). Net fair value loss on assets at fair value through income amounted to RMB888 million (net unrealised loss on trading securities amounted to RMB723 million for the corresponding period in 2004). This result was mainly attributable to the volatility of the stock market of Mainland China in the first half of 2005.
Benefits, claims and expenses
For the six months ended 30 June 2005, the Company’s total benefits, claims and expenses amounted to RMB42,783 million (RMB35,158 million for the corresponding period in 2004), representing an increase of 21.7% from the corresponding period in 2004. The increase was mainly due to the growth of the Company’s business.
Income tax
The Company’s income tax expenses for the six months ended 30 June 2005 were RMB1,391 million (RMB955 million for the corresponding period in 2004). The effective tax rate decreased from 25.2% for the first half of 2004 to 21.0% for the first half of 2005. This decrease was mainly attributable to the increase in tax-free interest income from government bonds for the first half of 2005.
Net Profit
For the six months ended 30 June 2005, the Company’s net profit attributable to shareholders of the Company was RMB5,208 million (RMB2,812 million for the corresponding period in 2004), representing an increase of 85.2% from the same period in 2004. The increase in net profit attributable to shareholders of the Company was attributable to an increase in investment income, business development and the restructuring of business mix, as well as cost control.
Commission File Number 001-31914
Liquidity and Capital Resources
Liquidity Resources
Our principal cash inflows come from insurance premiums, deposits, proceeds from sales of investment assets, investment income and financing income. The primary liquidity concerns with respect to these cash inflows are the risk of early contract holder and policyholder withdrawal, as well as the risks of default by debtors, interest rate changes and capital market volatilities, and other risks. The Company closely monitors and endeavors to manage these risks.
Additional sources of liquidity to meet unexpected cash outflows are available from our portfolio of cash and investment assets. As at 30 June 2005, the amount of cash and cash equivalents was RMB39,665 million (RMB27,217 million on 31 December 2004). As at 30 June 2005, the amount of term deposits was RMB167,121 million (RMB175,498 million on 31 December 2004).
The Company’s portfolio of investment securities also provides a source of liquidity to meet unexpected cash outflows. As at 30 June 2005, available-for-sale securities within the investments in debt securities had a fair value of RMB71,811 million (non-trading securities within the investments in debt securities had a fair value of RMB69,791 million on 31 December 2004). As at 30 June 2005, investment in equity securities (mainly securities investment funds) had a fair investment value of RMB20,779 million (RMB17,271 million on 31 December 2004).
Liquidity Uses
The Company’s principal cash outflows primarily relate to the liabilities associated with the benefits and claims of our various life insurance, annuity, accident and health insurance products, and dividend and interest payments on our insurance policies and annuity contracts, operating expenses, income taxes and dividends that may be declared and payable to our shareholders.
The Company believes that its sources of liquidity are sufficient to meet its cash requirements.
RESULTS OF THE GROUP
China Life Insurance Company Limited (the “Company”) is pleased to announce the unaudited consolidated results of the Company and its subsidiary (the “Group”) for the six months ended 30 June 2005:
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited | Unaudited (Restated) | |||||||
For the six months ended 30 June | ||||||||
2005 | 2004 | |||||||
Note | RMB million | RMB million | ||||||
REVENUES | ||||||||
Gross written premiums and policy fees | 42,607 | 34,668 | ||||||
Less: premiums ceded to reinsurers | (372 | ) | (584 | ) | ||||
Net written premiums and policy fees | 42,235 | 34,084 | ||||||
Net change in unearned premium reserves | (174 | ) | (147 | ) | ||||
Net premiums earned and policy fees | 42,061 | 33,937 | ||||||
Net investment income | 1 | 7,794 | 5,018 | |||||
Net realised gain/(loss) on financial assets | 1 | (383 | ) | — | ||||
Net realised gain/(loss) on investments | 1 | — | (63 | ) | ||||
Net fair value gain/(loss) on assets at fair value through income | 1 | (888 | ) | — | ||||
Net unrealised gain/(loss) on trading securities | 1 | — | (723 | ) | ||||
Other income | 834 | 776 | ||||||
Total revenues | 49,418 | 38,945 | ||||||
BENEFITS, CLAIMS AND EXPENSES | ||||||||
Insurance benefits and claims | ||||||||
Life insurance death and other benefits | (4,098 | ) | (2,740 | ) | ||||
Accident and health claims and claim adjustment expenses | (3,517 | ) | (2,732 | ) | ||||
Increase in liability of long-term traditional insurance contracts | (23,063 | ) | (19,245 | ) | ||||
Interest credited to long-term investment type insurance contracts | (2,288 | ) | (1,725 | ) | ||||
Interest credited to investment contracts | (479 | ) | (359 | ) | ||||
Policyholder dividends and participation in profits | (1,317 | ) | (1,157 | ) | ||||
Amortisation of deferred policy acquisition costs | (3,602 | ) | (2,893 | ) | ||||
Underwriting and policy acquisition costs | (1,082 | ) | (758 | ) | ||||
Administrative expenses | (3,192 | ) | (3,418 | ) | ||||
Other operating expenses | (54 | ) | (84 | ) | ||||
Statutory insurance levy | (91 | ) | (47 | ) | ||||
Total benefits, claims and expenses | (42,783 | ) | (35,158 | ) | ||||
Net profit before income tax expenses | 2 | 6,635 | 3,787 | |||||
Income tax expenses | 3 | (1,391 | ) | (955 | ) | |||
Net profit | 5,244 | 2,832 | ||||||
Attributable to: | ||||||||
– shareholders of the Company | 5,208 | 2,812 | ||||||
– minority interests | 36 | 20 | ||||||
5,244 | 2,832 | |||||||
Basic and diluted earnings per share | 4 | RMB0.19 | RMB 0.11 | |||||
Dividends | — | — | ||||||
Commission File Number 001-31914
Notes:
1. | Investment results |
For the six months ended 30 June | ||||||
2005 | 2004 | |||||
RMB million | RMB million | |||||
Net investment income | ||||||
Debt securities | 3,648 | 1,262 | ||||
Equity securities | 283 | 511 | ||||
Term deposits and cash and cash equivalents | 3,901 | 3,060 | ||||
Policy loans | 11 | — | ||||
Securities purchased under agreements to resell | 3 | 207 | ||||
Other investments | 15 | — | ||||
Subtotal | 7,861 | 5,040 | ||||
Securities sold under agreements to repurchase | (40 | ) | (10 | ) | ||
Investment expense | (27 | ) | (12 | ) | ||
Total | 7,794 | 5,018 | ||||
Net realised gain/(loss) | ||||||
Debt securities | 185 | 17 | ||||
Equity securities | 39 | — | ||||
Impairment | ||||||
– debt securities(i) | (92 | ) | (80 | ) | ||
– equity securities | (515 | ) | — | |||
Total | (383 | ) | (63 | ) | ||
Net fair value gain(loss) on assets at fair value through income | ||||||
Debt securities | (10 | ) | — | |||
Equity securities | (878 | ) | (723 | ) | ||
Total | (888 | ) | (723 | ) | ||
(i) | As at 30 June 2005, the carrying value of government bonds plus the related accrued interest deposited with Min Fa Securities Limited Company (“Min Fa Securities”) totaled RMB412 million. Min Fa Securities was known in financial difficulty in 2004. In July 2005, Min Fa Securities has been ordered by China Securities and Regulatory Commission to wind up and the liquidation proceedings of Min Fa Securities have commenced. As a result, the Group has made an additional provision of RMB92 million to fully cover the bond and related accrued interest. |
Commission File Number 001-31914
2. | Net profit before income tax expenses |
Net profit before income tax expenses is stated after charging the following:
For the six months ended 30 June | ||||
2005 | 2004 | |||
RMB million | RMB million | |||
Staff costs | ||||
Wages and salary | 1,333 | 1,693 | ||
Housing benefits | 101 | 86 | ||
Contribution to the defined contribution pension plan | 152 | 99 | ||
Depreciation – owned property, plant and equipment | 434 | 417 | ||
Loss on disposal of property, plant and equipment | 1 | 1 |
3. | Taxation |
(a) | The amount of taxation charged to the condensed consolidated income statement represents: |
For the six months ended 30 June | ||||
2005 | 2004 | |||
RMB million | RMB million | |||
Current taxation: | ||||
– Enterprises income tax | 568 | 102 | ||
Deferred taxation relating to the origination and reversal of temporary differences | 823 | 853 | ||
Taxation charges | 1,391 | 955 | ||
(b) | The reconciliation between the Group’s effective tax rate and the statutory tax rate of 33% in the PRC is as follows: |
For the six months ended 30 June | ||||||
2005 | 2004 | |||||
RMB million | RMB million | |||||
Net profit before income tax expenses | 6,635 | 3,787 | ||||
Tax computed at the statutory tax rate of 33% | 2,190 | 1,250 | ||||
Tax-exempt income | (814 | ) | (407 | ) | ||
Expenses not deductible for tax purposes | 15 | 112 | ||||
Income taxes at effective tax rate | 1,391 | 955 | ||||
Tax-exempt income includes mainly interest income from government bonds. Expenses not deductible for tax purposes include mainly commission, brokerage and donation expenses in excess of deductible amounts.
Commission File Number 001-31914
(c) | At 30 June 2005, deferred income taxation is calculated in full on temporary differences under the liability method using a principal taxation rate of 33%. |
The movement on the deferred income tax liabilities account is as follows:
For the six months ended 30 June | |||||
2005 | 2004 | ||||
RMB million | RMB million | ||||
(Restated) | |||||
At 1 January | 4,371 | 3,686 | |||
Deferred taxation charged to income statement | 823 | 853 | |||
Taxation charged to equity | |||||
– change in unrealised loss of available-for-sale securities (non-trading securities), deferred policy acquisition costs, and liability of long-term traditional insurance contracts | 1,450 | (932 | ) | ||
At 30 June | 6,644 | 3,607 | |||
4. | Earnings per share |
There is no difference between basic and diluted earnings per share. The basic and diluted earnings per share for the six months ended 30 June 2005 is based on the weighted average number of 26,764,705,000 (2004: 26,764,705,000) ordinary shares in issue during the period.
5. | Segment information |
For the six months ended 30 June 2005 | |||||||||||||||
Individual life | Group life | Accident & Health | Corporate & other | Total | |||||||||||
RMB million | RMB million | RMB million | RMB million | RMB million | |||||||||||
Revenues | |||||||||||||||
Gross written premiums and policy fees | 36,613 | 637 | 5,357 | — | 42,607 | ||||||||||
Gross written premiums | 33,417 | 220 | 5,357 | — | |||||||||||
– Term | 85 | 13 | — | — | |||||||||||
– Whole | 11,046 | 207 | — | — | |||||||||||
– Endowment | 20,278 | — | — | — | |||||||||||
– Annuity | 2,008 | — | — | — | |||||||||||
Policy fees | 3,196 | 417 | — | — | |||||||||||
Net premiums earned and policy fees | 36,562 | 634 | 4,865 | — | 42,061 | ||||||||||
Net investment income | 6,833 | 854 | 107 | — | 7,794 | ||||||||||
Net realised gain/(loss) on financial assets | (336 | ) | (42 | ) | (5 | ) | — | (383 | ) | ||||||
Net fair value gain/(loss) on assets at fair value through income | (779 | ) | (97 | ) | (12 | ) | — | (888 | ) | ||||||
Other income | — | — | — | 834 | 834 | ||||||||||
Segment revenues | 42,280 | 1,349 | 4,955 | 834 | 49,418 | ||||||||||
Benefits, claims and expenses | |||||||||||||||
Insurance benefits and claims | |||||||||||||||
Life insurance death and other benefits | (3,787 | ) | (311 | ) | — | — | (4,098 | ) | |||||||
Accident and health claims and claim adjustment expenses | — | — | (3,517 | ) | — | (3,517 | ) | ||||||||
Increase in liability of long-term traditional insurance contracts | (22,965 | ) | (98 | ) | — | — | (23,063 | ) | |||||||
Interest credited to long-term investment type insurance contracts | (2,274 | ) | (14 | ) | — | — | (2,288 | ) | |||||||
Interest credited to investment contracts | — | (479 | ) | — | — | (479 | ) | ||||||||
Policyholder dividends and participation in profits | (1,184 | ) | (133 | ) | — | — | (1,317 | ) | |||||||
Amortization of deferred policy acquisition costs | (3,308 | ) | (169 | ) | (125 | ) | — | (3,602 | ) | ||||||
Underwriting and policy acquisition costs | (912 | ) | (8 | ) | (162 | ) | — | (1,082 | ) | ||||||
Administrative expenses | (1,556 | ) | (289 | ) | (584 | ) | (763 | ) | (3,192 | ) | |||||
Other operating expenses | (23 | ) | (4 | ) | (8 | ) | (19 | ) | (54 | ) | |||||
Statutory insurance levy | (62 | ) | (1 | ) | (28 | ) | — | (91 | ) | ||||||
Segment benefits, claims and expenses | (36,071 | ) | (1,506 | ) | (4,424 | ) | (782 | ) | (42,783 | ) | |||||
Segment results | 6,209 | (157 | ) | 531 | 52 | 6,635 | |||||||||
Income tax expenses | — | — | — | (1,391 | ) | (1,391 | ) | ||||||||
Net profit/(loss) | 6,209 | (157 | ) | 531 | (1,339 | ) | 5,244 | ||||||||
Attributable to: | |||||||||||||||
– shareholders of the Company | 6,209 | (157 | ) | 531 | (1,375 | ) | 5,208 | ||||||||
– minority interests | — | — | — | 36 | 36 | ||||||||||
6,209 | (157 | ) | 531 | (1,339 | ) | 5,244 | |||||||||
Commission File Number 001-31914
For the six months ended 30 June 2004 (Restated) | |||||||||||||||
Individual life | Group life | Accident & Health | Corporate & other | Total | |||||||||||
RMB million | RMB million | RMB million | RMB million | RMB million | |||||||||||
Revenues | |||||||||||||||
Gross written premiums and policy fees | 28,762 | 323 | 5,583 | — | 34,668 | ||||||||||
Gross written premiums | 25,684 | 131 | 5,575 | — | |||||||||||
– Term | 73 | 2 | — | — | |||||||||||
– Whole | 8,950 | 129 | — | — | |||||||||||
– Endowment | 14,806 | — | — | — | |||||||||||
– Annuity | 1,855 | — | — | — | |||||||||||
Policy fees | 3,078 | 192 | 8 | — | |||||||||||
Net premiums earned and policy fees | 28,762 | 323 | 4,852 | — | 33,937 | ||||||||||
Net investment income | 4,455 | 472 | 91 | — | 5,018 | ||||||||||
Net realised gain/(loss) on investments | (56 | ) | (6 | ) | (1 | ) | — | (63 | ) | ||||||
Net unrealised gain/(loss) on trading securities | (642 | ) | (68 | ) | (13 | ) | — | (723 | ) | ||||||
Other income | — | — | — | 776 | 776 | ||||||||||
Segment revenues | 32,519 | 721 | 4,929 | 776 | 38,945 | ||||||||||
Benefits, claims and expenses | |||||||||||||||
Insurance benefits and claims | |||||||||||||||
Life insurance death and other benefits | (2,527 | ) | (198 | ) | (15 | ) | — | (2,740 | ) | ||||||
Accident and health claims and claim adjustment expenses | — | — | (2,732 | ) | — | (2,732 | ) | ||||||||
Increase in liability of long-term traditional insurance contracts | (18,903 | ) | (94 | ) | (248 | ) | — | (19,245 | ) | ||||||
Interest credited to long-term investment type insurance contracts | (1,725 | ) | — | — | — | (1,725 | ) | ||||||||
Interest credited to investment contracts | — | (356 | ) | (3 | ) | — | (359 | ) | |||||||
Policyholder dividends and participation in profits | (1,136 | ) | (21 | ) | — | — | (1,157 | ) | |||||||
Amortization of deferred policy acquisition costs | (2,773 | ) | (59 | ) | (61 | ) | — | (2,893 | ) | ||||||
Underwriting and policy acquisition costs | (522 | ) | (27 | ) | (209 | ) | — | (758 | ) | ||||||
Administrative expenses | (1,805 | ) | (163 | ) | (744 | ) | (706 | ) | (3,418 | ) | |||||
Other operating expenses | (27 | ) | (2 | ) | (11 | ) | (44 | ) | (84 | ) | |||||
Statutory insurance levy | — | — | (47 | ) | — | (47 | ) | ||||||||
Segment benefits, claims and expenses | (29,418 | ) | (920 | ) | (4,070 | ) | (750 | ) | (35,158 | ) | |||||
Segment results | 3,101 | (199 | ) | 859 | 26 | 3,787 | |||||||||
Income tax expenses | — | — | — | (955 | ) | (955 | ) | ||||||||
Net profit/(loss) | 3,101 | (199 | ) | 859 | (929 | ) | 2,832 | ||||||||
Attributable to: | |||||||||||||||
– shareholders of the Company | 3,101 | (199 | ) | 859 | (949 | ) | 2,812 | ||||||||
– minority interests | — | — | — | 20 | 20 | ||||||||||
3,101 | (199 | ) | 859 | (929 | ) | 2,832 | |||||||||
Commission File Number 001-31914
Condensed consolidated balance sheet
Unaudited | Audited (Restated) | |||
As at 30 June 2005 | As at 31 December 2004 | |||
RMB million | RMB million | |||
ASSETS | ||||
Property, plant and equipment | 12,487 | 12,250 | ||
Deferred policy acquisition costs | 35,269 | 32,787 | ||
Financial assets | ||||
Debt securities | 205,650 | 150,234 | ||
– held-to-maturity securities | 133,330 | 79,603 | ||
– available-for-sale securities | 71,811 | — | ||
– non-trading securities | — | 69,791 | ||
– financial assets at fair value through income | 509 | — | ||
– trading securities | — | 840 | ||
Equity securities | 20,779 | 17,271 | ||
– available-for-sale securities | 15,427 | — | ||
– non-trading securities | — | 12,597 | ||
– financial assets at fair value through income | 5,352 | — | ||
– trading securities | — | 4,674 | ||
Term deposits | 167,121 | 175,498 | ||
Statutory deposits - restricted | 4,000 | 4,000 | ||
Policy loans | 627 | 391 | ||
Securities purchased under agreements to resell | — | 279 | ||
Accrued investment income | 6,826 | 5,084 | ||
Premiums receivables | 6,123 | 3,912 | ||
Reinsurance assets | 1,387 | 1,297 | ||
Cash and cash equivalents | 39,665 | 27,217 | ||
Other | 1,849 | 3,451 | ||
Total assets | 501,783 | 433,671 | ||
LIABILITIES AND EQUITY | ||||
Liabilities | ||||
Insurance contracts | ||||
Short-term insurance contracts: | ||||
– reserves for claims and claim adjustment expenses | 1,468 | 1,215 | ||
– unearned premium reserves | 5,196 | 5,212 | ||
Long-term traditional insurance contracts | 140,123 | 117,301 | ||
Long-term investment type insurance contracts | 217,819 | 191,885 | ||
Financial liabilities | ||||
Investment contracts | ||||
– with discretionary participation feature (“DPF”) | 39,789 | 32,476 | ||
– without DPF | 1,990 | 1,635 | ||
Securities sold under agreements to repurchase | 1,168 | — | ||
Annuity and other insurance balances payable | 4,256 | 2,801 | ||
Premiums received in advance | 973 | 2,447 | ||
Policyholder dividends payable | 1,823 | 2,037 | ||
Other liabilities | 5,126 | 4,960 | ||
Deferred tax liabilities | 6,644 | 4,371 | ||
Statutory insurance fund | 319 | 429 | ||
Total liabilities | 426,694 | 366,769 | ||
Shareholders’ equity | ||||
Share capital | 26,765 | 26,765 | ||
Reserves | 34,518 | 31,573 | ||
Retained earnings | 13,400 | 8,192 | ||
74,683 | 66,530 | |||
Minority interests | 406 | 372 | ||
Total equity | 75,089 | 66,902 | ||
Total liabilities and equity | 501,783 | 433,671 | ||
Commission File Number 001-31914
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited | |||||||||||||
Attributable to shareholders of the Company | Minority Interest | Total | |||||||||||
Share capital | Reserves | Retained earnings | |||||||||||
RMB million | RMB million | RMB million | RMB million | RMB million | |||||||||
As at 1 January 2005 | 26,765 | 31,573 | 8,192 | 372 | 66,902 | ||||||||
Net profit | — | — | 5,208 | 36 | 5,244 | ||||||||
Unrealized gain/(loss), net of tax | — | 2,945 | — | (2 | ) | 2,943 | |||||||
As at 30 June 2005 | 26,765 | 34,518 | 13,400 | 406 | 75,089 | ||||||||
As at 1 January 2004 | 26,765 | 34,051 | 1,620 | 320 | 62,756 | ||||||||
Net profit | — | — | 2,812 | 20 | 2,832 | ||||||||
Unrealized gain/(loss), net of tax | — | (1,892 | ) | — | — | (1,892 | ) | ||||||
As at 30 June 2004 | 26,765 | 32,159 | 4,432 | 340 | 63,696 | ||||||||
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited | ||||||
For the six months ended 30 June | ||||||
2005 | 2004 | |||||
RMB million | RMB million | |||||
Net cash inflow from operating activities | 23,382 | 16,629 | ||||
Net cash outflow from investing activities | (45,528 | ) | (89,528 | ) | ||
Net cash inflow from financing activities | 34,594 | 53,163 | ||||
Net increase / (decrease) in cash and cash equivalents | 12,448 | (19,736 | ) | |||
Cash and cash equivalents | ||||||
Beginning of period at 1 January | 27,217 | 42,616 | ||||
End of period at 30 June | 39,665 | 22,880 | ||||
Analysis of balances of cash and cash equivalents | ||||||
Cash at bank and in hand | 15,756 | 22,429 | ||||
Short-term bank deposits | 23,909 | 451 | ||||
Cash and cash equivalents | 39,665 | 22,880 | ||||
Supplemental cash flow information | ||||||
Income tax paid | 268 | 132 |
Basis of preparation and accounting policies
This unaudited condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants.
These condensed accounts should be read in conjunction with the 2004 annual accounts.
The accounting policies and methods of computation used in the preparation of this condensed consolidated financial information are consistent with those used in the annual financial statements for the year ended 31 December 2004 except that the Group has changed certain of its accounting policies following its adoption of new / revised Hong Kong Financial Reporting Standards and Hong Kong Accounting Standards (“new HKFRS”) which were effective for accounting periods commencing on or after 1 January 2005. Other than reclassification in certain investment and insurance accounts there was no material impact of the adoption of the new HKFRS on shareholders’ equity and net profit.
This interim financial information has been prepared in accordance with those HKFRS standards and interpretations issued and effective as at the time of preparing this information. The HKFRS standards and interpretations that will be applicable at 31 December 2005, including those that will be applicable on an optional basis, are not known with certainty at the time of preparing this interim financial information.
Review of interim report by auditors and audit committee
The Company’s interim financial report for the six months ended 30 June 2005 has been reviewed by the Company’s independent auditors, PricewaterhouseCoopers, and has also been reviewed and approved by the Audit Committee of the Company.
Purchase, sale or redemption of the Company’s shares
During the six months ended 30 June 2005, the Company had not purchased, sold or redeemed any of its shares.
Compliance with Code on Corporate Governance Practices of the Listing Rules
For the six months ended 30 June 2005, the Company had complied with the code provisions of the Code on Corporate Governance Practices (the “Code”) set out in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, except in respect of the separated roles of chairman and chief executive officer and the composition of the remuneration committee, which were not in compliance with code provisions A.2.1 and B.1.1 of the Code respectively.
Commission File Number 001-31914
According to code provision A.2.1 of the Code, the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. The division of responsibilities between the chairman and chief executive officer should be clearly established and set out in writing.
During the reporting period, Mr. Wang Xianzhang acted as the Chairman and President from 1 January to 1 June 2005. On 1 June 2005, Mr. Wang Xianzhang resigned from the position of President. On the same day, Mr. Yang Chao was appointed as President by the Board. Therefore, during the period from 1 June to 30 June 2005, Mr. Wang Xianzhang and Mr. Yang Chao held the positions of Chairman and President respectively. On 29 July 2005, Mr. Wang Xianzhang resigned from the positions of Chairman and Director and Mr. Yang Chao was elected Director and Chairman on the same day.
The arrangement under which the roles of Chairman and President are performed by the same individual is the extension of the Company’s existing corporate governance model. It has been considered beneficial at the present stage as it helps to maintain the continuity of the Company’s policies and the stability of the Company’s operations, as well as to enhance the management of the Company. In the future, the Company will consider separating the roles of Chairman and President when it considers appropriate.
According to code provision B.1.1 of the Code, issuers should establish a remuneration committee with specific written terms of reference which deal clearly with its authority and duties. The majority of the members of the remuneration committee should be independent non-executive directors.
Currently, the Company’s management training and remuneration committee comprises four members, two of which are independent non-executive Directors. The Company will adjust, as soon as possible, the composition of the management training and remuneration committee pursuant to the requirement in code provision B.1.1 of the Code which provides that “a majority of the members of the remuneration committee should be independent non-executive directors”.
By Order of the Board of |
CHINA LIFE INSURANCE COMPANY LIMITED |
Yang Chao |
Chairman |
The Directors of China Life Insurance Company Limited:
Executive Directors: | Yang Chao, Miao Fuchun | |
Non-executive Directors: | Wu Yan, Shi Guoqing | |
Independent Non-executive Directors: | Long Yongtu, Chau Tak Hay, Sun Shuyi, Cai Rang | |
Beijing, China, 29 August 2005 |