Principally engaged in providing life insurance in RMB and foreign currencies (including various life insurance, health insurance, and accident and casualty insurance); acting as an agent for domestic and foreign insurance institutions for insurance, verification and claim settlement; insurance consulting; and engaging in capital utilization in accordance with relevant regulations.
3Q results for the 9 months ended 30-09-2019. No dividend was declared. (Announcement Date: 30 Oct 2019)
Business Review - For the six months ended June 30, 2019
(I) Insurance Business
In the first half of 2019, the Company carried out the general principle of “making steady progress” and actively responded to new changes. The Company has achieved steady growth of gross written premiums (“GWP”) and better business structure and quality through focusing on core business and consolidating transformation results.
First, GWP achieved steady growth. In the first half of 2019, the Company realized GWP of RMB73,994 million, increasing by 9.0% compared with the same period of last year. The first year regular premiums from long-term insurance business amounted to RMB11,698 million, increasing by 1.1% compared with the same period of last year. The premiums from short-term insurance business totalled RMB3,883 million, increasing by 31.0% compared with the same period of last year and renewal premiums reached RMB58,399 million, growing by 9.6% compared with the same period of last year. The value of the first half year’s new business was RMB5,890 million, decreasing by 8.7% compared with the same period of last year. The embedded value reached RMB191,403 million, increasing by 10.5% compared with the end of last year. And the residual margin(1) was RMB208,313 million, increasing by 6.5% compared with the end of last year.
Second, business structure kept optimizing. The Company vigorously developed protection business with its priority on long-term health insurance business while moderately growing annuity business. In the first half of 2019, the first year premiums from long-term health insurance accounted for 55.7% of first year premiums from long-term insurance business, increasing by 1.4pt compared with the same period of last year. The first year regular premiums from regular premium products with payment periods of ten years or more accounted for 51.3% of first year regular premiums from long-term insurance business. The renewal premiums accounted for 78.9% of GWP, which remained basically flat with the same period of last year.
Third, business quality kept improving. The Company improved business operation and management through strengthening awareness of risk prevention. In the first half of 2019, the 13-month persistency ratio and 25-month persistency ratio in individual life insurance business were 90.1% and 86.5% respectively, down by 0.6pt and up by 1.8pt compared with the same period of last year respectively. Because the surrender peak of short and medium term insurance products passed away smoothly, the first half of 2019 has also seen the surrender rate of 1.0%, decreasing by 3.0pt compared with the same period of last year.
(II) Asset management business
Since 2019, China’s economic growth remained resilient as growth drivers transformed rapidly and positive signs emerged in structural adjustments. Global economic and financial situations were still complex and more external uncertainties and instabilities appeared. Overall, there were tough challenges in asset management business of insurance companies, such as severe credit situations, great reinvestment pressures, more fluctuations in capital market, higher tail risks and etc.. All of these brought greater pressure for asset allocation. In the face of complex and severe market situations, the Company adhered to prudent and moderate investment strategy and continued to optimize investment portfolio based on investment research and risk management in terms of asset management business.
The Company mostly invested in debt financial assets. In the first half of 2019, the Company mainly invested in interest rate bonds with eligible return and controlled risk, including long-duration treasury bond and local government bond. Through intensive research and assessment, the Company actively invested in high-quality assets with high return and security in terms of selecting financial products. Meanwhile, the Company closely monitored and minimized the risks of fixed-income financial assets and strictly controlled the qualifications of newly-added fixed-income financial assets. The impact brought by credit risk events was successfully avoided. As at 30 June 2019, the debt financial assets of the Company amounted to RMB521,416 million, accounting for 67.4% of the total investment assets, an increase of 1.7pt compared with the end of last year.
In terms of equity financial assets, the Company prudently controlled risk exposures and sought rational risk-return ratio based on strategic judgment and structural trend. On the one hand, the Company continued to take value investment as the criterion, sought certain return and selected high-quality investment targets from the bottom up. On the other hand, the Company actively seized market opportunities and gained earnings through band operation. As at 30 June 2019, the equity financial assets of the Company amounted to RMB122,225 million, accounting for 15.8% of the total investment assets, a decrease of 0.8pt compared with the end of last year.
Business Outlook - For the six months ended June 30, 2019
In 2019, in the face of complex external situations, China has made steady progress in economic performance. In the second half of 2019, it is expected that the external environment for life insurance industry will rebound along with the constantly optimizing economic structure, growing enterprise vitality and increasing household income.
To adhere to the general requirements of pursuing progress while ensuring stability from the central government, act upon new development philosophy and stay committed to the path of high-quality development, the Company will take the following measures:
Firstly, the Company will strengthen Party leadership. The Company will stick to the initial intention, keep in mind its mission, take “in-depth study and implementation of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and the guiding principles from the 19th CPC National Congress” as the key work, improve the political stance, strengthen responsibility and give play to the leading role of Party construction in the Company’s development.
Secondly, the Company will perfect market mechanism. Focusing on operation performance, the Company will lay equal stress on incentives and restrictions and constantly improve its market competitiveness through market and industry benchmarking.
Thirdly, the Company will enrich product pipelines. Through the understanding of customers’ needs, the Company will adhere to returning to the essence of insurance and provide comprehensive protection for customers.
Fourthly, the Company will improve the capabilities of sales team. The Company will step up efforts to enlarge its sales team and make its sales team stronger, improve the marketing and service capabilities of sales team.
Fifthly, the Company will strengthen sales support. The Company will speed up the building of information system to constantly improve the service efficiency of operation and offer stronger support for the sales team.
Sixthly, the Company will stick to prudent investment. The Company will strengthen long-term investment, strictly forestall risks, beef up the synergy between assets and liabilities to ensure the preservation and appreciation of insurance assets.
Seventhly, the Company will persist in compliance operation in accordance with laws. On the basis of consolidating the risk management basis and safeguarding the compliance bottom line, the Company will continue to advance the building of comprehensive risk management system, optimize internal control and compliance system and set up mechanisms to prevent and mitigate risks.
Source: New China Life Ins (01336) Interim Results Announcement