China Life Insurance Company Limited Announces 2005 Annual Results

    HONG KONG, April 19 /Xinhua-PRNewswire/ -- China Life Insurance Company
 Limited (SEHK: 2628; NYSE:   LFC) today announced the consolidated audited
 results of the Company and its subsidiaries (''China Life'' or the
 ''Company'') for the full year ended 31 December 2005.
     Key Highlights
 
     -- Net profit attributable to shareholders of the Company for the year
        amounted to RMB 9,306 million, up 29.77% from 2004.
     -- Basic and fully diluted earnings per share were RMB 0.35.
     -- Total revenues for the year reached RMB 98,212 million, up 27.87% from
        2004.
     -- Gross written premiums and policy fees reached RMB 81,022 million, up
        22.28% from 2004.
     -- As at 31 December 2005, the Company's embedded value was RMB 113,954
        million, up
     -- 26.51% from 2004, and the value of one year's sales was RMB 7,489
        million, up 15.14% from 2004.
     -- As at 31 December 2005, the Company's total assets were RMB 559,219
        million. Investment assets were RMB 494,356 million, while investment
        yield (on investment assets that include financial assets and cash and
        cash equivalents but exclude accrued investment income) was 3.86%, up
        37 basis points from 2004.
     -- The Company continued to maintain its leading position in the life
        insurance market in China, with a market share of 44.07%.
     -- The Board of Directors recommended the payment of a final dividend of
        RMB0.05 per share for the year to the shareholders whose names are on
        the register of shareholders on 17 May 2006.
     In year 2005, the Company achieved record levels of net profit, total
 revenues and total assets. For the year ended 31 December 2005, China
 Life's net profit attributable to shareholders of the Company amounted to
 RMB 9,306 million, an increase of 29.77% from 2004, primarily driven by
 adjustments in the structure of the business, improvement in investment
 income and enhancement of management practices. Basic and fully diluted
 earnings per share were RMB 0.35. The Company's total revenues amounted to
 RMB 98,212 million, a 27.87% increase over the previous year. As at 31
 December 2005, the Company's total assets were RMB 559,219 million. The
 Board of Directors recommended the payment of a final dividend of RMB 0.05
 per share for the year to the shareholders whose names are on the register
 of shareholders on 17 May 2006.
     Commenting on the annual results of the Company for the financial year
 2005, Mr Yang Chao, Chairman of the Board of China Life, said: ''I am
 pleased to report encouraging progresses in terms of reforms and business
 development by the Company in 2005. The Company has made adjustments to its
 Board of Directors and senior management in its continuing effort to
 improve corporate governance. As the core member of the China Life
 Insurance Group Company (''the Group''), China Life has adopted the Group's
 new development strategy of transforming itself into a major international
 financial and insurance group with rational resource allocation, clear
 strategic advantages, strong core businesses, appropriately diversified
 operations and the respect of the community and the industry. The Group
 will be characterised by a high embedded value, strong core competitiveness
 and highly sustainable development. China Life has integrated this Group
 strategy into its business objectives, namely, to establish the Company as
 a world-class life insurance Company with advanced corporate governance, a
 well-established management system, stringent internal controls, leading
 technologies, a first-class team, superior service and an outstanding
 brand. The Company will uphold the guiding principle of scientific
 development and contribute to the rapid development and improvement of the
 mainland insurance industry. The Company is committed to expanding and
 strengthening its business to enhance shareholder value.''
     Mr. Wu Yan, President of China Life, said: ''During the year, the
 Company adhered to a prudent development strategy, resulting in steady
 business growth, continuous improvement in business structure, and
 substantial increase in investment income. In addition to continuous growth
 in operating profits, the Company also achieved further improvement in
 management as well as greater influence in the society, and maintained our
 leading position in PRC life insurance market. All staff members of the
 Company share the same vision, and are determined to fulfil the mission of
 'Focusing on people, Caring for life, Creating value, Serving society'.''
     Strong growth in business, leading position in the market
     In 2005, the Company's total revenues were RMB 98,212 million, up
 27.87% from 2004. Gross written premiums and policy fees reached RMB 81,022
 million, up 22.28% from 2004. Net profit attributable to shareholders of
 the Company reached RMB 9,306 million, up 29.77% from 2004.
     According to figures released by the China Insurance Regulatory
 Commission (''CIRC''), the Company continued to maintain its leading
 position of China's life insurance market, with a market share of 44.07% in
 2005.
     Business structure further optimized, embedded value further increased
     In 2005, leveraging on the positive effects of total budget management
 and cost management, the Company continued to adjust its business structure
 with a view to achieving a balanced business growth.
     In 2005, gross written premiums were RMB 74,939 million, representing a
 22.72% increase from 2004. First-year gross written premiums from long-term
 traditional insurance contracts amounted to RMB 20,425 million, up 1.14%
 from 2004. First-year regular gross written premiums reached RMB 18,529
 million, up 6.44% from 2004. First-year regular gross written premiums
 accounted for 90.72% of first-year gross written premiums from long-term
 traditional insurance contracts.
     As at 31 December 2005, the Company's embedded value was RMB 113,954
 million, an increase of 26.51% from 2004. The value of one year's sales for
 the year ended 31 December 2005 was RMB 7,489 million, up 15.14% from 2004.
 Embedded value is an actuarially determined estimate of the economic value
 of life insurance business of an insurance Company, excluding the economic
 value of future new business. The value of one year's sales provides an
 indication of the value being created for investors by new business
 activity and hence the potential of the business.
     Optimized asset structure, increased investment income
     In 2005, the Company adhered to prudent principles and adjusted its
 investment strategies according to changes in the capital markets. During
 the year, the Company increased the proportion of bond investments with
 longer maturities and lowered the proportion of term deposits. In addition,
 the Company adopted a proactive and yet prudent approach to equity
 investments and optimized the structure of its foreign exchange assets. The
 Company also extended the durations of its assets, improved asset-liability
 match and effectively increased investment income. As at 31 December 2005,
 the Company's total investment assets (including financial assets and cash
 and cash equivalents but excluding accrued investment income) amounted to
 RMB 494,356 million. Investment yield was 3.86%, up 37 basis points from
 2004.
     Stringent cost control, strong financial positions
     In 2005, the Company strived to achieve the realization of business
 development, structural adjustment and earnings growth, and highlighted
 core significance of financial management in the Company's overall business
 management. While ensuring continuous business development, the Company
 further implemented total budget management to stringently control costs.
 In 2005, the consolidated cost control ratio was 17.2%, down 1.4 percentage
 points from 2004.
     As at 31 December 2005, the Company's total assets were RMB 559,219
 million. Shareholders' equity was RMB 80,378 million. The Company's
 solvency level was approximately 2.73 times the minimum regulatory
 requirement. A strong financial position and an adequate solvency level
 have enabled the Company to expand its business at a rapid pace.
     Broadened sales channel, enhanced service quality
     The Company has the largest sales team in China's life insurance
 industry, with the broadest geographic coverage. In 2005, the Company
 continued to maintain its leading sales capabilities by continuously
 expanding sales channels and scope of cooperation, as well as stepping up
 efforts in sales staff training and management. As at 31 December 2005, the
 Company has approximately 640,000 individual agents, 12,000 direct sales
 staff, and a network of more than 89,000 cooperating bank branches and post
 saving offices that have established bancassurance business relationships.
     In 2005, the Company continued to strive to improve underwriting and
 claims management as well as customer service standards. The Company
 formulated and revised a series of policies and management rules, adjusted
 and optimized business flows, strengthened controls on business risks,
 improved its service and upgraded its effectiveness and quality of business
 processing. The centralized service platform ''95519'' Call Center was
 awarded the Best Performing Call Centre in China 2005 by the Customer
 Relationship Management Professional Committee of the Alliance for
 Promotion of Informationalization under the Ministry of Information
 Industry. China Life was the only life insurance Company to receive such
 award in China. This was also the second consecutive year the Company was
 granted with this award.
     Further improvement in corporate governance and internal control
     In order to satisfy regulatory requirements at which the Company is
 listed in a more effective manner, and to further enhance its corporate
 governance standards, China Life introduced a series of enhancement
 initiatives in this area. The Company made changes and enhancements to the
 Board of Directors and its special committees to further emphasise the
 roles of independent directors. According to the requirements of the Code
 on Corporate Governance Practices of the Stock Exchange of Hong Kong, the
 roles of the Chairman and the President were also separated. In addition,
 the Company further optimizes its vertically led and centrally managed
 audit system, with the internal audit team further strengthened and a
 series of internal auditing systems and guidelines formulated and revised.
 The Company also allocates sufficient resources and continues to optimize
 internal control systems and is preparing itself for compliance with the
 Sarbanes-Oxley Act Section 404.
     Since its listing, the Company has placed strong emphasis on the
 supervision and management on three types of risks: financial, investment
 and operational. The Company also continuously improved its information
 disclosure system. The supervisory and control system for internal control
 and risk management is comprised of the Board of Directors and its Audit
 Committee and Risk Management Committee, the Company's Supervisory
 Committee, the Internal Control and Risk Management Committee under the
 Management, as well as departments exercising internal control and
 supervisory roles for the Company, including the newly established Internal
 Control and Compliance Department, as well as the Legal Affairs Department
 and Audit Department. Continuous improvement in internal control
 facilitates prevention and management of business risks, which will result
 in better protection of interests of customers and shareholders.
     In February 2006, the Company was awarded ''The Most Trusted Life
 Insurance Company'' in the 2005 Financial Entities Election in China, a
 major online election in the country. According to the ranking announced by
 Forbes in April 2006, the Company was ranked 297th among the Top 2000
 Global Listed Companies, and was ranked seventh among the companies based
 in Greater China (including Hong Kong Special Administrative Region, Macau
 Special Administrative Region and the Taiwan Region). In April 2006, the
 Company was named "The 2005 Leader in Insurance Industry" in the "2005
 Chinese Service Industry Leaders Awards" organized by a number of market
 research institutes including the Horizon Research Consultancy Group.
     2006 Outlook
     In 2006, further development of the country's economy and the expansion
 of investment channels for insurance funds will bring about more
 development opportunities for the Company. On the other hand, keen
 competition in the industry and uncertainties in the capital markets will
 bring challenges. The Company will adopt a development strategy that is
 both proactive and balanced. It will further improve corporate governance
 and enhance its internal control, risk management and business management
 capabilities. By integrating sales resources, China Life will establish an
 efficient and effective sales system and back-office support system. The
 Company will strengthen its market leading position and continue to
 restructure its business, optimize asset allocation, and strengthen cost
 control to further enhance profitability.
     Forward-looking statements
     Certain statements contained in this announcement may be viewed as
 ''forward-looking statements" within the meaning of Section 21E of the US.
 Securities Exchange Act of 1934, as amended. Such forward-looking
 statements involve known and unknown risks, uncertainties and other
 factors, which may cause the actual performance, financial condition or
 results of operations of the Company to be materially different from any
 future performance, financial condition or results of operations implied by
 such forward-looking statements. Further information regarding these risks,
 uncertainties and other factors is included in the Company's Registration
 Statement on Form F-1 for its initial public offering (333-110615) and in
 the Company's other filings with the SEC.
     About China Life Insurance Company Limited
     China Life Insurance Company Limited (the ''Company'') (SEHK: 2628;
 NYSE:   LFC) was established in Beijing on 30 June 2003. On 17 and 18
 December 2003, the Company successfully listed on the New York Stock
 Exchange and the Stock Exchange of Hong Kong respectively.
     The Company is the leading life insurance Company in the insurance
 market of China (referring to the People's Republic of China for this press
 release, excluding the Hong Kong Special Administrative Region, Macau
 Special Administrative Region and the Taiwan Region). The Company has the
 most extensive distribution network in China that comprises exclusive
 agents, direct sales representatives and dedicated and non-dedicated
 agencies.
     The Company offers a series of products and services, including
 individual and group life insurance, accident insurance and health
 insurance. It is the largest life insurance Company in China, and is the
 leading provider of individual and group life insurance, annuities
 products, accident insurance and health insurance. As at 31 December 2005,
 the Company had over 70 million individual and group life insurance
 policies, annuities contracts and long- term health insurance policies that
 are in force, and also offers individual and group accident and short-term
 health insurance policies. The Company also controls China Life Asset
 Management Company Limited, and is the largest insurance asset manager and
 one of the largest institutional investors in China.
                                   Appendix 1
 
       CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005
 
                                                           2005        2004
                                                       RMB million  RMB million
                                                                     (Restated)
     REVENUES
     Gross written premiums and policy fees
         (including gross written premiums and
          policy fees from insurance contracts
          2005: RMB 80,651 million, 2004:
          RMB 65,878 million )                           81,022        66,257
     Less: premiums ceded to reinsurers                    (769)       (1,182)
     Net written premiums and policy fees                80,253        65,075
     Net change in unearned premium reserves               (215)          (67)
     Net premiums earned and policy fees                 80,038        65,008
     Net investment income                               16,685        11,317
     Net realised losses on financial assets               (510)           --
     Net realised losses on investments                      --          (237)
     Net fair value gains on assets at fair value
      through income                                        260            --
     Net unrealised losses on trading securities             --        (1,061)
     Other income                                         1,739         1,779
     Total revenues                                      98,212        76,806
     BENEFITS, CLAIMS AND EXPENSES
     Insurance benefits and claims
     Life insurance death and other benefits             (8,311)       (6,816)
     Accident and health claims and claim
      adjustment expenses                                (6,847)       (6,418)
     Increase in long-term traditional insurance
      contracts liabilities                             (33,977)      (25,361)
     Interest credited to long-term investment
      type insurance contracts                           (4,894)       (3,704)
     Interest credited to investment contracts             (973)         (616)
     Increase in deferred income                         (8,521)       (7,793)
     Policyholder dividends resulting from
      participation in profits                           (5,359)       (2,048)
     Amortisation of deferred policy acquisition
      costs                                              (7,766)       (6,263)
     Underwriting and policy acquisition costs           (1,845)       (1,472)
     Administrative expenses                             (7,237)       (6,585)
     Other operating expenses                              (798)         (131)
     Statutory insurance fund                              (174)          (96)
     Total benefits, claims and expenses                (86,702)      (67,303)
     Net Profit before income tax expenses               11,510         9,503
     Income tax expenses                                 (2,145)       (2,280)
     Net profit                                           9,365         7,223
 
     Attributable to:
       - shareholders of the Company                      9,306         7,171
       - minority interest                                   59            52
     Basic and diluted earnings per share            RMB   0.35    RMB   0.27
 
     Dividends proposed after the balance sheet
      date                                                1,338           Nil
 
 
                                   Appendix 2
 
               CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2005
 
                                                       As at           As at
                                                    31 December     31 December
                                                        2005           2004
                                                                    (Restated)
                                                     RMB million   RMB million
     ASSETS
     Property, plant and equipment                      12,710         12,250
     Deferred policy acquisition costs                  37,741         32,787
     Financial assets
       Debt securities:                                255,554        150,234
       - held-to-maturity securities                   146,297         79,603
       - available-for-sale securities                  96,425             --
       - non-trading securities                             --         69,791
       - financial assets at fair value
          through income                                12,832             --
       - trading securities                                 --            840
       Equity securities:                               39,548         17,271
       - available-for-sale securities                  26,261             --
       - non-trading securities                             --         12,597
       - financial assets at fair value
          through income                                13,287             --
       - trading securities                                 --          4,674
       Term deposits                                   164,869        175,498
       Statutory deposits-restricted                     5,353          4,000
       Policy loans                                        981            391
       Securities purchased under agreements
        to resell                                           --            279
       Accrued investment income                         6,813          5,084
     Premiums receivables                                4,959          3,912
     Reinsurance assets                                  1,182          1,297
     Cash and cash equivalents                          28,051         27,217
     Other                                               1,458          3,451
 
     Total Assets                                      559,219        433,671
 
     LIABILITIES AND EQUITY
     Liabilities
 
     Insurance contracts
       Short-term insurance contracts:
       - reserves for claims and claim
          adjustment expenses                            1,784          1,215
       - unearned premium reserves                       5,147          5,212
       Long-term traditional insurance
        contracts                                      124,656         89,698
       Long-term investment type insurance
        contracts                                      237,001        191,885
     Deferred income                                    34,631         27,603
     Financial Liabilities
       Investment contracts
       - with discretionary participation
         feature (''DPF'')                               42,230         32,476
       - without DPF                                     1,872          1,635
       Securities sold under agreements to
        repurchase                                       4,731             --
     Annuity and other insurance balances
      payable                                            4,492          2,801
     Premiums received in advance                        2,951          2,447
     Policyholder dividends payable                      6,204          2,037
     Other liabilities                                   4,106          4,922
     Current income tax liabilities                        525             38
     Deferred tax liabilities                            7,982          4,371
     Statutory insurance fund                               98            429
 
     Total liabilities                                 478,410        366,769
 
     Contingencies and commitments                          --             --
 
     Shareholders' equity
     Share capital                                      26,765         26,765
     Reserves                                           37,225         31,573
     Retained earnings                                  16,388          8,192
 
     Total shareholders' equity                         80,378         66,530
 
     Minority interest                                     431            372
 
     Total equity                                       80,809         66,902
     Total liabilities and equity                      559,219        433,671
 
 
 
                                   Appendix 3
 
                      GROSS WRITTEN PREMIUMS AND DEPOSITS
                      For the year ended 31 December 2005
 
 
 
                                                    2005                 2004
                                             RMB million          RMB million
     Individual life insurance
     Gross written premiums                       63,205               50,113
     First-year gross written
      premiums                                    19,574               19,900
     Single gross written premiums                 1,085                2,526
     First-year regular gross written             18,489               17,374
     premiums
     Renewal gross written premiums               43,631               30,213
     Deposits                                     62,483               66,981
     First-year deposits                          49,144               54,662
     Single deposits                              46,061               52,343
     First-year regular deposits                   3,083                2,319
     Renewal deposits                             13,339               12,319
 
 
     Group life insurance
     Gross written premiums                          867                  344
     First-year gross written
      premiums                                       851                  295
     Single gross written premiums                   811                  261
     First-year regular gross written
      premiums                                        40                   34
     Renewal gross written premiums                   16                   49
     Deposits                                     23,463               21,756
     First-year deposits                          23,452               21,738
     Single deposits                              23,401               21,726
     First-year regular deposits                      51                   12
     Renewal deposits                                 11                   18
 
 
     Accident and health insurance
     Gross written premium                        10,867               10,606
     Short-term accident insurance
     Gross written premiums                        5,135                4,977
     Short-term health insurance
     Gross written premiums                        5,732                5,629
 
 
     Total gross written premiums                 74,939               61,063
     Total deposits                               85,946               88,737
 
 
     For further information, please contact:
 
     Media Enquiries:
 
     English / Mandarin
      Mr. Bruce Shu
      Citigate Dewe Rogerson
      Tel:   +852-9132-2906 or +852-2533-4607
      Fax:   +852-2524-5599
      Email: bruce.shu@citigatedr-hk.com
 
     English / Cantonese / Mandarin
      Mr. Mill Seen
      Citigate Dewe Rogerson
      Tel:   +852-9224-9240 or +852-2533-4612
      Fax:   +852-2524-5599
      Email: mill.seen@citigatedr-hk.com
 
     Mandarin
      Ms. Liu Yang
      Citigate Dewe Rogerson
      Tel:   +86-138-0110-4947 or +86-10-6505-2082
      Fax:   +86-10-6505-2080
      Email: liu.yang@citigatedr-hk.com
 
      Mr. Jason Qingyang Cao
      China Life Insurance Company Limited
      Tel:   +852-9610-2760 (Tuesday, April 18)
      Tel:   +86-10-8565-9778 (Regular contact number)
      Fax:   +86-10-8525-2210
      Email: caoqingyang@e-chinalife.com
 
     Investor and Analyst Enquiries:
 
      Mr. Jason Qingyang Cao
      China Life Insurance Company Limited
      Tel:   +852-9610-2760 (Tuesday, April 18)
      Tel:   +86-10-8565-9778 (Regular contact number)
      Fax:   +86-10-8525-2210
      Email: caoqingyang@e-chinalife.com
 
 

SOURCE China Life Insurance Company Limited

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