EX-99.1 2 d195841dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

CHINA LIFE INSURANCE COMPANY LIMITED

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

(Stock Code: 2628)

2020 THIRD QUARTER REPORT

 

 

This announcement is made by China Life Insurance Company Limited (the “Company”) pursuant to the inside information provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and Rules 13.09(2) and 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

 

The financial data of the Company for the first three quarters of 2020 have been prepared in accordance with the China Accounting Standards for Business Enterprises and are unaudited. Net profit attributable to equity holders of the Company and equity attributable to equity holders of the Company in the consolidated financial statements have no difference from the relevant data under the International Financial Reporting Standards.

 

 

1.

IMPORTANT NOTICE

 

  1.1

The Board of Directors, Board of Supervisors, Directors, Supervisors and Senior Management of the Company warrant that the information in this quarterly report is true, accurate and complete and contains no false representations, misleading statements or material omissions, and jointly and severally accept full legal responsibility.

 

  1.2

On 28 October 2020, the 2020 Third Quarter Report of the Company was considered and approved at the twenty-ninth meeting of the sixth session of the Board of the Company. Of the eleven Directors of the Company, nine attended the meeting. Chairman and Executive Director Mr. Wang Bin could not attend the meeting due to other businesses, and gave written authorization to Executive Director Mr. Su Hengxuan to act as proxy to attend, vote and chair the meeting. Non-executive Director Mr. Yuan Changqing could not attend the meeting due to other businesses, and gave written authorization to Executive Director Mr. Li Mingguang to act as proxy to attend and vote at the meeting.

 

  1.3

The Company’s 2020 third quarter financial report is unaudited.

 

  1.4

Mr. Wang Bin, Chairman of the Board of the Company, Ms. Huang Xiumei, Vice President in charge of financial affairs, Mr. Li Mingguang, Chief Actuary and Ms. Hu Jin, Head of the Financial Department, confirm that the financial statements in this 2020 third quarter report are true, accurate and complete.

 

1

2.

THE COMPANY’S BASIC INFORMATION

 

  2.1

Major financial data

Currency: RMB

     As at
30 September 2020		      As at 31 December
2019		      Increase/(decrease)
compared to
31 December 2019		  

Total assets (million)

      4,059,708        3,726,734        8.9 % 

Total equity holders’ equity (million)

      417,502        403,764        3.4 % 

Ordinary share holders’ equity per share (RMB per share)

      14.77        14.01        5.4 % 
     For the nine
months ended
30 September 2020		      For the
nine months ended
30 September 2019		      Increase/(decrease)
compared to the
same period of 2019		  

Net cash flows from operating activities (million)

      238,918        207,380        15.2 % 

Net cash flows from operating activities per share (RMB per share)

      8.45        7.34        15.2 % 

Operating income (million)

      691,571        624,024        10.8 % 

Net profit attributable to equity holders of the Company (million)

      47,078        57,702        -18.4 % 

Net profit attributable to equity holders of the Company after deducting non-recurring items (million)

      47,278        52,607        -10.1 % 

Earnings per share (basic and diluted) (RMB per share)

      1.66        2.03        -18.4 % 

Basic earnings per share after deducting non-recurring items (RMB per share)

      1.67        1.85        -10.0 % 

Weighted average ROE (%)

      11.43        16.66       
 A decrease of 5.23
percentage points		  
 

Weighted average ROE after deducting non-recurring items (%)

      11.48        15.18       
 A decrease of 3.70
percentage points		  
 

 

  Note:

In calculating the percentage changes of “Ordinary share holders’ equity per share”, “Net cash flows from operating activities per share”, “Earnings per share (basic and diluted)” and “Basic earnings per share after deducting non-recurring items”, the tail differences of the basic figures have been taken into account.

 

2

In the first three quarters of 2020, under the complicated and severe external environment, the Company closely adhered to the strategic deployment of “China Life Revitalization”, proceeded well with both pandemic control and business development, and actively pushed forward all tasks according to the requirements for high-quality development, thus maintaining the leading market position with a good development momentum. Firstly, the Company made steady progress in business development. In the first three quarters of 2020, the Company achieved revenues from insurance business1 of RMB543,553 million, an increase of 9.4% year on year. First-year regular premiums amounted to RMB106,049 million, an increase of 7.1% year on year. Renewal premiums amounted to RMB368,679 million, an increase of 10.1% year on year. Short-term insurance premiums amounted to RMB66,882 million, an increase of 9.3% year on year. Secondly, the Company achieved a continued growth in its business value. During the reporting period, the percentage of first-year regular premiums of the Company in premiums from new long-term insurance policies was 98.20%, an increase of 0.13 percentage point from the corresponding period of 2019. First-year regular premiums with a payment duration of ten years or longer amounted to RMB48,560 million, which accounted for 45.79% in first-year regular premiums. Prioritizing on business value growth, the Company continued to accelerate the development of its protection-oriented business. The percentage of premiums from designated protection-oriented products in first-year regular premiums increased by 1 percentage point year on year. During the reporting period, the value of new business for the first three quarters of 2020 grew by 2.7% year on year. The surrender rate was 0.85%, a decrease of 0.82 percentage point year on year. Thirdly, the sales force of the Company remained stable. With the “Yi Ti Duo Yuan” sales function restructuring (a strengthened individual agent business sector in coordination with other business channels) being completed, the Company maintained its sales force strategy of improving quality while expanding the size, and focused on its day-to-day management and quality enhancement, aiming for the high-quality development of its sales force. As at the end of the reporting period, the Company’s total sales force was 1.662 million, including 1.581 million agents in the individual agent business sector, which remained stable in general. Fourthly, the Company constantly enhanced its investment capability. As at the end of the reporting period, the Company’s investment assets reached RMB3,880,410 million, an increase of 8.5% from the end of 2019. The Company deepened the market-oriented reform of its investment management system, coordinated asset allocation and entrusted investment management at account level, and enhanced its investment capability through research of asset types and optimization of investment strategies. In the third quarter of 2020, the Company seized the opportunity of interest rate hike to increase allocation to government bonds with long durations, flexibly controlled the exposure of open market equity investments by taking advantage of market fluctuations, optimized the structure of its equity holdings, and took gains when appropriate. In the first three quarters of 2020, the Company achieved the gross investment income2 of RMB146,953 million, an increase of 9.3% year on year, and the gross investment yield3 was 5.36%. The net investment income4 was RMB122,723 million, an increase of 7.7% year on year, and the net investment yield5 was 4.47%.

 

1 

Revenues from insurance business is consistent with Premium Income in the attached income statement.

2 

Gross investment income = Net investment income + Net realized gains on investment assets + Fair value gains/losses – Impairment losses of investment assets

3 

Gross investment yield = {[(Gross investment income – Interest paid for financial assets sold under agreements to repurchase)/((Investment assets at the end of previous year – Financial assets sold under agreements to repurchase at the end of previous year – Derivative financial liabilities at the end of previous year + Investment assets at the end of the period – Financial assets sold under agreements to repurchase at the end of the period – Derivative financial liabilities at the end of the period)/2)]/274}×366

4 

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

5 

Net investment yield = {[(Net investment income – Interest paid for financial assets sold under agreements to repurchase)/((Investment assets at the end of previous year – Financial asset sold under agreements to repurchase at the end of previous year + Investment assets at the end of the period – Financial assets sold under agreements to repurchase at the end of the period)/2]/274}×366

 

3

During the reporting period, net profit attributable to equity holders of the Company was RMB47,078 million, a decrease of 18.4% year on year. As at the end of the reporting period, the core solvency ratio and comprehensive solvency ratio of the Company were 255.49% and 264.51%, respectively.

For the next stage, the Company will continue to adhere to the strategic deployment of “China Life Revitalization”, take proactive efforts to fulfill the overall targets for the year 2020, and make proper planning for the year 2021. In addition to the regular pandemic control and tasks of ensuring stability on the six fronts and maintaining security in the six areas, the Company will, according to the requirements for high-quality development, strengthen business value creation, push forward reform and innovation in greater depth, firmly maintain the bottom line of risk management and control, and strive to promote “China Life Revitalization” to a new stage.

 

4

Non-recurring Items and Amounts

 

            RMB million  

Non-recurring items

    For the reporting
period (from
July to September)		      For the nine
months ended
30 September 2020		  

Gains/(losses) on disposal of non-current assets

      (7 )       (10 ) 

Government subsidies recognized in current gains/(losses)

      34        86  

Donations

      (179 )       (264 ) 

Net non-recurring items other than those mentioned above

      (44 )       (70 ) 

Effect of income tax

      49        65  

Attributable to non-controlling interests

      (7 )       (7 ) 
  

 

 

     

 

 

  

Total

      (154 )       (200 ) 
  

 

 

     

 

 

  

 

  Note:

As an insurance company, investment (utilization of insurance funds) is one of the major businesses of the Company. Therefore, the non-recurring items do not include fair value gains/(losses) from financial assets at fair value through profit or loss and financial liabilities at fair value through profit or loss, as well as investment income from the disposal of financial assets at fair value through profit or loss and financial liabilities at fair value through profit or loss and available-for-sale financial assets.

 

5

  2.2

Total number of shareholders and the particulars of top ten shareholders as at the end of the reporting period

 

Total number of shareholders as at the end of the reporting period

   

Number of holders of A Shares: 134,473

  
  

Number of holders of H Shares: 26,448

  
Particulars of top ten shareholders of the Company

 

      Unit: Share  
Name of shareholders    Nature of shareholder    Percentage of
shareholding		    

Total number

of shares

     

Number of
shares subject

to selling
restrictions

     

Number of
shares pledged

or frozen

  

China Life Insurance (Group) Company

    State-owned legal person      68.37 %      19,323,530,000        —          —    

HKSCC Nominees Limited

    Overseas legal person      25.92 %      7,327,000,696        —          —    

China Securities Finance Corporation Limited

    State-owned legal person      2.56 %      723,937,634        —          —    

Central Huijin Asset Management Limited

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

Hong Kong Securities Clearing Company Limited

    Overseas legal person      0.22 %      61,838,562        —          —    

China Universal Asset Management Co., Ltd – Industrial and Commercial Bank of China Limited – China Universal – Tianfu Bull No. 53 Asset Management Plan

    Other      0.05 %      15,015,845        —          —    

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

    Other      0.04 %      12,032,229        —          —    

China International Television Corporation

    State-owned legal person      0.04 %      10,000,000        —          —    

Abu Dhabi Investment Authority

    Overseas legal person      0.03 %      9,174,546        —          —    
Qian Hai Life Insurance Co., Ltd – Huatai Portfolio of Participating Insurance Products    Other      0.03 %      9,017,040        —          —    
Details of shareholders                        1.       

HKSCC Nominees Limited is a company that holds shares on behalf of the clients of the Hong Kong stock brokers and other participants of the CCASS system. The relevant regulations of The Stock Exchange of Hong Kong Limited do not require such persons to declare whether their shareholdings are pledged or frozen. Hence, HKSCC Nominees Limited is unable to calculate or provide the number of shares that are pledged or frozen.

 

   2.    China Universal Asset Management Co., Ltd – Industrial and Commercial Bank of China Limited –China Universal – Tianfu Bull No. 53 Asset Management Plan has Industrial and Commercial Bank of China Limited as its asset trustee. Industrial and Commercial Bank of China Limited –SSE 50 Exchange Traded Index Securities Investment Fund have Industrial and Commercial Bank of China Limited as its fund depositary. Save as above, the Company was not aware of any connected relationship and concerted parties as defined by the “Measures for the Administration of the Takeover of Listed Companies” among the top ten shareholders of the Company.

 

6

  2.3

Total number of preference share holders, top ten preference share holders, and the particulars of top ten preference share holders with no selling restrictions as at the end of the reporting period

☐  Applicable        ✓   Not applicable

 

3.

SIGNIFICANT EVENTS

 

  3.1

Particulars of and reasons for changes in major accounting items and financial indicators of the Company

✓   Applicable       ☐  Not applicable

 

  (1)

Changes in key financial indicators and the reasons

 

                         RMB million

Key financial indicators

    As at
30 September
2020		      As at
31 December
2019		      Increase/
(decrease)		    

Main reasons

Total assets

      4,059,708        3,726,734        8.9 %    Accumulation of the assets from insurance business and investment business

Total liabilities

      3,635,628        3,317,392        9.6 %    An increase in insurance reserves

Total equity holders’ equity

      417,502        403,764        3.4 %    The combined impact of total comprehensive income, profit distribution and redemption of core tier 2 capital securities during the reporting period

 

7

                   RMB million

Key financial indicators

    For the nine
months ended
30 September
2020		    For the nine
months ended
30 September
2019		    Increase/
(decrease)		  

Main reasons

Operating profit

    54,131    62,071    -12.8%   The combined impact of the update of discount rate assumptions for reserves of traditional insurance contracts and the change in gross investment income

Net profit attributable to equity holders of the Company

    47,078    57,702    -18.4%   The combined impact of the update of discount rate assumptions for reserves of traditional insurance contracts, the adjustment of the pre-tax deduction policy of underwriting and policy acquisition costs adopted in the corresponding period of 2019 and the change in gross investment income

 

8

(2)

Material changes in major accounting items and the reasons

RMB million

Key financial indicators

    As at 30
September
2020		      As at 31
December
2019		      Increase/
(decrease)		    

Main reasons

Securities purchased under agreements to resell

      25,390        4,467        468.4 %    The needs for liquidity management

Premiums receivables

      40,529        17,281        134.5 %    Accumulation of renewal premiums

Securities sold under agreements to repurchase

      70,598        118,088        -40.2 %    The needs for liquidity management

Unearned premium reserves

      25,642        13,001        97.2 %    An increase in short-term insurance business and timing differences of business schedule

Other liabilities

      63,003        43,780        43.9 %    An increase in payables to third-party holders of consolidated structured entities

RMB million

Key financial indicators

    For the nine
months ended
30 September
2020		      For the nine
months ended
30 September
2019		      Increase/
(decrease)		    

Main reasons

Surrenders

      25,460        43,739        -41.8 %    A decrease in the surrender of certain products

Impairment losses

      11,691        3,915        198.6 %    An increase in equity investment assets meeting impairment criteria

 

9

  3.2

Explanation and analysis of significant events and their impacts and solutions

☐ Applicable    ✓ Not applicable

 

  3.3

Undertakings not implemented on time during the reporting period

✓ Applicable    ☐ Not applicable

 

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

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

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

Given that the change of ownership of the above two properties and related land use rights were directed by the co-owners, and all formalities in relation to the change of ownership were proceeded slowly due to reasons such as issues rooted in history and government approvals, CLIC, the controlling shareholder of the Company, made further commitment as follows: CLIC will assist the Company in completing, and urge the co-owners to complete the formalities in relation to the change of ownership in respect of the above two properties and related land use rights as soon as possible. If the formalities cannot be completed due to the reasons of the co-owners, CLIC will take any other legally practicable measures to resolve the issue and will bear any potential losses suffered by the Company as a result of the defective ownership.

 

10

  3.4

Warnings and explanation for any forecasted losses or significant changes (as compared to the same period of last year) in accumulated net profit from the beginning of the year to the end of the next reporting period

☐ Applicable    ✓ Not applicable

This announcement is published in both Chinese and English. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail.

By Order of the Board

China Life Insurance Company Limited

Heng Victor Ja Wei

Company Secretary

As at the date of this announcement, the Board of Directors of the Company comprises:

 

Executive Directors:    Wang Bin, Su Hengxuan, Li Mingguang
Non-executive Directors:    Yuan Changqing, Liu Huimin, Yin Zhaojun, Wang Junhui
Independent Non-executive Directors:    Chang Tso Tung Stephen, Robinson Drake Pike,
   Tang Xin, Leung Oi-Sie Elsie

Hong Kong, 28 October 2020

 

11

4.

APPENDIX

 

  4.1

Balance sheet as at 30 September 2020 (unaudited)

 

            RMB million (Unless otherwise stated)  
    

As at

30 September

     

As at

31 December

     

As at

30 September

     

As at

31 December

  
   2020      2019      2020      2019  
     Group      Group      Company      Company  

ASSETS

            

Assets

            

Cash fund

      54,463        55,082        49,270        48,794  

Financial assets at fair value through profit or loss

      162,292        141,606        133,551        117,471  

Derivative financial assets

      —          428        —          428  

Securities purchased under agreements to resell

      25,390        4,467        23,940        1,963  

Interest receivables

      49,867        41,455        49,014        40,855  

Premiums receivables

      40,529        17,281        40,529        17,281  

Receivables from reinsurers

      857        808        857        808  

Unearned premium reserves receivable from reinsurers

      565        369        565        369  

Claim reserves receivable from reinsurers

      195        145        195        145  

Reserves for life insurance receivables from reinsurers

      589        483        589        483  

Reserves for long-term health insurance receivables from reinsurers

      3,723        3,356        3,723        3,356  

Other receivables

      16,336        19,595        13,699        17,329  

Loans

      650,565        608,920        632,030        594,913  

Term deposits

      544,825        535,260        520,039        528,754  

Available-for-sale financial assets

      1,079,855        1,058,957        1,055,516        1,037,629  

Held-to-maturity investments

      1,115,462        928,751        1,114,573        927,892  

Long-term equity investments

      226,969        222,983        269,170        254,905  

Statutory deposits

      6,333        6,333        5,653        5,653  

Investment properties

      14,256        12,141        6,078        3,914  

Constructions in progress

      12,647        14,377        11,894        13,657  

Fixed assets

      37,263        36,343        35,504        34,545  

Right-of-use assets

      3,177        3,520        2,876        3,272  

Intangible assets

      8,021        8,070        7,306        7,340  

Deferred tax assets

      137        128        —          —    

Other assets

      5,382        5,866        5,171        5,590  

Separate account assets

      10        10        10        10  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Assets

      4,059,708        3,726,734        3,981,752        3,667,356  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

Wang Bin   Huang Xiumei   Li Mingguang   Hu Jin
Chairman   Vice President in   Chief Actuary   Head of
  charge of Accounting Affairs     Financial Department

 

12

  4.1

Balance sheet as at 30 September 2020 (unaudited) (continued)

 

            RMB million (Unless otherwise stated)  
    

As at
30 September
2020

Group

     

As at
31 December
2019

Group

      As at
30 September
2020
Company		      As at
31 December
2019
Company		  
LIABILITIES AND EQUITY            

Liabilities

            

Short-term borrowings

      1,624        1,115        —          —    

Financial liabilities at fair value through profit or loss

      2,708        3,859        —          —    

Securities sold under agreements to repurchase

      70,598        118,088        64,227        113,189  

Premiums received in advance

      15,923        60,898        15,923        60,898  

Brokerage and commission payable

      5,433        7,418        5,433        7,418  

Reinsurance payable

      1,514        817        1,514        817  

Salary and welfare payable

      9,752        12,223        8,680        11,048  

Taxes payable

      1,274        897        908        409  

Claims payable

      55,046        51,019        55,046        51,019  

Policyholder dividends payable

      110,749        112,593        110,749        112,593  

Other payable

      16,127        16,804        14,877        15,328  

Policyholder deposits

      288,350        267,794        288,350        267,794  

Unearned premium reserves

      25,642        13,001        25,642        13,001  

Claim reserves

      22,135        18,404        22,135        18,404  

Reserves for life insurance

      2,722,499        2,386,130        2,722,499        2,386,130  

Reserves for long-term health insurance

      159,897        135,201        159,897        135,201  

Long-term borrowings

      18,378        18,930        —          —    

Bonds payable

      34,991        34,990        34,991        34,990  

Lease liabilities

      2,721        3,091        2,436        2,842  

Deferred tax liabilities

      7,254        10,330        7,519        10,714  

Other liabilities

      63,003        43,780        23,955        22,283  

Separate account liabilities

      10        10        10        10  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities

      3,635,628        3,317,392        3,564,791        3,264,088  
  

 

 

     

 

 

     

 

 

     

 

 

  

Equity

            

Share capital

      28,265        28,265        28,265        28,265  

Other equity instruments

      —          7,791        —          7,791  

Capital reserve

      53,783        55,009        53,035        54,327  

Accumulated other comprehensive income

      25,674        29,163        25,408        28,716  

Surplus reserve

      81,018        75,161        80,970        75,113  

General reserve

      37,982        37,888        37,304        37,304  

Retained earnings

      190,780        170,487        191,979        171,752  
  

 

 

     

 

 

     

 

 

     

 

 

  

Attributable to equity holders of the Company

      417,502        403,764        
  

 

 

     

 

 

     

 

 

     

 

 

  

Non-controlling interests

      6,578        5,578        
  

 

 

     

 

 

     

 

 

     

 

 

  

Total equity

      424,080        409,342        416,961        403,268  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total liabilities and equity

      4,059,708        3,726,734        3,981,752        3,667,356  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

Wang Bin   Huang Xiumei   Li Mingguang   Hu Jin
Chairman   Vice President in   Chief Actuary   Head of
  charge of Accounting Affairs     Financial Department

 

13

  4.2

Income statement for the third quarter of 2020 (unaudited)

 

     RMB million (Unless otherwise stated)  
     For the nine months
ended 30 September		    

For the nine months

ended 30 September

  
    

2020

Group

    

2019

Group

    

2020

Company

    

2019

Company

  

1 Operating income

      691,571       624,024       687,207       620,351  

Premiums earned

      526,355       480,521       526,355       480,521  

Premium income

      543,553       497,047       543,553       497,047  

Including: Reinsurance premium income

      1       3       1       3  

Less: Premiums ceded to reinsurers

      (4,753 )      (4,038 )      (4,753 )      (4,038 ) 

Change in unearned premium reserves

      (12,445 )      (12,488 )      (12,445 )      (12,488 ) 

Investment income

      156,593       126,239       155,501       125,142  

Including: Share of profit of associates and joint ventures

      6,974       8,712       8,010       8,857  

Other gains

      122       53       89       35  

Fair value gains/(losses)

      2,049       11,947       2,059       11,437  

Foreign exchange gains/(losses)

      143       (27 )      (125 )      295  

Other operating income

      6,307       5,278       3,326       2,908  

Gains/(losses) on disposal of assets

      2       13       2       13  

2 Operating expenses

      (637,440 )      (561,953 )      (634,837 )      (559,617 ) 

Surrenders

      (25,460 )      (43,739 )      (25,460 )      (43,739 ) 

Claims expense

      (102,073 )      (99,575 )      (102,073 )      (99,575 ) 

Less: Claims recoverable from reinsurers

      2,882       2,786       2,882       2,786  

Increase in insurance contracts reserve

      (364,780 )      (295,086 )      (364,780 )      (295,086 ) 

Less: Insurance reserves recoverable from reinsurers

      523       788       523       788  

Policyholder dividends resulting from participation in profits

      (22,775 )      (17,810 )      (22,775 )      (17,810 ) 

Tax and surcharges

      (854 )      (620 )      (717 )      (529 ) 

Underwriting and policy acquisition costs

      (70,207 )      (63,011 )      (70,207 )      (63,011 ) 

Administrative expenses

      (26,644 )      (26,506 )      (25,066 )      (25,028 ) 

Less: Expenses recoverable from reinsurers

      664       202       664       202  

Other operating expenses

      (17,025 )      (15,467 )      (16,137 )      (14,792 ) 

Impairment losses

      (11,691 )      (3,915 )      (11,691 )      (3,823 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

3 Operating profit

      54,131       62,071       52,370       60,734  
  

 

 

    

 

 

    

 

 

    

 

 

  

Add: Non-operating income

      84       76       78       54  

Less: Non-operating expenses

      (395 )      (190 )      (385 )      (184 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

4 Net profit before income tax

      53,820       61,957       52,063       60,604  
  

 

 

    

 

 

    

 

 

    

 

 

  

Less: Income tax expenses

      (5,899 )      (3,699 )      (5,145 )      (3,327 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

 

Wang Bin   Huang Xiumei   Li Mingguang   Hu Jin
Chairman   Vice President in   Chief Actuary   Head of
  charge of Accounting Affairs     Financial Department

 

14

  4.2

Income statement for the third quarter of 2020 (unaudited) (continued)

 

           RMB million (Unless otherwise stated)  
     For the nine months     For the nine months  
     ended 30 September     ended 30 September  
     2020     2019     2020     2019  
     Group     Group     Company     Company  

5 Net profit

      47,921       58,258       46,918       57,277  
  

 

 

    

 

 

    

 

 

    

 

 

  

According to operating continuity:

         

– Net profit from continuing operations

      47,921       58,258       46,918       57,277  

According to ownership of the company:

         

– Equity holders of the Company

      47,078       57,702      

– Non-controlling interests

      843       556      

6 Earnings per share

         

Basic earnings per share

      RMB1.66       RMB2.03      

Diluted earnings per share

      RMB1.66       RMB2.03      

7 Other Comprehensive income

      (3,479 )      20,424       (3,308 )      20,149  

Other comprehensive income attributable to equity holders of the Company (net of tax)

      (3,489 )      20,370      

Other comprehensive income that may be reclassified to profit or loss

      (3,507 )      20,370       (3,326 )      20,149  

Fair value gains/(losses) on available-for-sale financial assets

      60       32,911       73       32,730  

Less: Amount transferred to net profit from other comprehensive income

      (7,967 )      (5,010 )      (7,899 )      (4,975 ) 

Portion of fair value changes on available-for-sale financial assets attributable to participating policyholders

      5,309       (8,122 )      5,309       (8,122 ) 

Other comprehensive income that may be transferred to profit or loss under the equity method

      (928 )      328       (779 )      330  

Exchanges differences on translating foreign operations

      19       263       (30 )      186  

Other comprehensive income that will not be reclassified to profit or loss

      18       —         18       —    

Other comprehensive income that may not be transferred to profit or loss under the equity method

      18       —         18       —    

Other comprehensive income attributable to non-controlling interests (net of tax)

      10       54      
  

 

 

    

 

 

    

 

 

    

 

 

  

8 Total Comprehensive income

      44,442       78,682       43,610       77,426  
  

 

 

    

 

 

    

 

 

    

 

 

  

– Attributable to equity holders of the Company

      43,589       78,072      

– Attributable to non-controlling interests

      853       610      

 

Wang Bin   Huang Xiumei   Li Mingguang   Hu Jin
Chairman   Vice President in   Chief Actuary   Head of
  charge of Accounting Affairs     Financial Department

 

15

  4.2

Income statement for the third quarter of 2020 (unaudited) (continued)

 

     RMB million (Unless otherwise stated)  
    

For the three months

ended 30 September

    

For the three months

ended 30 September

  
    

2020

Group

    

2019

Group

    

2020

Company

    

2019

Company

  

1 Operating income

      177,836       166,791       176,341       165,915  

Premiums earned

      118,419       119,224       118,419       119,224  

Premium income

      116,186       119,071       116,186       119,071  

Including: Reinsurance premium income

      —         1       —         1  

Less: Premiums ceded to reinsurers

      (1,640 )      (1,397 )      (1,640 )      (1,397 ) 

Change in unearned premium reserves

      3,873       1,550       3,873       1,550  

Investment income

      58,834       45,819       58,376       45,351  

Including: Share of profit of associates and joint ventures

      2,284       3,047       2,338       2,927  

Other gains

      44       31       19       13  

Fair value gains/(losses)

      (1,706 )      98       (1,351 )      126  

Foreign exchange gains/(losses)

      168       (57 )      (235 )      257  

Other operating income

      2,079       1,663       1,115       931  

Gains/(losses) on disposal of assets

      (2 )      13       (2 )      13  

2 Operating expenses

      (159,354 )      (143,678 )      (158,721 )      (143,116 ) 

Surrenders

      (7,805 )      (7,563 )      (7,805 )      (7,563 ) 

Claims expense

      (34,676 )      (30,392 )      (34,676 )      (30,392 ) 

Less: Claims recoverable from reinsurers

      1,198       956       1,198       956  

Increase in insurance contracts reserve

      (75,895 )      (68,039 )      (75,895 )      (68,039 ) 

Less: Insurance reserves recoverable from reinsurers Policyholder dividends resulting from participation in profits

     

 220

(8,268

  

) 

    

 261

(6,974

  

) 

    

 220

(8,268

  

) 

    

 261

(6,974

  

) 

Tax and surcharges

      (216 )      (143 )      (189 )      (128 ) 

Underwriting and policy acquisition costs

      (13,689 )      (17,416 )      (13,689 )      (17,416 ) 

Administrative expenses

      (8,587 )      (8,693 )      (7,993 )      (8,275 ) 

Less: Expenses recoverable from reinsurers

      457       84       457       84  

Other operating expenses

      (5,777 )      (5,210 )      (5,765 )      (5,252 ) 

Impairment losses

      (6,316 )      (549 )      (6,316 )      (378 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

3 Operating profit

      18,482       23,113       17,620       22,799  
  

 

 

    

 

 

    

 

 

    

 

 

  

Add: Non-operating income

      18       27       16       14  

Less: Non-operating expenses

      (244 )      (76 )      (241 )      (75 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

4 Net profit before income tax

      18,256       23,064       17,395       22,738  
  

 

 

    

 

 

    

 

 

    

 

 

  

Less: Income tax expenses

      (1,397 )      (2,735 )      (1,125 )      (2,672 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

 

Wang Bin   Huang Xiumei   Li Mingguang   Hu Jin
Chairman   Vice President in   Chief Actuary   Head of
  charge of Accounting Affairs     Financial Department

 

16

  4.2

Income statement for the third quarter of 2020 (unaudited) (continued)

 

     RMB million (Unless otherwise stated)  
     For the three months     For the three months  
     ended 30 September     ended 30 September  
     2020     2019     2020     2019  
     Group     Group     Company     Company  

5 Net profit

      16,859       20,329       16,270       20,066  
  

 

 

    

 

 

    

 

 

    

 

 

  

According to operating continuity:

         

– Net profit from continuing operations

      16,859       20,329       16,270       20,066  

According to ownership of the company:

         

– Equity holders of the Company

      16,543       20,103      

– Non-controlling interests

      316       226      

6 Earnings per share

         

Basic earnings per share

      RMB0.59       RMB0.71      

Diluted earnings per share

      RMB0.59       RMB0.71      

7 Other Comprehensive income

      (5,763 )      207       (5,418 )      96  

Other comprehensive income attributable to equity holders of the Company (net of tax)

      (5,754 )      192      

Other comprehensive income that may be reclassified to profit or loss

      (5,880 )      192       (5,544 )      96  

Fair value gains/(losses) on available-for- sale financial assets

      (8,919 )      1,297       (8,605 )      1,190  

Less: Amount transferred to net profit from other comprehensive income

      123       (1,463 )      136       (1,455 ) 

Portion of fair value changes on available-for-sale financial assets attributable to participating policyholders

      3,937       236       3,937       236  

Other comprehensive income that may be transferred to profit or loss under the equity method

      (965 )      (77 )      (963 )      (50 ) 

Exchanges differences on translating foreign operations

      (56 )      199       (49 )      175  

Other comprehensive income that will not be reclassified to profit or loss

      126       —         126       —    

Other comprehensive income that may not be transferred to profit or loss under the equity method

      126       —         126       —    

Other comprehensive income attributable to non-controlling interests (net of tax)

      (9 )      15      
  

 

 

    

 

 

    

 

 

    

 

 

  

8 Total Comprehensive income

      11,096       20,536       10,852       20,162  
  

 

 

    

 

 

    

 

 

    

 

 

  

– Attributable to equity holders of the Company

      10,789       20,295      

– Attributable to non-controlling interests

      307       241      

 

Wang Bin   Huang Xiumei   Li Mingguang   Hu Jin
Chairman   Vice President in   Chief Actuary   Head of
  charge of Accounting Affairs     Financial Department

 

17

  4.3

Cash flow statement for the third quarter of 2020 (unaudited)

 

RMB million (Unless otherwise stated)

     For the nine months
ended 30 September		     For the nine months
ended 30 September		  
     2020
Group		     2019
Group		     2020
Company		     2019
Company		  

1 Cash flows from operating activities

         

Premiums received

      476,464       433,497       476,464       433,497  

Net increase in policyholder deposits

      20,899       15,761       20,899       15,761  

Net cash received from financial assets at fair value through profit or loss

      —         15,256       —         26,887  

Net cash received from financial liabilities at fair value through profit or loss

      155       1,196       —         —    

Cash received from other operating activities

      12,394       7,579       5,074       3,985  
  

 

 

    

 

 

    

 

 

    

 

 

  

Sub-total of cash inflows from operating activities

      509,912       473,289       502,437       480,130  
  

 

 

    

 

 

    

 

 

    

 

 

  

Cash paid for claims

      (123,506 )      (141,881 )      (123,506 )      (141,881 ) 

Net cash paid for reinsurance business

      (559 )      (764 )      (559 )      (764 ) 

Cash paid for brokerage and commission fees

      (72,192 )      (61,531 )      (72,192 )      (61,531 ) 

Cash paid for policyholder dividends

      (17,524 )      (11,466 )      (17,524 )      (11,466 ) 

Cash paid to and for employees

      (18,224 )      (18,296 )      (17,090 )      (17,280 ) 

Cash paid for taxes and surcharges

      (13,476 )      (11,590 )      (11,830 )      (10,459 ) 

Net cash paid for financial assets at fair value through profit or loss

      (4,206 )      —         (243 )      —    

Cash paid for other operating activities

      (21,307 )      (20,381 )      (18,253 )      (17,183 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Sub-total of cash outflows from operating activities

      (270,994 )      (265,909 )      (261,197 )      (260,564 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net cash flows from operating activities

      238,918       207,380       241,240       219,566  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

Wang Bin

Chairman

   

Huang Xiumei

Vice President in

charge of Accounting Affairs

   

Li Mingguang

Chief Actuary

   

Hu Jin

Head of

Financial Department

 

18

  4.3

Cash flow statement for the third quarter of 2020 (unaudited) (continued)

 

 

RMB million (Unless otherwise stated)

     For the nine months
ended 30 September		     For the nine months
ended 30 September		  
     2020
Group		     2019
Group		     2020
Company		     2019
Company		  

2 Cash flows from investing activities

         

Cash received from sales and redemption of investments

      462,567       646,322       453,676       635,534  

Cash received from investment income

      113,316       103,842       108,924       103,767  

Net cash received from disposals of fixed assets, intangible assets and other long-term assets

      29       35       29       35  

Net cash received from securities purchased under agreements to resell

      —         7,981       —         7,483  

Net cash received from the disposal of subsidiaries and other business units

      1,235       1,896       2,844       2,077  
  

 

 

    

 

 

    

 

 

    

 

 

  

Sub-total of cash inflows from investing activities

      577,147       760,076       565,473       748,896  
  

 

 

    

 

 

    

 

 

    

 

 

  

Cash paid for investments

      (708,414 )      (898,683 )      (679,385 )      (893,796 ) 

Net increase in policy loans

      (18,171 )      (20,588 )      (18,171 )      (20,588 ) 

Cash paid for acquisition of fixed assets, intangible assets and other long-term assets

      (4,617 )      (6,078 )      (4,281 )      (5,484 ) 

Net cash paid from securities purchased under agreements to resell

      (21,203 )      —         (21,977 )      —    
  

 

 

    

 

 

    

 

 

    

 

 

  

Sub-total of cash outflows from investing activities

      (752,405 )      (925,349 )      (723,814 )      (919,868 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net cash flows from investing activities

      (175,258 )      (165,273 )      (158,341 )      (170,972 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

 

Wang Bin

Chairman

   

Huang Xiumei

Vice President in

charge of Accounting Affairs

   

Li Mingguang

Chief Actuary

   

Hu Jin

Head of

Financial Department

 

19

  4.3

Cash flow statement for the third quarter of 2020 (unaudited) (continued)

 

     RMB million (Unless otherwise stated)  
     For the nine months
ended 30 September		     For the nine months
ended 30 September		  
     2020     2019     2020     2019  
     Group     Group     Company     Company  

3 Cash flows from financing activities

         

Cash received from investment

      17,551       7,034       —         —    

Including: Cash received from the investment of non-controlling interests by subsidiaries

      17,551       7,034      

Cash received from borrowings

      4,141       35,014       —         34,988  
  

 

 

    

 

 

    

 

 

    

 

 

  

Sub-total of cash inflows from financing activities

      21,692       42,048       —         34,988  
  

 

 

    

 

 

    

 

 

    

 

 

  

Cash repaid to lenders

      (12,898 )      (565 )      (9,051 )      —    

Cash paid for dividends and interests and repaid for lenders

      (24,090 )      (6,620 )      (23,372 )      (6,041 ) 

Net cash paid for securities sold under agreements to repurchase

      (46,834 )      (65,595 )      (48,962 )      (66,673 ) 

Cash paid for other financing activities

      (2,292 )      (1,383 )      (1,085 )      (825 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Sub-total of cash outflows from financing activities

      (86,114 )      (74,163 )      (82,470 )      (73,539 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net cash flows from financing activities

      (64,422 )      (32,115 )      (82,470 )      (38,551 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

4 Effect of changes in foreign exchange rate on cash and cash equivalents

      2       116       43       78  
  

 

 

    

 

 

    

 

 

    

 

 

  

5 Net increase/(decrease) in cash and cash equivalents

      (760 )      10,108       472       10,121  
  

 

 

    

 

 

    

 

 

    

 

 

  

Add: Opening balance of cash and cash equivalents

      53,306       50,809       48,802       47,904  
  

 

 

    

 

 

    

 

 

    

 

 

  

6 Closing balance of cash and cash equivalents

      52,546       60,917       49,274       58,025  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

Wang Bin

Chairman

   

Huang Xiumei

Vice President in

charge of Accounting Affairs

   

Li Mingguang

Chief Actuary

   

Hu Jin

Head of

Financial Department

 

20