New China Life Insurance Company Ltd.

This is a good opportunity for us to meet with you, the investors and analysts face-to-face and also friends from the media. We will take this opportunity to look back on our results in 2022. And as the host today, I'm Gong Xinfeng, Vice President, Chief Actuary and Board Secretary of the company. Today's annual results announcement is a good point for us to review and report our annual results in 2022. First of all, I'd like to introduce the senior management attending today. They are Mr. Li Quan, proposed chairman and president, proposed president Mr. Zhang Hong, Mr. Yang Zheng, Vice President and CFO, Vice President and Chief Risk Officer, Mr. Qin Hongbo, and Vice President Mr. Wang Lianwen, welcome. Also, we have invited two directors, independent directors, Mr. Ma Youting and Mr. Guo Yongqing to attend online. We have a briefing session and a Q&A session for today, and a simultaneous interpreting is provided. Now, let's begin the first session. Mr. Li Quan will introduce the 2022 overview and the insurance business, and Mr. Yang Zheng will introduce investment and financials. I will introduce embedded value. I will give the floor to Mr. Li Quan. Ladies and gentlemen, good afternoon. Welcome to NCI 2022 annual results announcement. First of all, I'd like to introduce the 2022 overview. In 2022, It's a difficult time for the industry, but our company maintained our strategic focus, deepened the return to the essence of insurance, and advanced healthy and stable development. The major results are as follows. GWP totaled 163.1 billion. Total assets reached 1.25 trillion yuan. Equity attributable to shareholders of the company was... 102.9 billion yuan. Net investment yield was 4.6%. Embedded value reached 255.6 billion yuan. Comprehensive sovereignty margin ratio was 238%. In 2022, in the face of severe market adjustment, the company adhered to the general principle of seeking progress while ensuring stability, improved the overall layout with life insurance as the core, supported by wealth management, old age care and health care, and empowered by science and technology. One prominent brand value, we have become a member of the Fortune 500 for two years in a row. and world's top 500 public companies by Forbes for 9 years and also world's 50 most valuable insurance brands for 8 years. Second, solid main business. NCI has always adhered to the essence of life insurance, explored market demand, optimized marketing channels, and continued to improve sales team and service network to build a professional and high-quality sales team with broad customer base. Third, supportive business collaboration. The company exceeded 1 trillion yuan. Investment remains prudent and forms excellent synergy with liabilities. Healthcare and old age care businesses support life insurance greatly. A comprehensive old age care and healthcare service system of old age care and healthcare community plus nursing and Medicare community plus leisure and tourism community has been established. Fourth, convenient and high-quality service. The company continues to strengthen application of technology and optimize service supply and process. And the value-added health service extended. Our service quality and efficiency continue to improve. Fifth, professional and efficient management. After 26 years of development and accumulation, we have a management team with rich experience and keen market insight, as well as a group of talents with high quality and professional underwriting, actuarial and risk management skills. The management efficiency constantly improves. In terms of risk management, NCI continued to improve our risk management system with the system spanning all major business areas. Steady progress has been made in risk management system and procedure and the risk monitoring and reporting mechanism optimized. Our risk management capacity has also been enhanced. The risk management system timely identified risks and gave warnings. Internal control system covered whole management modules. compliance management system monitored and reported key assessment indicators. Also, we constantly optimized our risk monitoring and reporting mechanism, set up early warnings intervals for monitoring and analysis of the key indicators for major risks, including marketing risk, credit risk, insurance risk, etc., Also, we have a risk warning and a reminder of related risks. In 2022, there was no major risk event of the company. In terms of ESG, we actively pay back to the society, serves national development strategy, fulfills social responsibilities, and contributes to people's livelihood. manifesting the responsibility of a large state-controlled listed company. First, we practice sustainable development, building a green operation system, providing financing for green transformation, and invested 14.7 billion yuan in green development. Second, support the real economy. By the end of 2022, we invested over 700 billion yuan to serve the real economy, and invested over 200 billion yuan to serve strategic emerging industries. Third, develop healthcare and old-age care businesses. We rolled out three old-age care projects, namely Le Xiang, Yi Xiang, and Zun Xiang, and improved operation of 19 health management centers. The New China Life Health, Excellent Health, became a designated medical institution for basic medical insurance in Beijing. Fourth, we implemented the Healthy China Strategy. By the end of 2022, policy-oriented health insurance projects covered nine provinces and served 17.95 million residents. Fifth, support the construction of a multi-level and a multi-pillar pension system. We carried out exclusive commercial pension pilot program and developed individual pension projects. The New China Pension won 19 occupational pension portfolios in 16 provinces. Sixth, contribute to rural revitalization and engage in public welfare and charity. We invested over 15 million yuan to targeted areas, donated money and supplies to about 90 million yuan, and donated total sum assured about 400 billion yuan to sanitation workers. In wealth management, by the end of 2022, Asset management company managed entrusted assets amounting to 479.6 billion, among which 437.7 billion are portfolio asset management products, increasing by 171 billion and 294 billion compared with 2021 and 2020 respectively. In terms of customer service, we adhere to the customer-centered philosophy. And through our diversified markets across the country, we offered about 33 million individual customers and 80,000 institution customers with our products and services. In quick claim settlement and premium services, since 2011, our total insurance benefits and claims amounted to 394 billion yuan. Self-service WeChat claim for individual customers has achieved 24-7 online claim filing with over 96.72% online claims and the average of settlement time is 0.56 days. In product supply, we focus on customer needs. and provide medical and illness insurance products providing insurance protection in all fronts. Also, we built a diversified product structure to meet the diversified needs. In customer service, we have over 1,600 outlets nationwide and have 630 senior care stations. We intensified our construction of multifunctional and human agents and AI agents. Our light-weighted and distributed cloud platform, Sui Shinto, was established. The new generation of smart self-service machine was established. And our all-functional media platform covers phone call message, website, and WeChat. We gradually provide professional human agents and AI at the same time at service. Looking into 2023, the life insurance industry has entered a new cycle of high-quality development. Liability business will be integrated into the construction of the old-age care and healthcare system, and asset business will be integrated into national strategies to highlight the long-term value of insurance funds. In 2023, NCI will actively integrate into the new development pattern and respond to industry challenges. In business development, we will improve business value, stabilize business volume, shift to long-term and diversified business. deeper industrial coordination and consolidate the foundation for development. First, maintain strategic focus and pursue long-term development. During the 14th five-year plan period, we will enhance new growth drivers, promote overall development layout with life insurance as the core supported by wealth management, old age care and health care and empowered by science and technology. Through the development of old-age care and health care businesses as well as asset management business, we will strive to make life insurance business bigger and stronger and enhance technological empowerment. We will strive for healthy, sustainable and high-quality development. Second, we will promote transformation to improve business performance. NCI will optimize product structure, strengthen product innovation, develop long-term business to diversify product structure, and we will improve business quality, improve efficiency. Third, based on the main responsibility and the main business, we will serve people's livelihoods. We will continue to leverage risk management and investment management, enrich the supply of inclusive products, and explore the development. of long-term care insurance, participate in the construction of commercial pension system, and contribute our share to the socioeconomic recovery. Now let's start the insurance business part. In 2022, faced with external situations, we responded to multiple challenges, focused on market demands, and firmly pursued high-quality development. Stable business performance was maintained. GWP reached 163.1 billion yuan, in which FYP from long-term insurance business totaled 38.8 billion yuan, accounting for 23.8%. Renewal premiums accounted for... ¥119.7 billion, accounting for 73.4%, up by 2.5% as a solid contributor to premium. Short-term insurance reached ¥4.6 billion, accounting for 2.8%. Breakdown by channels. Individual insurance channel realized premiums of ¥116.4 billion, accounting for 71.3%. Bank Assurance Channel realized 43.9 billion yuan, accounting for 26.9%. Group Insurance Channel realized 2.8 billion yuan. Individual Insurance Channel, impacted by multiple factors, including frequent pandemic outbreaks, lack of demand, and shrinking sales team. FYP was 10.7 billion yuan, among which... FYRP accounted for 94% of FYP for long-term insurance business. And we strengthened management on renewal business, which amounted to 103.8 billion yuan, accounting for 89% of individual insurance premiums, serving as a bedrock of the channel. In individual insurance sales team, We cleaned agent headcount and worked hard to build a young professional and urban sales team. By the end of last year, agent headcounts in individual insurance channel totaled 197,000 and the monthly average qualified agents was 45,000. Our monthly average comprehensive productivity increased to 3,200 yuan, growing by 18.8%. In Bank of France Channel, we prioritized regular business and improved cooperation mode and product and service supply. Premiums of the channel totaled 43.9 billion yuan, increasing by 7.8%. Value contribution increased by 6 percentage points. We have multiple insurance products to meet the diversified needs of our customers. And we have comprehensive cooperation layout. We cooperated with major state-owned banks and joint stock banks, and their businesses' growth boosted. Our productive team developed a lot. We are committed to building a united team, great service operation and training. Also, we hold the bottom line of risk control and compliance. We focused on key indicators, strengthened monitoring of key areas, and our persistency ratio improved steadily. For bank insurance premiums, FYP reached 28 billion yuan, up by 11.8%. First-year regular premiums from long-term insurance amounted to 7.7 billion yuan, up by 7.9%. Renewal premiums totaled 15.9 billion yuan, rising by 2.4%. For major products, in 2022, we explored customer demands. FYP for long-term participating insurance amounted to 20.3 billion yuan, increasing by 11.4%. FYP for long-term traditional insurance amounted to 14.5%, representing a minor growth. Due to sluggish health insurance business and the reduction of agent headcount, FYP for long-term insurance business totaled 4 billion yuan. In terms of business quality, 13-month persistency ratio of individual life insurance was 82.6%. Surrender rate was 1.8%, down by 0.2 percentage point. That's all for insurance business. Now let's welcome Mr. Yang Zhang to introduce the financials and investment part.

Thank you, Mr. Li. Next, I would like to introduce the financials and investment of the company in 2022. The total revenue of the company is over $209 billion, and the net of premiums and policy fees is $160 billion. Just now, Mr. Leszczynski gave a detailed introduction, and the investment yield is $46 billion. Because of the similar external environment, the investment yield decreased. The net profit attributed to shareholders of the company was $9.8 billion, And this is closely related to the insurance business and for the expenses. Due to the tightened and prudent management of fees, the management and expenditure efficiency has improved. The commissions and management fees have decreased. And for the profit and losses, we have disclosed detailed information. And now, here I will just introduce the big numbers. And next, I would like to introduce the investment. For the investment assets, since 2019, the company has implemented the strategy of asset-level dual-engine-driven growth. And the total assets and investment assets have seen rapid growth year-on-year. And by the end of last year, they have increased it to $1.2 trillion respectively. For the investment yield in the past several years, the company stick to prudent long-term and value investment philosophy and take into consideration the discipline and the yield, grasp opportunities And that investment yield in 2022 was 2.6% up by 0.3 percentage points. And in the past 10 years, the average total investment yield was 5.4% higher than the major investment assumptions in EV evaluation. So in the long term, The investment yield can cover our liability cost, so the investment risk under control. And for the investment portfolios in 2022, the portfolio is relatively stable. Term deposits have increased and the debt financial assets increased and the equity investment is relatively flat compared with the last year. And in the investment, the company attached importance to the control of credit risk and took a series of measures to control the investment risks. and for the net standard asset, which is a feature of NCI. In the past several years, we have constantly talked this topic with the market. Similar to the consensus, the proportion of net standard assets is decreased to 18.4% of the total investment in assets, down by 2.1 percentage points, which is which is in line with our expectations. And in the asset, the rating was the proportion of A3, and the asset accounted for 98%. And for the solvency of the company, we all know that the regulators have promoted the CROS-2. The standard for the calculation of solvency margin ratio has changed a lot. Core solvency margin ratio of the company is about 140%, and comprehensive solvency margin ratio was 238, which are higher than regulatory bottom line requirements. So this has provided sufficient margins for the Development of the Business and Provision of Risks. Next, let's welcome Mr. Gongxin Fengdu to introduce the embedded value. Thank you, Mr. Yang. Next, I would like to introduce the embedded value of the company. By the end of 2022, the EV of the company is $255 billion. It remains stable. And the value of the first business is about $89 billion, and the adjusted net worth is about $165 billion. Two lessons go to the analysis of the change. Operating related changes contribute to the EV growth of 8.6%. Even though there's a lot of volatile in the capital market, after calculating the economic experience variance, the EV has remained stable. For the new business value, Due to the insufficient of the market demand limits on the sales and recruitment of individual life insurance channels, the V&V of the company decreased to 0.4 billion. This is all for the embedded value. So this is the end of the presentation. Next, let's go to the Q&A session. Due to time limits, please propose no more than two questions. And please tell us your name and institution to represent before with your question. Next, let's go to the questions.

Thank you for giving me this opportunity. I'm CMC Zhu Lifang. I have two questions. The first is about investment and the second is about liability. We have seen that the net profit in Q4 has improved a lot and we have improvements in investment. Our investment yield and net investment yield across the year have among the best in the peers. How did you achieve this and what investment contribute to this? What are your outlook for 2023? And also for liability, the industry have many confidence for 2023 and what is your view on future development? Mr. Yang Zheng will answer your first question. Thank you for your question. And thank you more for your support for our investment capacities. Actually, in 2022, this year is not for the life insurance industry and also for the general investment industry is a very hard year. The general pressure and individual pressure, I believe everyone has insight for this. Actually, over the years, our growth in capacity of investment have always been a top priority. And we hold the opportunities for investment yield. In Q4 of last year, the short-term investment achieved a better yield. This shows our company's capacity in seeing opportunities of short-term investment. And we can quickly achieve our investment yield in short terms. You may all be aware that in Q4 of last year, The capital market has injected a great growth driving force for the general market and also for our general investment. We have been admitted to our general principle and we have achieved steady progress. Our major responsibility is to seize market opportunities. Last year was a difficult year with much pressure and this year we will meet more opportunities and challenges. The major task of the company is to Build market opportunities and continue our investment adjustment. Any individual investment will not impact our general yield in the long term. So our investment yield is accumulated through the year and with multiple investments. I'd like to make a few more points. You just mentioned that in Q4 last year was an important period for our company and our investment team was very patient to seize the opportunity in Q4. From September, when the market was at a low point, our investment allocation was improved a lot, which brought us with a generous yield, including our shares and bonds, and also our investment in Hong Kong Stock Exchange. Mr. Yang just elaborated on the general level And I may talk about things that is more specific. Actually, in last September, we all know that the shares in Hong Kong stock market declined a lot to about 12.5 thousand. And we increased our investment So our investment yield was turned to a positive range. From what we can see in this channel, we have over $30 billion of investment in the Hong Kong Stock Exchange. And under the general 20% decline of the general market, we have achieved 5% of growth. From what I see from the public data, this is a rare result. I will answer the second question. I'd like to say something else first. Before I enter this conference room, I see many of our guests are exchanging business cards and talking with each other and I'm very happy to see this scene because our customers are people and only people-to-people exchanges can help us bring more demands. The past three years has been very difficult for this industry, and we moved many of our business online. So this year, you just mentioned the word confidence. I think today's scene and atmosphere can give us more confidence for this industry. In this year, we can see the industry is rebounding. So we can have more opportunities to communicate with the market and give full play of our advantage under the macroeconomic situation recovery of China's economy we can better operate. So what I just said is also our confidence and decision for 2023. At the beginning of this year, we proposed at a work conference that our general principle is pursuing growth while maintaining stability, and the key word is growth. So return to the value and in terms of specific strategies, we will make majorly three strategies. The first is in businesses. In terms of our concept, we'll continue to implement the new development philosophy and follow the way of high quality development. This is embodied in many areas of our company. including how to improve our business management and team management and also our product, our cost and productivity. Actually, in 2022, we have made much progress which laid a solid foundation for this year's development. And we strengthened our value management system. The second is in business. Firstly, we attach great importance to stabilizing the volume. And based on that, we will improve the structure. This is the two key points in our business management. Just as what the central government has asked. We need to stabilize the volume and improve the quality. For our company, we are recovering from the previous difficulties and we will have more space and room to improve our structure based on our previous development. You may have followed some of our products like regular premiums from 10-year business. This all will be shown in our this year's assessment. And our business will be stable and value will be improved. The third is management. Improvement in value relies on the general management approval focusing on high quality development. We will implement fruitful, useful strategies to build our channels. You may have further questions regarding channel I will not elaborate on this now. The key is for the individual channel, the bank insurance channel, we will strengthen their capacity and improve their productivity so as to improve their value contribution and ultimately to improve our quality. In the past years, our team was impacted by the pandemic And in 2023, through improving our quality, we hope to improve the business and reduce the surrender rate to retain more business in the company to show our good quality. Also, we will improve our efficiency in management, improve our resource utilization So in terms of concept, business, and management, we will follow the general trend of the economic recovery, improve NCI's quality, turn a downing point, and achieve progress. That's all for my answer. Next question, please. Management team, thank you for the opportunity.