China Life (CILJF) 20-F for FY2019, filed Apr 29, 2020

As filed with the Securities and Exchange Commission on April 29, 2020

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

Commissionfile number 001-31914

中国人寿保险股份有限公司

(Exact name of Registrant as specified in its charter)

China LifeInsurance Company Limited

(Translation of Registrant’s name into English)

People’s Republic of China

(Jurisdiction of incorporation or organization)

16 FinancialStreet

Xicheng District

Beijing 100033, China

(Address of principal executive offices)

Yinghui Li

16 FinancialStreet

Xicheng District

Beijing 100033, China

Tel: (86-10) 6363 1191

Fax: (86-10) 6657 5112

Email: liyh@e-chinalife.com

(Name, Telephone, Email and/or Facsimile Number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on whichregistered
American depositary shares	LFC	New York Stock Exchange
H shares, par value RMB 1.00 per share		New York Stock Exchange*
*	Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary<br>shares, each representing 5 H shares.
---	---

Securities registered or to be registered pursuant to Section 12(g) of theAct:

None.

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None.

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As of December 31, 2019, 7,441,175,000 H shares and 20,823,530,000 **** A shares, par value RMB 1.00 per share, were issued and outstanding. H shares are listed on the Hong Kong Stock Exchange. A shares are listed on the Shanghai Stock Exchange. Both H shares and A shares are ordinary shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ Yes ☐ No

If this report is an annual report or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ <br>Accelerated filer ☐ Non-accelerated filer ☐ <br> Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Yes ☐ No

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S.GAAP ☐	International Financial Reporting Standards as issued<br><br><br>by the International Accounting Standards Board ☒	Other ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

CHINA LIFE INSURANCE COMPANY LIMITED

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS		1
CERTAIN TERMS AND CONVENTIONS		2
PART I		4
Item 1.	Identity of Directors, Senior Management and Advisers	4
Item 2.	Offer Statistics and Expected Timetable	4
Item 3.	Key Information	4
A.	Selected Financial Data	4
B.	Capitalization and Indebtedness	9
C.	Reasons for the Offer and Use of Proceeds	9
D.	Risk Factors	9
Item 4.	Information on the Company	32
A.	History and Development of the Company	32
B.	Business Overview	36
C.	Organizational Structure	93
D.	Property, Plants and Equipment	95
Item 4A.	Unresolved Staff Comments	95
Item 5.	Operating and Financial Review and Prospects	95
A.	Operating Results	117
B.	Liquidity and Capital Resources	134
C.	Research and Development, Patents and Licenses	137
D.	Trend Information	138
E.	Off-Balance Sheet Arrangements	138
F.	Tabular Disclosure of Contractual Obligations	138
Item 6.	Directors, Senior Management and Employees	138
A.	Directors and Senior Management	138
B.	Compensation	146
C.	Board Practices	149
D.	Employees	150
E.	Share Ownership	151
Item 7.	Major Shareholders and Related Party Transactions	151
A.	Major Shareholders	151
B.	Related Party Transactions	152
C.	Interests of Experts and Counsel	167
Item 8.	Financial Information	168
A.	Consolidated Financial Statements and Other Financial<br>Information	168
B.	Significant Changes	170
C.	Embedded Value	170
Item 9.	The Offer and Listing.	176
Item10.	Additional Information.	176
A.	Share Capital	176

B.	Articles of Association	176
C.	Material Contracts	194
D.	Exchange Controls	194
E.	Taxation	195
F.	Dividends and Paying Agents	205
G.	Statement by Experts	205
H.	Documents on Display	205
I.	Subsidiary Information	205
Item11.	Quantitative and Qualitative Disclosures about Market Risk	206
Item12.	Description of Securities Other Than Equity Securities	214
A.	Debt Securities	214
B.	Warrants and Rights	214
C.	Other Securities	214
D.	American Depositary Shares	214
PART II		215
Item13.	Defaults, Dividend Arrearages and Delinquencies	215
Item14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	215
A.	Material Modification To The Rights Of Security Holders	215
B.	Use of Proceeds	215
Item15.	Controls and Procedures	216
Item16A.	Audit Committee Financial Expert	217
Item16B.	Code of Ethics	217
Item16C.	Principal Accountant Fees and Services	217
Item16D.	Exemptions from the Listing Standards for Audit<br>Committees.	218
Item16E.	Purchases of Equity Securities by the Issuer and Affiliated<br>Purchasers	218
Item16F.	Change in Registrant’s Certifying Accountant	218
Item16G.	Corporate Governance	218
Item16H.	Mine Safety Disclosure	221
PART III		221
Item17.	Financial Statements	221
Item18.	Financial Statements	221
Item19.	Exhibits	221

FORWARD-LOOKING STATEMENTS

This annual report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements state our intentions, beliefs, expectations or predictions for the future, in particular under “Item 4. Information on the Company”, “Item 5. Operating and Financial Review and Prospects” and “Item 8. Financial Information—Embedded Value”.

The forward-looking statements include, without limitation, statements relating to:

•	future developments in the insurance industry in China;
•	changes in interest rates and other economic and business conditions in China;
---	---
•	the industry regulatory environment as well as the industry outlook generally;
---	---
•	the amount and nature of, and potential for, future development of our business;
---	---
•	the outcome of litigation and regulatory proceedings that we currently face or may face in the future;<br>
---	---
•	our business strategy and plan of operations;
---	---
•	the prospective financial information regarding our business;
---	---
•	our dividend policy; and
---	---
•	information regarding our embedded value.
---	---

In some cases, we use words such as “believe”, “intend”, “anticipate”, “estimate”, “project”, “forecast”, “plan”, “potential”, “will”, “may”, “should” and “expect” and similar expressions to identify forward-looking statements. All statements other than statements of historical facts included in this annual report, including statements regarding our future financial position, strategy, projected costs and plans and objectives of management for future operations, are forward-looking statements. Although we believe that the expectations reflected in those forward-looking statements are reasonable, we can give no assurance that those expectations will prove to have been correct, and you are cautioned not to place undue reliance on such statements. Important factors that could cause actual results to differ materially from our expectations are disclosed under “Item 3. Key Information—Risk Factors” and elsewhere in this annual report, including in conjunction with the forward-looking statements included in this annual report. We undertake no obligation to publicly update or revise any forward-looking statements contained in this annual report, whether as a result of new information, future events or otherwise, except as required by law. All forward-looking statements contained in this annual report are qualified by reference to this cautionary statement.

CERTAIN TERMS AND CONVENTIONS

References in this annual report to “we”, “us”, “our”, the “Company” or “China Life” mean China Life Insurance Company Limited and, as the context may require, its subsidiaries. References to “CLIC” mean China Life Insurance (Group) Company and, as the context may require, its subsidiaries, other than China Life. References in this annual report to “AMC” mean China Life Asset Management Company Limited, the asset management company established by us with CLIC on November 23, 2003. References to “CLPCIC” mean China Life Property and Casualty Insurance Company Limited, the property and casualty company established by us with CLIC on December 30, 2006. References to “China Life Pension” mean China Life Pension Company Limited established by us, CLIC and AMC on January 15, 2007.

The statistical and market share information contained in this annual report has been derived from government sources, including the China Insurance Yearbook 2017, the China Insurance Yearbook 2018, the China Insurance Yearbook 2019 and other public sources. The information has not been verified by us independently. Unless otherwise indicated, market share information set forth in this annual report is based on premium information as reported by the CBIRC. The reported information includes premium information that is not determined in accordance with HKFRS, U.S. GAAP or IFRS.

References to “A shares” mean the RMB ordinary shares which have been listed on the Shanghai Stock Exchange since January 9, 2007.

References to the “CIRC” mean the China Insurance Regulatory Commission, which was established in 1998 and merged with the China Banking Regulatory Commission in April 2018. References to the “CBRC” mean the China Banking Regulatory Commission, which was established in 2003 and merged with the CIRC in April 2018. References to “CBIRC” mean the China Banking and Insurance Regulatory Commission, which was established in April 2018 as a result of the merger of CIRC and CBRC. In this annual report, references to the “CIRC” mean the China’s insurance regulator prior to April 2018 and references to the “CBIRC” mean the China’s insurance regulator after April 2018, as the context may require.

References to “China” or “PRC” mean the People’s Republic of China, excluding, for purposes of this annual report, Hong Kong, Macau and Taiwan. References to the “central government” mean the government of the PRC. References to “State Council” mean the State Council of the PRC. References to “MOF” or “Ministry of Finance” mean the Ministry of Finance of the PRC. References to “Ministry of Commerce” mean the Ministry of Commerce of the PRC. References to “SAFE” mean the State Administration of Foreign Exchange of the PRC. References to “SAMR” mean the State Administration for Market Regulation of the PRC.

References to “HKSE” or “Hong Kong Stock Exchange” mean The Stock Exchange of Hong Kong Limited. References to “NYSE” or “New York Stock Exchange” mean the New York Stock Exchange. References to “SSE” or “Shanghai Stock Exchange” mean the Shanghai Stock Exchange.

References to “IFRS” mean the International Financial Reporting Standards as issued by the International Accounting Standards Board, references to “U.S. GAAP” mean the generally accepted accounting principles in the United States, references to “HKFRS” mean the Hong Kong Financial Reporting Standards, issued by the Hong Kong Institute of Certified Public Accountants, and references to “PRC GAAP” mean the PRC Accounting Standards for Business Enterprises applicable to companies listed in the PRC. Unless otherwise indicated, our financial information presented in this annual report has been prepared in accordance with IFRS.

References to “Renminbi” or “RMB” in this annual report mean the currency of the PRC, references to “U.S. dollars” or “US$” mean the currency of the United States of America, and references to “Hong Kong dollars”, “H.K. dollars” or “HK$” mean the currency of the Hong Kong Special Administrative Region of the PRC.

Unless otherwise indicated, translations of RMB amounts into U.S. dollars for presentation only in this annual report have been made at the rate of US$ 1.00 to RMB 6.9618, the noon buying rate in the City of New York for cable transfers payable in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York on December 31, 2019. No representation is made that Renminbi amounts could have been, or could be, converted into U.S. dollars at that rate on December 31, 2019 or at all. Translations of foreign currency amounts into RMB amounts for the purpose of preparing our audited consolidated financial statements included elsewhere in this annual report or our previous annual reports have been made at the exchange rates published by the PBOC.

Any discrepancies in any table between totals and sums of the amounts listed are due to rounding.

If there is any discrepancy or inconsistency between the Chinese names of the PRC entities in this annual report and their English translations, the Chinese version shall prevail.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS.

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.

Not applicable.

ITEM 3. KEY INFORMATION.

A. SELECTED FINANCIAL DATA

Selected Historical Consolidated Financial Data

The following tables set forth our selected consolidated financial information for the periods indicated. We have derived the consolidated financial information from our audited consolidated financial statements included elsewhere in this annual report or our previous annual reports.

We prepare our consolidated financial statements in accordance with IFRS as issued by the IASB.

You should read this information in conjunction with the rest of the annual report, including our audited consolidated financial statements and the accompanying notes, “Item 5. Operating and Financial Review and Prospects” included elsewhere in this annual report and the independent registered public accounting firm’s reports.

	For the year ended December 31,
	2015			2016			2017			2018			2019			2019
	RMB			RMB			RMB			RMB			RMB			US
Consolidated Statement of Comprehensive Income	(in millions except for per share data)
Revenues
Gross written premiums		363,971			430,498			511,966			535,826			567,086
Less: premiums ceded to reinsurers		(978	)		(1,758	)		(3,661	)		(4,503	)		(5,238	)		)
Net written premiums		362,993			428,740			508,305			531,323			561,848
Net change in unearned premium reserves		(692	)		(2,510	)		(1,395	)		700			(1,570	)		)
Net premiums earned		362,301			426,230			506,910			532,023			560,278
Investment income		97,582			109,147			122,727			125,167			139,919
Net realized gains on financial assets		32,297			6,038			42			(19,591	)		1,831
Net fair value gains through profit or loss		10,209			(7,094	)		6,183			(18,278	)		19,251
Other income		5,060			6,460			7,493			8,098			8,195
Total revenues	****	507,449	****	****	540,781	****	****	643,355	****	****	627,419	****	****	729,474	****		****
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits		(221,701	)		(253,157	)		(259,708	)		(248,736	)		(127,877	)		)
Accident and health claims and claim adjustment expenses		(21,009	)		(27,269	)		(33,818	)		(40,552	)		(50,783	)		)
Increase in insurance contract liabilities		(109,509	)		(126,619	)		(172,517	)		(189,931	)		(330,807	)		)
Investment contract benefits		(2,264	)		(5,316	)		(8,076	)		(9,332	)		(9,157	)		)
Policyholder dividends resulting from participation in profits		(33,491	)		(15,883	)		(21,871	)		(19,646	)		(22,375	)		)
Underwriting and policy acquisition costs		(35,569	)		(52,022	)		(64,789	)		(62,705	)		(81,396	)		)
Finance costs		(4,320	)		(4,767	)		(4,601	)		(4,116	)		(4,255	)		)
Administrative expenses		(27,458	)		(31,854	)		(35,953	)		(37,486	)		(40,275	)		)
Other expenses		(7,428	)		(4,859	)		(6,426	)		(7,642	)		(9,602	)		)
Statutory insurance fund contribution		(743	)		(1,048	)		(1,068	)		(1,097	)		(1,163	)		)
Total benefits, claims and expenses	****	(463,492	)	****	(522,794	)	****	(608,827	)	****	(621,243	)	****	(677,690	)		)
Net gains on investments of associates and joint ventures		1,974			5,855			7,143			7,745			8,011
Including: share of profit of associates and joint ventures		2,984			5,855			7,143			7,745			9,159
Profit before income tax		45,931			23,842			41,671			13,921			59,795
Income tax		(10,744	)		(4,257	)		(8,919	)		(1,985	)		(781	)		)
Net profit	****	35,187	****	****	19,585	****	****	32,752	****	****	11,936	****	****	59,014	****		****
Attributable to:
- Equity holders of the Company		34,699			19,127			32,253			11,395			58,287
- Non-controlling interests		488			458			499			541			727
Basic and diluted earnings pershare^(1)^		1.22			0.66			1.13			0.39			2.05

All values are in US Dollars.

^(1)^	Numbers are based on the weighted average number of 28,264,705,000 shares in issue.

	For the year ended December 31,
	2015			2016			2017			2018			2019			2019
	RMB			RMB			RMB			RMB			RMB			US
	(in millions except for per share data)
Other comprehensive income that may be reclassified to profit or loss in subsequentperiods:
Fair value gains/(losses) on<br>available-for-sale securities		54,080			(44,509	)		(15,003	)		(24,591	)		69,600
Amount transferred to net profit from other comprehensive income		(32,297	)		(6,038	)		(42	)		19,549			(4,635	)		)
Portion of fair value changes on<br>available-for-sale securities attributable to participating policyholders		(12,767	)		17,372			5,605			(32	)		(19,521	)		)
Share of other comprehensive income of associates and joint ventures under the equity<br>method		353			(864	)		20			735			599
Exchange differences on translating foreign operations		10			21			(865	)		598			237
Income tax relating to components of other comprehensive income		(2,242	)		8,242			2,359			1,716			(11,292	)		)
Other comprehensive income that may be reclassified to profit or loss in subsequentperiods		7,137			(25,776	)		(7,926	)		(2,025	)		34,988
Other comprehensive income that will not be reclassified to profit or loss in subsequentperiods
Share of other comprehensive income of associates and joint ventures under the equity<br>method		—			—			—			—			(76	)		)
Other comprehensive income for the year, net of tax		7,137			(25,776	)		(7,926	)		(2,025	)		34,912
Total comprehensive income for the year, net of tax	****	42,324	****	****	(6,191	)	****	24,826	****	****	9,911	****	****	93,926	****		****
Attributable to:
- Equity holders of the Company		41,775			(6,647	)		24,341			9,325			93,134
- Non-controlling interests		549			456			485			586			792

All values are in US Dollars.

	As of December 31,
	2015		2016		2017		2018		2019		2019
	RMB		RMB		RMB		RMB		RMB		US
Consolidated Statement of Financial Position	(in millions)
Assets
Property, plant and equipment		26,974		30,389		42,707		47,281		51,758
Right-of-use<br>assets		—		—		—		—		3,520
Investment properties		1,237		1,191		3,064		9,747		12,141
Investments in associates and joint ventures		47,175		119,766		161,472		201,661		222,983
Held-to-maturity<br>securities		504,075		594,730		717,037		806,717		928,751
Loans		207,267		226,573		383,504		450,251		608,920
Term deposits		562,622		538,325		449,400		559,341		535,260
Statutory deposits - restricted		6,333		6,333		6,333		6,333		6,333
Available-for-sale<br>securities		770,516		766,423		810,734		870,533		1,058,957
Securities at fair value through profit or loss		137,990		209,124		136,809		138,717		141,608
Derivative financial assets		—		—		—		—		428
Securities purchased under agreements to resell		21,503		43,538		36,185		9,905		4,467
Accrued investment income		49,552		55,945		50,641		48,402		41,703
Premiums receivable		11,913		13,421		14,121		15,648		17,281
Reinsurance assets		1,420		2,134		3,046		4,364		5,161
Other assets		23,642		22,013		33,952		33,437		34,029
Deferred tax assets		—		—		—		1,257		128
Cash and cash equivalents		76,096		67,046		48,586		50,809		53,306
Total assets	****	2,448,315	****	2,696,951	****	2,897,591	****	3,254,403	****	3,726,734
Liabilities and equity
Liabilities
Insurance contracts		1,715,985		1,847,986		2,025,133		2,216,031		2,552,736
Investment contracts		84,106		195,706		232,500		255,434		267,804
Policyholder dividends payable		107,774		87,725		83,910		85,071		112,593
Interest-bearing loans and borrowings		2,643		16,170		18,794		20,150		20,045
Lease liabilities		—		—		—		—		3,091
Bonds payable		67,994		37,998		—		—		34,990
Financial liabilities at fair value through profit or loss		856		2,031		2,529		2,680		3,859
Derivative financial liabilities		—		—		—		1,877		—
Securities sold under agreements to repurchase		31,354		81,088		87,309		192,141		118,088
Annuity and other insurance balances payable		30,092		39,038		44,820		49,465		51,019
Premiums received in advance		32,266		35,252		18,505		46,650		60,898
Other liabilities		26,514		36,836		47,430		58,426		81,114
Deferred tax liabilities		16,953		7,768		4,871		—		10,330
Current income tax liabilities		5,347		1,214		6,198		2,630		223
Statutory insurance fund		217		491		282		558		602
Total liabilities	****	2,122,101	****	2,389,303	****	2,572,281	****	2,931,113	****	3,317,392
Equity
Share capital		28,265		28,265		28,265		28,265		28,265
Other equity instruments		7,791		7,791		7,791		7,791		7,791
Reserves		163,381		145,007		145,675		149,293		197,221
Retained earnings		123,055		122,558		139,202		133,022		170,487
Attributable to equity holders of the Company	****	322,492	****	303,621	****	320,933	****	318,371	****	403,764
Non-controlling interests		3,722		4,027		4,377		4,919		5,578
Total equity	****	326,214	****	307,648	****	325,310	****	323,290	****	409,342
Total liabilities and equity	****	2,448,315	****	2,696,951	****	2,897,591	****	3,254,403	****	3,726,734

All values are in US Dollars.

Exchange Rate Information

We prepare our consolidated financial statements in Renminbi. This annual report contains translations of Renminbi amounts into U.S. dollars, and U.S. dollars into Renminbi, at RMB 6.9618 to US$ 1.00, the noon buying rate on December 31, 2019 in the City of New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York. You should not assume that Renminbi amounts could actually be converted into U.S. dollars at these rates or at all. Translations of foreign currency amounts into RMB amounts for the purpose of preparing our audited consolidated financial statements included elsewhere in this annual report or our previous annual reports have been made at the exchange rates published by the PBOC.

Since July 21, 2005, the PRC government has followed a managed floating exchange rate system that allows the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. Under this system, the PBOC announces the closing price of a foreign currency traded against the Renminbi in the inter-bank foreign exchange market after the closing of the market on each working day, and makes it the central parity for the trading against the Renminbi on the following working day. On August 11, 2015, the PBOC adjusted the quotation mechanism of the Renminbi central parity to also consider demand and supply in foreign exchange markets and price movements of major currencies, in addition to the closing price on the previous working day. On May 26, 2017, the PBOC introduced a “counter-cyclical factor” into its formula that determines a central parity of Renminbi against the U.S. dollar. Under the current mechanism, the central parity of the Renminbi against the U.S. dollar is determined based on the closing rate, changes in a basket of currencies and the counter-cyclical factor. See “Item 3. Key Information—Risk Factors—Risks Relating to the People’s Republic of China—Government control of currency conversion and the fluctuation of the Renminbi may materially and adversely affect our operations and financial results”. In 2019, the Renminbi depreciated by approximately 1.65% against the U.S. dollar. It remains unclear what further fluctuations may occur or what impact this will have on the value of the Renminbi.

Although PRC governmental policies were introduced in 1996 to reduce restrictions on the convertibility of Renminbi into foreign currency for current account items, conversion of Renminbi into foreign exchange for capital account items, such as foreign direct investments, loans or securities, requires the approval of the SAFE and other relevant authorities. Although experimental policies were introduced in certain pilot areas such as the Shanghai free trade zone to reduce foreign exchange control, restrictions on the convertibility of Renminbi into foreign currency are still in force in most parts of China.

The Hong Kong dollar is freely convertible into other currencies, including the U.S. dollar. Since October 17, 1983, the Hong Kong dollar has been linked to the U.S. dollar at the rate of HK$ 7.80 to US$ 1.00. The central element in the arrangements which give effect to the link is that by agreement between the Hong Kong government and the three Hong Kong banknote issuing banks, The Hongkong and Shanghai Banking Corporation Limited, Standard Chartered Bank (Hong Kong) Limited and the Bank of China (Hong Kong) Limited, certificates of debts, which are issued by the Hong Kong Government Exchange Fund to the banknote issuing banks to be held as cover for their banknote issues, are issued and redeemed only against payment in U.S. dollars, at the fixed exchange rate of HK$ 7.80 to US$ 1.00. When the banknotes are withdrawn from circulation, the banknote issuing banks surrender the certificates of debts to the Hong Kong Government Exchange Fund and are paid the equivalent U.S. dollars at the fixed rate.

The market exchange rate of the Hong Kong dollar against the U.S. dollar continues to be determined by the forces of supply and demand in the foreign exchange market. However, against the background of the fixed rate which applies to the issue of the Hong Kong currency in the form of banknotes, as described above, the market exchange rate has not deviated materially from the level of HK$ 7.80 to US$ 1.00 since the link was first established. The Hong Kong government has stated its intention to maintain the link at that rate, and it, acting through the Hong Kong Monetary Authority, has a number of means by which it may act to maintain exchange rate stability. Exchange rates between the Hong Kong dollar and other currencies are influenced by the linked rate between the U.S. dollar and the Hong Kong dollar.

B. CAPITALIZATION AND INDEBTEDNESS

Not Applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not Applicable.

D. RISK FACTORS

Our business, financial condition and results of operations can be affected materially and adversely by any of the following risk factors. The risks and uncertainties described below may not be the only ones that we face. Additional risks and uncertainties that we are not aware of or that we currently believe are immaterial may also adversely affect our business, financial condition or results of operations.

Risks Relating to Our Business

Our investments are subject to risks.

We are exposed to potential investment losses if there is an economic downturn in China.

Until November 2006, we were only permitted to invest the premiums and other income we receive in investments in China. We obtained the approval to invest overseas with our foreign currency denominated funds in November 2006. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Regulation of investments”. However, we have continued to make our investments mainly in China and, as of December 31, 2019, approximately **** 97.99% of our total investment assets were in China. In particular, as of December 31, 2019, approximately 42.65% of our total investment assets consisted of debt securities including Chinese government bonds, government agency bonds, corporate bonds, subordinated bonds and other debt securities as permitted by relevant government agencies; approximately 14.98% of our total investment assets consisted of term deposits with Chinese banks, of which 43.61% were placed with the five largest Chinese state-owned commercial banks; and approximately 17.04% of our total investment assets consisted of loans provided to Chinese entities and individuals, including policy loans, investment in debt investment plans and trust schemes. A serious downturn in the Chinese economy may lead to investment losses, which would reduce our earnings.

The PRC securities markets are still emerging markets, which may expose us to risks ofloss from our investments there.

As of December 31, 2019, we had RMB 605,568 million (US$ 86,984 million) invested in equity securities, among which RMB 192,063 million (US$ 27,588 **** million) were invested in PRC securities markets, including securities investment funds and shares traded on the securities markets in China. These securities investment funds and shares are primarily invested in equity securities that are issued by Chinese companies and traded on China’s stock exchanges. The PRC securities markets are still emerging markets and are characterized by evolving regulatory, accounting and disclosure requirements. This may from time to time result in significant price volatility, unexpected losses or lack of liquidity. These factors could cause us to incur losses on our publicly traded investments. Also, as one of the largest institutional investors in China, we may from time to time hold significant positions in many securities in which we invest, and any decision to sell or any perception in the market that we are a major seller of a security could adversely affect the liquidity and market price of that security.

Defaults on our debt investments may materiallyand adversely affect our profitability.

Approximately 42.65% of our investment assets as of December 31, 2019 were comprised of debt securities. The issuers whose debt securities we hold may fail to pay or otherwise default on their obligations due to bankruptcy, a lack of liquidity, a downturn in the economy, operational failures or other reasons. Losses due to these defaults could reduce our profitability.

Defaults on our investments in loans may materially and adversely affect ourprofitability.

Approximately 17.04% of our investment assets as of December 31, 2019 were comprised of loans, including policy loans, investments in debt investment plans and trust schemes. The borrowers to whom we provided loans may fail to pay or otherwise default on their obligations due to bankruptcy, a lack of liquidity, a downturn in the economy, operational failures or other reasons. Losses due to these defaults could reduce our profitability.

Investments in new investment channels maynot lead to improvements in our rate of investment return or we may incur losses.

The CBIRC has in recent years significantly broadened the investment channels of Chinese life insurance companies. We have considered these alternative channels when making investments. For example, in 2014, we made our first overseas real estate investment, first overseas private equity fund investment and first domestic preferred shares investment. In 2016, we made our first investment in shares traded on the Hong Kong Stock Exchange through the Shanghai-Hong Kong Stock Connect between China’s mainland markets and the Hong Kong Stock Exchange, and we also made our first investment in interbank negotiable certificates of deposit. In 2019, we made our first investment in bonds issued by banks for capital replenishment. However, our experience with these new investment channels, especially overseas channels, is limited, and these new channels are still subject to evolving regulatory requirements, which may increase the risk exposure of our investments.

We may incur foreign exchange and other losses for our investments denominated inforeign currencies.

A portion of our investment assets are held in foreign currencies. We are authorized by the CBIRC to invest our assets held in foreign currencies in the overseas financial markets as permitted by the CBIRC. Thus, our investment results may be subject to foreign exchange gains and losses due to changes in exchange rates as well as the volatility and various other factors of overseas capital markets, including, among others, increase in interest rates. We recorded RMB 67 million (US$ 10 million) in foreign exchange losses for the year ended December 31, 2019, resulting mainly from the change in foreign exchange rates applicable to our assets and liabilities held in foreign currencies. However, it remains unclear what further fluctuations may occur or what impact this will have on the value of the Renminbi. Future movements in the exchange rate of RMB against the U.S. dollar and other foreign currencies may adversely affect our results of operations and financial condition.

The outbreak of COVID-19 could have an adverse impact on our business.

The COVID-19 pandemic and the measures taken by governments around the world to contain its spread has negatively impacted the global economy, disrupted travel and business operations and created significant volatility and declines in the financial markets. Although, as of the date of this annual report, the travel and business restrictions imposed in China have largely been lifted, a further imposition of such restrictions, if the outbreak were to worsen, may interfere with our operations by, among other things, preventing face to face sales, which could have a material adverse impact on sales of our products. In addition, the value of the investments we hold, the income we receive from such investments, and our ability to adjust our portfolio mix, could be affected if there were further volatility or declines in the stock markets or if interest rates were to decline further as a result of government stimulus measures. See “Item 11 Quantitative and Qualitative Disclosures about Market Risk—Interest Rate Risk”. Furthermore, if a worsening of the COVID-19 outbreak were to result in increased claims for certain insurance products, it could reduce our earnings. Although the outbreak of COVID-19 has not had a material adverse impact on our business as of the date of this annual report, we cannot guarantee that this will continue to be the case if the outbreak were to worsen.

We are exposed to changes in interest rates.

Changes in interest rates may affect our profitability.

Our profitability is affected by changes in interest rates. Interest rates are highly sensitive to many factors, including economic growth rate, inflation, governmental monetary and tax policies, domestic and international economic and political conditions, financial regulatory requirements and other factors beyond our control. If interest rates were to increase significantly in the future, surrenders and withdrawals of life insurance and annuity policies and contracts may increase as policy holders may seek other investments with higher perceived returns. This process may result in cash outflows requiring that we sell investment assets at a time when the prices of those assets are adversely affected by the increase in market interest rates, which may result in realized investment losses. However, if interest rates were to decline in the future, the income we realize from our investments may decrease, affecting our profitability. In addition, as instruments in our investment portfolio mature, we might have to reinvest the funds we receive in investments bearing low interest rates, which may also affect our profitability. See “Item 11 Quantitative and Qualitative Disclosures about Market Risk—Interest Rate Risk”.

On June 10, 1999, the CIRC set the maximum guaranteed interest rate which insurance companies could commit to pay on new policies at 2.50% (compounded annually) and, in response, we set the guaranteed interest rates on our products at a range of between 1.50% and 2.50%. In August 2013, February 2015 and September 2015, the CIRC removed the 2.50% cap on the guaranteed interest rates for traditional non-participating insurance policies, universal life insurance policies and participating life insurance policies, respectively. From October 1, 2015, the guaranteed interest rates of all long-term life insurance products are to be decided by insurance companies at their discretion in accordance with the principle of prudence, but CBIRC approval is required for products with guaranteed interest rates above the maximum valuation rate set by the CBIRC. This maximum valuation rate varies by product. Although the removal of the 2.50% cap has not resulted in any material impact on the profitability of our insurance policies in force, it could result in the increase of the guaranteed interest rates of our new products and the decrease of our spread. We cannot assure you that the removal of the 2.50% cap will not lead to a material adverse effect on our business, results of operations or financial condition.

As of December 31, 2019, the average guaranteed rate of return for all of our long-term insurance policies in force was 2.71%, while our investment yields for the years ended December 31, 2019, 2018 and 2017 were 5.24%, 3.29% and 5.16%, respectively. See “Item 4. Information on the Company—Business Overview—Investments—Investment Results”. If the rates of return on our investments were to fall below the minimum rates we guarantee, our profitability would be materially and adversely affected.

Because of the general lack of long-term fixed income securities in the Chinesecapital markets, we are unable to match closely the duration of our assets and liabilities, which increases our exposure to interest rate risk.

Like other insurance companies, we seek to manage interest rate risk through managing, to the extent possible, the average duration of our investment assets and the insurance policy liabilities they support. Matching the duration of our assets to their related liabilities reduces our exposure to changes in interest rates, because the effect of the changes largely will be offset against each other. **** However, the limited availability of long-duration investment assets in the markets in which we invest, has resulted in, and in the future may result in, the duration of our assets being shorter than that of our liabilities, particularly with respect to liabilities with durations of more than 20 years. **** Furthermore, the Chinese financial markets currently do not provide adequate financial derivative products for us to hedge our interest rate risk. **** We believe that with the development of the Chinese capital markets and the gradual easing of the investment restrictions imposed on insurance companies in China, our ability to match the duration of our assets to that of our liabilities will improve. We also seek to manage the risk of duration mismatch by focusing on product offerings whose maturity profiles are in line with the duration of investments available to us in the prevailing investment environment. However, until we are able to match more closely the duration of our assets and liabilities, we will continue to be exposed to interest rate changes, which may materially and adversely affect our business and earnings.

Our growth is dependent on our ability to attract and retain productive agents.

A substantial portion of our business is conducted through our exclusive agents. Because of differences in productivity, some of our sales agents are responsible for a disproportionately high percentage of our sales of individual products. If we are unable to retain and build on this core group of highly productive agents, our business could be materially and adversely affected. Increasing competition for agents from other insurance companies and business institutions and increasing labor costs in China may also force us to increase the compensation of our agents, which would increase our operating costs and reduce our profitability. In addition, on January 6, 2013, the CIRC issued the Regulatory Rules on Insurance Sales Personnel, or the Sales Personnel Rules, which became effective on July 1, 2013. Among other things, the Sales Personnel Rules provide that exclusive agents must have at least a college degree, instead of a junior high school degree as previously required by the CIRC. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Regulation of Insurance Agencies, Insurance Brokers and Other Intermediaries”. The CIRC has authorized its local branches to set the education degree requirements for exclusive agents by considering local conditions. We believe that if more CBIRC branches were to impose the requirement of having a college degree or above on new qualified exclusive agents, we cannot guarantee that we will not have difficulty in attracting and retaining productive agents in the future. In addition, as the market competition for qualified agents increases, our costs of attracting and retaining qualified agents may increase.

If we are unable to develop other distribution channels for our products, our growth may be materiallyand adversely affected.

Commercial banks are rapidly emerging as some of the fastest growing distribution channels in China. Many newly established domestic and foreign-invested life insurance companies have been focusing on commercial banks as one of their main distribution channels. **** In addition, with the relaxation of the regulatory restrictions of ownership by commercial banks in insurance companies, the number of insurance companies owned or controlled by commercial banks is increasing. Among the six largest Chinese state-owned commercial banks, five banks and the controlling shareholder of the remaining one have set up their own life insurance companies. These insurance companies are able to benefit from their holding relationships with these commercial banks to develop bancassurance as their main distribution channels. We do not have exclusive arrangements with any of the commercial banks through which we sell life insurance and annuity products, and thus our sales may be materially and adversely affected if one or more commercial banks choose to favor our competitors’ products over our own. **** In addition, as the bancassurance market becomes increasingly competitive, commercial banks may demand higher commission rates, which could increase our cost of sales and reduce our profitability. **** If we are unable to continue to develop our alternative distribution channels, our growth may be materially and adversely affected.

Agent and employee misconduct is difficultto detect and deter and could harm our reputation or lead to regulatory sanctions or litigation costs.

Agent or employee misconduct could result in violations of law by us, regulatory sanctions, litigation or serious reputational or financial harm. Misconduct could include:

•	engaging in misrepresentation or fraudulent activities when marketing or selling insurance policies or annuity<br>contracts to customers;
•	hiding unauthorized or unsuccessful activities, resulting in unknown and unmanaged risks or losses; or<br>
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•	otherwise not complying with laws or our control policies or procedures.
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We cannot always deter agent or employee misconduct, and the precautions we take to prevent and detect these activities may not be effective in all cases. We have experienced agent and employee misconduct that has resulted in litigation and administrative actions against us and these agents and employees, and in some cases criminal proceedings and convictions against the agent or employee in question. None of these actions has resulted in material losses, damages, fines or other sanctions against us. We cannot assure you, however, that agent or employee misconduct will not lead to a material adverse effect on our business, results of operations, financial condition or prospects.

Our business is dependent on our ability to attract and retain keypersonnel, including senior management, underwriting personnel, actuaries, information technology specialists, investment managers and other professionals.

The success of our business is dependent to a large extent on our ability to attract and retain key personnel who have in-depth knowledge and understanding of the life insurance market in China, including members of our senior management, qualified underwriting personnel, actuaries, information technology specialists and experienced investment managers. As of the date of this annual report, we do not carry key personnel insurance for any of these personnel. **** We compete to attract and retain these key personnel with other life insurance companies and financial institutions, some of which may offer better compensation arrangements. Existing insurers are expanding their operations and the number of other financial institutions is growing. As the insurance and investment businesses continue to expand in China, we expect that competition for these personnel will increase in the future. Although we have not had difficulty in attracting and retaining qualified key personnel in the past, **** we cannot guarantee that this will continue to be the case. If we were unable to continue to attract and retain key personnel, our business and financial performance could be materially and adversely affected.

Differences in future actual operating results from the assumptions used in pricing and establishingreserves for our insurance and annuity products may materially affect our earnings.

Our earnings depend significantly upon the extent to which our actual operating results are consistent with the assumptions used in pricing and establishing the reserves for insurance contracts in our financial statements. Our assumptions include those for discount rate, mortality, morbidity, lapse rate and expenses. To the extent that trends in actual experiences are less favorable than our underlying assumptions used in establishing these reserves, and these trends are expected to continue in the future, we could be required to increase our reserves. Any such increase could have a material adverse effect on our profitability and, if significant, our financial condition.

We establish the reserves for insurance contracts based on the use of assumptions for discount rate, mortality, morbidity, lapse rate and expenses. These assumptions are based on our previous experience and the data published by other Chinese life insurers, as well as judgments made by the management. These assumptions may deviate from our actual experience, and, as a result, we cannot determine precisely the amounts which we will ultimately pay to fulfill our obligations under the insurance contracts or when these payments will need to be made. These amounts may vary from the estimated amounts, particularly when those payments may not occur until well into the future. The discount rate assumption is affected by certain factors, such as further macro-economy, monetary and exchange rate policies, capital market results and availability of investment channels to invest our insurance funds. We review and update the assumptions used to evaluate the reserves periodically, and establish the reserves for insurance contracts based on such assumptions. If the reserves originally established for future policy benefits prove inadequate, we must increase our reserves established for future policy benefits, which may have a material effect on our earnings and our financial condition.

We have data available for a shorter period of time than life insurance companies operating in some other countries do and, as a result, less claims experience on which to base some of the assumptions used in establishing our reserves. For a discussion of how we establish our assumptions for mortality, morbidity and lapse rate, see “Item 5. Operating and Financial Review and Prospects—Critical Accounting Policies”. Given the limited nature of this experience, it is possible that our actual claims could vary significantly from the assumptions used.

Our risk management and internal reporting systems, policies and procedures may leave us exposed tounidentified or unanticipated risks, which could materially and adversely affect our businesses or result in losses.

Our policies and procedures to identify, monitor and manage risks may not be fully effective. Many of our current methods of managing risk and exposures are based upon our use of observed historical market behavior or statistics based on historical models. As a result, these methods may not fully predict future exposures, which could be significantly greater than what the historical measures indicate. In addition, risk management depends upon the evaluation of information regarding markets, customers or other matters that is publicly available or otherwise accessible to us, which may not always be accurate, complete, up-to-date or properly evaluated. In addition, a significant portion of business information needs to be centralized from our many branch offices. Management of operational, legal and regulatory risks requires, among other things, policies and procedures to record properly and verify a large number of transactions and events, and these policies and procedures may not be fully effective. Failure or the ineffectiveness of these systems could materially and adversely affect our business or result in losses.

We are likely to offer a broader and more diverse range of insurance and investment products in the future as the insurance market in China continues to develop. At the same time, we anticipate that we may invest in a significantly broader range of asset classes. The combination of these factors will require us to continue to enhance our risk management capabilities and is likely to increase the importance of our risk management policies and procedures to our results of operations and financial condition. If we fail to adapt our risk management policies and procedures to our changing business, our business, results of operations and financial condition could be materially and adversely affected. ****

Catastrophes could materially reduce our earnings and cashflow.

We could in the future experience catastrophic losses that may have an adverse impact on the business, results of operations and financial condition of our insurance business. Catastrophes can be caused by various events, including terrorist attacks, earthquakes, hurricanes, floods and fires, as well as pandemics and epidemics, including the recent COVID-19 outbreak.

We establish liabilities for claims arising from a specific catastrophe after assessing the exposure and damages arising from the event. Although we have purchased catastrophe reinsurance in order to reduce our catastrophe exposure, we cannot assure you that any significant catastrophic event will not have a material adverse effect on us.

Current or future litigation, arbitration and regulatory proceedings could result in financial losses or harm our businesses.

We are involved in litigation and arbitration proceedings involving our insurance operations on an ongoing basis. In addition, the CBIRC as well as other PRC governmental agencies, including tax and audit bureaus and the PBOC, from time to time make inquiries and conduct examinations or investigations concerning our compliance with PRC laws and regulations. These litigation, arbitration and administrative proceedings have in the past resulted in payments of insurance benefits, damage awards, settlements or administrative sanctions, including fines, which have not been material to us. **** We currently have control procedures in place to monitor our litigation, arbitration and regulatory exposure and take appropriate actions. See “Item 8. Financial Information—Consolidated Financial Statements and Other Financial Information—Legal and Regulatory Proceedings”. While we cannot predict the outcome of any pending or future litigation, arbitration, examination or investigation, we do not believe that any pending legal matter will have a material adverse effect on our business, financial condition or results of operations. **** However, we cannot assure you that any future litigation, arbitration or regulatory proceeding will not have an adverse outcome, which could have a material adverse effect on our operating results or cash flows. See “Item 8. Financial Information—Consolidated Financial Statements and Other Financial Information—Legal and Regulatory Proceedings”.

The embedded value information we present in this annual report is based on several assumptions andmay vary significantly as those assumptions are changed.

In order to provide investors with an additional tool to understand our economic value and business results, we have disclosed information regarding our embedded value, as discussed in the section entitled “Item 8. Financial Information—Embedded Value”. The embedded value is an estimate of our economic value (excluding the value attributed to new business after the valuation date) and is based on a discounted cash flow valuation determined using commonly applied actuarial methodologies. Standards with respect to the calculation of embedded value are still evolving, however, and there is no universal standard which defines the form, calculation method or presentation format of the embedded value of an insurance company. **** Assumptions used in embedded value calculations include rate of investment return, discount rate, mortality, morbidity, expenses and surrender rate, as well as certain macro factors, many of which are beyond our control. These assumptions may deviate significantly from our actual experience and therefore the embedded value is consequently not inherently predictive. Furthermore, since our actual market value is determined by investors based on a variety of information available to them, the embedded value should not be construed to be a direct reflection of our performance. The inclusion of the embedded value in this annual report should not be regarded as a representation by us, our management or any other person as to our future profitability. Because of the technical complexity involved in embedded value calculations and the fact that embedded value estimates vary materially as key assumptions are changed, you should read the discussion under the section entitled “Item 8. Financial Information—Embedded Value” in its entirety. You should use special care when interpreting embedded value results and should not place undue reliance solely on them. See also “Forward-Looking Statements”.

A computer system failure, cyber-attacks or other security breaches may disrupt our business, damage our reputation and adversely affect our results ofoperations and financial condition.

We use computer systems to store, retrieve, evaluate and utilize customer and company data and information. Our business is highly dependent on our ability to access these systems to perform necessary business functions such as developing and selling insurance products, providing customer support, policy management, filing and paying claims, managing our investment portfolios and producing financial statements. Although we have designed and implemented a variety of security measures and backup plans to prevent or limit the effect of failure, our computer systems may be vulnerable to disruptions as a result of natural disasters, man-made disasters, criminal activities, pandemics or other events beyond our control. In addition, our computer systems may be subject to computer viruses or other malicious codes, unauthorized access, cyber-attacks or other computer-related penetrations. The failure of our computer systems for any reason could disrupt our operations and may adversely affect our business, results of operations and financial condition. Although we have not experienced such a computer system failure or security breach in the past, we cannot assure you that we will not encounter a failure or security breach in the future.

We retain confidential information on our computer systems, including customer information and proprietary business information. In addition, for business purposes, from time to time customer information is transmitted between our computer systems and those of third parties, such as third-party agents selling insurance products for us. Any compromise of the security or other errors of our computer systems or those arising during the information transmission process that result in the disclosure of personally identifiable customer information could damage our reputation, expose us to litigation, increase regulatory scrutiny and require us to incur significant technical, legal and other expenses.

United States Foreign Account Tax Compliance Act

The Foreign Account Tax Compliance Act, or FATCA, generally requires a foreign financial institution, or FFI, to enter into an FFI agreement under which it will agree to identify and provide the United States Internal Revenue Service, or the IRS, with information regarding accounts, including certain insurance policies, held by U.S. persons and U.S.-owned foreign entities, or be subject to a 30% withholding tax on “withholdable payments”, which include, among other items, payments of U.S.-source interest and dividends and gross proceeds from the sale or other disposition of property that may produce U.S.-source interest or dividends. Proposed regulations promulgated on December 13, 2018, or the proposed FATCA regulations, eliminate withholding on payments of gross proceeds from the sale or other disposition of property that may produce U.S.-source interest or dividends. In addition, an FFI that has entered into an FFI agreement may be required to withhold on certain “foreign passthrough payments” that it makes to FFIs that have not entered into their own FFI agreements or to account holders who do not respond to requests to confirm their U.S. person status and/or do not agree to allow the FFI to report certain account related information to the IRS. Under the proposed FATCA regulations, withholding on foreign passthru payments will begin no earlier than the date that is two years after the date of publication in the Federal Register of final regulations that define the term “foreign passthru payment”. Consequently, the scope of any withholding on foreign passthru payments is uncertain at this time.

The United States and the PRC have agreed in substance on the terms of an intergovernmental agreement, or IGA, that is intended to facilitate the type of information reporting required under FATCA. Under the agreed terms, instead of reporting directly to the IRS, Chinese FFIs are required to report specified account information directly to the PRC tax authority, which will then pass that information to the IRS. **** While compliance with the IGA will not eliminate the risk of withholding described above, it is expected to reduce that risk for FFIs that are resident in China. Although the IGA has not yet been officially signed, the PRC and the United States have agreed to treat the IGA as in effect from June 26, 2014, provided that the PRC continues to demonstrate “firm resolve” to sign the IGA as soon as possible. If the United States and the PRC ultimately fail to reach a final agreement on the terms of the IGA, then the FATCA reporting and withholding regime described in the prior paragraph will apply to Chinese FFIs. ****

We will closely monitor developments regarding FATCA and the IGA. If we are required to comply with the terms of the IGA or FATCA, as applicable, we expect that our compliance costs will increase. If we do not comply with the terms of the IGA or FATCA, as applicable, then certain payments to us will be subject to withholding under FATCA. However, since the text of the IGA has not been released, and regulations and other guidance remain under development, the future impact of this law on us is uncertain.

U.S. Holders will be subject to adverse tax consequences if we are considered to be a passive foreigninvestment company, or PFIC, for U.S. federal income tax purposes

If we are considered a PFIC for U.S. federal income tax purposes, a U.S. Holder will be subject to adverse tax consequences. A non-U.S. corporation will generally be a PFIC if 75% or more of its gross income constitutes “passive income” or 50% or more of its assets produce “passive income” or are held for the production of “passive income”. The PFIC provisions, as modified by the Tax Cuts and Jobs Act, or the TCJA, specifically exclude from the definition of “passive income” any income “derived in the active conduct of an insurance business by a qualifying insurance corporation”. A non-U.S. corporation is a qualifying insurance corporation if it would be subject to tax as an insurance company if it were a domestic corporation and (i) loss and loss adjustment expenses and certain reserves, or “applicable insurance liabilities”, constitute more than 25% of the non-U.S. corporation’s gross assets for the relevant year or (ii) a U.S. Holder makes an election to apply an alternative facts and circumstances test that applies only in certain runoff-related or ratings-related circumstances involving the insurance business. We make various simplifying assumptions to estimate the asset composition and value of our subsidiaries in order to apply the PFIC tests to the income and assets of our 25% or greater owned subsidiaries.

The IRS released proposed Treasury regulations regarding the application of the PFIC rules to insurance companies in July 2019. These regulations are not yet in force but are proposed to be effective for taxable years of U.S. Holders beginning on or after the date that final regulations are issued. The proposed Treasury regulations provide that whether a company is engaged in the active conduct of an insurance business is a facts and circumstances test, but also introduce a “bright-line” test providing that the active conduct requirement is met only if the insurance company’s “active conduct percentage” is at least 50%. In general, a company’s active conduct percentage is determined by dividing the company’s aggregate expenses for certain insurance-related services of its officers and employees (and the officers and employees of certain affiliates) by the company’s aggregate expenses for such insurance-related services (including those paid to unaffiliated persons). If these rules are finalized in proposed form, we cannot assure you that we would not be treated as a PFIC.

Although we believe that we were not classified as a PFIC in 2019, there is no assurance that the IRS will not take a contrary position and assert that we are a PFIC, and no assurances can be given that we will not become a PFIC at some point in the future. U.S. Holders are urged to consult their tax advisors regarding the effects of the PFIC rules.

The auditors’ reports included in this annual report are prepared by relying on audit work whichis not inspected by the Public Company Accounting Oversight Board and, as such, investors may be deprived of the benefits of such inspection.

Auditors of companies that are registered with the SEC and traded publicly in the United States, including our independent registered public accounting firm, must be registered with the US Public Company Accounting Oversight Board (United States), or the PCAOB, and are required by the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States and professional standards. Because we have substantial operations within China and our independent registered public accounting firm is based in China, the PCAOB is currently unable to conduct inspections of the work of our auditor as it relates to those operations without the approval of the Chinese authorities, and thus our auditor’s work related to our operations in China is not currently inspected by the PCAOB.

This lack of PCAOB inspection of audit work performed in China prevents the PCAOB from regularly evaluating the audit work of any auditor that was performed in China including those performed by our auditor. As a result, investors may be deprived of the full benefits of PCAOB inspections.

The inability of the PCAOB to conduct inspections of audit work performed in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures as compared to auditors in other jurisdictions that are subject to PCAOB inspections on all of their work. Investors may lose confidence in our reported financial information and procedures and the quality of our consolidated financial statements.

On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in China. The joint statement reflects a heightened interest in an issue that has vexed U.S. regulators in recent years. However, it remains unclear what further actions the SEC and the PCAOB will take to address this issue.

Inspections of other firms that the PCAOB has conducted outside the PRC have identified deficiencies in those firms’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The inability of the PCAOB to conduct full inspections of auditors in the PRC makes it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of the PRC that are subject to PCAOB inspections. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements.

As part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in particular China’s, in June 2019, a bipartisan group of lawmakers introduced bills in both houses of the U.S. Congress, which if passed, would require the SEC to maintain a list of issuers for which PCAOB is not able to inspect or investigate an auditor report issued by a foreign public accounting firm. The proposed Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges (EQUITABLE) Act prescribes increased disclosure requirements for these issuers and, beginning in 2025, the delisting from U.S. national securities exchanges included on the SEC’s list for three consecutive years. Enactment of this legislation or other efforts to increase U.S. regulatory access to audit information could cause investor uncertainty for affected issuers, including us, and the market price of the ADSs could be adversely affected. It is unclear if this proposed legislation would be enacted. Furthermore, there has been recent media reports on deliberations within the U.S. government regarding potentially limiting or restricting China-based companies from accessing U.S. capital markets. If any such deliberations were to materialize, the resulting legislation may have material and adverse impact on the stock performance of China-based issuers listed in the United States.

We may be adversely affected if additional remedial measures are imposed on the four China-basedaccounting firms which reached settlement with the SEC in the administrative proceedings brought by the SEC against them.

In December 2012, the SEC initiated administrative proceedings against five accounting firms in China, alleging that they refused to produce audit work papers and other documents related to certain China-based companies under investigation by the SEC for potential accounting fraud. In January 2014, an SEC administrative law judge ruled in favor of the SEC, issuing an initial decision which censured each of the five accounting firms for failure to provide their audit work papers to the SEC and ordered a six-month suspension of the China-based affiliates of four of the five accounting firms’ right to practice before the SEC. The accounting firms have appealed the decision of the administrative law judge to the SEC, and the decision will not come into force unless and until an order of finality is issued by the SEC. We are not subject to any SEC investigations, nor are we involved in the proceedings brought by the SEC against the accounting firms. However, the China affiliate of the independent registered public accounting firm that has issued the auditor’s report included in our annual reports filed with the SEC for the 2013, 2014 and 2015 fiscal years, which is also our independent registered public accounting firm for the 2016, 2017, 2018 and 2019 fiscal years, is one of the five accounting firms named in the SEC’s proceedings.

In February 2015, four of the five accounting firms, including the China affiliate of the independent registered public accounting firm that has issued the auditor’s report included in our annual report filed with the SEC for the 2013, 2014 and 2015 fiscal years, which is also our independent registered public accounting firm for the 2016, 2017, 2018 and 2019 fiscal years, each agreed to a censure and to pay a fine to the SEC to settle the dispute and avoid suspension of their ability to practice before the SEC. The settlement required the firms to follow detailed procedures and to seek to provide the SEC with access to audit documents of China-based companies via the CSRC. If future document productions fail to meet the specified criteria, the SEC retains authority to impose a variety of additional remedial measures on the firms depending on the nature of the failure, including an automatic six-month bar on the performance of certain audit work, commencement of a new proceeding or the resumption of the current proceeding by the SEC. While we cannot predict if the SEC will further review the four China-based accounting firms’ compliance with specified criteria or if the results of such a review would result in the SEC imposing penalties, if they are subject to additional remedial measures, we may be adversely affected, along with other U.S.-listed companies in China audited by these accounting firms. If none of the China-based auditors are able to continue to perform audit work for China-based companies listed in the U.S., we will not be able to meet the reporting requirements under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which may ultimately result in our deregistration by the SEC and delisting of our ADSs from the NYSE.

Risks Relating to the PRC Life Insurance Industry

We expect competition in the Chinese insurance industry to increase, which may materially and adversely affect the growth of our business.

We face competitive pressures from both domestic and foreign-invested life insurance companies operating in China, as well as from property and casualty insurance companies, which may compete with our accident and short-term health insurance businesses, and other financial institutions that sell other financial investment products in competition with ours. In addition, the establishment of other professional health insurance companies and pension annuities companies may also lead to greater competition in the health insurance business and commercial pension insurance business. **** If we are not able to adapt to these increasingly competitive pressures in the future, our growth rate may decline, which could materially and adversely affect our earnings.

Competition among domestic life insurance companies is increasing.

According to statistical and market share information derived from China Insurance Yearbook, in 2018, the last year for which the market information for separate geographic markets is available, our closest competitors are Ping An Life Insurance Company of China, Ltd., or Ping An Life, China Pacific Life Insurance Co., Ltd., or China Pacific Life, Huaxia Life Insurance Company Limited, or Huaxia Life, and Taiping Life Insurance Company Limited, or Taiping Life. Ping An Life, China Pacific Life, Huaxia Life, Taiping Life and we together accounted for approximately 56% of the life insurance premiums in China in 2018, with our market share in China increasing from 19.7% in 2017 to 20.4% in 2018. Each of Ping An Life, China Pacific Life, Huaxia Life and Taiping Life has operated in the Chinese insurance market for more than ten years, and each has a recognized brand name. In 2018, Ping An Life had a greater market share than we did in Shanghai, Guangdong, Shenzhen, Beijing, Tianjin, Heilongjiang, Liaoning, Dalian, Ningbo, Qingdao, Hubei, Chongqing, Hainan and Xiamen, China Pacific Life had a greater market share than we did in Ningbo, and Huaxia Life had a greater market share than we did in Hainan.

We also face competition from insurance companies owned or controlled by commercial banks. **** Among the six largest Chinese state-owned commercial banks, five banks and the controlling shareholder of the remaining one have set up their own life insurance companies. **** These insurance companies are able to benefit from their holding relationships with these commercial banks to develop bancassurance as their main distribution channels. **** In addition, we also face competition from smaller insurance companies, which may have competitive advantages in various regions in which we operate, and new entrants to the group life insurance market, including professional pension companies that are being established pursuant to a set of regulations promulgated by the Ministry of Human Resources and Social Security of the PRC, and new entrants to the health insurance industry, including newly approved and established professional health insurance companies, following Chinese government’s adoption of policies that encourage the development of health insurance and improved health care in China.

Competition from foreign-invested life insurance companies is increasing, as restrictions on theiroperations in China are relaxed.

Foreign-invested life insurance companies are insurance companies in which foreign entities hold at least a 25% interest. Foreign-invested life insurers have been permitted to sell individual and group life insurance, health insurance and annuity products nationwide in China since December 2004. **** According to statistical and market share information derived from China Insurance Yearbook, in 2018, foreign-invested insurers had a life insurance market share of approximately 8.1% . On November 10, 2017, China announced that it will substantially relax foreign ownership limits in life insurance companies. In 2018, China increased the limit on foreign ownership in Chinese life insurance companies to 51% and on December 6, 2019, CBIRC announced that starting from January 1, 2020, foreign investors will be allowed to own 100% in Chinese life insurers. We believe that the relaxation of the restrictions on foreign-invested insurers will continue to increase the competitive pressures we are facing.

We are likely to face increasing competition from property and casualty insurance companies and other companies offering products thatcompete with our own.

In addition to competition from life insurance companies, we face competition from other companies that may offer products that compete with our own, including:

•	Property and casualty companies. Beginning on January 1, 2003, property and casualty insurance<br>companies have been permitted to sell short-term health insurance and accident products, but only with regulatory approval. There were 88 property and casualty insurers as of December 31, 2018. We believe property and casualty insurers have the<br>competitive advantage of being able to bundle, or cross-sell, short-term health and accident products with the other non-life insurance products that they are currently selling to their existing and potential<br>customers. We believe this will lead to greater competition in the accident and health insurance sectors. On December 30, 2006, we established a property and casualty company, CLPCIC, with CLIC. While this joint venture mainly focuses on<br>property insurance business, it also develops short-term health insurance and accident business. Its operations may have a negative impact on sales of our short-term health insurance and accident products in the future.
•	Mutual fund companies, commercial banks and other financial services providers. We face increasing<br>competition from other financial services providers, primarily licensed mutual fund companies, commercial banks providing personal banking services and offering various financial products, trust companies and securities brokerage firms licensed to<br>manage separate accounts. These financial service providers provide a variety of financial investment products that may prove to be attractive to the public and thereby adversely affect the sale of some products we offer, including traditional life<br>insurance policies with a savings feature, participating life insurance policies and annuities.
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Property and casualty companies. Beginning on January 1, 2003, property and casualty insurance companies have been permitted to sell short-term health insurance and accident products, but only with regulatory approval. There were 88 property and casualty insurers as of December 31, 2018. We believe property and casualty insurers have the competitive advantage of being able to bundle, or cross-sell, short-term health and accident products with the other non-life insurance products that they are currently selling to their existing and potential customers. We believe this will lead to greater competition in the accident and health insurance sectors. On December 30, 2006, we established a property and casualty company, CLPCIC, with CLIC. While this joint venture mainly focuses on property insurance business, it also develops short-term health insurance and accident business. Its operations may have a negative impact on sales of our short-term health insurance and accident products in the future.

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Mutual fund companies, commercial banks and other financial services providers. We face increasing competition from other financial services providers, primarily licensed mutual fund companies, commercial banks providing personal banking services and offering various financial products, trust companies and securities brokerage firms licensed to manage separate accounts. These financial service providers provide a variety of financial investment products that may prove to be attractive to the public and thereby adversely affect the sale of some products we offer, including traditional life insurance policies with a savings feature, participating life insurance policies and annuities.

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All of our institutional insurance agencies and brokers are required to obtain permits and beregistered. If a substantial number of our institutional insurance agencies and brokers fail to meet these qualification and registration requirements or this failure results in policyholders canceling their policies, our business may be materiallyand adversely affected.

Institutional insurance agents and insurance brokers are required under the PRC insurance law to register with the administration of industry and commerce, and obtain business licenses with the permits issued by the CBIRC. It also requires non-dedicated institutional insurance agencies to obtain registrations with the administration of industry and commerce with the permits issued by the CBIRC. We cannot assure you that all of our institutional agents will obtain such licenses. The enforcement of this requirement could adversely affect the composition and productivity of our distribution channel, which could have a material adverse effect on our business.

Further development of regulations inChina may impose additional costs or restrictions on our activities.

We operate in a highly regulated industry. The CBIRC supervises and administers the insurance industry in China. In exercising its authority, it is given certain discretion to administer the law. China’s insurance regulatory regime is undergoing significant changes toward a more transparent regulatory process and a convergent movement toward international standards. Some of these changes may result in additional costs or restrictions on our activities. For example, the CIRC issued notices in September 2016 and May 2017 to further reinforce the regulation of life insurance products by requiring insurance companies to revise or improve the design of a number of insurance products. For instance, insurance companies are required to (i) increase the death coverage for insurance products including individual term life insurance, individual endowment insurance and individual whole life insurance products, and (ii) seek CIRC approval for universal insurance products with a guaranteed interest rate above 3%. CIRC also required that (i) whole life insurance, annuity insurance and care insurance products must not be designed as short-to-medium term products, (ii) the first payment of survival insurance benefits for endowment products and annuity products must only occur after five years since the policy has become effective, and the annual payment or partial payment must not exceed 20% of the paid premiums, and (iii) insurance companies must not design universal insurance products or investment-linked insurance products in the form of riders. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Regulation of products”. These new requirements apply to a number of key products sold by us. Although these requirements are consistent with our long-term development strategy, revising the design of a number of products during a short period of time may increase our operating costs and may adversely affect our business, results of operations and financial condition.

In addition, because the terms of our products are subject to regulations, changes in regulations may affect our profitability on the policies and contracts we issue. For instance, under the guidelines issued by the CIRC, the dividends on our participating products must be no less than 70% of the distributable earnings from participating products in accordance with CIRC requirements. If this level were to be increased in the future, our profitability could be materially and adversely affected. Furthermore, in August 2013, February 2015 and September 2015, the CIRC removed the 2.50% cap on the guaranteed interest rates for traditional non-participating insurance policies, universal life insurance policies and participating life insurance policies, respectively. From October 1, 2015, the guaranteed interest rates of all long-term life insurance products are to be decided by insurance companies at their discretion in accordance with the principle of prudence, but CBIRC approval is required for products with guaranteed interest rates above the maximum valuation rate set by the CBIRC, which varies by product. Although the removal of the 2.50% cap has not resulted in any material impact on the profitability of our insurance policies in force, it could result in the increase of the guaranteed interest rates of our new products and the decrease of our spread, and therefore we cannot assure you that the removal of the 2.50% cap will not lead to a material adverse effect on our business, results of operations or financial condition.

Our ability to comply with minimum solvency requirements is affected by a number of factors, and our compliancemay force us to raise additional capital, which could increase our financing costs or be dilutive to our existing investors, or to reduce our growth.

In February 2015, the CIRC issued the major technical standards for a new set of solvency regulations, the “China Risk Oriented Solvency System”, or C-ROSS, with the aim of replacing the then current solvency requirements on Chinese insurance companies, or Solvency I. C-ROSS adopts the internationally accepted “three-pillar” regulatory system which includes quantitative capital requirements, qualitative regulatory requirements and market discipline mechanisms while its regulatory concept, models, methods and parameters are based on Chinese insurance market conditions. C-ROSS was officially implemented by the CIRC on January 1, 2016. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Solvency requirements”. Our core solvency adequacy ratio under C-ROSS as of December 31, 2019 was 266.71%, and our comprehensive solvency adequacy ratio under C-ROSS as of December 31, 2019 was 276.53%. While our solvency ratio is currently above the regulatory requirements, if we grow rapidly in the future, or if the required solvency level is raised in the future, we may need to raise additional capital to meet our solvency requirement, including through additional issuance of capital replenishment bonds, which would increase our financing costs, or through additional issuance of shares, which would be dilutive to our existing investors. If we are not able to raise additional capital, we may be forced to reduce the growth of our business.

Furthermore, as we are exposed to potential insurance, market and investment risks, we cannot assure you that our solvency ratio under C-ROSS will always be above the required level. If our solvency ratio under C-ROSS is below the required solvency level, we may need to raise additional capital to meet our solvency requirement, including through additional issuance of subordinated debt, which would increase our financing costs, or through additional issuance of shares, which would be dilutive to our existing investors. If we are not able to raise additional capital, we may be forced to reduce the growth of our business. A failure to meet our Solvency requirement can also lead to various regulatory actions being taken by the CBIRC, which could have a material adverse effect on our business or financial condition. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Solvency requirements”.

Risks Relating to the Restructuring

CLIC hasincurred substantial losses on the policies retained by it in the restructuring. If CLIC is unable to meet its obligations to its policyholders, it may seek to increase the level of dividends we pay, sell the China Life shares it owns or take otheractions which may have a material adverse effect on the value of the shares our other existing investors own.

In connection with the restructuring, CLIC transferred to us (1) all long-term insurance policies (policies having a term of more than one year from the date of issuance) issued on or after June 10, 1999, having policy terms approved by or filed with the CIRC on or after June 10, 1999 and either (i) recorded as a long-term insurance policy as of June 30, 2003 in an actuarial database attached to the restructuring agreement as an annex or (ii) having policy terms for group supplemental medical insurance (fund type), (2) stand-alone short-term policies (policies having a term of one year or less from the date of issuance) issued on or after June 10, 1999, and (3) all riders supplemental to the policies described in clauses (1) and (2) above, together with the reinsurance contracts specified in an annex to the restructuring agreement. See “Item 4. Information on the Company—History and Development of the Company—Our Restructuring”. CLIC has incurred substantial losses on these non-transferred policies, primarily because the guaranteed interest rates it had committed to pay on these policies are higher than the investment return it was able to generate on its investment assets. This negative spread on non-transferred policies created substantial losses for CLIC and a resulting negative net worth. The amount of accumulated undistributed profits of CLIC itself is expected to remain negative in the short term.

In connection with the restructuring, CLIC established, together with the MOF, a special purpose fund for the purpose of paying claims under the non-transferred policies. The approval of the special purpose fund issued to CLIC provides that in the event there is any deficiency in the special purpose fund for so long as the fund is in existence, the MOF will provide support through the injection of funds to ensure the payments of benefits and claims to the policyholders of the non-transferred policies. See “Item 4. Information on the Company—History and Development of the Company—Our Restructuring”. In connection with the restructuring, we were advised by our PRC legal counsel, King & Wood, that (1) the MOF had the authority to issue this approval regarding the special purpose fund, (2) the approval was valid and effective, and (3) it had no reason to believe that the MOF will revoke the approval. We cannot assure you, however, that changes in law, facts or circumstances that may occur after such date will not affect the conclusions stated in such advice.

We cannot predict the amount of funds that will be available to the special purpose fund from CLIC’s own operations to satisfy its obligations to its policyholders as they become due. CLIC’s cash requirements and available cash resources will be affected by several factors which are subject to uncertainty, including prevailing interest rates and the returns on investment generated by CLIC’s assets, as well as the claims, expenses and persistency experience with respect to CLIC’s insurance policies. The cash resources available to CLIC will also depend in part on our profitability, which will affect the amount of our tax payments and hence the amount of refund contributed to the fund (if CLIC’s application for the extension of the period during which the income tax payments will be rebated is approved; See “Item 4. Information on the Company—History and Development of the Company—Our Restructuring”), the timing and amount of our dividend payments and the market prices of our shares and ADSs, which will affect the proceeds to CLIC from dispositions of our shares. If it is unable to satisfy its obligations to its policyholders from other sources, CLIC may seek, subject to our articles of association and applicable laws, to increase the amount of dividends we pay in order to satisfy its cash flow requirements. Any such increase in our dividend payments would reduce the funds available for reinvestment in our business. In addition, if we are unable to pay dividends in amounts sufficient to satisfy these requirements, CLIC may seek to sell its shareholdings in us or take other actions in order to satisfy these needs. The sale of these holdings or even the market perception of such a sale may materially and adversely affect the price of our shares.

The transfer of policies to us by CLIC and/or the separation of assets between CLIC and us may be subject to challenge.

In connection with the restructuring, we were advised by our PRC legal counsel, King & Wood, that (1) the transferred policies were legally and validly transferred to China Life and (2) following the restructuring, we would not have any continuing obligations to holders of the non-transferred policies who remain policyholders of CLIC and that there was no legal basis on which holders of the non-transferred policies can make a claim against China Life. We were advised by King & Wood that, although there was no specific law applicable to restructurings, these conclusions were supported by, among other things, the approval of the restructuring and various related matters by the State Council, the MOF and the CIRC; the support provided by the MOF with respect to the non-transferred policies as described above; and contract and other law. We cannot assure you that policyholders of CLIC, holders of transferred policies or other parties will not seek to challenge the transfer of the transferred policies or the separation of assets occurring as a consequence of the restructuring, or that a court would decide in a manner consistent with King & Wood’s conclusions. If the transfer of policies to us or the separation of assets were challenged successfully, our financial condition and results of operations would likely be materially and adversely affected.

We do not hold exclusive rights to the trademarks in the “China Life” name (in English andChinese), the “ball” logos and other business related slogans and logos, and CLIC, which owns these trademarks, may take actions that would impair the benefits we derive from their use.

We conduct our business under the “China Life” brand name, the “ball” logos, the “C” mark and other business related slogans and logos. CLIC owns these trademarks and has registered them with the Trademark Office of the SAMR. **** CLIC has entered into a trademark license agreement with us, under which CLIC has agreed to grant us and our branches a royalty-free license to use the “China Life” brand name, the “ball” logos and the “C” mark.

Although CLIC has undertaken in a non-competition agreement with us not to compete with us in China, without our prior consent in writing, in any life, accident and health insurance and any other businesses in China which may compete with our insurance business, CLIC, its subsidiaries and affiliates are permitted to use the brand name and logo in their own businesses, including life insurance business outside China and any other businesses they may enter into in the future within China, including property and casualty (other than businesses that compete with our accident and health businesses) and asset management businesses. In addition, they are not precluded from taking actions that may impair the value of the brand name, which could harm our business. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Continuing Related Party Transactions with CLIC”. The China Life brand name and our reputation could be materially harmed if CLIC fails to make payments when due on outstanding policies retained by CLIC in the restructuring or new policies written by CLIC after the restructuring, if CLIC reduces the rates of return payable on policies retained by CLIC or if CLIC is placed into receivership.

As our controlling shareholder, CLIC will be able to exert influence on ouraffairs and could cause us to make decisions or enter into transactions that may not be in your best interests.

We are controlled by CLIC, whose interests may conflict with those of our other shareholders. As of the date of this annual report, CLIC holds approximately 68.37% **** of our share capital. As a result of these factors, CLIC, which is wholly owned by the PRC government, will, so long as it holds the majority of our shares, effectively be able to control the composition of our board of directors and, through the board, exercise a significant influence over our management and policies. In addition, subject to our articles of association and applicable laws, CLIC may, so long as it holds the majority of our shares, effectively be able to determine the timing and amount of our dividend payments and approve increases or decreases of our share capital, the issuance of new securities, amendments of our articles of association, mergers and acquisitions and other major corporate transactions. CLIC may also be able to prevent us effectively from taking actions to enforce or exercise our rights under agreements to which we are a party, including the agreements we entered into with CLIC in connection with the restructuring. See “Item 7. Major Shareholders and Related Party Transactions”. As a majority shareholder, CLIC may be able to take these actions without your approval. In addition, CLIC’s control could have the effect of deterring takeovers or delaying or preventing changes in control or changes in management that might be desirable to other shareholders.

CLIC may direct business opportunities elsewhere.

CLIC has other business interests, including the run-off of the insurance policies retained by it in the restructuring. Notwithstanding a general undertaking pursuant to a non-competition agreement with us not to compete with us in our principal areas of business in China, CLIC is permitted to sell riders to these retained policies and enter into other businesses, including life insurance businesses outside of China and property and casualty (other than businesses that compete with our accident and health businesses) and asset management businesses, both inside and outside of China. In 2006, we formed a property and casualty company with CLIC, in connection with which we granted a waiver to CLIC allowing it to engage in accident and short-term health businesses indirectly through the property and casualty company.

CLIC engages in insurance businesses in **** Hong Kong, Macau, Singapore and Indonesia through China Life Insurance (Overseas) Co., Limited, or China Life Overseas, its wholly owned subsidiary. CLIC also may continue to engage in insurance business in other regions outside of China in the future. Although it is required under the non-competition agreement to give us a right of first refusal over business opportunities it develops in these areas, we may not be in a position to take advantage of these opportunities at that time, which could harm our business. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Continuing Related Party Transactions with CLIC”.

In addition, while we provide policy administration and other services to CLIC for the policies retained by CLIC in the restructuring, and provide investment management services to CLIC through our asset management subsidiary, these agreements can be terminated with notice or upon expiration. If CLIC were to terminate its policy administration and asset management arrangements with us and our asset management subsidiary, respectively, our loss of fees could materially and adversely affect us.

Risks Relating to the People’sRepublic of China

China’s economic, political and social conditions, as well as government policies, could affect our business.

Substantially all of our assets are located in China and substantially all of our revenues are derived from our operations in China. Accordingly, our results of operations and prospects are subject, to a significant degree, to economic, political and legal developments in China. The economy of China differs from the economies of most developed countries in many respects, including, without limitation:

•	the extent of government involvement;
•	its level of development;
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•	its growth rate; and
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•	its control of foreign exchange.
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The economy of China has been transitioning from one of high-speed growth to one that seeks high-quality development. Although in recent years the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the Chinese government. In addition, the Chinese government continues to play a significant role in regulating industrial development. It also exercises significant control over China’s economic growth through controlling payment of foreign currency denominated obligations, setting and implementing financial and monetary policy and providing preferential treatment to particular industries.

According to data released by the National Bureau of Statistics of China, China’s Gross Domestic Product, a key indicator of economic growth, was 6.1% in 2019. The recent outbreak of COVID-19 and the global effort to contain it have negatively impacted the global economy and have slowed the Chinese economy as well. China’s Gross Domestic Product in the first quarter of 2020 shrank 6.8% year-on-year. In an effort to bolster the economy, the Chinese government may take certain measures, including adjustment of interest rates and market-oriented financial reforms. Some of the measures taken by the Chinese government to improve China’s economic performance may have a negative effect on our business. **** For example, our operating results and financial condition could be materially and adversely affected by government monetary policies and changes in interest rate policies, tax regulations and policies and regulations affecting the capital markets and the asset management industry. A slowdown in Chinese growth rates could also adversely affect us by impacting sales of our products, reducing our investment returns, or otherwise. ****

The PRC legal system has inherentuncertainties that could limit the legal protections available to you.

We are organized under the laws of China and are governed by our articles of association. The Chinese legal system is based on written statutes. Prior court decisions may be cited for reference but are not binding on subsequent cases and have limited precedential value. Since 1979, the Chinese legislative bodies have promulgated laws and regulations dealing with such economic matters as foreign investment, corporate organization and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, and because of the limited volume of published decisions, the interpretation and enforcement of these laws and regulations involve uncertainties.

Holders of Hshares and ADSs generally are required to resolve disputes with us, our senior management and holders of our A shares only through arbitration in Hong Kong or China.

In accordance with the rules applicable to Chinese overseas listed companies, our articles of association provide that, with certain limited exceptions, all disputes or claims based on our articles of association, PRC company law or other relevant laws or administrative rules, and concerning matters between holders of H shares and ADSs and holders of A shares, us, or our directors, supervisors, president, vice presidents or other senior officers, must be submitted for arbitration at either the China International Economic and Trade Arbitration Commission or the Hong Kong International Arbitration Center. If an applicant chooses to have the dispute arbitrated at the Hong Kong International Arbitration Center, either party may request that the venue be changed to Shenzhen, a city in China near Hong Kong. The governing law for any such disputes or claims is Chinese law, unless Chinese law itself provides otherwise. Pursuant to an arrangement of mutual enforcement of arbitration awards between the PRC courts and the Hong Kong courts, Hong Kong arbitration awards are enforceable in China, subject to the satisfaction of certain legal requirements. However, due to the limited number of actions that have been brought in China by holders of shares issued by a Chinese company to enforce an arbitral award, we are uncertain as to the outcome of any action brought in China to enforce a Hong Kong arbitral award made in favor of holders of H shares and ADSs.

The laws in China differ from the laws in the United States and may afford less protection to ourminority shareholders.

Although Chinese company law provides that shareholders of a Chinese company may, under certain circumstances, sue the company’s directors, supervisors and senior management in the interests of the company, limited detailed implementation rules or court interpretations have been issued in this regard. Also, class action lawsuits are generally uncommon in China. In addition, PRC company law imposes limited obligations on a controlling shareholder with respect to protection of the interests of minority shareholders, although overseas listed joint stock companies, such as ourselves, are required to adopt certain provisions in their articles of association that are designed to protect minority shareholder rights. These mandatory provisions provide, among other things, that the rights of any class of shares, including H shares, may not be varied without a resolution approved by holders of shares in the affected class holding no less than two-thirds of the shares of the affected class entitled to vote, and provide that in connection with a merger or division involving our company, a dissenting shareholder may require us to purchase the dissenters’ shares at a fair price. Disputes arising from these protective provisions would likely have to be resolved by arbitration. **** See “—Holders of H shares and ADSs generally are required to resolve disputes with us, our senior management and holders of our A shares only through arbitration in Hong Kong or China”.

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in the PRC based on U.S.or other foreign laws against us, our management and some of the experts named in the annual report.

We are a company incorporated under the laws of China, and substantially all of our assets are located in China. In addition, most of our directors, supervisors, executive officers and some of the experts named in this annual report reside within China, and substantially all of the assets of these persons are located within China. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon our directors, supervisors or executive officers or some of the experts named in this annual report, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Our PRC legal counsel, King & Wood, has advised us that China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States, the United Kingdom, Japan or many other countries. Our Hong Kong legal adviser, Latham & Watkins, has also advised us that Hong Kong has no statutory arrangement for the reciprocal enforcement of judgments with the United States although it may be possible for a civil action to be brought in Hong Kong based on a monetary judgment of the courts of the United States. As a result, recognition and enforcement in China or Hong Kong of judgments of a court in the United States and any of the other jurisdictions mentioned above in relation to any matter may be difficult or impossible. Furthermore, an original action may be brought in the PRC against us, our directors, supervisors, executive officers or the experts named in this annual report only if the actions are not required to be arbitrated by PRC law and our articles of association, and only if the facts alleged in the complaint give rise to a cause of action under PRC law. In connection with any such original action, a PRC court may award civil liability, including monetary damages.

Due to jurisdictional limitations and various other factors, the U.S. Securities and Exchange Commission, the U.S. Department of Justice and other U.S. authorities may also be limited in their ability to pursue companies and individuals in China, in connection with any alleged violation of U.S. securities and other laws.

Holders of H shares may be subject to PRC taxation.

Under current PRC tax laws, regulations and rulings, dividends paid by us to individual holders of H shares outside of the PRC are subject to PRC individual income tax at rates not exceeding 20%, depending on the applicable tax treaties between the home country of the individual holder of H shares and the PRC. When paying dividends to non-resident enterprise holders of H shares outside of the PRC, such dividends are subject to an enterprise income tax, which is currently levied at a rate of 10%. Such non-resident enterprise holders of H shares may be entitled to tax reductions or exemptions according to applicable tax treaties. In addition, to date, relevant tax authorities have not collected capital gains tax on the gains realized by individuals upon the sale or other disposition of H shares. If relevant tax authorities promulgate implementation rules on the taxation of capital gains realized by individuals upon the sale or other disposition of H shares, individual holders of H shares may be required to pay capital gains tax. See “Item 10. Additional Information—Taxation—The People’s Republic of China”.

Government control of currency conversion andthe fluctuation of the Renminbi may materially and adversely affect our operations and financial results.

We receive substantially all of our revenues in Renminbi, which currently is not a freely convertible currency. A portion of these revenues must be converted into other currencies to allow us to make payments on declared dividends, if any, on our H shares, and payments of interest and principal on our debt held in foreign currencies.

Under China’s existing foreign exchange regulations, we are able to pay dividends and interest and principal in foreign currencies without prior approval from the SAFE by complying with various procedural requirements. **** The Chinese government, however, may, at its discretion, restrict access in the future to foreign currencies for current account transactions. If this were to occur, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs.

The value of the Renminbi against the U.S. dollar and other currencies fluctuates and is affected by, among other things, changes in China’s political and economic conditions. On July 21, 2005, the PRC government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. Under this system, the PBOC announces the closing price of a foreign currency traded against the Renminbi in the inter-bank foreign exchange market after the closing of the market on each working day, and makes it the central parity for the trading against the Renminbi on the following working day. On August 11, 2015, the PBOC adjusted the quotation mechanism of the Renminbi central parity to also consider demand and supply in foreign exchange markets and price movements of major currencies, in addition to the closing price on the previous working day. On May 26, 2017, the PBOC introduced the “counter-cyclical factor” into its formula that determines a central parity of Renminbi against the U.S. dollar. Under the current mechanism, the central parity of the Renminbi against the U.S. dollar is determined based on the closing price, changes in a basket of currency exchange rates and the counter-cyclical factor. From July 21, 2005 to April 10, 2020, the Renminbi appreciated by approximately 13**.**25% against the U.S. dollar. In 2019, the Renminbi depreciated by 1.65% against the U.S. dollar. A portion of our assets and liabilities are held in foreign currencies and may be subject to foreign exchange gains and losses due to changes in exchange rates. We recorded RMB 67 million (US$ 10 million) in foreign exchange losses for the year ended December 31, 2019, resulting mainly from the change in foreign exchange rates applicable to our assets and liabilities held in foreign currencies. Any future appreciation of the Renminbi may materially and adversely affect the value of, and any dividends payable on, our H shares in foreign currency terms. Our financial condition and results of operations also may be affected by changes in the value of certain currencies other than the Renminbi.

Payment of dividends is subject to restrictions under Chinese law.

Under Chinese law, dividends may be paid only out of distributable profits. Any distributable profits that are not distributed in a given year are retained and available for distribution in subsequent years. However, ordinarily we will not pay any dividends in a year in which we do not have any distributable profits.

Payment of dividends by us is also regulated by the PRC insurance law. See “Item 8. Financial Information—Consolidated Financial Statements and Other Financial Information—Policy on Dividend Distributions”.

ITEM 4. INFORMATION ON THECOMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

We were formed as a joint stock life insurance company pursuant to the PRC company law on June 30, 2003 under the corporate name of 中国人寿保险股份有限公司 in connection with the restructuring.

General Information

Our principal executive offices are located at 16 Financial Street, Xicheng District, Beijing 100033, China. Our telephone number is (86-10) 6363-3333. Our official website address is www.e-chinalife.com. The information on our website is not a part of this annual report. We have appointed CT Corporation System at 111 Eighth Avenue, New York, New York 10011 as our agent for service of process in the United States.

Our Restructuring

Upon the approval of the State Council and the CIRC, we were formed on June 30, 2003 as a joint stock company in connection with the restructuring by CLIC, our controlling shareholder. The restructuring was effected through a plan of restructuring, which was approved by the CIRC on August 21, 2003, and a restructuring agreement we entered into with CLIC on September 30, 2003, with retroactive effect to June 30, 2003, which we refer to in this annual report as the effective date. Pursuant to PRC law and the restructuring agreement, we enjoyed the rights and benefits and assumed the obligations and liabilities arising from the restructuring from and after the effective date.

In connection with the restructuring:

•	CLIC transferred to us (1) all long-term insurance policies (policies having a term of more than one year<br>from the date of issuance) issued on or after June 10, 1999, having policy terms approved by or filed with the CIRC on or after June 10, 1999 and either (i) recorded as a long-term insurance policy as of June 30, 2003 in an<br>actuarial database attached to the restructuring agreement as an annex or (ii) having policy terms for group supplemental medical insurance (fund type), (2) stand-alone short-term policies (policies having a term of one year or less from the<br>date of issuance) issued on or after June 10, 1999 and (3) all riders supplemental to the policies described in clauses (1) and (2) above, together with the applicable reinsurance contracts specified in an annex to the restructuring<br>agreement. We refer to these policies in this annual report as the “transferred policies”. All other insurance policies were retained by CLIC. We refer to these policies as the “non-transferred<br>policies”. We assumed all obligations and liabilities of CLIC under the transferred policies. CLIC continues to be responsible for its liabilities and obligations under the non-transferred policies<br>following the effective date.
•	Cash, specified investment assets and various other assets were also transferred to us.
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•	CLIC agreed not to, directly or indirectly through its subsidiaries and affiliates, participate, operate or<br>engage in life, accident and health insurance businesses and any other business in China which may compete with our insurance business. CLIC also undertook (1) to refer to us any corporate business opportunity that falls within our business<br>scope and which may directly or indirectly compete with our business and (2) to grant us a right of first refusal, on the same terms and conditions, to purchase any new business developed by CLIC. See “Item 7. Major Shareholders and<br>Related Party Transactions—Related Party Transactions—Continuing Related Party Transactions with CLIC”.
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•	Substantially all of the management personnel and employees who were employed by CLIC in connection with the<br>transferred assets and business were transferred to us. Some management and personnel remained with CLIC.
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•	CLIC retained the trademarks used in our business, including the “China Life” name in English and<br>Chinese and the “ball” logos, and granted us and our branches a royalty-free license to use these trademarks. CLIC and its subsidiaries and affiliates will be entitled to use these trademarks, but CLIC may not license or transfer these<br>trademarks to any other third parties. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Continuing Related Party Transactions with CLIC”.
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•	CLIC’s contracts with its agents and other intermediaries were transferred to us.
•	We entered into various agreements under which we provide policy administration services to CLIC for the non-transferred policies, manage CLIC’s investment assets and lease office space from CLIC for our branch and field offices. See “Item 7. Major Shareholders and Related Party Transactions”.<br>
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In connection with the restructuring, CLIC established, together with the MOF, a special purpose fund for the purpose of paying claims under the non-transferred policies. Under the administrative measures for the special purpose fund as amended in May 2012, the special purpose fund will be funded by renewal premiums paid on the non-transferred policies over time; tax rebates received by CLIC; proceeds from the investments of the special purpose fund; shareholder dividends paid in cash to CLIC by its subsidiaries and shareholding enterprises; proceeds from the disposition by CLIC of its shares in its subsidiaries and shareholding enterprises over time; cash income from the disposition of assets by CLIC; financial assets owned by CLIC; long-term equity investment held by CLIC; and funds injected by the MOF in the event of a deficiency in the special purpose fund. The special purpose fund is co-administered by CLIC and the MOF. The special purpose fund will be available to satisfy CLIC’s operating expenses, including the payment of benefits and claims obligations arising from the non-transferred policies, as well as expenses incurred in operating the special purpose fund, including third-party management fees, professional fees and such other purposes as the management committee of the special purpose fund may agree, as well as capital expenses as approved by the MOF. A management committee of the special purpose fund comprised of four representatives from the MOF and three representatives from CLIC oversees the management of the fund, with specified material items subject to the approval of the MOF. The special purpose fund will be dissolved when all claims and benefits under the non-transferred policies have been paid, or sooner if the management committee so agrees.

The MOF’s approval of the special purpose fund issued to CLIC provides that in the event there is any deficiency in the special purpose fund for so long as the fund is in existence as described above to meet any payment obligation arising out of the non-transferred policies, the MOF will provide support through the injection of funds to ensure the payments of benefits and claims to the policyholders of the non-transferred policies. In connection with the restructuring, we were advised by our PRC legal counsel, King & Wood, that (1) the MOF had the authority to issue this approval regarding the special purpose fund, (2) the approval was valid and effective, and (3) it had no reason to believe that the MOF will revoke the approval. We cannot assure you, however, that changes in law, facts or circumstances that may occur after such date will not affect the conclusions stated in such advice.

In accordance with generally applicable tax laws and regulations, CLIC, AMC and ourselves will file income tax returns and pay our respective income taxes as separate and independent taxpayers. In accordance with a circular issued by the MOF, a portion of the income tax payments made by CLIC and us during the period of January 1, 2003 to December 31, 2010 is required to be rebated to CLIC. All of the income tax payments made by AMC may also be rebated to CLIC, if the current shareholding structure of AMC remains unchanged. **** In 2011 CLIC applied for the extension of the period during which the income tax payments will be rebated, but no substantive progress had been made as of the date of this annual report.

In connection with the restructuring, we were advised by our PRC legal counsel, King & Wood, that following the restructuring we would not have any continuing obligations to holders of the non-transferred policies and that there was no legal basis on which holders of the non-transferred policies could make a claim against China Life. King & Wood based its conclusion on, among other things, the following factors: (1) after the restructuring, China Life was established as a separate legal entity and China Life’s assets and liabilities should be regarded as distinct and separate from those of CLIC; (2) there was no contractual relationship, direct or indirect, between the holders of the non-transferred policies and China Life; (3) the restructuring (including the transfer of the transferred policies to China Life) was approved by the CIRC and was conducted without infringing upon the rights of the holders of non-transferred policies; (4) the arrangements made under the restructuring agreement, in particular the MOF’s support as described above, were expected to enable CLIC to satisfy its obligations under the non-transferred policies; and (5) PRC regulatory authorities had no legal power to direct China Life to assume CLIC’s obligations under the non-transferred policies or to indemnify the holders of the non-transferred policies.

See “Item 3. Key Information—Risk Factors—Risks Relating to the Restructuring”.

Developments After Restructuring

On November 23, 2003, we established an asset management company, AMC, with CLIC, in connection with the restructuring. AMC manages our investment assets and, separately, substantially all of those of CLIC. On December 30, 2006, we established a property and casualty company, CLPCIC, with CLIC. On January 15, 2007, we established a pension insurance company, China Life Pension, with CLIC and AMC.

In December 2003, we successfully completed our initial public offering of H shares, including H shares in the form of American depositary shares, or ADSs, and raised approximately RMB 24,707 million in aggregate net proceeds. Upon completion of our initial public offering, our H shares became listed on the Hong Kong Stock Exchange and ADSs each representing 40 of our H shares became listed on the New York Stock Exchange. The ratio of ADSs to H shares was reduced from 40 H shares to 15 H shares on December 29, 2006 and was further reduced from 15 H shares to 5 H shares on May 26, 2015.

In December 2006, we issued 1,500,000,000 new ordinary domestic shares through public offering on the SSE at the offering price of RMB 18.88 per share, raising RMB 28,320 million in aggregate gross proceeds. The A shares have been listed on the SSE since January 9, 2007. Prior to the offering, CLIC held 19,323,530,000 ordinary domestic shares, or CLIC A shares, which have been registered with the China Securities Depository and Clearing Corporation Limited as circulative A shares with restrictive trading following the A share offering. CLIC has undertaken that for a period of 36 months commencing on January 9, 2007 it will not transfer or put on trust the CLIC A shares held by it or allow such CLIC A shares to be repurchased by China Life. On January 11, 2010, 19,323,530,000 CLIC A shares were released from trading restrictions.

In July 2015**,** we issued Core Tier 2 Capital Securities in the principal amount of US$ 1,280 million to qualified investors who meet applicable regulatory requirements at an initial distribution rate of 4.00%.

In March 2019, we issued bonds in the principal amount of RMB 35 billion for capital replenishment in the national inter-bank bond market. The bonds have a 10-year maturity and a fixed coupon rate of 4.28% per annum. We have a conditional right to redeem the bonds on the fifth anniversary of issuance. The proceeds from the issuance of the bonds will be used to replenish our capital so as to enhance our solvency according to applicable laws and approvals from regulatory authorities.

We incurred capital expenditures of RMB 10,562 million (US$ 1,517 **** million), RMB 14,755 million, and RMB 17,055 million in 2019, 2018 and 2017, respectively. These capital expenditures mainly comprised of the addition of properties for our own use.

SEC’sWebsite and Our Website

The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Our official website address is www.e-chinalife.com. The information on our website is not a part of this annual report.

B. BUSINESS OVERVIEW

We are the leading life insurance company in China. We provide a broad range of insurance products, including individual and group life insurance, annuity, health insurance and accident insurance products. We had nearly 303 million insurance policies in force as of December 31, 2019, including individual and group life insurance policies, annuity contracts, health insurance and accident insurance policies. As of December 31, 2019, the average guaranteed rate of return for all of our long-term insurance policies in force was 2.71%. For the financial year ended December 31, 2019, our lapse rate was approximately 1.89%. The policy persistency rates, which measure the ratio of the insurance policies that are still effective after a certain period, were 86.80% for 14 months after issuance and 85.90% for 26 months after issuance.

The information below is organized in accordance with our identified segments.

Life Insurance

We offer life insurance and annuity products to individuals and groups. We market our individual life insurance and annuity products primarily through a distribution force comprised of approximately 1,613,000 **** exclusive agents operating in approximately 16,000 field offices throughout China, as well as other non-dedicated agencies located at branch offices of banks and other organizations. We offer group life insurance and annuity products to the employees of companies and institutions through approximately 65,500 **** direct sales representatives, as well as insurance agencies and insurance brokerage companies. Gross written premiums generated by our life insurance and annuity products totaled RMB 446,562 million **** (US$ 64,145 million) for the year ended December 31, 2019, RMB 437,540 million **** for the year ended December 31, 2018, and RMB 429,822 million **** for the year ended December 31, 2017, constituting 78.74%, 81.66% and 83.96% of our total gross written premiums for those periods. Gross written premiums generated by our life insurance and annuity products for 2019 increased by 2.06 % from 2018.

The following table sets forth selected financial and other data regarding our life insurance and annuity business as of the dates or for the periods indicated.

	As of or for the year ended December 31,							Compoundannualgrowth rate
	2017		2018		2019		2019	(2017-2019)
	RMB		RMB		RMB		US
	(in millions, except as otherwise indicated)
Gross written premiums		429,822		437,540		446,562			1.93	%
Liabilities of insurance contracts		1,914,597		2,081,822		2,385,407			11.62	%
Liabilities of investment contracts		218,436		240,152		252,362			7.49	%

All values are in US Dollars.

Products

We offer a wide variety of life insurance and annuity products to individuals, providing a wide range of coverage for the whole length of a policyholder’s life. Our individual life insurance products consist of whole life and term life insurance and endowment insurance. We also offer group annuity products and term life insurance products to enterprises and institutions. We market these products as an important part of our group customers’ overall employee benefit plans. We believe we are the market leader in the development of group annuity products.

We offer both non-participating and participating products. There were approximately 249 million non-participating policies and 54.53 million participating policies as of December 31, 2019, among which approximately 151 million non-participating policies and 35.99 million participating policies were sold to individuals.

The following table sets forth selected financial information regarding our life insurance and annuity products.

	For the year ended December 31,							Compoundannualgrowth rate
	2017		2018		2019		2019	(2017-2019)
	RMB		RMB		RMB		US
	(in millions, except as otherwise indicated)
Gross written premiums
Whole life and term life insurance		40,606		49,520		64,196			25.74	%
Endowment		198,418		126,318		113,950			(24.22	%)
Annuities		190,798		261,702		268,416			18.61	%

All values are in US Dollars.

Whole Life and Term Life Insurance

Non-participating whole life and term life insurance

We offer non-participating whole life and term life insurance products.

Non-participating whole life insurance products provide a guaranteed benefit, pre-determined by the contract, upon the death of the insured, in return for the periodic payment of fixed premiums over a pre-determined period. Premium payments may be required for the length of the contract period, to a specified age or for a specified period, and are typically level throughout the period.

Non-participating term life insurance products provide a guaranteed benefit upon the death of the insured within a specified time period in return for the periodic payment of fixed premiums. Specified coverage periods generally range from 5 to 30 years or expire at specified ages. Death benefits and premiums are typically set at a level amount over the coverage period. Term life insurance products are sometimes referred to as pure protection products, in that there are normally little or no savings or investment elements. Unlike endowment products, term life insurance policies expire without maturity benefits.

Participating whole life insurance

We also offer participating whole life insurance products, which, in addition to the benefit payment of traditional whole life insurance policies, also provide a participation feature in the form of dividends. The policyholder is entitled to share a portion of the distributable earnings from participating products, as determined by us based on formulas prescribed by the CIRC.****Under guidelines issued by the CIRC, the dividends must be no less than 70% of the distributable earnings from participating products. We offer participating whole life insurance products only to individual customers.

Endowment

Non-participating endowment products

Non-participating endowment products provide to the insured various guaranteed benefits if the insured survives specified maturity dates or periods stated in the policy, and provide to a beneficiary guaranteed benefits upon the death of the insured within the coverage period, in return for the periodic payment of premiums. Specified coverage periods generally range from 5 to 30 years or end at specified ages. Premiums are typically at a level amount for the coverage period.

Participating endowment products

We also offer participating endowment products, which are endowment policies that also provide a participation feature in the form of dividends. Policyholders are entitled to share a portion of the distributable earnings from participating products, as determined by us based on formulas prescribed by the CIRC. Under guidelines issued by the CIRC, the dividends must be no less than 70% of the distributable earnings from participating products. ****

China Life Xin Fu Yi Sheng Participating Endowment and China Life Fu Lu Shuang Xi Participating Endowment generated the most income of our participating endowment products in 2019. China Life Xin Fu Yi Sheng Participating Endowment generated RMB 16,963 million (US$ 2,437 million) of net premiums in 2019, representing 3.81% of the net premiums of our life insurance business, and China Life Fu Lu Shuang Xi Participating Endowment generated RMB 15,129 million (US$ 2,173 million) of net premiums in 2019, representing 3.39% of the net premiums of our life insurance business. The net premiums earned from our participating endowment products decreased **** by RMB 15,182 million (US$ 2,181 million), or 14.56%, to RMB 89,076 million (US$ 12,795 million) in 2019 from RMB 104,258 million in 2018.

We offer endowment products only to individual customers.

Annuities

Annuities are used for both asset accumulation and asset distribution needs. Annuitants pay premiums into our accounts, and receive payments of benefits during the payoff period as specified in the contracts. We offer both non-participating and participating annuities. For non-participating annuity products, risks associated with the underlying investments are borne entirely by us. A significant portion of our non-participating annuity products imposes charges upon surrender.

Participating annuity products are annuities that provide a participation feature in the form of dividends in addition to the guaranteed annuity benefits. The dividends are determined by us in the same manner as our life insurance policies. Like non-participating annuities, a significant portion of our participating annuity products imposes charges upon surrender.

In our universal group annuities, interest accrued on an annuitant’s deposits is credited to each participating employee’s personal account, or to each participating employee’s personal account and employer’s group account.

Universal Insurance Products

Universal insurance products are insurance policies with flexible premium and sum insured as well as transparency on costs. For each universal insurance policy, we establish a separate account and determine the interest credit rate, mortality and expense charges specifically for the account. The benefits of universal insurance products are linked to the account value of each separate account.

Personal Tax-deferred Pension Insurance Products

In May 2018, the Chinese government permitted trial sales of personal tax-deferred pension insurance products in Shanghai, the Fujian province (including Xiamen) and Suzhou Industrial Park, and we commenced our personal tax-deferred pension insurance business. Because such business is still at the trial stage and sales are limited geographically, our premium income from personal tax-deferred pension insurance business remains small.

Marketing and Distribution

Individual

We have historically sold most of our individual life insurance and annuity products to the mass market and will continue to actively serve this market. However, we believe our core individual customer base will evolve as China’s economy develops.****We will seek to capitalize on the market opportunities in the growing affluent segment of China’s population by focusing our marketing efforts on large and medium-sized cities with an aim to attract more medium- and high-end customers, as we believe that the demand for life insurance and annuity products in these areas is greater. **** In addition, we have been implementing a customer segmentation sales approach which targets different customers with different products, with these products in many cases supplemented by our individual accident and health products.

We distribute our individual life and annuity products nationwide through multiple channels. Our primary distribution system is comprised of approximately 1,613,000 **** exclusive agents in approximately 16,000 **** field offices throughout China. In addition, we are implementing our customer-oriented market segmentation sales initiatives to all exclusive agents nationwide. **** While continuing to invest in our exclusive agent force, we have also expanded into other distribution channels, primarily non-dedicated agencies located in approximately 42,600 **** outlets of commercial banks, to diversify our distribution channels and to achieve higher growth. See “—Distribution Channels”.

Group

We target our group life insurance and annuity products to large institutional customers in China, including branches of foreign companies, which we believe have a greater awareness of and need for group life insurance and annuity products. We have long-term customer relationships with many of China’s largest companies and institutions. We provide large group customers with products having flexible fee and dividend structures, as well as convenient customer service. While continuing to focus on large institutional clients, we also target small- to medium-sized companies to supplement our growth.

We market our group life insurance and annuity products primarily through our direct sales representatives. We also market our group life insurance and annuity products through commercial banks, insurance agency companies and insurance brokerage companies. See “—Distribution Channels”.

Health Insurance

We offer a broad array of health insurance products and services to both individuals and groups, including medical insurance, care insurance, disease insurance and disability income insurance. Our health insurance gross written premiums totaled RMB 105,581 million (US$ 15,166 million) for the year ended December 31, 2019, RMB 83,614 million for the year ended December 31, 2018 and RMB 67,708 million for the year ended December 31, 2017, constituting 18.62%, 15.60% and 13.23% of our total gross written premiums for those periods. Gross written premiums generated by our health insurance products for 2019 increased by 26.27% from 2018.

Our health insurance business shares our nationwide life insurance sales force and distribution network of exclusive agents. Our policy review and claim adjustment processes are facilitated through a team of supporting personnel with medical training.

The following table sets forth selected financial and other data regarding our health insurance as of the dates or for the periods indicated. The financial results of both our long-term health insurance and short-term health insurance are reflected in the following table.

	As of or for the year ended December 31,							Compoundannualgrowth rate
	2017		2018		2019		2019	(2017-2019)
	RMB		RMB		RMB		US
	(in millions, except as otherwise indicated)
Gross written premiums		67,708		83,614		105,581			24.87	%
Liabilities of insurance contracts		102,190		125,743		158,800			24.66	%
Liabilities of investment contracts		14,064		15,282		15,442			4.78	%

All values are in US Dollars.

Products

We offer health insurance products to both individuals and groups. We classify our health insurance products as short-term products, having policy terms of less than or up to one year, and long-term products, having policy terms longer than one year. We offer both short-term and long-term defined health benefit plans, medical expense reimbursement plans, care insurance plans and disease-specific plans to individuals and groups.

Defined health benefit plans

These plans provide a fixed payment based on the number of days of hospitalization resulting from diseases, injuries from accidents or surgical operations. Policyholders either pay premiums in a single payment or on a periodic basis.

Medical expense reimbursement plans

These plans provide for the reimbursement of a portion of the participant’s outpatient or hospitalization treatment fees and expenses. Policyholders pay premiums either in a single payment or on a periodic basis or, for certain group medical expense reimbursement plans, irregularly as determined by the policyholder.

We also provide medical agency services for the basic social medical insurance plans offered by local governments. The agency services include checking and reimbursement of medical expenses and medical service investigations. We do not collect premiums but only charge a specified amount of handling fees for these services. As of December 31, 2019, we had carried out more than 600 medical agency services projects in over 29 provinces and cities, providing services to more than 100 million people.

We also commenced our supplementary major medical insurance business in 2013. As part of the Chinese government’s overall medical insurance scheme, supplementary major medical insurance reimburses policyholders for a specified percentage of their high medical expenses caused by major illnesses which are in excess of the maximum amounts covered by the basic social medical insurance and which would otherwise be borne by the individuals. The Chinese government has implemented supplementary major medical insurance programs nationwide in China. Local governments use a portion of the basic medical insurance funds to purchase supplementary major medical insurance services from qualified insurance companies through a government tender. Supplementary major medical insurance offers protection to all the policyholders covered by the basic social medical insurance in the pilot areas. As of December 31, 2019, we had undertaken over 230 supplementary major medical insurance programs, providing services to approximately 400 million people.

Care insurance plans

These plans provide individuals who have disabilities covered by the insurance contracts with a fixed allowance and reimbursement of expenses for their daily living and medical care. Premium payments are paid either in a single payment or on a periodic basis.

We commenced our care insurance business in 2015. The Chinese government launched pilot long-term care insurance programs beginning in 2016. Under these programs, local governments in pilot areas raise funds through various channels to provide funds or protection services to people who have life disabilities for their daily living and medical care. Some local governments purchase long-term care insurance services from qualified insurance companies through government tender procedures. As of December 31, 2019, we had undertaken more than 40 long-term care insurance programs, providing services to over 13 million people.

Disease-specific plans

These plans provide a payment benefit for various diseases. Premium payments for disease-specific plans are paid either in a single payment or on a periodic basis.

Marketing and Distribution

We offer our health insurance products to both individuals and groups through the same distribution channels we use to market our life insurance products. We market our individual health insurance products through our exclusive agent sales force, and our group health insurance products primarily through our direct sales representatives. See “—Distribution Channels”.

We market our health insurance products either as primary products, as riders or as supplementary products packaged with our life, annuity or accident insurance products. We conduct extensive health insurance related training programs for our direct sales representatives and our exclusive agents.

Accident Insurance

We are the leading accident insurance provider in China. Our accident insurance gross written premiums totaled RMB 14,943 million (US$ 2,146 million) for the year ended December 31, 2019, RMB 14,672 million for the year ended December 31, 2018 and RMB 14,436 million for the year ended December 31, 2017, constituting 2.64%, 2.74% and 2.82% of our total gross written premiums for those periods. Gross written premiums generated by our accident insurance products for 2019 increased by 1.85% from 2018.

The following table sets forth selected financial and other data regarding our accident insurance as of the dates or for the periods indicated. The financial results of both our long-term accident insurance and short-term accident insurance are reflected in the following table.

	As of or for the year ended December 31,							Compoundannualgrowth rate
	2017		2018		2019		2019	(2017-2019)
	RMB		RMB		RMB		US
	(in millions, except as otherwise indicated)
Gross written premiums		14,436		14,672		14,943			1.74	%
Liabilities of insurance contracts		8,346		8,466		8,529			1.09	%

All values are in US Dollars.

Products

We offer a broad array of accident insurance products to both individuals and groups.

Individual accident insurance

Individual accident insurance products provide a benefit in the event of death or disability of the insured as a result of an accident and, for certain products, a reimbursement of medical expenses to the insured in connection with an accident. Typically, a death benefit is paid if the insured dies as a result of the accident within 180 days of the accident, and a disability benefit is paid if the insured is disabled, with the benefit depending on the extent of the disability. Certain individual accident insurance products may also provide coverage if the insured receives medical treatment at a medical institution approved by us as a result of an accident. We offer a broad array of individual accident insurance products, such as insurance for students and infants against death and disability resulting from accidental injury and comprehensive coverage against accidental injury. We also offer products to individuals requiring special protection, such as accidental death and disability insurance for commercial air travel passengers and automobile passengers and drivers.

Group accident insurance

We offer a number of group accident insurance products and services to businesses, government agencies and other organizations of various sizes. We also offer group accident products targeted at specific groups, such as small-value group accident injury insurance to low-income people in rural areas.

Marketing and Distribution

We market our individual accident insurance products through our direct sales force and our exclusive agent sales force, as well as intermediaries, such as non-dedicated agencies located at outlets of commercial banks, savings cooperatives, travel agencies, hotels and airline sales counters and insurance agency and insurance brokerage companies. We market our group accident insurance products primarily through our direct sales representatives and the same intermediaries we use to sell our individual accident products. See “—Distribution Channels”.

We market our accident insurance products either as primary products, as riders or as supplementary products packaged with our life, annuity or health products. Our direct sales representatives market our individual accident products to employees of our institutional customers.

Product Development

In 2019, in line with our general development strategy, we developed and introduced 102 new products, including: 38 long-term insurance products consisting of 12 life insurance products, nine annuity products, one accident insurance product and 16 health insurance products; and 64 short-term insurance products consisting of 11 life insurance products, 26 accident insurance products and 27 health insurance products.

With respect to long-term insurance products, we developed and introduced, among others:

•	for the individual insurance distribution channel, Xin Xiang Zhi Zun (celebration edition), Jin Xiu Qian Cheng,<br>Xin Fu Lin Men and modified universal product Xin Zun Bao (Type A) for better meeting the demands of the customers; upgraded products of Kang Ning series, relaunch of the sale of Rui Xin series products and upgraded Bai Wan Ru Yi Xing product for<br>promoting the development of protection-based products by enhancing the accidental injury protection function; universal endowment product Fu Lu Xiang Ban, which allows for refund of premiums paid upon policy maturity; upgraded China Life Luck<br>series products; and participating endowment product Ru Yi Chuan Jia, which features both protection and savings;
•	for the bancassurance distribution channel, products including China Life Xin Ying Yi Sheng Whole Life Insurance,<br>China Life Le An Xiang Ban Hospitalization Expense Reimbursement Supplementary Medical Insurance, China Life Xin Ji Bao Annuity Insurance, China Life Xin Yuan Bao Whole Life Insurance (universal) (Le Xin edition) and China Life Xin Fu Xiang Ying<br>Pension Annuity Insurance;
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•	for the group distribution channel, products including China Life Kang Hui Group Whole Life Critical Illness<br>Insurance (exclusive edition), China Life Additional Hui Xiang Yi Sheng Disease-specific Insurance and China Life Sales Elite Group Pension Annuity Insurance (universal).
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With respect to short-term insurance products, we developed products including, among others, Ru E Kang Yue Proton and Heavy Ion, China Life Additional Fu Pin Bao Group Medical Insurance with Defined Benefits for Illness Hospitalization, China Life Additional Fu Pin Bao Group Medical Insurance with Defined Benefits for Accidental Injury Hospitalization, Xi Yang Hong series, Xi Yang Bao series, “OBOR” series, China Life Group Disability Income Insurance for Professional Athletes, China Life Additional Xin Lv Zhou Expense Reimbursement Medical Insurance for Illness Hospitalization, China Life Additional Xin Lv Zhou Supplementary Medical Insurance for Illness Hospitalization, China Life Comprehensive Group Medical Insurance, Tong Tai Wu You series, China Life Da Ai Wu Jiang Disease-specific Group Insurance, China Life Fei An Bao Insurance for Specific Tumor Diseases, and China Life Additional Insurance for Overseas Treatment of Specific Diseases.

Distribution Channels

We believe we have the largest distribution force with the most extensive geographic reach compared with any of our competitors. Our distribution network reaches almost every county in China. **** Throughout China, we have approximately **** 1,613,000 **** exclusive agents operating in approximately 16,000 **** field offices for our individual products and approximately 65,500 **** direct sales representatives for group products. We have a multi-channel distribution network selling individual and group insurance products through intermediaries, primarily non-dedicated agencies located in approximately 42,600 **** outlets of commercial banks as of the end of 2019. **** Commission rates vary by product, based on such factors as the payment terms and period over which the premiums are paid for the product, as well as CIRC regulations. We support our agents and representatives through training programs, sales materials and information technology systems.

Exclusive agent force

Our exclusive agent force of approximately 1,613,000 **** agents is the primary distribution channel for our individual life, annuity, health and accident insurance products.

The following table sets forth information relating to our exclusive agent force as of the dates indicated.

	As of December 31,
	2017		2018		2019
Number of exclusive agents (approximately)		1,578,000		1,439,000		1,613,000
Number of field offices (approximately)		17,100		17,451		16,000

Our exclusive agent force is among our most valuable assets, allowing us to more effectively control our distribution and build and maintain long-term relationships with our individual customers. The number of our exclusive agents increased from 1,439,000 as of the end of 2018 to 1,613,000 as of the end of 2019. During 2019, we continued to improve both the quantity and quality of our agent force, which has become an important driver of our business growth. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Regulation of Insurance Agencies, Insurance Brokers and Other Intermediaries” and “Item 3. Key Information—Risk Factors—Risks Relating to Our business—Our growth is dependent on our ability to attract and retain productive agents”. We believe that our customers and prospective customers prefer the personal approach of our exclusive agents and, therefore, we believe our exclusive agent force will continue to serve as our core distribution channel.

We also have developed a special sales force targeting “orphan policies” (policies which were serviced by former exclusive agents who have since left the company) to improve our service for these policies.

We supervise and provide training to our exclusive agents through more than 5,307 full-time trainers and 127,536 part time trainers. We set product management and customer service standards, and have developed sales risk warning and credit rating systems, which we require all of our field offices and agents to meet, and conduct field tests with a view to ensuring quality. We also have an extensive training program.

We compensate our exclusive agent force through a system of commissions and bonuses to reward performance. Our agents are compensated based on a commission rate that generally decreases over the premium period. For short-term insurance products, our exclusive agents are generally compensated with fixed agent fees. We provide group annuities, group commercial supplemental pension insurance, group life and medical insurance for our exclusive agents. We motivate our agents by rewarding them with performance-based bonuses and by organizing sales-related competitions among different field offices and sales units. We also try to increase the loyalty of our exclusive agents through other methods, such as through participation in sales conferences.

We believe we have the largest exclusive agent sales force in China. We intend to improve the quality and productivity of our individual exclusive agent force and reduce the attrition rate of our agents by taking the following actions:

•	improving the overall productivity of our exclusive agents by implementing our market segmentation sales<br>approach, managing, supporting and incentivizing the exclusive agents through different levels, and providing standardized sales services to our customers;
•	motivating our exclusive agents with an improved performance-based evaluation and compensation scheme;<br>
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•	building a more professional exclusive agent force by improving our education and training system and programs,<br>enhancing our training efforts and increasing the number of qualified exclusive agents;
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•	improving the quality of our exclusive agent force and reducing turnover by expanding our recruitment program and<br>strengthening the cultivation, training and performance support for our new exclusive agents;
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•	improving the productivity of our exclusive agent force by strengthening professional operation and standardized<br>management; and
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•	improving the capabilities of our exclusive agent force for customer service and self and team management by<br>providing effective sales support, including establishing a customer service platform and improving and expanding the China Life E-Home sales support system.
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Group distribution channel

Our group distribution channel is comprised of our direct sales force and intermediaries.

Direct sales force

Our direct sales force, which consists of approximately 65,500 direct sales representatives, is our primary distribution system for our group life insurance and annuities, group accident insurance and group health insurance products, as well as our individual accident insurance and individual short-term health insurance products. As of the end of 2019, the number of our direct sales representatives was 65,500, and, in particular, the number of direct sales representatives with high productivity reached 45,000. In 2019, we continued to improve the quality of the sales force by dismissing direct sales representatives with lower productivity, and further strengthened and improved our group distribution channel.

We believe maintaining our leading position in the group insurance market depends on a professional and qualified direct sales force. We set product management and customer service standards which we require all of our branch offices and direct sales representatives to meet.

We motivate our direct sales representatives by rewarding them with performance-based bonuses and by organizing sales and services-related competitions among different branch offices and sales units.

Intermediaries

We also offer individual and group products through intermediaries.

We market group products through dedicated insurance agencies and insurance brokerage companies. Dedicated insurance agencies and insurance brokerage companies work with companies primarily to select group insurance providers and group products and services in return for commission fees. Currently, the market of dedicated insurance agencies and insurance brokerage companies in China generally remains underdeveloped. However, we expect that the dedicated insurance agencies and insurance brokerage companies will play a more important role in sales of our group products in the future.

We also sell short-term insurance products through other non-dedicated agencies. Currently, we have non-dedicated agencies operating at outlets of commercial banks, travel agencies, credit cooperatives, small loan companies and airline sales counters. We expect non-dedicated agencies to become an increasingly important distribution channel for individual products.

Bancassurance channel

We have bancassurance arrangements with major commercial banks in China, and currently generate a significant portion of our total sales through bancassurance. **** Our distribution channels are primarily comprised of non-dedicated agencies located in approximately 42,600 outlets of commercial banks. We have established strategic alliances with many banks. We intend to improve the attractiveness of our products by providing new products and all-around services to each major bank and providing training and integrated systems support to our banking partners.

Other distribution channels

During 2019, in response to regulatory requirements and our development strategy, we integrated our telephone sales channel with our exclusive agent force. We also continued to improve our Internet-based sales channel and increase the variety of products sold online. Our customers are able to purchase some of our life, health and accident insurance products through our Internet-based channel. We have continued to optimize online services and improve user experience, supporting our other distribution channels through our Internet-based distribution channel.

Gross written premiums attributable to each distribution channel

The following table sets forth gross written premiums attributable to each distribution channel, as of the dates indicated.

	For the year ended December 31,
	2017		2018		2019		2019
	RMB		RMB		RMB		US
	(in millions)
Exclusive agent force		353,668		408,278		436,621
First-year business of long-term insurance		90,629		79,513		84,142
First-year regular		90,240		79,241		83,865
Single		389		272		277
Renewal business		253,586		316,930		336,676
Short-term insurance business		9,453		11,835		15,803
Group distribution channel		26,207		26,404		28,846
First-year business of long-term insurance		4,368		3,487		3,018
First-year regular		943		1,004		968
Single		3,425		2,483		2,050
Renewal business		999		1,649		1,995
Short-term insurance business		20,840		21,268		23,833
Bancassurance channel		113,505		76,841		70,060
First-year business of long-term insurance		80,731		31,881		23,851
First-year regular		20,954		23,239		23,820
Single		59,777		8,642		31
Renewal business		31,880		43,785		44,623
Short-term insurance business		894		1,175		1,586
Other distribution channels		18,586		24,303		31,559
First-year business of long-term insurance		1,064		937		763
First-year regular		984		935		763
Single		80		2		—
Renewal business		1,641		2,314		2,503
Short-term insurance business		15,881		21,052		28,293
Total	****	511,966	****	535,826	****	567,086

All values are in US Dollars.

Competition

According to statistical and market share information derived from China Insurance Yearbook, in 2018, the last year for which the market information for each individual insurance company and separate business segments is available, our nearest competitors were Ping An Life, China Pacific Life, Huaxia Life and Taiping Life.

•	In the life insurance market, Ping An Life, China Pacific Life, Huaxia Life, Taiping Life, and we collectively<br>represented approximately 54.8% of total life insurance premiums in 2018. We primarily compete based on the nationwide reach of our sales network, our large distribution force and the level of services we provide, as well as our strong brand name.<br>
•	In the accident insurance market, Ping An Life, China Pacific Life, Huaxia Life, Taiping Life, and we<br>collectively represented approximately 63.0% of total accident premiums in 2018. We primarily compete based on the nationwide reach of our sales network and the level of services we provide and our strong brand name, as well as our cooperative<br>arrangements with other companies and institutions. ****
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•

In the life insurance market, Ping An Life, China Pacific Life, Huaxia Life, Taiping Life, and we collectively represented approximately 54.8% of total life insurance premiums in 2018. We primarily compete based on the nationwide reach of our sales network, our large distribution force and the level of services we provide, as well as our strong brand name.

•

In the accident insurance market, Ping An Life, China Pacific Life, Huaxia Life, Taiping Life, and we collectively represented approximately 63.0% of total accident premiums in 2018. We primarily compete based on the nationwide reach of our sales network and the level of services we provide and our strong brand name, as well as our cooperative arrangements with other companies and institutions. ****

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•

In the health insurance market, Ping An Life, China Pacific Life, Huaxia Life, Taiping Life, and we collectively represented approximately 56.2% of total health premiums in 2018. We primarily compete based on the nationwide reach of our sales network, the level of services we provide, our multi-layered managed care scheme and systems of policy review and claim management, as well as our strong brand name.

The following table sets forth market share information for the year ended December 31, 2018, the most recent year for which official market information for separate business segments is available, in all segments of the life insurance market in which we do business.

	Lifepremiumsmarket share			Accidentpremiumsmarket share			Healthpremiumsmarket share			Totalpremiumsmarket share
China Life		20.8	%		22.3	%		17.2	%		20.4	%
Ping An Life Insurance Company of China, Ltd.^(1)^		15.5	%		27.0	%		21.2	%		17.0	%
China Pacific Life Insurance Co., Ltd.		7.3	%		9.2	%		8.6	%		7.7	%
Huaxia Life Insurance Co., Ltd.		6.8	%		1.2	%		3.1	%		6.0	%
Taiping Life Insurance Co., Ltd		4.4	%		3.4	%		6.1	%		4.7	%
Others^(2)^		45.2	%		37.0	%		43.8	%		44.1	%
Total	****	100	%	****	100	%	****	100	%	****	100	%
(1)	For purposes of this annual report, the statistics for Ping An Life Insurance Company of China, Ltd. do not<br>include those of Ping An Health Insurance Company of China, Ltd. and Ping An Annuity Insurance Company of China, Ltd.
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(2)	Others include: PICC Life Insurance Co., Ltd., PICC Health Insurance Co., Ltd., Taiping Pension Co., Ltd.,<br>Minsheng Life Insurance Co., Ltd., CPIC Allianz Health Insurance Co., Ltd., Ping An Annuity Insurance Company of China, Ltd., Ping An Health Insurance Company of China, Ltd., China United Life Insurance Co., Ltd., Sunshine Life Insurance Corporation<br>Limited, Taikang Life Insurance Co., Ltd., Taikang Pension & Insurance Co., Ltd., New China Life Insurance Co., Ltd., Huatai Life Insurance Co., Ltd., Tianan Life Insurance Company Limited of China, Funde Sino Life Insurance Co., Ltd.,<br>Anbang Life Insurance Co., Ltd., Anbang Annuity Insurance Co., Ltd., Hexie Health Insurance Co., Ltd., Union Life Insurance Co., Ltd., Greatwall Life Insurance Co., Ltd., ABC Life Insurance Co., Ltd., Kunlun Health Insurance Co., Ltd., June Life<br>Insurance Co., Ltd., Sinatay Life Insurance Co., Ltd., Yingda Taihe Life Insurance Co., Ltd., Guohua Life Insurance Co., Ltd., Happy Life Insurance Co., Ltd., Aeon Life Insurance Co., Ltd., China Post Life Insurance Co., Ltd., Zhongrong Life<br>Insurance Co., Ltd., Lian Life Insurance Co., Ltd., Sino-Conflux Insurance Company, Qian Hai Life Insurance Co., Ltd., Soochow Life Insurance Co., Ltd., Hongkang Life Insurance Co., Ltd., Pearl River Life Insurance Co., Ltd., Jixiang Life Insurance<br>Company Limited, Bohai Life Insurance Corporation Limited, Guolian Insurance Co., Ltd., Shanghai Life Insurance Company Limited, Hengqin Life Insurance Co., Ltd., Fosun United Health Insurance Co., Ltd., Hetai Life Insurance Co., Ltd., Huagui Life<br>Insurance Co., Ltd., Trust Mutual Life Insurance Company, Aixin Life Insurance Co., Ltd., China Merchants Life Insurance Company Limited, China Three Gorges Life Insurance Co., Ltd., Beijing Life Insurance Co., Ltd., Guobao Life Insurance Co., Ltd.,<br>Ruihua Health Assurance Corporation, Haibao Life Insurance Co., Ltd., Guofu Life Insurance Co., Ltd., Manulife-Sinochem Life Insurance Co., Ltd., CCB Life Insurance Company Limited, Allianz China Life Insurance Co., Ltd., ICBC-AXA Assurance Co., Ltd., BoComm Life Insurance Co., Ltd., Citic-Prudential Life Insurance Co., Ltd., Generali China Life Insurance Co., Ltd., Sun Life Everbright Life Insurance Co., Ltd., ING-BOB Life Insurance Co., Ltd., Founder Meiji Yasuda Life Insurance Co., Ltd., Aviva-COFCO Life Insurance Co., Ltd., Aegon THTF Life Insurance Co., Ltd., CIGNA – CMB Life Insurance Co., Ltd., Greatwall<br>Changsheng Life Insurance Co., Ltd., Heng An Standard Life Insurance Co., Ltd., Skandia-BSM Life Insurance Co., Ltd., Sino-US United MetLife Insurance Company Ltd.,<br>Cathay Lujiazui Life Insurance Co., Ltd., BOC Samsung Life Insurance Co., Ltd., Sino-French Life Insurance Co., Ltd., Evergrand Life Assurance Co., Ltd., King Dragon Life Insurance Co., Ltd., HSBC Life Insurance Co., Ltd., Shin Kong – HNA Life<br>Insurance Co., Ltd., Pramerica Fosun Life Insurance Co., Ltd., Sino-Korea Life Insurance Co., Ltd., ERGO China Life Insurance Co., Ltd. and American International Assurance Co., Ltd. (China).
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Source: China Insurance Yearbook 2019

We face competition not only from domestic life insurance companies, but also from non-life insurance companies and foreign-invested life insurers. There were 85 licensed life insurers **** as of December 31, 2017 and 91 as of December 31, 2018. Property and casualty insurers were allowed to sell accident and short-term health insurance products with regulatory approval starting from January 2003, which we believe will lead to greater competition in the accident and health insurance sectors, especially in the group accident and group health insurance products. In addition, we believe that China’s commitment to accelerate the opening of its insurance sector to foreign investors, including the relaxation on market access requirements applicable to foreign-invested insurance companies and foreign ownership limits in its insurance sector, will further increase competition in China’s life insurance market. In 2018, China increased the limit on foreign ownership in Chinese life insurance companies to 51% and on December 6, 2019, CBIRC announced that starting from January 1, 2020, foreign investors will be allowed to own 100% in Chinese life insurers. We believe that the relaxation of the restrictions on foreign-invested insurers will continue to increase the competitive pressures we are facing.

See “Item 3. Key Information—Risk Factors—Risks Relating to the PRC Life Insurance Industry—We expect competition in the Chinese insurance industry to increase, which may materially and adversely affect the growth of our business”.

We also face increasing competition from other financial services providers, primarily licensed mutual fund companies, commercial banks providing personal banking services and operating business of various financial products, trust companies and brokerage houses licensed to manage separate accounts. These financial services providers may be permitted to manage employer-sponsored defined contribution pension plans, which we believe will compete directly with our group annuity products. We also face competition in the sale of our traditional life insurance savings policies, individual participating policies and annuities from financial institutions which offer investment products to the public.

Business Management

Customer Support Management

We seek to provide quality services to our customers and potential customers and to be responsive to their needs, both before and after a sale, through an extensive customer support network. Our customer service network is managed by specialized customer service departments, which are responsible for setting uniform standards and procedures for providing policy-related services to customers, handling inquiries and complaints from customers and training customer services personnel.

We deliver customer services primarily through customer service centers and customer contact centers operating in our branch offices and in field offices throughout China. We have upgraded our telephone call center to a multimedia coordination center that allows customers to access our various service channels, including our dedicated customer service line “95519”, official WeChat account, official website and China Life Insurance application. We take advantage of alternative customer services channels, such as online electronic notification, cell phone messages and online smart robots, complementing the customer services provided by our customer service centers and customer contact centers. ****

Customer service centers

We provide comprehensive insurance service to customers through approximately 2,600 **** customer service centers nationwide. Our customer service centers provide several types of policy-related services to our customers, including policy administration and claims settlement. We apply AI technology to our customer service and use technology products such as Smart Teller Machines, Intelligent Robot at Counter, China Life Electronic Counter, Intelligent Appointment and China Life Insurance App, to simplify service process and improve service efficiency. We have uniform service standards for customer service centers nationwide and require our customer service centers to provide these policy related services in accordance with the uniform standards to ensure the high quality of the services we provide. In 2019, we received the award of “Enterprise with Outstanding Contribution for Improving the Service Quality of China Insurance Industry” from the China Association for Quality Promotion for the tenth time. Many of our customer service centers won the title of “Customer Satisfaction AAA Unit”.

Customer contact centers

Our customer contact centers allow customers to make product and service inquiries, file suggestions and complaints, report claims and losses, make appointments and apply for conservations through telephone and Internet channels. Our customer contact centers also allow the customers to access online self-services through a smart voice navigation system, an interactive voice response system and intelligent online robots. They also provide follow-up review of policies, notifications and reminder services to customers. With our dedicated customer service line “95519”, our customers can reach us on a “24 hours/7 days” basis. We have also built an integrated financial service ecology. Through our dedicated customer line “95519”, in addition to access to our service, customers are also able to access other financial services provided by CLPCIC, China Life Pension, CGB, AMP and China Life Insurance Overseas.

We believe our customer contact centers have become popular with our customers because of the quality of services we provide and our continuous efforts in innovation. We received the awards of “China’s Best Customer Contact Center of Year 2018-2019” and “China’s Best Customer Contact Center for Operation and Management” from the Customer Relationship Management Committee of the China Federation of IT Promotion and Customer Contact Center Committee. **** We also received the “Best Call Centers in the World” award from the International Customer Management Institute in 2007, 2011 and 2015, respectively. We will use new technology and new services to innovate and continue to promote the intelligent and digital transformation and upgrading of our customer contact centers. We seek to ensure that we have a sufficient number of lines and staff to service the increasing use of our customer contact centers.

We have established system-wide standards for our customer contact centers, which we monitor periodically through regular quality monitoring and customer satisfaction surveys on the contact centers.

Notification services

We send cellphone messages and online notifications to convey such information as renewal payment reminders, notice of successful premium payment and birthday greetings.

Internet-based services

Our customers can access our various service guides through our website (www.e-chinalife.com). We also use emails to send messages to our customers throughout China, conveying such information as renewal payment reminders.

Our Internet-based services are offered through our China Life Insurance App (formerly China Life E Bao) and official WeChat account. During 2019, the number of registered users of our online channels increased by 24.92% from 2018, and 99.56% of policy loans and 95.69% of the receipt of policies were handled online including through our China Life Insurance application and official WeChat account.

Supplementary services

To allow our customers to benefit from superior service and enhance their service experience, we provide several types of supplementary services while continuing to provide quality basic insurance services.

To meet the demand of different customer groups, we have launched four service programs, namely “Excellent Teenagers”, “Healthy Family”, “Financial Elite” and “Colorful Life”. In 2019, we continued to hold the “Little Painters of China Life” and “China Life 700 Running” activities and also organized a series of online and offline customer festival activities. In 2019, we carried out over 32,000 activities and served 40.28 million customers.

Underwriting and Pricing

Our individual and group insurance underwriting involves the evaluation of applications for life, accident and health insurance products by a professional staff of underwriters and actuaries, who determine the type and the amount of risk that we are willing to accept. We have established qualification requirements and review procedures for our underwriting professionals. We employ detailed underwriting policies, guidelines and procedures designed to assist our underwriters to assess and quantify risks before issuing a policy to qualified applicants.

We generally evaluate the risk characteristics of each prospective insured. Requests for coverage are reviewed on their merits, and a policy is not issued unless the particular risk or risk portfolio has been examined and approved for underwriting.

We have different authorization limits and procedures depending on the amount of the claim. We also have authorization limits for personnel depending on their qualifications.

In order to maintain high standards of underwriting quality and consistency, we engage in periodic internal underwriting audits.

Individual and group product pricing reflects our insurance underwriting standards. Product pricing on insurance products is based on the expected payout of benefits, calculated through the use of mortality table, morbidity, expenses and investment returns. Those assumptions and other assumptions for calculating expected profit margin are based on our own experience, third party consultation, the experience of reinsurance companies and published data from other institutions. For more information on regulation of insurance products, see “—Regulatory and Related Matters—Insurance Company Regulation”.

We primarily offer products denominated in Renminbi.

Claims Management

We manage the claims from policyholders through our claims verification staff at our headquarters and branch offices. Typically, upon receiving a claim, a staff person will make a preliminary verification if all materials supporting the claim have been submitted; if so, the claim and its materials will be forwarded to the claim settlement department to confirm liability and to determine whether a claim investigation is needed. Upon confirming the validity of the claim and insurance liability, the amount payable to the insured will be calculated, and the claim will be paid upon completion of approval procedure. Meanwhile, in order to improve the operational efficiency of claims for small-sum medical insurance with low risks, we have built an automatic operation mode to automatically handle the entire process after the acceptance of the claim.

We manage claims management risk through organizational controls and computer systems controls. Our organizational controls include specific limits on authorization for branches at different levels; periodic case inspection and special inspections in particular situations by risk management departments at all levels of our organization; and expense mechanisms linking payout ratios of short-term insurance policies and expense ratios of branches. Except for some health insurance claims below a certain amount, verification of claims by two staff members is also required. We also periodically provide training for our claims verification personnel and conduct appraisals of their performance. Our claims management is strictly processed with computers to streamline claims verification and handling.

Reinsurance

We have entered into various reinsurance agreements with China Life Reinsurance Company Ltd., or China Life Re, formerly known as China Reinsurance Company, for the reinsurance of individual risks and group risks. In general, individual and group risks are primarily reinsured either on a surplus basis, whereby we are reinsured for risks above a specified amount, or on a quota share basis. Under our reinsurance policy, the specified amount above which the risks are reinsured varies among different types of insurance products. In general, our reinsurance agreements with China Life Re do not have a definite term, but may be terminated with respect to new business thereunder by either party on a date agreed by both parties with three to six months’ notice.

We have also entered into reinsurance agreements separately with other reinsurance companies including the Beijing branch of Munich Reinsurance Company, the Beijing Branch of SCOR, the Shanghai branch of Reinsurance Group of America, the Beijing branch of Swiss Reinsurance Company Limited, the Shanghai branch of Hannover Re, the Shanghai branch of General Re Corporation and Aetna Life & Casualty (Bermuda) Ltd.

In June 2019, we renewed our catastrophe reinsurance in order to reduce our catastrophe exposure.

These reinsurance agreements spread the risk and reduce the effect on us of potential losses. Under the terms of the reinsurance agreements, the reinsurer agrees to assume liabilities for the ceded business in the event the claim is paid. However, we remain liable to our policyholders if the reinsurer fails to meet the obligations assumed by it.

We also accept external auditing of reinsured business by our reinsurers.

Investments

As of December 31, 2019, we had RMB 3,573,154 million (US$ 513,251 million) of investment assets. As provided by China’s insurance laws and regulations, we may invest insurance premiums and other insurance funds in five categories of investment assets, including liquidity assets, fixed income assets, equity assets, real properties and other financial assets, all as defined by the CBIRC and subject to various limitations. Each category of investment assets is also divided into domestic assets and overseas assets. See “—Regulatory and Related Matters—Insurance Company Regulation—Regulation of investments”. As of December 31, 2019, we have invested our insurance premiums and other insurance funds in term deposits, debt securities, loans, securities investment funds, stocks, resale agreements, investment properties, investments in associates and joint ventures, equity interests of non-listed enterprises and related financial products.

We direct and monitor our investment activities through the application of our strategic asset allocation plan, annual asset allocation plan, investment guidelines and a series of investment management systems, which include: (1) performance goals for the investment fund; (2) specified asset allocations and investment scope based on regulatory provisions, level of indebtedness and market forecasts; (3) specified investment duration and asset-liability matching requirements based on asset-liability matching strategies; (4) specified authorization levels required for approval of significant investment projects; and (5) specified risk management policies and prohibitions. These are subject to review and approval by the board of directors, and, in particular, the strategic asset allocation plan and annual asset allocation plan are subject to review and approval by the board of directors annually. The board of directors may delegate and authorize our management to review and approve investment guidelines and some investment management systems.

Investment proposals typically originate from our investment management department, which is in charge of all of our investment assets except for investment in real properties used by us, which is separately managed by our own-use real property investment management department. Material investment decisions are reviewed and approved by our board of directors or shareholder’s meeting and other investment proposals are reviewed by our president and senior management for final approval.

AMC, the asset management company that we established with CLIC, manages a substantial part of our Renminbi investments and, separately, substantially all of the investments retained by CLIC. See “—Asset Management Business”. IHC, a wholly owned subsidiary of CLIC, also manages our investments in unlisted equity interests, real estate and related financial products and securitization financial products. Other related parties are also entrusted to manage a small amount of our assets. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions”. In addition, as of December 31, 2019, we had also engaged 22 third party domestic investment managers to manage RMB 96,257 million (US$ 13,826 million) for investment in Chinese public markets and 10 third party overseas investment managers to manage US$ 1,363 million for investment in overseas public markets.

The following table summarizes information concerning our investment assets as of December 31, 2017, 2018 and 2019.

	As of December 31,
	2017					2018					2019
	Carryingvalue		% oftotal			Carryingvalue		% oftotal			Carryingvalue		% oftotal
	(RMB in millions, except as otherwise indicated)
Cash and cash equivalents		48,586		1.8	%		50,809		1.6	%		53,306		1.5	%
Term deposits		449,400		16.3	%		559,341		18.0	%		535,260		15.0	%
Statutory deposits—restricted		6,333		0.2	%		6,333		0.2	%		6,333		0.2	%
Debt securities,<br>held-to-maturity		717,037		26.1	%		806,717		26.1	%		928,751		26.0	%
Debt securities,<br>available-for-sale		455,124		16.5	%		496,590		16.0	%		509,791		14.3	%
Debt securities, securities at fair value through profit or loss		82,891		3.0	%		88,003		2.8	%		85,206		2.4	%
Debt securities		1,255,052		45.6	%		1,391,310		44.9	%		1,523,748		42.7	%
Loans		383,504		13.9	%		450,251		14.5	%		608,920		17.0	%
Equity securities, available for sale		355,610		12.9	%		373,943		12.1	%		549,166		15.4	%
Equity securities, securities at fair value through profit or loss		53,918		2.0	%		50,714		1.6	%		56,402		1.6	%
Equity securities		409,528		14.9	%		424,657		13.7	%		605,568		17.0	%
Derivative financial assets		—		—			—		—			428		0.0	%
Resale agreements		36,185		1.3	%		9,905		0.3	%		4,467		0.1	%
Investment properties		3,064		0.1	%		9,747		0.3	%		12,141		0.3	%
Investments in associates and joint ventures		161,472		5.9	%		201,661		6.5	%		222,983		6.2	%
Total investment assets	****	2,753,124	****	100.0	%	****	3,104,014	****	100.0	%	****	3,573,154	****	100.0	%
Average investment assets balance		2,633,087					2,928,569					3,338,584

Risk management

Our primary investment objective is to pursue optimal investment yields while considering macroeconomic factors, risk control and regulatory requirements. We are exposed to five primary sources of investment risk:

•	interest rate risk, relating to the market price and cash flow variability associated with changes in interest<br>rates;
•	credit risk, relating to the uncertainty associated with the continued ability of a given obligor to make timely<br>payments of principal and interest;
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•	market valuation risk, relating to the changes in market value for our investments, particularly our securities<br>investment fund holdings and shares listed on the Chinese securities exchanges, which are denominated and traded in Renminbi;
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•	liquidity risk, relating to the lack of liquidity in many of the debt and equity securities markets we invest in,<br>due to contractual restrictions on transfer or the size of our investments in relation to the overall market; and
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•	currency exchange risk, relating to the impact of changes in the value of the Renminbi against the U.S. dollar<br>and other currencies on the value of our investments.
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Our investment assets are principally comprised of fixed income securities and term deposits, and therefore changes in interest rates have a significant impact on the rate of our investment return. **** We manage interest rate risk through adjustments to our portfolio mix and terms, and by managing, to the extent possible, the average duration and maturity of our assets and liabilities. However, because of the general lack of long-term fixed income securities in the Chinese financial markets, the duration of some of our assets is lower than our liabilities. We believe that with the development of China’s financial markets and the gradual easing of our investment restrictions, our ability to match our assets to our liabilities will improve. Although we have been approved to enter into interest rate swaps, it is still not an effective means for us to hedge our interest rate risk as the Chinese interest rate swap market is still in the early stages of development.

We believe we have a relatively low credit risk, because we mainly invest in fixed income products with high credit ratings. We monitor our credit risk through in-house fundamental analysis of the Chinese economy and the underlying obligors and transaction structures. ****

We are subject to market valuation risk, particularly because China’s bond and stock markets are more volatile than developed markets. We manage valuation risk through industry and issuer diversification and asset allocation.

Since substantially all of our investments are made in China, we are exposed to the effect of changes in the Chinese economy and other factors which affect the Chinese banking industry and securities markets.

We are also subject to market liquidity risk for many of the investments we make, due to the size of our investments in relation to the overall market. We manage liquidity risk through selection of liquid assets and through asset diversification. In addition, we view fundraising through repurchase agreements as a way of managing our short-term liquidity risk.

Our ability to manage our investment risks is limited by the investment restrictions placed on us and the lack of sophisticated investment vehicles for risk management in China’s capital markets. The CBIRC allows insurance companies to invest in financial derivative products with the aim to hedge and reduce investment risks. We are considering these alternative ways of investing to further improve our risk management.

Our assets held in foreign currencies are subject to foreign exchange risks resulting from the fluctuations of the value of the Renminbi against the U.S. dollar and other foreign currencies. As we are approved by the CIRC to invest our assets held in foreign currencies in overseas financial markets, the return from overseas investments could, to a certain extent, reduce the foreign exchange risks we are exposed to.

For further information on our management of interest rate risk and market valuation risk, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk”.

Investment results

Our investment yields for the years ended December 31, 2019, 2018 and 2017 were 5.24%, 3.29%, and 5.16%, respectively. Beginning in 2018, we revised the formula to calculate our investment yield to consider the impact of investments in associates and joint ventures on our investment yield. The investment yield for the fiscal years ended December 31, 2017 has also been revised to conform to the revised formula.

The following table sets forth the yields on average assets for each major component of our investment portfolios for the periods indicated.

	As of or for the years ended December 31,
	2017						2018						2019
	Yield^(1)^			Amount			Yield^(1)^			Amount			Yield^(1)^			Amount
	(RMB in millions, except as otherwise indicated )
Cash, cash equivalents, statutory deposits and term deposits:						****
Investment income		4.3	%		23,827			4.1	%		22,699			4.4	%		26,695
Ending assets: cash and cash equivalents					48,586						50,809						53,306
Ending assets: statutory deposits—restricted					6,333						6,333						6,333
Ending assets: term deposits					449,400						559,341						535,260
Ending assets					504,319						616,483						594,899
Debt securities:
Investment income					53,895						61,517						63,148
Net realized gains on financial assets					(123	)					357						(35	)
Net fair value gains through profit or loss					(1,542	)					2,006						778
Total		4.3	%		52,230			4.8	%		63,880			4.4	%		63,891
Ending assets					1,255,052						1,391,310						1,523,748
Loans:
Investment income		5.4	%		16,320			5.5	%		22,894			5.1	%		27,111
Ending assets					383,504						450,251						608,920
Equity securities:
Investment income					27,939						17,776						22,804
Net realized gains on financial assets					165						(19,948	)					1,866
Net fair value gains through profit or loss					8,179						(18,938	)					18,279
Total		8.7	%		36,283			(5.1	%)		(21,110	)		8.3	%		42,949
Ending assets					409,528						424,657						605,568
Resale agreements:
Investment income		1.9	%		746			1.2	%		281			2.2	%		161
Ending assets					36,185						9,905						4,467
Investments properties:
Income of investments properties		3.2	%		69			1.6	%		105			0.3	%		31
Ending assets					3,064						9,747						12,141
Investments in associates and joint ventures:
Net gains on investments of associates and joint ventures		5.1	%		7,143			4.3	%		7,745			3.8	%		8,011
Ending assets					161,472						201,661						222,983
Securities sold under agreements to repurchase:
Interest expense		(3.7	%)		(3,144	)		(2.6	%)		(3,565	)		(1.5	%)		(2,392	)
Ending liabilities					87,309						192,141						118,088
Total investments:
Investment income					122,727						125,167						139,919
Net realized gains on financial assets					42						(19,591	)					1,831
Net fair value gains through profit or loss					6,183						(18,278	)					19,251
Income of Investments properties					69						105						31
Net gains on investments of associates and joint ventures					7,143						7,745						8,011
Interest expense of securities sold under agreements to repurchase					(3,144	)					(3,565	)					(2,392	)
Total		5.16	%		133,020			3.29	%		91,583			5.24	%		166,651
Ending assets excluding securities sold under agreements to repurchase					2,665,815						2,911,873						3,455,066
(1)	Yields for 2019, 2018 and 2017 are calculated by dividing the gross investment income for that year by the<br>average of the ending balances of that year and the previous year.
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Term deposits

Term deposits consist principally of term deposits with Chinese commercial banking institutions and represented 15.0% of our total investment assets as of December 31, 2019, 18.0% of our total investment assets as of December 31, 2018 and 16.3% of our total investment assets as of December 31, 2017.

We generally place term deposits with state-owned commercial banks and large joint stock commercial banks. The terms of the term deposits vary. They typically allow us to renegotiate terms with the banks upon prepayment, including the methods for the calculation of accrued interest, if any. We make large term deposits to obtain higher yields than can ordinarily be obtained with regular deposits.

The following table sets forth term deposits by contractual maturity dates, as of the dates indicated.

	As of December 31,
	2017		2018		2019
	Amortizedcost		Amortizedcost		Amortizedcost
	(RMB in millions)
Due in one year or less		97,076		158,920		107,039
Due after one year and through five years		349,524		323,021		420,191
Due after five years and through ten years		2,800		77,400		8,030
Total term deposits	****	449,400	****	559,341	****	535,260

The following table sets forth term deposits outstanding to Chinese banking institutions as of the dates indicated.

	As of December 31,
	2017		2018		2019
	Amortizedcost		Amortizedcost		Amortizedcost
	(RMB in millions)
Industrial & Commercial Bank of China		10,819		5,378		3,205
Agriculture Bank of China		50,819		42,264		49,089
Bank of China		43,625		40,000		40,000
China Construction Bank		26,070		25,200		5,200
Bank of Communications		132,922		200,534		135,950
Other banks		185,145		245,965		301,816
Total term deposits	****	449,400	****	559,341	****	535,260

Debt securities

Debt securities in which we are permitted to invest mainly consist of the following categories:

•	Chinese government bonds;
•	government agency bonds (including local government bonds issued and repaid by the MOF as agent, central bank<br>notes, financial bonds issued by Chinese state-owned policy banks and RMB-denominated bonds issued by international development institutions);
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•	corporate bonds (including financial bonds issued by commercial banks, corporate bonds, convertible corporate<br>bonds, short-term financing bonds and medium-term notes);
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•	subordinated bonds and debt (including subordinated bonds issued by Chinese state-owned policy banks,<br>subordinated bonds issued by commercial banks, subordinated debt with fixed terms issued by commercial banks and subordinated debt with fixed terms issued by insurance companies); and
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•	tier 2 capital bonds and perpetual capital bonds (including tier 2 capital bonds and perpetual capital bonds<br>issued by Chinese state-owned policy banks, and tier 2 capital bonds and perpetual capital bonds issued by qualified commercial banks).
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Debt securities represented 42.7% of our total investment assets as of December 31, 2019, 44.9% of our total investment assets as of December 31, 2018 and 45.6% of our total investment assets as of December 31, 2017.

Based on estimated fair value, Chinese government bonds, Chinese government agency bonds, corporate bonds, subordinated bonds and debt and other debt securities comprised 4.7%, 33.6%, 29.1%, 10.6% and 22.0% of our total available-for-sale debt securities as of December 31, 2019, 5.7%, 36.3%,37.5%,4.3% and 16.2% **** of our total available-for-sale debt securities as of December 31, 2018 and 5.4%, 34.7%, 43.3%, 3.0% and 13.6% of our total available-for-sale debt securities as of December 31, 2017. Except for a small number of debt securities, which collectively had a carrying value of RMB 41,650 million (US$ 5,983 million) as of December 31, 2019, most of our debt securities are traded on security exchanges or in the unlisted interbank market in China.

We mainly invest in secured bonds and unsecured bonds rated AA or above by the rating agencies recognized by the CBIRC, such as China Chengxin International Credit Rating Co., Ltd., or Chengxin International, and China Lianhe Credit Rating Co., Ltd., or Lianhe Credit. We also invest in short-term financing bonds rated A-2 or above.

Chengxin International is a member of Moody’s Investors Service Inc., with Moody’s owning 30% equity interest in Chengxin International. Chengxin International created its own rating structures by making reference to the rating structures and experience of Moody’s and Fitch Ratings. AAA is the highest rating. Other approved rating agencies, such as Lianhe Credit, have similar rating structures. Ratings given by these entities are not directly comparable to ratings given by U.S. rating agencies.

The following table sets forth the amortized cost and estimated fair value of debt securities, as of the dates indicated.

	As of December 31,
	2017										2018										2019
	Amortizedcost		% oftotal			Estimatedfair value		% oftotal			Amortizedcost		% oftotal			Estimatedfair value		% oftotal			Amortizedcost		% oftotal			Estimatedfair value		% oftotal
	(RMB in millions)
Debt securities,available-for-sale:
Government bonds		24,818		2.0	%		24,632		2.0	%		26,759		1.9	%		28,440		2.0	%		22,500		1.5	%		23,758		1.5	%
Government agency bonds		164,331		13.0	%		157,765		12.8	%		172,250		12.5	%		180,273		12.6	%		163,678		10.9	%		171,189		10.9	%
Corporate bonds		199,613		15.7	%		197,133		16.1	%		181,178		13.2	%		185,720		13.1	%		145,033		9.6	%		148,455		9.5	%
Subordinated bonds/debt		13,588		1.1	%		13,495		1.1	%		20,953		1.5	%		21,514		1.5	%		53,062		3.5	%		53,922		3.4	%
Others		62,651		4.9	%		62,099		5.0	%		78,136		5.8	%		80,643		5.6	%		109,729		7.3	%		112,467		7.3	%
Total debt securities,available-for-sale	****	465,001	****	36.7	%	****	455,124	****	37.0	%	****	479,276	****	34.9	%	****	496,590	****	34.8	%	****	494,002	****	32.8	%	****	509,791	****	32.6	%
Debt securities, held to maturity:
Government bonds		125,866		9.9	%		123,712		10.0	%		179,943		13.1	%		191,009		13.4	%		215,928		14.3	%		228,198		14.6	%
Government agency bonds		241,808		19.1	%		223,313		18.2	%		266,986		19.4	%		276,484		19.3	%		401,799		26.6	%		415,013		26.6	%
Corporate bonds		200,869		15.9	%		196,536		16.0	%		212,709		15.5	%		220,267		15.4	%		198,322		13.2	%		206,793		13.2	%
Subordinated bonds/debt		148,494		11.7	%		149,423		12.1	%		147,079		10.7	%		155,783		10.9	%		112,702		7.5	%		118,571		7.6	%
Total debt securities, held to maturity	****	717,037	****	56.6	%	****	692,984	****	56.3	%	****	806,717	****	58.7	%	****	843,543	****	59.0	%	****	928,751	****	61.6	%	****	968,575	****	62.0	%
Debt securities, securities at fair value through profit or loss
Government bonds		2,139		0.2	%		2,081		0.2	%		118		0.0	%		118		0.0	%		41		0.0	%		41		0.0	%
Government agency bonds		9,463		0.7	%		9,084		0.7	%		6,639		0.5	%		6,760		0.5	%		6,829		0.5	%		6,859		0.4	%
Corporate bonds		68,401		5.4	%		66,915		5.4	%		79,390		5.8	%		79,774		5.6	%		76,395		5.0	%		77,215		4.9	%
Others		4,819		0.4	%		4,811		0.4	%		1,346		0.1	%		1,351		0.1	%		1,083		0.1	%		1,091		0.1	%
Total debt securities, securities at fair value through profit or loss	****	84,822	****	6.7	%	****	82,891	****	6.7	%	****	87,493	****	6.4	%	****	88,003	****	6.2	%	****	84,348	****	5.6	%	****	85,206	****	5.4	%
Total debt securities	****	1,266,860	****	100.0	%	****	1,230,999	****	100.0	%	****	1,373,486	****	100.0	%	****	1,428,136	****	100.0	%	****	1,507,101	****	100.0	%	****	1,563,572	****	100.0	%

The following table shows the amortized cost and estimated fair value of debt securities excluding securities at fair value through profit or loss by contractual maturity dates, as of the dates indicated.

	As of December 31,
	2017				2018				2019
	Amortizedcost		Estimatedfair value		Amortizedcost		Estimatedfair value		Amortizedcost		Estimatedfair value
	(RMB in millions)
Due in one year or less		64,919		64,884		28,371		28,529		51,097		50,715
Due after one year and through five years		268,090		265,832		304,467		313,067		279,248		288,711
Due after five years and through ten years		460,372		452,122		485,722		506,005		457,940		478,297
Due after ten years		388,657		365,270		467,433		492,532		634,468		660,643
Total debt securities, excluding those at fair value through profit or loss	****	1,182,038	****	1,148,108	****	1,285,993	****	1,340,133	****	1,422,753	****	1,478,366

Our investments in debt securities are subject to strict restrictions under relevant Chinese regulation. See “—Regulatory and Related Matters—Regulation of investments”. We diversify our corporate bonds by industry and issuer to effectively manage and control concentration risks. As of the date of this annual report, we believe that our corporate bond portfolio does not have significant exposure to a single industry or issuer.

Loans

We offer interest-bearing policy loans to our policyholders, who may borrow from us in amounts up to the total cash values of their policies. In general, the loans are secured by the policyholders’ rights under the policies. As of December 31, 2019, the total amount of our policy loans was RMB 174,872 million (US$ 25,119 million), and represented 4.89% of our total investment assets as of that date.

In addition to policy loans, our other loans mainly consist of our investment in debt investment plans and trust schemes. As of and for the year ended December 31, 2017, the total amount of our investment in debt investment plans was RMB 73,668 million, and we had total investment proceeds from such plans of approximately RMB 3,605 million. As of and for the year ended December 31, 2018, the total amount of our investment in debt investment plans was RMB 75,717 million, and we had total investment proceeds from such plans of approximately RMB 4,295 million. As of and for the year ended December 31, 2019, the total amount of our investment in debt investment plans was RMB 83,924 million (US$ 12,055 million), and we had total investment proceeds from such plans of approximately RMB 4,489 million (US$ 645 million). As of and for the year ended December 31, 2017, the total amount of our investment in trust schemes was RMB 163,764 million, and we had total investment proceeds from such schemes of approximately RMB 6,343 million. As of and for the year ended December 31, 2018, the total amount of our investment in trust schemes was RMB 185,105 million, and we had total investment proceeds from such schemes of approximately RMB 9,276 million. As of and for the year ended December 31, 2019, the total amount of our investment in trust schemes was RMB 215,306 million (US$ 30,927 million), and we had total investment proceeds from such schemes of approximately RMB 11,077 million (US$ 1,591 million).

Securities investment funds

Securities investment funds consist of Chinese domestic investment funds and overseas investment funds that primarily invest in securities. As of December 31, 2019, our investment in securities investment funds was RMB 118,450 million (US$17,014 million) and represented 3.31% of our total investment assets as of that date. Our investment in securities investment funds mainly consists of investment in Chinese domestic investment funds.

We invest in both “closed-end” securities investment funds, in which the number of shares is fixed and the share value depends on the trading prices, and “open-end” securities investment funds, in which the number of shares issued by the fund fluctuates and the share value is set by the value of the assets held by the fund. Our investments in securities investment funds are subject to strict restrictions under relevant Chinese regulations. See “—Regulatory and Related Matters—Insurance Company Regulation—Regulation of investments”. Our holdings in securities investment funds comply with those restrictions.

The following table presents the carrying values of investments in open-end and closed-end securities investment funds as of the dates indicated.

	As of December 31,
	2017					2018					2019
	Carryingvalue		% oftotal			Carryingvalue		% oftotal			Carryingvalue		% oftotal
	(RMB in millions, except as otherwise indicated)
Open-end		99,012		97.8	%		104,107		98.0	%		118,450		100.0	%
Closed-end		2,224		2.2	%		2,164		2.0	%		—		—
Total	****	101,236	****	100.0	%	****	106,271	****	100.0	%	****	118,450	****	100.0	%

Stocks

Investments in stocks consist of investment in publicly offered and listed equity securities that are denominated and traded in Renminbi and investment in stocks listed on specified overseas stock exchanges that are permitted by the CIRC. Our investments in stocks are subject to strict restrictions under relevant Chinese regulations. See “—Regulatory and Related Matters—Insurance Company Regulation—Regulation of investments”. As of December 31, 2019, the total amount of our investment in common stocks was RMB 276,604 million (US$ 39,732 million), and represented 7.7% of our total investment assets as of that date. As of December 31, 2018, the total amount of our investment in common stocks was RMB 178,710 million , and represented 5.8 % of our total investment assets as of that date. As of December 31, 2017, the total amount of our investment in common stocks was RMB 173,450 million, and represented 6.3% of our total investment assets as of that date.

Resale agreements

We enter into resale agreements, which consist of securities resell activities in resell markets.

The securities purchased under agreements to resell were RMB 4,467 million (US$ 642 million) as of December 31, 2019, RMB 9,905 million as of December 31, 2018, and RMB 36,185 million as of December 31, 2017.

Equity interests in non-listed enterprises andrelated financial products

Insurance companies are allowed to invest, directly or indirectly, in equity interests in non-listed enterprises. These investments are categorized either as “direct investments”, for investments by an insurance company in its name, or as “indirect investments”, for investments through equity investment funds and other related financial products sponsored and established by an investment management institution. Our investments in equity interests in non-listed enterprises and related financial products are subject to strict restrictions under relevant Chinese regulations. See “—Regulatory and Related Matters—Insurance Company Regulation—Regulation of investments”.

We started to make investments in equity interests in non-listed enterprises in 2006. In November 2017, we entrusted IHC to invest in Ningbo Meishan Bonded Port Area Baishan Investment Management Partnership, or Baidu Fund Partnership. The total capital commitment in the Baidu Fund Partnership is RMB 7.011 billion, of which RMB 5.6 billion was subscribed by us and RMB 1.4 billion was subscribed by Ningbo Meishan Bonded Port Area Baidu Zhixin Asset Management Company, each as a limited partner. The Baidu Fund Partnership primarily makes mid-to-late stage investments in private equity transactions in the Internet sector, including Internet, mobile Internet, artificial intelligence, Internet finance, consumption upgrade, and Internet+.

In 2018, we subscribed for additional shares of CLPCIC by contributing RMB 1.52 billion undistributed profits of CLPCIC. In December 2018, we subscribed for an additional 1,871,875,329 shares of China Guangfa Bank, or CGB, for RMB 13.012 billion. Upon closing, we hold 8,600,631,426 shares of CGB, and our shareholding in CGB remains at 43.686%. We are still the largest shareholder of CGB.

In 2018, we invested RMB 8 billion in equity interests in China Power Investment Nuclear Power Co., Ltd.

In 2019, we invested RMB 9 billion in equity interests in Qinghai Huanghe Hydropower Development Co., Ltd.

The following table presents the carrying values of our major investments in equity interests in non-listed enterprises as of the dates indicated.

	As of December 31,
	2017		2018		2019
	Carryingvalue		Carryingvalue		Carryingvalue
	(RMB in millions, except as otherwise indicated)
China Life Property and Casualty Insurance Company Limited		8,185		7,963		9,332
China Guangfa Bank Co., Ltd.		53,459		72,655		75,180
Sinopec Sales Co., Ltd.		10,172		10,219		10,232
Sinopec Sichuan to East China Gas Pipeline Co., Ltd.		21,347		21,387		21,433
Ningbo Meishan Bonded Port Area Baishan Investment Management Partnership		1,680		1,698		1,751
China Power Investment Nuclear Power Co., Ltd.		—		8,036		8,607
Qinghai Huanghe Hydropower Development Co., Ltd.		—		—		9,007

Asset Management Business

On November 23, 2003, in connection with the restructuring, we established an asset management company, AMC, with CLIC, for the purpose of operating the asset management business more professionally in a separate entity and to better attract and retain qualified investment management professionals. AMC manages our investment assets and, separately, substantially all of those of CLIC. For a description of our investment assets, see “—Investments”.

We own 60% and CLIC owns 40% of AMC. Directors of AMC are appointed by the shareholders at a general meeting. As the controlling shareholder, we effectively control the composition of AMC’s board of directors. In 2014, the registered capital of AMC was increased from RMB 3 billion to RMB 4 billion. The proportionate shareholding between CLIC and us remains unchanged.

As of and for the year ended December 31, 2019, AMC had total assets of RMB 11,914 million (US$ 1,711 million), net assets of RMB 10,354 million (US$ 1,487 million) and net profit of RMB 1,286 million (US$ 185 million).

Property and Casualty Business

In December 2006, we and CLIC established a property and casualty company, CLPCIC, with us owning 40% and CLIC owning the remaining 60%. In 2018, the registered capital of CLPCIC was increased from RMB 15 billion to RMB 18.8 billion, with us and CLIC contributing RMB 1.52 billion and 2.28 billion undistributed profits of CLPCIC, respectively. The proportionate shareholding between CLIC and us remains unchanged.

As of and for the year ended December 31, 2019, CLPCIC had total assets of RMB 91,167 million (US$ 13,095 million), net assets of RMB 23,330 million (US$ 3,351 million) and net profit of RMB 2,123 million (US$ 305 million).

Pension Insurance Business

In January 2007, we, CLIC and AMC established a pension insurance company, China Life Pension, with us owning 55%, CLIC owning 25% and AMC owning the remaining 20%. In January 2015, the registered capital of China Life Pension was increased from RMB 2.5 billion to RMB 3.4 billion. China Life Pension is currently held 70.74%, **** 4.41%, 3.53%, 1.33%, and 19.99% by us, CLIC, AMC, China Credit Trust Company Limited and AMP Life Limited, respectively. ****

China Life Pension has obtained qualifications to serve as investment manager, trustee and account manager of enterprise annuity funds.

As of and for the year ended December 31, 2019, China Life Pension had total assets of RMB 5,644 million (US$ 811 million), net assets of RMB 4,084 million (US$ 587 million) and net profit of RMB 635 million (US$ 91 million).

Information Technology

Our computer systems provide support for many aspects of our businesses, including product development, sales and marketing, business management, cost control and risk control. We have approximately 1,981 **** experienced engineers, technicians and specialists providing professional and flexible support for our business operations in various aspects, including the design, research and development and operation of our computer systems.

During 2019, we actively applied advanced technologies and pushed forward digital transformation. We took the following steps:

•	Upgrade of sales model. We adopted technologies such as AI and Big Data to achieve data integration, and<br>developed innovative sales models such as an AI sales model called “Golden Instruction”, which is designed to achieve smarter, more accurate and convenient sales of insurance products. In 2019, the online customer acquisition rate grew by<br>47% year-on-year, and the percentage of online sales force recruitment reached 70%. We held online training sessions for new agents with 4.9 million participants.<br>More than 60 million customers were recommended to the sales team through the intelligent platform, and the ratio of customers who purchased long-term insurance policies to all the recommended customers increased by four times.<br>
•	Upgrade of field offices and equipment. We used the “Internet of Things” technology, which<br>accelerated the real-time interconnection between different field offices and networks as well as the intelligent upgrade of daily office operations. In 2019, we added 88,000 sets of intelligent equipment and deployed more than 2,000 self-service<br>terminals at our service counters nationwide and set up demonstrative 5G digital field offices in multiple cities.
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•	Upgrade of service and customer experience. We continued to use AI technology in underwriting, policy<br>administration, claims settlement, services and risk control. In 2019, the approval rate of individual insurance policies by automatic underwriting was 89.4%, and the number of claims settled through complete automatic process reached more than<br>11.3 million. We introduced a short-term risk identification model for critical illness insurance with a 91% accuracy rate in identifying risks. We also developed a platform to utilize intelligent technologies to discover and verify suspected<br>money-laundering activities, which enhanced our ability to control sales risks.
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•	Establishment of cloud-based infrastructure. We utilized industry-leading hybrid clouds to achieve the<br>rapid deployment of our front office applications and secure storage of back office data, which effectively improved the stability, smoothness and security of our systems. Specifically, resource allocation efficiency and overall access speed<br>increased by nine-times and two-times, respectively. While substantially expanding the resources of our basic platform, we also managed to reduce the costs of resources.
•	Roll-out of new digital applications and establishment of digitalecosystem. We introduced component-based plug-in professional service modules and efficiently launched various types of flexibly-combined “light” applications suited for different market<br>application scenarios for their users. We also introduced a series of innovative applications such as cloud video and cloud desktop, and provided readily available, mobile, convenient live-streaming and smart office services for our salespersons and<br>employees nationwide. In addition, during 2019, we developed more than 1,000 innovative applications based on the platform and cooperated with more than 6,000 institutions to carry out various services and over 40,000 activities, which enhanced our<br>insurance-centered ecosystem services.
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•

Establishment of cloud-based infrastructure. We utilized industry-leading hybrid clouds to achieve the rapid deployment of our front office applications and secure storage of back office data, which effectively improved the stability, smoothness and security of our systems. Specifically, resource allocation efficiency and overall access speed increased by nine-times and two-times, respectively. While substantially expanding the resources of our basic platform, we also managed to reduce the costs of resources.

•

Roll-out of new digital applications and establishment of digitalecosystem. We introduced component-based plug-in professional service modules and efficiently launched various types of flexibly-combined “light” applications suited for different market application scenarios for their users. We also introduced a series of innovative applications such as cloud video and cloud desktop, and provided readily available, mobile, convenient live-streaming and smart office services for our salespersons and employees nationwide. In addition, during 2019, we developed more than 1,000 innovative applications based on the platform and cooperated with more than 6,000 institutions to carry out various services and over 40,000 activities, which enhanced our insurance-centered ecosystem services.

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We also continue to attach importance to financial data security and have implemented projects, including the separation of internal and external networks, cloud desktops, providing different levels of protection fitting to the various application systems, intelligent security monitoring and supervision platforms and anti-intrusion systems. User access information obtained through front office applications is gathered and managed at a back office platform. We have built a security protection system to cover assessment, protection, detection, response, recovery and other aspects of data protection. We have an intelligent visualization system to provide real-time monitoring on cyber attacks. We also have internal rules on the procedures for reporting and handling material accidents, including cybersecurity incidents, occurring during business operations.

Trademarks

We conduct our business under the “China Life” brand name (in English and Chinese), the “ball” logos, the “C” mark and other business related slogans and logos. CLIC owns these trademarks and has registered them with the Trademark Office of the SAMR. CLIC has entered into a trademark license agreement with us, under which CLIC has agreed to grant us a royalty-free license to use the “China Life” brand name, the “ball” logos and the “C” mark. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions—Continuing Related Party Transactions with CLIC”.

Regulatory and Related Matters

Overview

The insurance industry is heavily regulated in the PRC. The applicable laws and regulations governing insurance activities undertaken within the territories of the PRC consist principally of the PRC Insurance Law and rules and regulations promulgated under that law. The CBIRC is the authority authorized by the PRC State Council to regulate and supervise the insurance industry in the PRC. The CBIRC has been the principal regulatory authority over the PRC insurance industry since 2018, when its predecessor, the CIRC, was merged with China’s banking regulator, the CBRC.

The PRC Insurance Law, which provided the initial framework for regulating the PRC insurance industry, was enacted in 1995, and significantly amended on October 28, 2002, February 28, 2009, August 31, 2014 and April 24, 2015. Among other things, the major provisions of the PRC Insurance Law include: (1) licensing of insurance companies and insurance intermediaries, such as agents and brokers; (2) separation of property and casualty business and life insurance business; (3) regulation of market conduct by participants; (4) substantive regulation of insurance products; (5) regulation of the financial condition and performance of insurance companies; and (6) supervisory and enforcement powers of the CBIRC.

The CIRC, the predecessor to the CBIRC, was established in 1998. The CBIRC has extensive supervisory authority over the PRC insurance industry, including: (1) promulgation of regulations applicable to the insurance industry; (2) approval for establishment of insurance companies and their subsidiaries; (3) review of qualifications of senior management of insurance companies; (4) supervision of insurance companies and their solvency and market activities; (5) establishment of investment regulations; (6) approving the policy terms and premium rates for certain insurance products; (7) setting standards for measuring the financial soundness of insurance companies; (8) requiring insurance companies to submit reports concerning their business operations and condition of assets; and (9) ordering the suspension of all or part of an insurance company’s business. Since their establishment, CBIRC and its predecessor CIRC have promulgated a series of regulations indicating a gradual shift in the regulatory approach to a more transparent regulatory process and a convergent movement toward international standards.

Insurance Company Regulation

Licensing requirements

An insurance company is required to obtain a license from the CBIRC in order to engage in an insurance business. In general, a license will be granted only if the company can meet prescribed registered capital requirements and other specified requirements, including requirements relating to its form of organization, the qualifications of its senior management and actuarial staff, the adequacy of its information systems and specifications relating to the insurance products to be offered.

The CBIRC may grant a life insurer a license to offer all or part of the following products: accident insurance, term life insurance, whole life insurance, annuities, short-term and long-term health insurance, endowment insurance (for individuals only) and other personal insurance approved by the CBIRC, as well as reinsurance relating to any of the foregoing.

An insurance company may seek approval for establishing branch offices to meet its business needs so long as it meets minimum capital and other requirements. Our headquarters and all of our branch offices have obtained the requisite insurance licenses.

Minimum capital requirements

The minimum paid-in capital for an insurance company is RMB 200 million. For an insurance company whose registered capital is RMB 200 million, the minimum incremental capital for each first branch office in a province other than the province where its headquarter is located is RMB 20 million. No additional capital will be required when the paid-in capital has reached RMB 500 million, and the insurer’s solvency is sound.

Restriction of ownership in joint stock insurance companies

Any acquisition of shares which results in the acquirer owning 5% or more of the registered capital of a joint stock insurance company, whether or not listed, requires the approval of the CBIRC. A filing with the CBIRC is required with respect to a change of equity interest of less than 5% in an insurance company, unless it is a listed insurance company. Equity interests held by a single shareholder, including its related parties and persons acting in concert, must not exceed one-third of the registered capital of a single insurance company. An exception to the one-third cap applies to insurance companies establishing or investing in other insurance companies for the purposes of innovation and specialization of their business, or consolidating their operations under a single group management. Equity interests held by a single domestic limited partnership must not exceed 5% of the registered capital of a single insurance company. The combined equity interests held by several domestic limited partnerships must not exceed 15% of the registered capital of a single insurance company, and the combined equity interests held by foreign investors may not exceed 51% of the total equity of a single life insurance company. On December 6, 2019, CBIRC announced that starting from January 1, 2020, restrictions on foreign ownership in Chinese life insurers will be removed and foreign investors will be allowed to own 100% in Chinese life insurers.

Fundamental changes

Prior approval must be obtained from the CBIRC before specified fundamental changes relating to a Chinese insurance company may occur. These include: a change of company name, registered capital or address of executive offices of companies or their subsidiaries; an expansion of business scope; an amendment to articles of association; a merger or spin-off; a change in a shareholder whose capital contribution accounts for 5% or more of the total capital of the company or a change in shareholding of 5% or more of the shares of the company; and a termination of a branch office. In addition, certain other changes relating to the insurance company must be reviewed by or filed with the CBIRC.

Regulation of products

Regulation of ordinary personal insurance products. An ordinary personal insurance product is one whose insurance premiums and policy benefits are definite upon issuance of the insurance policy. Beginning from August 5, 2013, the CIRC removed the original 2.50% cap on the guaranteed interest rates of ordinary personal insurance products, and such guaranteed interest rates can be decided by insurance companies at their discretion in accordance with the principle of prudence. Meanwhile, the statutory valuation rates of ordinary personal insurance policies issued on and after August 5, 2013 have been increased from 2.50% to 3.50%. In addition, beginning from August 5, 2013, if the guaranteed interest rate of an ordinary personal insurance product developed by an insurance company is not higher than the maximum valuation rate set by the CBIRC which varies depending on product, the insurance company must file the relevant information of the product with the CBIRC. If such rate is higher than the maximum valuation rate set by the CBIRC, the insurance company is required to obtain the approval of the CBIRC on the product in advance, and during the approval process, the insurance company is not allowed to submit new insurance clauses and premium rates to the CBIRC for approval. On September 2, 2016, the CIRC further required that policy loans provided by an insurer may not exceed 80% of the cash value or account value of the policy. From October 1, 2017, the first payment of survival insurance benefits for the ordinary endowment products and annuity products must occur only after five years since the policy becomes effective and the annual payment or partial payment must not exceed 20% of the paid premiums. Beginning from August 30, 2019, the cap on the valuation rate of premium reserves of ordinary pension annuity products or ordinary long-term annuity products with a term more than ten years issued on and after August 5, 2013 is equal the lower of 3.50% or the guaranteed interest rate.

Regulation of participating products. A participating product is one which the policyholder or annuitant is entitled to share in the distributable earnings of the insurer through “policy dividends”. The participation dividend may be in the form of a cash payment or an increase in the insured amount. At least 70% of the distributable earnings is required to be distributed as dividends. In September 2015, the CIRC removed the original 2.50% cap on the guaranteed interest rate of participating products. From October 1, 2015, the guaranteed interest rate is to be decided by insurance companies at their discretion in accordance with the principle of prudence. If the guaranteed interest rate of a participating product developed by an insurance company is not higher than 3.50%, the insurance company must file the specific information of such product with the CBIRC for record. If such rate is higher than 3.50%, the insurance company is required to obtain the approval of the CBIRC for the product. In addition, the valuation rate of unearned premium reserves of participating products equals to either the guaranteed interest rate or 3.00%, whichever is lower. Beginning from September 2, 2016, if the guaranteed interest rate of a life insurance product newly developed by an insurance company is lower than the maximum valuation rate set by the CIRC, which is 3.00% for participating products, the insurance company is only required to file specified information relating to the product with the CBIRC, and if such rates are higher than 3.00%, the insurance company is required to obtain the approval of the CBIRC for such products. From October 1, 2017, the first payment of survival insurance benefits for the participating endowment products and annuity products must occur only after five years since the policy becomes effective and the annual payment or partial payment must not exceed 20% of the paid premiums.

Regulation of universal products. A universal product is one which offers the typical protection of life insurance with investment accounts providing a minimum yield. The premium payments and coverage of universal products are flexible, usually with a minimum guaranteed interest rate, and the investment yields are settled periodically. Beginning from February 16, 2015, the CIRC removed the original 2.50% cap on the minimum guaranteed interest rate of universal products, with the guaranteed interest rate to be decided by insurance companies at their discretion in accordance with the principle of prudence. Meanwhile, the maximum valuation rate of a universal product has been increased from a compound annual rate of 2.50% to a compound annual rate of 3.50%. Beginning from September 2, 2016, the CIRC changed the maximum valuation rate of a universal product from a compound annual rate of 3.50% to a compound annual rate of 3.00%. If the minimum guaranteed interest rate of a universal product developed by an insurance company is not higher than the maximum valuation rate set by the CBIRC (i.e., a compound annual rate of 3.00%), the insurance company must file specified information relating to the product with the CBIRC. If such rate is higher than the maximum valuation rate set by the CBIRC, the insurance company is required to obtain the approval of the CBIRC for the product. Any amendment to the insurance clauses, premium rates, insurance liabilities, types of insurance or pricing methods of universal products must be filed with or approved by the CBIRC. From October 1, 2017, universal products must be designed to allow the flexibility to pay additional premiums from time to time and to adjust the insured amount. Insurance companies may not design the universal products in the form of riders.

Regulation of investment-linked products. An investment-linked product is one which insures the policyholder or annuitant against one or more separate risks and at the same time gives the policyholder or annuitant an interest in one or more separate investment accounts. Insurance companies must complete the establishment of investment accounts before submitting the required information regarding their investment-linked products to the CBIRC for approval or filing. Insurance companies must report on the establishment, change, consolidation, division, close or settlement of the investment accounts to the CBIRC within 10 business days after occurrence of these events. Transactions between a separate investment account and any other account of the insurance company, other than a transfer of cash to establish the investment account, are prohibited, and, investment-linked products must be designed to allow the flexibility to pay additional premiums from time to time and to adjust the insured amount. Insurance companies may not design investment-linked products in the form of riders. Other CIRC regulations govern the sale and disclosure terms of investment-linked products.

Regulation of variable annuityinsurance. Variable annuity insurance is a type of insurance where the policy benefits are associated with the price of the investment unit in the linked investment account, and a minimum amount of policy benefits is guaranteed as stipulated in the insurance agreement. Under variable annuity insurance, the insurance company is obliged to pay an annuity or offer an option for the conversion of the insurance proceeds to be annuitized upon maturity. Variable annuity products may not be sold or amended without the prior approval of the CBIRC. Variable annuity products must be sold and disclosed in accordance with the requirements of the CIRC.

Regulation of pension insurance. A life insurance company or a pension insurance company, as approved by the CIRC, may engage in individual and group pension insurance business. The pension insurance terms and premium rates determined by an insurance company must be filed with or approved by the CBIRC in accordance with its regulatory provisions. Other CIRC regulations govern the sale and disclosure terms of pension insurance, as well as the investments by pension insurance funds.

Regulation of enterprise annuity funds. Subject to the approval of the PRC Ministry of Human Resources and Social Security, insurance companies may serve as the trustee, account manager and investment manager for enterprise annuity funds. China Life Pension has obtained qualifications to serve as investment manager, trustee and account manager of enterprise annuity fund.

Regulation of health insurance. Subject to approval by the CBIRC, life insurance companies may engage in health insurance business. Other insurance companies may, subject to approval by the CBIRC, engage in short-term health insurance business. Insurance companies engaged in health insurance business are required to submit an actuarial report or reserves assessment report for the preceding year in accordance with the relevant provisions of the CIRC. Insurance companies must also submit a pricing review report to the CBIRC before March 15 of each year regarding the short-term health insurance products. Insurance companies were permitted to sell health insurance products eligible for preferential individual income tax policies in accordance with the CIRC’s relevant requirements in 31 pilot cities, including Beijing, Shanghai, Tianjin and Chongqing beginning in 2016 and, from July 1, 2017, nationwide in China. The health insurance products may be offered to taxpayers who have reached the age of 16 but have not reached the statutory retirement age. The expenses incurred by individuals for purchasing such health insurance products will be deductible from their individual income tax up to RMB 2,400 per year or RMB 200 per month. Survival benefits paid before the expiry of the policy term of a care insurance product may only be paid under the condition that the care required by the insured is caused by disability in activities of daily living as agreed in the insurance contract. Survival benefits paid before the expiry of the policy term of a disability income insurance product may only be paid under the condition that the loss of working ability of the insured is caused by a disease or an accidental injury as agreed in the insurance contract. On December 1, 2019, the new Measures for the Administration of Health Insurance came into effect, pursuant to which sales of products that are not in compliance with the requirements under the new measure must be ceased before April 1, 2020.

Regulation of short-term accidental injury insurance. Short-term accidental injury insurance is a type of insurance that uses death or disability caused by accidents or physical injuries stipulated in the insurance agreement as a condition for paying insurance proceeds. Short-term accidental injury insurance products must be developed and managed by the headquarters of the insurance company and filed with the CBIRC. Insurance companies must also submit a pricing review report to the CBIRC before March 15 of each year regarding the short-term accident insurance products they offer.

Regulation of foreign exchange denominated insurance. Insurance companies may seek approval from the CBIRC and the SAFE to engage in foreign exchange denominated insurance and reinsurance businesses, allowing them to offer products to non-Chinese policyholders or for non-Chinese beneficiaries, as well as policies covering accidents and illnesses which occur outside China, together with related reinsurance.

Regulation of supplementary major medical insurance. As part of the Chinese government’s overall medical insurance scheme, supplementary major medical insurance reimburses policyholders for a specified percentage of their medical expenses which are in excess of the maximum amounts covered by the basic social medical insurance as long as such medical expenses are caused by the diseases covered by the basic social medical insurance. The supplementary major medical insurance programs have now been launched nationwide in China. Local governments use a portion of the basic medical insurance funds to purchase supplementary major medical insurance service from qualified insurance companies through a government tender. Insurance companies are required to apply to the CBIRC for the qualification to engage in such business. Supplementary major medical insurance products must be filed with the CBIRC.

Regulation of investments

Permitted investments. As a Chinese life insurance company, we are subject to restrictions under the PRC Insurance Law, the Measures for the Administration of the Utilization of Insurance Funds and other related rules and regulations on the asset categories and percentages in which we are permitted to invest. Assets that insurance companies may invest in are classified into five broad categories: current assets, fixed-income assets, equity assets, property assets and other financial assets. The amounts in percentages that may be invested in each asset category and the percentages that correspond to concentration risks for investing in a single item and counter-party are limited to specified amounts, and insurance companies are subject to risk monitoring requirements and early warning mechanisms with respect to liquidity, financing scale and asset classes.

Asset categories, investment and concentration risk regulatory percentages. Currently, Chinese life insurance companies are allowed to invest their funds in the following asset categories, subject to the satisfaction of conditions prescribed for each form of investment.

			Regulatory Percentage^(1)^
AssetCategory	Definition	Specific Items Included	InvestmentRegulatoryPercentage	Concentration Risk RegulatoryPercentage
Current assets	Current assets refer to cash reserves, deposits payable on demand, and highly-liquid assets with shorter terms and less risk of changes in value that can be readily converted into a definite amount of cash.	Domestic items mainly include cash, current deposits, bank call deposits, insurance asset management products on the monetary market, and government bonds, quasi-government bonds and reverse repurchase agreements with residual<br>maturities of one year or less. Overseas items mainly include bank current deposits, monetary market funds, overnight lending, commercial bills, bank bills, negotiable certificates of deposit, reverse repurchase agreements, short-term government<br>bonds, government-backed bonds, bonds of international financial organizations, corporate bonds and convertible bonds with residual maturities of one year or less, as well as other tools or products recognized by the CBIRC in this category.	None.	The total outstanding investments by an insurance company in a single legal person^(2)^ must not exceed 20% of the total<br>assets^(3)^ of the insurance company as at the end of the last quarter (excluding, among others, investments in domestic central government bonds, quasi-government bonds, and equity investments in<br>insurance enterprises with proprietary funds).

			Regulatory Percentage^(1)^
AssetCategory	Definition	Specific Items Included	InvestmentRegulatoryPercentage	Concentration Risk RegulatoryPercentage
Fixed-income assets	Fixed-income assets refer to assets characterized by a definite maturity date and payments of interest and principal according to pre-determined interest rates and payment methods, as well as<br>other assets whose main value is dependent on the changes in the value of the aforesaid assets.	Domestic items mainly include term deposits, negotiated deposits, bond funds, fixed-income insurance asset management products, financial institution (company) bonds, non-financial institution<br>(company) bonds and government bonds and quasi-government bonds with residual maturities of more than one year. Overseas items mainly include term deposits, structured deposits with bank guaranteed commitments, securities investment funds with<br>fixed-income commitments, government bonds, government-backed bonds, bonds of international financial organizations, corporate bonds and convertible bonds with residual maturities of more than one year, as well as other tools or products recognized<br>by the CBIRC in this category.	None.	The book balance of investment by an insurance company in a single fixed-income asset^(4)^<br>must not exceed 5% of the total assets of the insurance company as at the end of the last quarter, excluding investments in domestic central government bonds, quasi-government bonds and bank deposits.<br><br><br><br> <br>The total outstanding investment by an insurance company in a single legal person must<br>not exceed 20% of the total assets of the insurance company as at the end of the last quarter (excluding, among others, investments in domestic central government bonds, quasi-government bonds and equity investments in insurance enterprises with<br>proprietary funds).
Equity assets	Equity assets include both listed and unlisted equity assets.<br> <br><br><br><br>Listed equity assets refer to the ownership certificate representing the equity or other residual income rights of enterprises that are publicly listed and<br>traded on stock exchanges or financial asset markets, as well as other assets whose main value depends on the changes in the value of the aforesaid assets.<br> <br><br><br><br>Unlisted equity assets refer to the equity or other residual income rights of enterprises that are established and registered but are not publicly listed on<br>exchanges, as well as other assets whose main value depends on the changes in the value of the aforesaid assets.	Domestic items of listed equity assets mainly include shares^(6)^, equity funds, hybrid<br>funds and equity insurance asset management products. Overseas items of listed equity assets mainly include ordinary shares, preferred shares, global depositary receipts, American depositary receipts and equity securities investment funds, as well<br>as other tools or products recognized by the CBIRC in this category.<br> <br><br> <br>Domestic and<br>overseas items of unlisted equity assets mainly include equities of unlisted companies, equity investment funds (including venture capital funds), asset backed securities, insurance private equity funds and other related financial products, as well<br>as other tools or products recognized by the CBIRC in this category.	The total book balance of investments by an insurance company in equity assets must not exceed 30%^(5)^ of the total assets of the insurance company as at the end of the last<br>quarter, and the book balance of significant equity investments must not be higher than the net assets of the insurance company as at the end of the last quarter. The book balance does not include the equity of any insurance enterprise as invested<br>by the insurance company with its proprietary funds.	The book balance of investments by an insurance company in a single equity asset must not exceed 5%^(5)^ of the total assets of the insurance company as at the end of the last quarter, except as otherwise provided for significant equity investments, investments in equities of insurance enterprises<br>with self-owned funds and acquisitions of listed companies and investments in shares of listed commercial banks.<br> <br><br><br><br>The total outstanding investments by an insurance company in a single legal person must not exceed 20% of the total assets of the insurance company as at the<br>end of the last quarter (excluding, among others, investments in domestic central government bonds, quasi-government bonds, and equity investments in insurance enterprises with proprietary<br>funds).

			Regulatory Percentage^(1)^
AssetCategory	Definition	Specific Items Included	InvestmentRegulatoryPercentage	Concentration Risk RegulatoryPercentage
Property assets	Property assets refer to purchased or invested land, structures and other land attachments, as well as other assets whose main value depends on the changes in the value of the aforesaid assets.	Domestic items mainly include real estate, infrastructure investment schemes, property investment schemes, property insurance asset management products and other property related financial products. Overseas items mainly include<br>commercial properties, office properties and real estate investment trusts (REITs), as well as other tools or products recognized by the CBIRC in this category.	The total book balance of investments by an insurance company in property assets must not exceed 30%^(5)^of the total assets of the insurance company as at the end of the last quarter. The book balance does not include the properties purchased by the insurance company for its own use.<br><br><br><br> <br>The book balance of the properties purchased by an insurance company for its own use<br>must not exceed 50% of the net assets of the insurance company as at the end of the last quarter.	The book balance of investments by an insurance company in a single property asset must not exceed 5%^(6)^ of the total assets of the insurance company as at the end of the last quarter, excluding properties purchased for its own use.<br><br><br><br> <br>The total outstanding investments by an insurance company in a single legal person must<br>not exceed 20% of the total assets of the insurance company as at the end of the last quarter (excluding, among others, investments in domestic central government bonds, quasi-government bonds and equity investments in insurance enterprises with<br>proprietary funds).

			Regulatory Percentage^(1)^
AssetCategory	Definition	Specific Items Included	InvestmentRegulatoryPercentage	Concentration Risk RegulatoryPercentage
Other financial assets	Other financial assets refer to other kinds of assets that are distinctively different from all the foregoing categories of assets, including in terms of risk-return characteristics, liquidity and other characteristics, and cannot<br>be classified into any of the foregoing categories.	Domestic items mainly include financial products by commercial banks, asset-backed securities offered by banking financial institutions, trust schemes of collective funds offered by trust companies, special asset management schemes<br>offered by securities companies, project asset-backed schemes offered by insurance asset management companies and other insurance asset management products. Overseas items mainly include structured deposits without bank guaranteed commitments, as<br>well as other tools or products recognized by the CBIRC in this category.	The total book balance of investments by an insurance company in other financial assets must not exceed 25% of the total assets of the insurance company as at the end of the last quarter.	The book balance of investments by an insurance company in a single other financial asset must not exceed 5% of the total assets of the<br>insurance company as at the end of the last quarter, excluding purchase of insurance asset management products within its group.<br> <br><br><br><br>The total outstanding investments by an insurance company in a single legal person must not exceed 20% of the total assets of the insurance company as at the<br>end of the last quarter (excluding, among others, investments in domestic central government bonds, quasi-government bonds, and equity investments in insurance enterprises with proprietary funds).
Overseas investment	An insurance company is allowed to participate in overseas investments in 25 developed markets, 20 emerging markets and Macau in accordance with the relevant requirements of the CBIRC.	As referred to in the investable overseas items listed in each of the above asset categories.	The total outstanding overseas investments by an insurance company must not exceed 15% of the total assets of the insurance company as at the end of the last quarter.	The total outstanding investments by an insurance company in a single legal person must not exceed 20% of the total assets of the insurance company as at the end of the last quarter (excluding, among others, equity investments in<br>insurance enterprises with proprietary funds).
(1)	When calculating the regulatory percentages for each asset category, an insurance company is required to combine<br>its domestic and overseas investments in assets of the category on a consolidated basis.
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(2)	A single legal person refers to a single fund-raising party with legal person status that establishes a direct<br>creditor-debtor or shareholder relationship with an insurance company due to the latter’s investment therein.
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(3)	Total assets exclude the balance of the funds raised from bond repurchases and the amount of assets under<br>independent accounts (including investment-linked life insurance products, variable annuity products, health care entrusted management products, pension insurance entrusted management products and investment-oriented<br>non-life insurance products without pre-agreed returns).
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(4)	Single asset investments refer to the investments in a single specific item under any category of investment<br>assets. Where an investment product is issued in several phases, the book balance of the investment in a single asset is the sum of the investments in each phase.
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(5)	An insurance institution that has already taken advantage of relevant policies to increase its holdings of<br>blue-chip stocks must adjust the percentage of investments within two years from January 24, 2017 or within the time limit otherwise provided by relevant regulatory authorities until the percentage requirements under applicable regulatory<br>requirements are met, i.e., the total book balance of investments by an insurance company in equity assets must not exceed 30% of the total assets of the insurance company as at the end of the last quarter, and the book balance of investments by an<br>insurance company in a single equity asset must not exceed 5% of the total assets of the insurance company as at the end of the last quarter.
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(6)

The CBIRC classifies investments in stocks into three categories: (i) ordinary stock investment, which refers to investment in less than 20% of the total share capital of a listed company without control over the company, (ii) material stock investment, which refers to investment in 20% or more of the total share capital of a listed company without control over the company, and (iii) acquisition of a listed company, which refers to becoming the controlling shareholder or actual controller of a listed company or otherwise having control over a listed company. There is no regulatory restriction for ordinary stock investment that does not involve an acquisition in the secondary market of more than 5% of the share capital of a listed company. For ordinary stock investment that involves an acquisition in the secondary market of more than 5% of the share capital of a listed company, information disclosure and reporting after the investment are required. For a material stock investment, filing with the regulatory authorities after the investment is required. For acquisition of a listed company, prior regulatory approval is required.

Investment risk monitoring percentages. To alleviate the risks associated with liquidity and high volatility of assets, an insurance company that experiences any of the following circumstances is required to report to the CBIRC in a timely manner, and the CBIRC will closely monitor the operation of the insurance company and disclose the related information to the public when necessary:

•	Liquidity monitoring. The total book balance of investments by an insurance company in current assets and<br>government bonds and quasi-government bonds with residual maturities of one year or longer is lower than 5% of the total assets of the insurance company as at the end of the last quarter.
•	Financing leverage monitoring. The total outstanding borrowings (including inter-industry lending and bond<br>repurchases) of an insurance company exceed 20% of the total assets of the insurance company as at the end of the last quarter.
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•	Monitoring of different categories of assets. The total book balance of investments by an insurance company in<br>domestic bonds with a long-term credit rating of AA or lower as rated by domestic credit rating agencies exceeds 10% of the total assets of the insurance company as at the end of the last quarter, or the total book balance of investments in equity<br>assets exceeds 20% of the total assets of the insurance company as at the end of the last quarter, or the total book balance of investments in property assets exceeds 20% of the total assets of the insurance company as at the end of the last<br>quarter, or the total book balance of investments in other financial assets exceeds 15% of the total assets of the insurance company as at the end of the last quarter, or the total book balance of outstanding overseas investments exceeds 10% of the<br>total assets of the insurance company as at the end of the last quarter.
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•	The book balance of a single inter-group insurance asset management product purchased by an insurance company<br>exceeds 5% of the total assets of such insurance company as at the end of the last quarter.
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Risk Classification ofInsurance Assets. An insurance company must evaluate, at least once every half year, the quality of its insurance assets falling within the categories of fixed-income assets, equity assets and property assets, and divide such assets into five categories based on risk, namely “pass”, “special mention”, “substandard”, “doubtful” and “loss”, with the last three categories collectively referred to as “non-performing assets”. Insurance assets that require risk classification include assets invested by the insurance company other than those subject to fair value measurement and changes to these assets are counted as gains or losses for the period in question or owners’ equity. An insurance company must establish and improve risk classification systems and working processes for its assets and file reports on such systems and processes with the CBIRC. In addition, an insurance company is required to semiannually report to the CBIRC the relevant information on the classification of its assets. An insurance company must also establish feasible plans for annual asset loss provisions and write-offs, as well as plans for the disposal of non-performing assets based on its actual operations and the quality of its assets. These plans must be approved by its board of directors and be filed with the CBIRC.

Insurance private equity funds. Insurance companies are allowed to establish private equity funds that comply with the requirements of the CBIRC, including growth funds, buyout funds, funds for strategic emerging industries, mezzanine funds, real estate funds, venture capital funds, and funds of funds (FoF) primarily investing in the aforementioned funds. Insurance companies must register the establishment of private equity funds with the CBIRC, and periodically submit quarterly reports, annual reports and other related information to the CBIRC during the term of private equity funds.

Financial derivative products. Apart from the regulations on the five asset categories described above, the CIRC has separately issued a series of rules governing the operation of domestic and overseas trading of derivative products by an insurance company. Financial derivative products are financial contracts whose value is determined by one or more types of underlying assets, indices or certain events. Typical financial derivative products include forwards, futures, options and swaps.

Bank capital replenishment bonds. On January 25, 2019, the CBIRC issued separate rules allowing insurance companies to invest in Tier 2 capital bonds and non-fixed term capital bonds issued by banks. Investment in Tier 2 capital bonds and non-fixed term capital bonds issued by policy banks is regulated in accordance with requirements on investment in quasi-government bonds. Investment in Tier 2 capital bonds and non-fixed term capital bonds issued by commercial banks is regulated in accordance with requirements on investment in unsecured non-financial institution (company) bonds.

Insurance companies may participate in derivatives transactions only for the purpose of hedging or averting risks, and not for the purpose of speculation. Legitimate purposes include hedging or averting risks of current assets and liabilities, or the company as a whole, and hedging the risk of assets scheduled to be bought within the next month, or locking in future transaction prices.

“Assets scheduled to be bought”, as used above, refers to assets that an insurance institution has decided to buy after going through its investment decision-making process. If the assets are not bought within one month of the decision date, or the plan was aborted within the aforementioned period, the insurance institution must terminate, liquidate or unwind the relevant derivative upon the expiration of the prescribed period or within five trading days of such decision.

For an insurer carrying out interest rate swaps, the notional principal may not exceed 10% of its fixed-income assets (including bank deposits, bonds and other debt instruments) as of the end of the previous quarter. The notional principal swapped with the same counterparty may not exceed 3% of such counterparty’s fixed-income assets as of the end of the previous quarter.

Solvency requirements

On January 1, 2016, the CIRC implemented a new set of solvency regulations, the “China Risk Oriented Solvency System”, or C-ROSS, which replaced its previous solvency requirements known as “Solvency I”.

C-ROSS adopts the internationally accepted “three-pillar” regulatory system while its regulatory concept, models, methods and parameters are based on Chinese insurance market conditions. The three pillars are:

•	Pillar I: quantitative capital requirements which aim to prevent quantifiable risks, and include quantifying<br>capital requirements, criteria for assessment and recognition of actual assets and liabilities, capital classification, stress tests and regulatory measures to be imposed on the insurers which fail to meet the quantitative capital requirements.<br>

•	Pillar II: qualitative regulatory requirements which aim to prevent unquantifiable risks, and which include an<br>integrated risk rating, requirements on assessment and management of risks by the insurers, and regulatory inspection and analysis and regulatory measures to be imposed on the insurers which fail to meet the qualitative regulatory requirements.<br>
•	Pillar III: market discipline mechanisms which aim to involve, through sufficient information disclosure systems<br>and other means, market players including the public, customers, rating agencies and industry analysts by introducing mechanisms through which they will play an important role in the solvency supervision process.
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Under C-ROSS, the three indicators to measure the solvency ratio of an insurer include the following:

•	the core solvency adequacy ratio, which is calculated by dividing the core capital of an insurer by the minimum<br>capital it is required to meet;
•	the comprehensive solvency adequacy ratio, which is calculated by dividing the sum of core capital and<br>supplementary capital of an insurer by the minimum capital it is required to meet; and
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•	an integrated risk rating, which is a comprehensive rating system that the CIRC uses to evaluate an<br>insurer’s overall solvency based on both quantitative assessments on quantifiable risks in Pillar I and qualitative risk assessments on unquantifiable risks in Pillar II.
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The core solvency adequacy ratio and comprehensive solvency adequacy ratio of an insurer reflect the capital adequacy for quantifiable risks of such insurer, and the integrated risk rating reflects the overall solvency risks of such insurer.

The actual capital of an insurer is admitted assets less admitted liabilities, determined in accordance with relevant rules under C-ROSS. The actual capital is classified into core capital and supplementary capital, depending on the loss absorbing capacity and features of such capital. The minimum capital of an insurer is the capital that the CIRC requires it to meet.

Under C-ROSS, solvency risks are classified into inherent risk and control risk. Inherent risk refers to the risks that are unavoidable in the writing of insurance business. Control risk refers to the risks of failure to identify, evaluate and manage control inherent risk timely due to imperfections in the internal management and control process. Inherent risk includes both quantifiable risks and unquantifiable risks.

Quantifiable risks include the following:

•	Insurance risk, which includes life insurance risk and non-life insurance<br>risk;

•	Market risk, which includes interest rate risk, equity price risk, property price risk, overseas assets price<br>risk and foreign exchange risk; and
•	Credit risk, which includes spread risk and default risk.
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Unquantifiable risks include the following:

•	Operation risk;
•	Reputation risk;
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•	Strategy risk; and
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•	Liquidity risk.
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The minimum capital requirement for quantifiable risks is determined using a value at risk approach. The minimum capital requirement for control risk is determined based on solvency aligned risk management requirements and assessment, or SARMRA.

The CIRC comprehensively evaluates the inherent risk and control risk of an insurer and determines an integrated risk rating of solvency risks. Insurers will then be classified into the following four supervision categories:

•	Category A: an insurer’s solvency adequacy ratio meets the CIRC requirement, and its risk level is very low<br>for the four unquantifiable risks;
•	Category B: an insurer’s solvency adequacy ratio meets the CIRC requirement, and its risk level is low for<br>the four unquantifiable risks;
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•	Category C: an insurer’s solvency adequacy ratio does not meet the CIRC requirement, or an insurer’s<br>solvency adequacy ratio meets the CIRC requirement but its risk level is high for one or more of the four unquantifiable risks; or
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•	Category D: an insurer’s solvency adequacy ratio does not meet the CIRC requirement, or an insurer’s<br>solvency adequacy ratio meets the CIRC requirement but its risk level is serious for one or more of the four unquantifiable risks.
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The CIRC applies different regulatory policies to each of the four supervision categories with respect to, among others, market access, product management, use of insurance funds and on-site inspection.

Category B insurer may be subject to a range of regulatory actions by the CBIRC, including, among others, risk alert, supervisory conversation, rectification of identified problems within a specified deadline, on-site inspection or request to submit and implement plans to prevent insolvency or improve risk management.

If a Category C insurer does not meet the solvency adequacy ratio required by the CBIRC, the CBIRC may in such situations require the insurer to, in addition to the regulatory actions for category B, adjust its business structure, restrict business expansion and increase in assets, restrict the establishment of branch offices, restrict its commercial advertising activities, limit its business scope, transfer its insurance business to others or seek reinsurance of its insurance obligations, adjust investment portfolios or counterparties, limit its channels or percentages of investment, raise additional share capital, limit paying dividends on its shares, limit the remuneration of its directors and senior management or change its management team. If an insurer of category C meets the solvency adequacy ratio as required by the CBIRC but its risk level is high for one or more of the four unquantifiable risks, the CBIRC may take specific regulatory actions that target on the respective issues of each insurer.

For a Category D insurer the CBIRC may, in addition to the regulatory actions for category C, require such insurer to rectify or cease part or all new business, put the insurer into receivership or take other regulatory actions as determined by the CBIRC.

Based on the latest comprehensive rating results regarding the solvency risks of insurers released by the CBIRC for the fourth quarter of 2019, we had been classified as a Category A insurer.

Our core solvency adequacy ratio as of December 31, 2019 was 266.71%, and our comprehensive solvency adequacy ratio as of December 31, 2019 was 276.53%.

Statutory deposits

Insurance companies in China are required to deposit an amount equal to 20% of their registered capital with at least two qualified commercial banks, each of which must, among other things, have net assets of no less than RMB 20 billion as of the end of the previous year and have no affiliated relationship with the insurance company. These funds may not be used for any purpose other than to pay off debts during a liquidation proceeding. Insurance companies must choose more than two qualified commercial banks as statutory deposit banks and the statutory deposit period must be for a minimum of one year. In addition, when an insurance company deposits the statutory funds for a business opening or capital increase, renews the deposit upon maturity or transfers the deposit to another bank, changes the nature of the deposit upon maturity or withdraws the deposit before maturity, the insurance company must file with the CBIRC within 10 business days after these funds are duly deposited.

Statutoryinsurance fund

Chinese life insurance companies are required to contribute to a statutory insurance fund 0.15% of the premiums for life insurance with guaranteed earnings and 0.05% of the premiums for life insurance without guaranteed benefits; 0.8% of insurance premiums for short-term health insurance and 0.15% of insurance premiums for long-term health insurance; 0.8% of the premiums for non-investment accident insurance, 0.08% of the premiums for investment accident insurance with guaranteed benefits, and 0.05% of premiums for investment accident insurance without guaranteed benefits. Contributions are not required once the balance of the statutory insurance fund of a life insurance company reaches 1% of the company’s total assets.

Statutory reinsurance

Insurance companies are required to reinsure, for any single risk, the excess of the maximum potential liability over an amount equal to 10% of the sum of paid-in capital and capital reserves.

Actuaries

Insurance companies are required to employ actuarial professionals and establish a system for actuarial reporting.

Regulation of corporate governance

Directors and senior management qualification and remuneration management requirements. Directors, supervisors and senior management of an insurance company are subject to qualification requirements implemented by the CBIRC. An insurance company must have at least three independent directors and the number of independent directors shall be no less than one third of the number of all the directors. In addition, if any of the shareholders of an insurance company holds more than 50% of the registered capital or equity of the company, then the number of independent directors must be no less than one half of the number of all the directors, unless such 50% or greater shareholder is an insurance group company or an insurance company. An insurance company must reasonably determine the remuneration paid to its directors, supervisors and senior management based on the company’s financial conditions, operating results, risk control and other factors. Where an insurance company has inadequate solvency, the CBIRC will place restrictions on the remuneration of its directors, supervisors and senior management in accordance with relevant regulatory rules on solvency. The senior management of an insurance company receive in-office audits once every three years. If any member of the senior management leaves due to a job change, promotion or any other reasons, a departure audit must be conducted.

Risk management. Insurance companies must establish and adopt procedures, organizational structures, systems and measures to identify, evaluate and control the risks involved in its insurance operation. Insurance companies must report to the regulatory authorities in a timely manner any major risks, and submit an annual risk management report reviewed by the board of directors. In addition, as required by the CBIRC, an insurance company that conducts certain activities, such as direct share investments, equity investments, real estate investments, investments in unsecured bonds, development of infrastructure investment schemes and real estate investment schemes and use of derivatives, must have at least two qualified risk officers. Where an insurance company decides to change a risk officer, impose disciplinary sanctions on a risk officer, dismiss a risk officer or terminate the employment of a risk officer, the insurance company must replace such risk officer within 10 business days from the date of the decision, and report to the CBIRC the reasons for such replacement.

Asset-liability management. On July 24, 2019, the CBIRC released interim measures for the supervision and regulation of insurance asset-liability management. The new interim measures, as well as the other regulatory requirements including the previously issued rules on insurance asset-liability management, set forth a set of specific technical criteria and rules on the quantitative and competency assessments on asset-liability management, as well as requirements on preparing and submitting asset-liability management reports. Under the new interim measures, the CBIRC will adopt differential regulation and supervision standards for insurance companies depending on their respective asset-liability management competency and quantitative assessment scores.

Compliance management. Insurance companies must prevent, identify, evaluate, report and manage compliance risks by taking measures such as setting up a compliance department, formulating and implementing compliance policies (which are required to be filed with the CBIRC), exercising compliance monitoring and providing compliance trainings, so as to ensure compliance by the company, its staff and sales agents with the relevant laws and regulations, rules of regulatory authorities, industrial self-regulatory rules, internal management systems and codes of ethics. An annual compliance report must be submitted to the CBIRC by April 30 each year. Each insurance company is required by the CBIRC to appoint a compliance officer and establish a compliance management department in its head office. Where the proposed compliance head of an insurance company for whom the insurance company has applied for CBIRC approval of post-holding qualifications also serves in other senior management positions, the insurance company must submit a statement that the proposed compliance head will not also manage a business or financial department during his or her term of office. Beginning from July 1, 2017, the headquarter and provincial branches of an insurance company must each set up a compliance management department. Where the proposed compliance head of an insurance company for whom the insurance company has applied for approval of post-holding qualifications is to be served by a senior management person other than the general manager, the insurance company must submit a statement that the proposed compliance head will not also manage departments that may be in conflict with his or her responsibilities for compliance management, such as those for business, finance, fund use and internal audit during his or her term of office. As of the date of this annual report, we have set up a compliance management department, established compliance standards and appointed a compliance officer whose qualification has been approved by the CBIRC.

Related party transactions. Insurance companies are required to establish a related party transaction control committee to be responsible for identifying related parties, managing, reviewing and approving related party transactions and controlling risks. The related party transaction control committee must be composed of at least three directors, with an independent director acting as the person in charge. The related party transaction control committee should focus on the compliance, fairness and necessity of related party transactions. According to applicable CBIRC regulations, related party transactions between an insurance company and any of its related parties are classified as either “material related party transactions” or “ordinary related party transactions”. The term “material related party transactions” refers to any single transaction or a series of transactions within any given year between an insurance company or any of its controlled subsidiaries and a related party in which the trading volume exceeds RMB30 million and accounts for 1% or more of the insurance company’s audited net assets as of the end of the previous year. The term “ordinary related party transactions” refers to all related party transactions other than “material related party transactions”. A material related party transaction must be first reviewed by the related party transaction control committee, and then be approved by the board of directors, by vote of more than two thirds of non-affiliated directors, or by shareholders. An ordinary related party transaction must be reviewed in accordance with the internal management system and authorization process of the insurance company, and then be filed with or approved by the related party transaction control committee. An insurance company is required to maintain a system to manage related party transactions and file them with the CBIRC. Companies must take effective measures to prevent their shareholders, directors, supervisors, senior management and other related parties from taking advantage of their positions and acting against the interests of the company or the insured through related party transactions. In addition, an insurance company must report to the CBIRC each of its material related party transactions, the execution, renewal or substantive change of any framework transaction agreement, as well as any other transaction as required by the CBIRC.

Internal audit. Insurance companies are required to establish an independent department for internal audit purposes, staffed with sufficient internal audit personnel (the number of full-time internal audit personnel generally must not be less than 5‰ of the total number of the company’s employees), establish an audit committee, and designate an audit controller whose appointment and replacement must be filed with the CBIRC. An internal audit report must be submitted to the CBIRC by April 30 of each year and any major risk identified during the internal audit process must be reported to the CBIRC in a timely manner.

Reporting and disclosure requirements. An insurance company must disclose to the public various information regarding its operations and business, including financial and accounting information, information on its insurance liabilities and reserves, risk management, its insurance products, solvency, material related transactions and major events, as well as other information required by the CBIRC. An insurance company must disclose this information on its website, and by April 30 of each year, an insurance company must also disclose an annual report on its website and in media designated by the CBIRC. In addition, within 10 business days after the occurrence of a material related party transaction or other material events, an insurance company must disclose information about such transactions and events on its website.

Internal control assessment. Life insurance companies are required to submit to the CBIRC an internal control assessment form and an annual internal control assessment report each year. The CBIRC assesses the internal control of life insurance companies at least every three years, covering at least one third of all life insurance companies each year. Under the Basic Guidelines for Internal Controls in Insurance Companies issued by the CIRC in August 2010 and the Measures for Compliance Management of Insurance Companies issued by the CIRC in December 2016, an insurance company must establish an internal control evaluation system in various operations including sales, operation, basic management and fund use, and by April 30 of each year, submit to the CBIRC an evaluation report on its internal control. In addition, where the CBIRC deems necessary, the CBIRC may collect information reflecting the corporate governance of insurance companies, establish an information database of insurance companies’ governance, and conduct governance ratings for insurance companies through on-site or off-site investigations, media reports, assessments of independent rating agencies and public disclosure by insurance companies. The CBIRC may take regulatory measures against insurance companies based on the rating results, including interviews, a risk warning in writing and rectifications within a specified period.

Custody of insurance assets. Insurance companies are required to establish and improve mechanisms for the custody of insurance assets, select qualified commercial banks and other professional institutions, place various assets generated by the investment of insurance funds under third-party custody and oversight, and ensure that the revenue and expenditure concerning the use of insurance funds (except for expenditure of daily expenses) are primarily processed through the custody fund accounts. Insurance companies are required to submit implementing plans relating to the custody of their insurance assets to the CBIRC.

Market conduct

Insurance companies are required to take steps to ensure that sales promotional materials used by their sales representatives and agents are objective, true and correct, with no material omissions or misleading information, contain no forecasts of benefits that are not guaranteed under the insurance or annuity product and do not exaggerate the benefits provided under the insurance or annuity product. The sales promotional materials must also highlight in an appropriate fashion any exclusions of coverage or liability in their products, as well as terms providing for policy or annuity surrenders and return of premiums. If any insurance policy or consulting service is provided through telephone sales, requisite office space, staff, facilities and adequate supervision must be furnished. In addition, the telephone sale must be conducted directly by the insurance company, and the terms and rates of the premiums of the insurance policy and geographic business area must be submitted to the CBIRC for approval.

Insurance companies which conduct marketing and promotional activities through we-media platforms (such as websites, apps, blogs, microblogs, corporate accounts and WeChat) are required to establish an appropriate management system. The management criteria of such system should be no less strict than the criteria provided in existing regulations in relation to the insurance promotional materials for off-line channels.

Insurance companies are subject to extensive regulation against any anti-competitive behavior or unfair dealing conduct. They may not pay insurance agents, the insured or the beneficiary any rebates or other illegal payments, nor may they pay their agents commissions over and above the industry norm.

Insurance companies are required to establish internal rules and procedures to protect the personal data of policyholders and insureds. Insurance companies are prohibited from illegally obtaining, using or selling of the personal data of policyholders and insureds.

Insurance companies are also required to comply with anti-money laundering regulations and establish internal operational procedures and anti-money laundering control systems. No insurance activity can be conducted for the purpose of illegal fundraising.

Regulation of issuance of subordinated debt

Insurance companies that meet a series of qualification tests and are approved by the CBIRC may issue subordinated debt with a fixed term of at least five years to certain qualified Chinese legal persons and foreign investors. The audited net asset value of the issuer must be at least RMB 500 million as of the end of the prior year and the total amount of unpaid debt at any given point after the issuance, including both principal and interest, must not exceed the issuer’s net asset value as of the end of the prior year. Proceeds from the issuance of subordinated debt may be recorded as supplementary capital of an issuance company, provided that the total amount that has been recorded as supplementary capital may not exceed 50% of the net assets of an insurance company. Proceeds from the issuance of subordinated debt may not be used to offset daily operating losses of an insurance company. The issuer must comply with certain disclosure obligations both at the time of the issuance and during the term of the debt. The issuer may repay the debt only if its solvency ratio would remain at least 100% after the repayment of both principal and the interest. Qualified insurance groups or holding companies are also allowed to issue subordinated debt in accordance with the relevant requirements.

Since 2012, publicly listed insurance companies that meet a series of qualification tests and are approved by the CBIRC have also been permitted to issue subordinated convertible bonds. Subordinated convertible bonds refer to bonds issued by an insurance company in accordance with statutory procedures that satisfy the following conditions: the bonds have a maturity of five years or longer; the principal and interest of the bonds shall be repaid and paid after insurance policy liabilities and other general liabilities in the event of bankruptcy liquidation; and the bonds can be converted into shares of the insurance company in accordance with the agreed conditions within a certain period of time. An insurance company must submit an issuance application to the relevant securities regulatory authority within six months after the CBIRC has approved the issuance of subordinated convertible bonds, and an issuer must report the issuance information to the CBIRC within ten working days after completion of the issuance of subordinated convertible bonds.

Regulation of issuance of capital replenishment bonds by insurance companies

Since January 2015, insurance companies including insurance group companies that meet a series of qualification tests and are approved by the CBIRC and PBOC may issue bonds for capital replenishment in the national inter-bank bond market. The capital replenishment bonds issued by an insurance company must have a maturity of at least five years and be repaid after insurance policy liabilities and other general liabilities, but prior to payment related to the equity capital of such insurance company. The audited net asset value of the issuer as of the end of the prior year and its net asset value in the latest quarterly financial statements must be no less than RMB 1 billion, and the total amount of its issued capital replenishment bonds and fixed-term subordinated debts pursuant to CBIRC requirements must not exceed 100% of the issuer’s net asset value. The issuer must comply with certain disclosure obligations both at the time of the issuance and during the term of the bonds. The issuer has the right to redeem the capital replenishment bonds after five years of its issuance provided that its solvency ratio is at least 100% after the redemption.

Regulation of merger and acquisition of insurance companies

An insurance company may apply to the CBIRC for approval of the acquisition of control of another insurance company through the acquisition of equity or shares of the other insurance company. Except under special circumstances, such as a transfer between affiliated parties under common control or risk disposition, the acquiring party is not allowed to transfer the acquired equity or shares in the target insurance company within five years from the completion of the acquisition. Upon approval by the CBIRC, the acquiring party may control two insurance companies engaging in the same type of business after the completion of acquisition. In addition, an insurance company may apply to the CBIRC for approval for the merger with other insurance companies by absorption or establishing a new insurance company. The business scope of the insurance company subsequent to the merger is subject to the re-approval by the CBIRC. An insurance company must, during the twelve-month period after the completion of merger or acquisition, report the following information in writing to the CBIRC within the first 30 days of each quarter: the making of investments in and purchases or sales of material assets, related party transactions, business transfers, notifications to insurance consumers, public announcements, changes of senior management personnel and employee placements.

Regulation of establishment and management ofnon-insurance subsidiaries

An insurance company may apply to the CBIRC for approval for the direct or indirect establishment of domestic or overseas non-insurance subsidiaries (excluding insurance companies, insurance asset management institutions, dedicated insurance agencies, insurance brokerage institutions and insurance assessment institutions), primarily including: (1) financial institutions that engage in non-insurance financial services; (2) service firms that provide various supporting services to insurance companies; (3) investment platform companies with a strong connection with an insurance business, project companies established for managing the investment of insurance funds in real properties, and companies formed as a result of the investment of insurance funds in the upstream and downstream industry chain of an insurance business; and (4) other types of companies. Unless otherwise prescribed by laws, administrative regulations and the CBIRC, an insurance company is not allowed to guarantee the debts of its non-insurance subsidiaries, or lend funds to its non-insurance subsidiaries. An insurance company must build firewalls between its non-insurance subsidiaries in terms of personnel, capital, business and information to prevent risks spreading from its non-insurance subsidiaries. An insurance company must also cause its non-insurance subsidiaries to establish and improve their respective information disclosure systems, and submit to the CBIRC an annual report on its non-insurance subsidiaries by April 30 of each year.

Regulation of establishment of overseasinsurance institutions

An insurance company may apply to the CBIRC for approval for the establishment of overseas branches, overseas insurance companies and overseas insurance intermediaries, or the acquisition of overseas insurance companies or intermediaries. In order to submit such an application, an insurance company must have an operating history of no less than two years, total assets of no less than RMB 5 billion as at the end of the prior year and foreign exchange funds of no less than US$ 15 million or its equivalent in other freely convertible currencies as at the end of the preceding year. The applicant insurance company must also comply with applicable solvency, risk management and other requirements as stipulated by the CBIRC.

Compliance with regulatory requirements

Our management confirms that we have complied in all material respects with all applicable regulatory requirements set out above.

Regulation of Foreign-Invested Insurance Companies

China acceded to the WTO on December 11, 2001. As a result of China’s commitments in connection with the accession, the Chinese insurance market is gradually opening up to foreign insurers and insurance-related service providers. The geographic limitation on foreign life insurers, which were permitted to operate only in specified cities, has been lifted since December 11, 2004. Accordingly, foreign life insurers have been permitted to provide group life insurance, health insurance and annuity and other pension-like products since December 11, 2004. Since December 11, 2006, foreign insurance brokers have been permitted to set up wholly owned subsidiaries in China. In December 2019, the CBIRC announced that starting from January 1, 2020, the 51% cap on foreign ownership in Chinese life insurers will be removed and foreign investors will be allowed to own 100% in Chinese life insurers, and the CBIRC also removed the requirements that a foreign insurance company must have engaged in insurance business for more than 30 years and have maintained a representative office in China for at least two years before it can establish a foreign invested insurance company in China.

Foreign-invested insurance companies, including Sino-foreign equity joint ventures, wholly foreign-owned insurance companies and branches of foreign insurance companies, are generally regulated in the same manner as domestic insurance companies. Without the approval of the CBIRC, foreign-invested insurance companies may not engage in asset purchases and sales or other transactions with their affiliates, but may engage in outward and inward reinsurance with their affiliates. In addition, where the foreign-invested insurance company is a branch of a foreign insurance company, it is required to notify the CBIRC of fundamental events relating to the foreign insurance company within ten days following the occurrence of the event. Reportable events include: (1) a change of name, senior management or jurisdiction of incorporation of the foreign insurance company, (2) a change in the foreign insurance company’s share capital, (3) a change in any person beneficially owning 10% or more of the foreign insurance company’s shares, (4) a change in business scope, (5) the imposition of administrative sanctions by any applicable regulatory authority, (6) a material loss incurred by the foreign insurance company, (7) a spin-off, merger, dissolution, revocation of corporate franchise or bankruptcy involving the foreign insurance company and (8) other events specified by the CBIRC. If the foreign insurance company is dissolved, or its corporate franchise is revoked or it is declared bankrupt, the Chinese branch of the foreign insurance company will be prohibited from conducting any new business.

The CBIRC delegates certain authorities with respect to foreign-invested insurance companies to its provincial and local branch offices: approving the change of place of business of branches and subsidiaries of foreign-invested insurance companies; approving the establishment of subsidiary agencies of foreign-invested insurance companies below the branch-office level; approving the opening of subsidiary agencies of foreign-invested insurance companies below the branch-office level; and approving the qualification of senior management personnel of subsidiary agencies of foreign-invested insurance companies below the branch-office level.

Regulation of Insurance Asset Management Companies

An insurance asset management company is a limited liability company or joint stock company that manages insurance funds on behalf of others. Insurance asset management companies are regulated by the CBIRC.

Minimum capital requirements

The registered capital of an insurance asset management company may not be lower than RMB 100 million or the equivalent amount of other freely convertible currencies.

Business operations

An insurance asset management company may conduct the following businesses: (1) managing funds in Renminbi or other foreign currencies entrusted to it, including insurance funds, funds of pension, annuity and housing provident institutions, as well as funds of other qualified investors that are capable of identifying and undertaking corresponding risks; (2) managing and operating its own insurance funds in Renminbi or foreign currencies; (3) as trustee, carrying out asset management business appointed by and on behalf of the trustor, or developing asset management products for the interest of the beneficiary or for specific purposes and carrying out asset management business; (4) applying to relevant financial regulatory authorities to carry out publicly-raised asset management business in accordance with the law, provided that relevant conditions are met; (5) as approved by the CBIRC, issuing relevant asset management products to domestic insurance groups or holding companies, insurance companies, insurance asset management companies and other qualified investors capable of identifying and bearing the applicable risk; and (6) other businesses approved by the CBIRC or other departments of the State Council.

The investments of the insurance funds by insurance asset management companies are subject to the same requirements and limitations applicable to the investments by the insurance companies themselves. With the regulatory expansion of insurance company investment channels, the investment channels of insurance asset management companies over their own funds have been expanded as well to cover subordinated bonds issued by banks and insurance companies, bank subordinated bonds and stock investments.

Insurance asset management companies are also subject to the governance of regulations which generally apply to the asset management businesses of financial institutions. Starting from April 27, 2018, the asset management businesses of financial institutions are subject to new supervision rules, which apply to the participation of insurance funds in publicly-offered funds, private equity funds, trust schemes, equity investment schemes, debt investment schemes and portfolio insurance asset management products through the asset management products of insurance asset management companies.

In connection with the funds being managed by an insurance asset management company, a custodian is required to be appointed. The custodian must be an independent commercial bank or financial institution satisfying applicable CBIRC requirements.

Shareholding restrictions

At least 75% of the shares of an insurance asset management company must be owned by domestic insurance companies, and at least one of the shareholders of an insurance asset management company must be an insurance company or insurance holding company satisfying specified requirements.

Investment risk control

Both insurance companies and asset management companies must establish structures, arrangements and measures to recognize, assess, manage and control investment risks. Members of senior management may not be responsible for the management of departments in charge of investment decisions, investment transactions and risk controls at the same time. Branches of insurance companies may not manage insurance funds. Insurance asset management companies must arrange for separate investment managers to manage their own funds and the insurance funds from other insurance companies, as well as insurance funds from an insurance company that are of a different nature.

Major emergency response management

An insurance asset management company is required to establish a monitoring and precaution mechanism for major emergencies.

Regulation of Insurance Agencies, Insurance Brokers and Other Intermediaries

Insurance agents are business entities or individuals which or who act on behalf of an insurance company in respect of insurance matters. An insurance company is responsible for the acts of its agents when the acts are within the scope of their agency. Licensed insurance agencies fall into two groups: dedicated agencies and non-dedicated agencies.

A dedicated agency is a company (and its branches) organized under the PRC company law whose principal business is to act as an agent of insurance companies. Dedicated agencies are subject to minimum capital and other requirements, and their business is generally limited to insurance-related activities.

A non-dedicated agency is a business entity whose principal business is other than as an insurance agency. To receive a license, the agency business must have a direct relationship with its principal business, which the CBIRC has interpreted as permitting commercial banks to act as non-dedicated insurance agencies. Sales representatives of insurance companies are prohibited from selling insurance products at commercial bank outlets. The bancassurance management personnel of insurance companies are responsible for providing services (including training and the exchange of documents) to commercial banks and assisting commercial banks to provide related customer services, such as the payment of maturity benefits and handling of renewal fee after selling insurance products.

Prior to August 3, 2015, individual insurance agents, representatives of insurance agencies and insurance brokers were required to obtain qualification certificates issued by the CIRC. Under such CIRC regulations, we were subject to sanctions if we retained exclusive agents without CIRC qualification certificates, and policyholders who bought insurance policies through our unqualified agents were allowed to cancel the policies under some circumstances. On August 3, 2015, the CIRC issued a Notice on the Administration of Insurance Intermediary Personnel, effective on the same day. Under the new regulations, the CIRC canceled the requirements on qualification certificates or practice certificates for individual insurance agents, representatives of insurance agencies and insurance brokers, with the effect that insurance companies are now only required to complete registration for their individual insurance agents in the insurance intermediary regulatory information system maintained by the CIRC. In addition, insurance companies are required to take adequate measures to ensure the good conduct and professional competence of their individual insurance agents, representatives of insurance agencies and insurance brokers.

All insurance agencies and agents are required to enter into agency agreements that specify the duration of the agency; the amount of the agency fee and the method of payment; the scope of the agency, including the insurance products to be marketed; and other relevant matters. Absent specific CBIRC approval, insurance agents are prohibited from signing insurance and annuity products on behalf of the insurance companies they represent. None of our agents is authorized to sign insurance policies or annuity contracts for us.

Insurance agencies are required to open special accounts for the handling of funds that they hold or collect for the insurance companies they represent. They may not engage in the following activities: dealing with unauthorized insurers or insurance intermediaries, engaging in activities beyond their authorized business scope or geographical area, causing injury to the rights of the insurance companies they represent, spreading rumors or otherwise injuring the reputation of others in the insurance industry, misappropriating the funds of the insurance companies they represent, defrauding insurance customers through false or misleading representations or material omissions, using undue influence to induce insurance customers to purchase insurance, or defrauding the insurance companies they represent through collusion with the insured or the insurance beneficiary. In addition, dedicated insurance agencies are subject to various reporting requirements, including submission of annual financial reports, and are subject to supervision and examination by the CBIRC.

Insurance brokers who represent individuals and companies purchasing insurance and other intermediaries are subject to similar regulatory requirements regarding their activities. Among other things, they are subject to supervision and examination by the CBIRC, and fundamental corporate changes must be approved by the CBIRC. Only companies organized under the PRC company law and meeting requirements set by the CBIRC are authorized to act as insurance brokers. Insurance brokers are required to comply with standards prescribed by the CBIRC. Insurance brokerage agencies must provide training to their brokerage personnel regarding insurance laws and provide education on ethics and other matters.

Regulation of Internet Insurance Businesses

Insurance companies and intermediaries are allowed to carry out an Internet-based insurance business, including sales, underwriting, claims settlement, policy surrender, complaint handling, customer services and other insurance business activities, through proprietary network platforms or third-party network platforms that meet the relevant requirements prescribed by the CBIRC. Insurance companies and intermediaries that carry out an internet-based insurance business must set up an information disclosure column on their official websites, disclosing the related website names and addresses, internet insurance products, existing branches, customer services and ways for consumers to make complaints. The CBIRC is required to carry out regulation and on-site inspection of an internet insurance business, and may take rectification measures against insurance companies and intermediaries that conduct operations in violation of the regulations. Insurance companies engaging in internet-based guaranteed insurance businesses, which use internet credit lending platforms as intermediaries to provide both the borrowers (i.e., insurance applicants) and the lenders (i.e., the insured) on such platforms with guaranteed insurance services, must comply with regulatory requirements on solvency, verify the qualifications of insurance applicants in a prudent manner, clarify the information disclosure obligations of the internet platforms, enhance product management and adhere to other compliance requirements stipulated by the CBIRC.

No.2 Interpretation of Accounting Standard for Business Enterprises

On August 7, 2008, the MOF issued the No.2 Interpretation of Accounting Standard for Business Enterprises, requiring listed companies which issue both H shares and A shares to adopt consistent accounting policies to recognize, calculate and report a particular transaction in their H share financial statements and A share financial statements, except for certain differences in relation to the reversal of impairment losses of long-term assets and disclosures in relation to related party transactions.

On January 5, 2009, the CIRC issued the Notification on the Implementation of the No.2 Interpretation of Accounting Standards for Business Enterprises in the Insurance Sector (No.1 [2009] of CIRC), which requires insurance companies to make appropriate changes to their accounting policies that cause differences between onshore and offshore financial statements when preparing their 2009 annual financial statements, such that the same accounting policies and estimates will apply to a particular transaction.

On December 22, 2009, the MOF issued the Notification on the Promulgation of the Regulations regarding the Accounting Treatment of Insurance Contracts, which regulates issues relating to, among other things, the unbundling of mixed insurance contracts, tests for significant insurance risks and the calculation of reserves for insurance contracts, and requires insurance companies to comply with these requirements beginning with the preparation of their financial statements for the year ended December 31, 2009. The accounting treatment of any transaction item adopted in previous year which differs from those set out in the MOF’s regulations must be retrospectively adjusted, unless any such adjustment is not practicable under the circumstances.

Implementation of VAT

Following the decision of the PRC State Council, the Value Added Tax, or VAT, has applied to the financial and insurance sector since May 1, 2016. Therefore, our primary business has been subject to 6% VAT from May 1, 2016 instead of the 5% business tax, or BT, which previously had applied to our business.

Policy on pre-tax deduction of underwriting and policy acquisition costs

In May 2019, the MOF and SAT issued a policy on pre-tax deduction of underwriting and policy acquisition costs of insurance companies. Under the policy, from January 1, 2019, the underwriting and policy acquisition costs incurred by insurance companies in connection with their operating activities that do not exceed 18% of the balance of total premium income for the year, after deducting surrender payments and other expenses, can be deducted when calculating taxable income, and the portion that exceeds 18% can be carried forward and deducted in following years. The policy applies to the final settlement of enterprise income tax of insurance companies for the 2018 tax year. Therefore, the pre-tax deduction percentage for enterprise income tax on our underwriting and policy acquisition costs has been adjusted to 18% from the previous 10%, which will result in a reduction in our income tax in 2019 and future years.

AdministrativePenalty by the PBOC

In July 2018, the PBOC imposed a fine of RMB 700,000 on us for non-compliance with anti-money laundering laws and regulations during the period from July 1, 2015 to June 30, 2016. The non-compliance issues identified by the PBOC include failure to preserve clients’ identity information and transaction records and failure to submit reports on transactions of large payments and suspicious transactions to the PBOC. We have taken corrective measures and improved our anti-money laundering system by refining the process for identifying customers’ data, retaining transaction records and reporting large payment transactions and suspicious transactions. The fine imposed by the PBOC did not have a material impact on the business operations and financial results of our company.

C. ORGANIZATIONAL STRUCTURE

The following is our simplified corporate structure as of the date of this annual report:

LOGO

(1)	Wholly owned by CLIC
(2)	Formerly known as China Life Asset Management (Hong Kong) Company Limited
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List of Significant Subsidiaries

Name of Subsidiary	Jurisdiction of Incorporation	Proportion of Ownership Interest<br><br><br>Owned by China Life
中国人寿资产管理有限公司<br><br><br>China Life Asset Management Company Limited	The People’s Republic of China	60%<br><br><br>(directly)
中国人寿富兰克林资产管理有限公司<br> <br>China Life Franklin Asset Management Company Limited ^(1)^	Hong Kong	50%^(2)^<br><br><br>(indirectly through affiliate)
中国人寿养老保险股份有限公司<br><br><br>China Life Pension Company Limited	The People’s Republic of China	74.27%^(3)^<br><br><br>(directly and indirectly through affiliate)
国寿安保基金管理有限公司<br><br><br>China Life AMP Asset Management Co., Ltd.	The People’s Republic of China	85.03%^(4)^<br><br><br>(indirectly through affiliate)
国寿财富管理有限公司<br><br><br>China Life Wealth Management Company Limited	The People’s Republic of China	100%^(5)^<br><br><br>(indirectly through affiliate)
(1)	Formerly known as China Life Asset Management (Hong Kong) Company Limited.
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(2)	AMC, which is 60% owned by us, owns 50%.
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(3)	We own 70.74% and AMC, which is 60% owned by us, owns 3.53%.
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(4)	AMC, which is 60% owned by us, owns 85.03%.
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(5)	AMC, which is 60% owned by us, owns 48%, and China Life AMP, which is 85.03% owned by AMC, owns 52%.<br>
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D. PROPERTY, PLANTS AND EQUIPMENT

As of December 31, 2019, we owned and leased 4,171 and 11,887 properties, respectively, and had 307 properties under construction. Among the 4,171 properties owned by us, 1,639 properties are leased to third parties (including partial leasing) while the remaining properties are mainly occupied by us as office premises. Nine properties are recognized as investment properties.

On December 29, 2017, we entered into a new property leasing agreement with China Life Investment Holding Company Limited, or IHC. Under this property leasing agreement, which will expire on December 31, 2020, IHC agreed to lease to us 1,893 properties owned by it. The annual rent is determined by reference to market rent or, where there is no available comparison, by reference to the costs incurred by IHC in holding and maintaining the properties, plus a margin of approximately 5%.

ITEM 4A.UNRESOLVED STAFF COMMENTS.

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.

You should read the following discussion and analysis in conjunctionwith the audited consolidated financial statements and accompanying notes included elsewhere in this annual report.

Overview of Our Business

We are the leading life insurance company in China. We provide a broad range of insurance products, including individual and group life insurance, annuity contracts, health insurance and accident insurance products. We had nearly 303 million insurance policies in force as of December 31, 2019, including individual and group life insurance policies, annuity contracts, health insurance and accident insurance policies.

We report our financial results according to the following three principal business segments:

•	Life insurance, which offers participating and non-participating<br>life insurance and annuities to individuals and groups.
•	Health insurance, which offers short-term and long-term health insurance to individuals and groups. The<br>financial results of our supplementary major medical insurance are also reflected in our health insurance business segment.
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•	Accident insurance, which offers short-term and long-term accident insurance to individuals and groups.<br>

In addition, we have an “other” reporting segment, in which we primarily report the income and cost of the agency business in respect of transactions with CLIC and other companies, net share of profit of associates and joint ventures, income and expenses of subsidiaries, and unallocated income and expenditure of our company. **** See Note 5 to our consolidated financial statements included elsewhere in this annual report.

Financial Overview of Our Business

We had total gross written premiums of RMB 567,086 million (US$ 81,457 million) and net profit of RMB 59,014 million (US$ 8,477 million) for the year ended December 31, 2019. Our principal business segments had the following results:

•	Life insurance had total gross written premiums of RMB 446,562 million (US$ 64,145 million) in 2019.<br>
•	Health insurance had total gross written premiums of RMB 105,581 million (US$ 15,166 million) in<br>2019.
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•	Accident insurance had total gross written premiums of RMB 14,943 million (US$ 2,146 million) in<br>2019.
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Our business has been characterized by growth of premium income over the past several years, together with a move towards an improved business structure which has been evidenced by a rapid increase in first-year regular premiums, with the percentage of first-year regular premiums for products with regular premiums of ten years or more in first-year regular premiums being above 50% since 2013. At the same time, our business has also been affected by certain unfavorable factors, including the increasing cross-industry competition from companies in other financial industries, and the rapid development of the insurance companies owned or controlled by commercial banks and some other small and medium-sized insurance companies, which have secured an increasing market share, as well as the changing economic and investment environment within China, including slowing economic growth and fluctuations in interest rates.

Factors Affecting Our Results of Operations

Revenues, Expenses and Profitability

We earn our revenues primarily from:

•	insurance premiums from the sale of life insurance policies and annuity contracts, including participating and non-participating policies and annuity contracts with life contingencies, as well as accident and health insurance products. Net premiums earned accounted for 76.81% of total revenues in 2019.
•	investment income and net realized gains on financial assets, net fair value gains through profit or loss.<br>Investment income and net realized gains on financial assets, net fair value gains through profit or loss accounted for 22.07% of total revenues in 2019.
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In addition, following the restructuring, we receive service fees for policy management services we provide to CLIC. AMC also receives asset management fees for asset management services provided to CLIC. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions”.

Our operating expenses primarily include:

•	insurance benefits provided to our policyholders, accident and health claims and claim adjustment expenses;<br>
•	increase in insurance contracts liabilities;
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•	investment contract benefits;
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•	policyholder dividends resulting from participation in profits;
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•	underwriting and policy acquisition costs; and
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•	administrative and other expenses.
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We also pay rent to IHC on the properties we lease from it.

Our profitability depends principally on our ability to price and manage risk on insurance and annuity products, our ability to maximize the return on investment assets, our ability to attract and retain customers, and our ability to manage expenses. In particular, factors affecting our profitability include:

•	our ability to design and distribute products and services and to introduce new products which gain market<br>acceptance on a timely basis;
•	our ability to price our insurance and investment products at levels that enable us to earn a margin over the<br>costs of providing benefits and the expense of acquiring customers and administering those products;
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•	our returns on investment assets;
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•	our mortality and morbidity experience, which affects our insurance reserves;
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•	our lapse experience, which affects our ability to recover the cost of acquiring new business over the lives of<br>the contracts;
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•	our cost of administering insurance contracts and providing customer services;
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•	our ability to manage liquidity, market and credit risk in our investment portfolio and to manage duration risk<br>in our asset and policy portfolios through asset-liability management; and
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•	changes in regulations.
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In addition, other factors, such as competition, securities market conditions, taxes and general economic conditions, affect our profitability.

Interest Rates

For our long-term life insurance products including annuity products, we are obligated to pay contractual benefits to our policyholders or the beneficiaries based on a guaranteed interest rate, **** which is established when the product is priced. These products expose us to the risk that changes in interest rates may change our “spread”, or the difference between the amount of return we are able to earn on our investments and the amount of return we are required to pay under the policies. In August 2013, February 2015 and September 2015, the CIRC removed the 2.50% cap on the guaranteed interest rates for the traditional participating insurance policies, universal life insurance policies, and participating life insurance policies, respectively. From October 1, 2015, the guaranteed interest rates of all long-term life insurance products are to be decided by insurance companies at their discretion in accordance with the principle of prudence, but CBIRC approval is required for products with guaranteed interest rates above the maximum valuation rate set by the CBIRC, which varies by product. If the rates of return on our investments fall below the rates we guarantee, our profitability would be adversely affected. In November 2014, the interest rate on one-year term deposits, a key benchmark rate, was reduced from 3.00% to 2.75%, and in 2015, the interest rate was further reduced five times from 2.75% to 1.50%. As of the date of this annual report, this interest rate remained unchanged. If economic conditions change in the future, the Chinese government may adjust the interest rates accordingly. As of December 31, 2019, the average guaranteed rate of return for all of our long-term insurance policies in force was 2.71%, while our investment yields for the years ended December 31, 2019, 2018 and 2017were 5.24%, 3.29% and 5.16%, respectively. However, if the rates of return on our investments were to fall below the rates we guarantee, our profitability would be materially and adversely affected. If the interest rates were to be increased, but we did not raise the guaranteed rates of our products, sales of some of our products could be adversely impacted.

Interest rates also affect our returns on investment assets, a large proportion of which is held in term deposits and debt securities. In a declining interest rate environment, interest rate changes expose us to reinvestment risks. In a rising interest rate environment, higher rates may yield greater interest income but also may result in a decline in the fair value of debt securities designated as trading.

For further information on our exposure to interest rate risk, see “Item 11 Quantitative and Qualitative Disclosure about Market Risk—Interest Rate Risk” and Note 4 to our consolidated financial statements included elsewhere in this annual report.

Investments

As an insurance company, we are permitted to invest in five categories of investment assets, including liquidity assets, fixed income assets, equity assets, real properties and other financial assets. However, we are limited by Chinese laws and regulations in the maximum amount that we may invest in each type of assets. See “Item 4. Information on the Company—Business Overview—Investments” and “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Regulation of investments”. Our material concentration risks relate to our investments in bank deposits and Chinese government securities. ****

Our investments are subject to risks. Volatility or declines in Chinese and international financial markets may expose us to higher market and credit risks, such as when domestic and international economic conditions differ from market expectations. We may also invest in new investment channels, use new investment tools or engage new investment managers, which may expose us to new risks. These factors could affect our investment income and the book value of our investment assets. In addition, as a portion of our investment assets are held in foreign currencies, our investment results may also be subject to foreign exchange gains and losses due to changes in exchange rates. Furthermore, our investments in associates are also affected by the operational conditions, financial risks and volatility in profits of these associates, which, in turn, will affect our profitability. See “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—Our investments are subject to risks”.

Our results can be materially affected by investment impairments. The following table sets forth impairment charges and reversal of impairment charges, which are included in net realized gains on financial assets and net gains on investments of associates and joint ventures, for the years ended December 31, 2017, 2018 and 2019.

Impairment	For the year ended December 31,
	2017			2018			2019			2019
	(RMB in millions)									US
Debt securities		(114	)		(42	)		(3,749	)		)
Equity securities		(2,643	)		(8,163	)		(2,638	)		)
Associates and joint ventures		—			—			(1,500	)		)
Total	****	(2,757	)	****	(8,205	)	****	(7,887	)		)

All values are in US Dollars.

During the year ended December 31, 2019, we recognized an impairment expense of RMB 2,638 million (US$ 379 million) for available-for-sale equity securities for which we determined that objective evidence of impairment existed. During the year ended December 31, 2018, we recognized an impairment expense of RMB 8,163 million for available-for-sale equity securities for which we determined that objective evidence of impairment existed. During the year ended December 31, 2017, we recognized an impairment expense of RMB 2,643 million for available-for-sale equity securities for which we determined that objective evidence of impairment existed. Our rationale for the impairment is based on a severe or prolonged decline in value. These securities were not impaired due to company-specific events such as bankruptcies.

During the year ended December 31, 2019, we recognized an impairment expense of RMB 3,749 million (US$ 539 million) in debt securities. During the year ended December 31, 2018, we recognized an impairment expense of RMB 42 million in debt securities. During the year ended December 31, 2017, we recognized an impairment expense of RMB 114 million in debt securities.

During the year ended December 31, 2019, we recognized an impairment expense of RMB 1,500 million (US$ 215 million) in associates and joint ventures. During the years ended December 31, 2018 and December 31, 2017, we recognized no impairment expense in associates and joint ventures.

Available-for-sale securities comprised of the following asset classes as of December 31, 2017, 2018 and 2019.

	As of December 31,
	2017				2018				2019
	Cost oramortizedcost		Estimatedfair value		Cost oramortizedcost		Estimatedfair value		Cost oramortizedcost		Estimatedfair value
	(RMB in millions)
Debt securities
Government bonds		24,818		24,632		26,759		28,440		22,500		23,758
Government agency bonds		164,331		157,765		172,250		180,273		163,678		171,189
Corporate bonds		199,613		197,133		181,178		185,720		145,033		148,455
Subordinated bonds/debt		13,588		13,495		20,953		21,514		53,062		53,922
Other		62,651		62,099		78,136		80,643		109,729		112,467
Subtotal	****	465,001	****	455,124	****	479,276	****	496,590	****	494,002	****	509,791
Equity securities
Funds		97,516		91,344		115,949		92,304		97,208		102,349
Common stocks		124,090		129,424		160,231		143,469		217,564		236,323
Other		127,689		134,842		126,253		138,170		195,360		210,494
Subtotal	****	349,295	****	355,610	****	402,433	****	373,943	****	510,132	****	549,166
Total	****	814,296	****	810,734	****	881,709	****	870,533	****	1,004,134	****	1,058,957

The difference between the aggregate cost/amortized cost and the aggregate estimated fair value reflects the amount of the unrealized gains and losses, and provision for impairment losses. As of December 31, 2019, we had gross unrealized gains of RMB 63,261 million (US$ 9,087 million) and gross unrealized losses of RMB 5,055 million (US$ 726 million), and made a provision for impairment losses of RMB 3,383 million (US$ 486 million). As of December 31, 2018, we had gross unrealized gains of RMB 37,125 million and gross unrealized losses of RMB 43,884 million, and made a provision for impairment losses of RMB 4,417 million. As of December 31, 2017, we had gross unrealized gains of RMB 25,120 million and gross unrealized losses of RMB 26,837 million, and made a provision for impairment losses of RMB 1,845 million. The unrealized losses as of December 31, 2019 related primarily to the unrealized losses of available-for-sale stocks and funds.

The following tables set forth the length of time that each class of available-for-sale securities has continuously been in an unrealized loss position as of December 31, 2019, 2018 and 2017. For the year ended December 31, 2019, the decrease of our unrealized losses on equity securities, mainly resulting from the overall upturn of the Chinese stock market, constituted a significant component of the movement of the total unrealized losses compared to the prior year. **** For the year ended December 31, 2018, unrealized losses on equity securities, mainly resulting from the overall volatility and downturn of the Chinese stock market, constituted a significant component of the movement of the total unrealized losses compared to the prior year. For the year ended December 31, 2017, unrealized losses on debt securities, mainly resulting from the increase in interest rates in the Chinese market, constituted a significant component of the movement of the total unrealized losses compared to the prior year.

100

As of December 31, 2019	0-6months			7-12months			More than 12months			Total
	(RMB in millions)
Debt securities
Unrealized losses		374			141			531			1,046
Carrying amounts		28,298			2,794			25,884			56,976
Unrealized losses as a percentage of carrying amounts		1.32	%		5.05	%		2.05	%		1.84	%
Equity securities
Unrealized losses		2,084			1,029			896			4,009
Carrying amounts		50,291			26,006			3,175			79,472
Unrealized losses as a percentage of carrying amounts		4.14	%		3.96	%		28.22	%		5.04	%
Total
Total unrealized losses	****	2,458	****	****	1,170	****	****	1,427	****	****	5,055	****
Total carrying amounts	****	78,589	****	****	28,800	****	****	29,059	****	****	136,448	****
Unrealized losses as a percentage of carrying amounts	****	3.13	%	****	4.06	%	****	4.91	%	****	3.70	%
As of December 31, 2018	0-6months			7-12months			More than 12months			Total
	(RMB in millions)
Debt securities
Unrealized losses		126			473			1,046			1,645
Carrying amounts		9,665			11,075			41,365			62,105
Unrealized losses as a percentage of carrying amounts		1.30	%		4.27	%		2.53	%		2.65	%
Equity securities
Unrealized losses		7,445			21,813			12,981			42,239
Carrying amounts		50,073			92,845			52,549			195,467
Unrealized losses as a percentage of carrying amounts		14.87	%		23.49	%		24.70	%		21.61	%
Total
Total unrealized losses	****	7,571	****	****	22,286	****	****	14,027	****	****	43,884	****
Total carrying amounts	****	59,738	****	****	103,920	****	****	93,914	****	****	257,572	****
Unrealized losses as a percentage of carrying amounts	****	12.67	%	****	21.45	%	****	14.94	%	****	17.04	%
As of December 31, 2017	0-6months			7-12months			More than 12months			Total
	(RMB in millions)
Debt securities
Unrealized losses		3,670			2,128			5,274			11,072
Carrying amounts		181,504			52,795			45,788			280,087
Unrealized losses as a percentage of carrying amounts		2.02	%		4.03	%		11.52	%		3.95	%
Equity securities
Unrealized losses		12,342			3,391			32			15,765
Carrying amounts		132,893			25,982			786			159,661
Unrealized losses as a percentage of carrying amounts		9.29	%		13.05	%		4.07	%		9.87	%
Total
Total unrealized losses	****	16,012	****	****	5,519	****	****	5,306	****	****	26,837	****
Total carrying amounts	****	314,397	****	****	78,777	****	****	46,574	****	****	439,748	****
Unrealized losses as a percentage of carrying amounts	****	5.09	%	****	7.01	%	****	11.39	%	****	6.10	%

Financial assets other than those accounted for as at fair value through profit or loss are adjusted for impairments.

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In evaluating whether a decline in value is an impairment for these financial assets, we consider several factors including, but not limited to, the following:

•	significant financial difficulty of the issuer or debtor;
•	a breach of contract, such as a default or delinquency in payments;
---	---
•	it becomes probable that the issuer or debtor will enter into bankruptcy or other financial reorganization; and<br>
---	---
•	the disappearance of an active market for that financial asset because of financial difficulties.<br>
---	---

In evaluating whether a decline in value is impairment for equity securities, we also consider the extent or the duration of the decline. The quantitative factors include the following:

•	the market price of the equity securities was more than 50% below their cost at the reporting date;<br>
•	the market price of the equity securities was more than 20% below their cost for a period of at least six months<br>at the reporting date; and
---	---
•	the market price of the equity securities was below their cost for a period of more than one year (including one<br>year) at the reporting date.
---	---

When the decline in value is considered an impairment, held-to-maturity debt securities are written down to their present value of estimated future cash flows discounted at the securities’ effective interest rates, and available-for-sale debt securities and equity securities are written down to their fair value, and the change is recorded in net realized gains on financial assets in the period the impairment is recognized. The impairment loss is reversed through the net profit if in a subsequent period the fair value of a debt security increases and the increase can be objectively related to an event occurring after the impairment loss was recognized through net profit. The impairment losses recognized in net profit on equity investments are not reversed. See “—Critical Accounting Policies”.

As of December 31, 2019, our total investment assets were RMB 3,573,154 million (US$ 513,251million) and the investment yield for the year ended December 31, 2019 was 5.24%. The investment yield primarily reflected the increase in spread income and fair value through profit or loss of equity investments we have invested in. As of December 31, 2018, our total investment assets were RMB 3,104,014 million and the investment yield for the year ended December 31, 2018 was 3.29%. As of December 31, 2017, our total investment assets were RMB 2,753,124 million and the investment yield for the year ended December 31, 2017 was 5.16%.

We calculate the investment yields for a given year by dividing the gross investment income for that year by the average of the ending balance of investment assets of that year and the previous year. Beginning in 2018, we revised the formula to calculate our investment yield to consider the impact of investments in associates and joint ventures on our investment yield. The investment yield for the fiscal year ended December 31, 2017 has also been revised to conform to the revised formula.

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Mix of Products

The following table sets forth premium information as of or for the years ended December 31, 2019, 2018 and 2017 by type of product in our life insurance business, health insurance business and accident insurance business.

	As of or for the year endedDecember 31,							Compoundannualgrowth rate
	2017		2018		2019		2019	(2017-2019)
	RMB		RMB		RMB
Life insurance business
Whole life and term life insurance:
Gross written premiums		40,606		49,520		64,196			25.74	%
Endowment:
Gross written premiums		198,418		126,318		113,950			(24.22	%)
Annuities:
Gross written premiums		190,798		261,702		268,416			18.61	%
Health insurance business^(1)^
Gross written insurance premiums		67,708		83,614		105,581			24.87	%
Accident insurance business^(2)^
Gross written insurance premiums		14,436		14,672		14,943			1.74	%

All values are in US Dollars.

(1)	Including long-term and short-term health products.
(2)	Including long-term and short-term accident products.
---	---

Under guidelines issued by the CBIRC, we are required to pay to our participating policyholders dividends which are no less than 70% of the distributable earnings on participating products. Participating products tend to present us with less market risk, since we have more flexibility to set the level of dividends and participating products are subject to guaranteed interest rates which are generally lower than those of non-participating products. In addition, changes in interest rates have less of impact on their lapse rates than on those of non-participating policies. Conversely, participating products tend to be less profitable for us than non-participating products, largely because the terms of these contracts effectively commit us to sharing a portion of our earnings from participating products with our policyholders. However, participating products still provide us with attractive profit contributions given the growing level of sales volume they produce.

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Products classified as investment contracts also affect our revenues, since only a portion of the payments we received under such products are recorded in our consolidated income statement as policy fees, and the majority of such payments are recorded as investment contracts under financial liabilities on our balance sheet.

We have adjusted our premium structure to focus more on sales of products with regular premiums, especially products with regular premiums for ten years or more, which has reduced the proportion of single written premiums of our total first-year gross written premiums. We believe that this strategy could contribute to a more steady development of our business and enhance the loyalty of our customers and the retention rate of our sales agent force.

Regulation

We operate in a highly regulated industry. Changes in regulation can have a significant impact on our revenues, expenses and profitability. China’s insurance regulatory regime is undergoing significant changes toward a more transparent regulatory process and a convergent movement toward international standards. Among other things, recent changes to permitted investment channels for insurance companies have impacted our investment portfolio and returns. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters”.

Critical Accounting Policies

We prepared the consolidated financial statements under the historical cost convention, except for financial assets and financial liabilities at fair value through profit or loss, available-for-sale financial assets, insurance contract liabilities and certain property, plant and equipment at deemed cost during restructuring process. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires our management to exercise its judgments in the process of applying our accounting policies. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to our businesses and operations. The following sections discuss the accounting policies applied in preparing our consolidated financial statements that we believe are most dependent on the application of these judgments and estimates. However, uncertainty about these judgments and estimates could result in outcomes that require a material adjustment to the carrying amounts of assets and liabilities in the future periods.

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Liability for Long-term Insurance Contracts

Long-term insurance contracts include whole life insurance, term life insurance, endowment insurance and annuity policies with significant life contingency risk. Premiums are recognized as revenue when the insurance contracts are recognized and premiums are due from policyholders.

We use the discounted cash flow method to estimate the reserve of long-term insurance contracts. The reserve of long-term insurance contracts consists of a reasonable estimate of liability, a risk margin and a residual margin. The long-term insurance contracts liabilities are calculated using various assumptions, including assumptions on mortality rates, morbidity rates, lapse rates, discount rates and expense assumptions, and based on the following principles:

•	The reasonable estimate for liability of long-term insurance contracts is the present value of reasonable<br>estimates of future cash outflows less future cash inflows. The expected future cash inflows include cash inflows of future premiums arising from the undertaking of insurance obligations, with consideration of decrement mostly from death and<br>surrenders. The expected future cash outflows are cash outflows incurred to fulfill contractual obligations, consisting of the following:
(i)	Guaranteed benefits based on contractual terms, including payments for deaths, disabilities, diseases,<br>survivals, maturities and surrenders;
---	---
(ii)	Additional non-guaranteed benefits, such as policyholder dividends; and<br>
---	---
(iii)	Reasonable expenses incurred to manage insurance contracts or to process claims, including maintenance expenses<br>and claim settlement expenses. Future administration expenses are included in the maintenance expense. Expenses are determined based on expense analysis with consideration of future inflation and our expense management control.<br>
---	---

On each reporting date, we review the assumptions for reasonable estimates of liability and risk margins, with consideration of all available information, taking into account our historical experience and expectation of future events. Changes in assumptions are recognized in net profit. Assumptions for the amortization of residual margin are locked in at policy issuance date and are not adjusted at each reporting date. We incorporate the potential impact of future risk factors on our operating results in the determination of assumptions. The sensitivity analysis disclosed in the Note 4.1.3 on page F-42 of this annual report provides a detailed analysis of impact of assumption changes on our operating results.

•	Margins have been taken into consideration while computing the reserves of insurance contracts, measured<br>separately and recognized in net profit in each period over the life of the contracts. At the inception of the contracts, we do not recognize Day One gain, whereas on the other hand, Day One loss is recognized in profit immediately.<br>

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Margins comprise risk margin and residual margin. Risk margin is the reserve accrued to compensate for the uncertain amount and timing of future cash flows. At the inception of the contract, the residual margin is calculated net of certain acquisition costs, mainly consist of underwriting and policy acquisition costs, by us representing Day One gain and will be amortized over the life of contracts. For insurance contracts of which future returns are affected by investment yields of corresponding investment portfolios, their related residual margins are amortized based on estimated future participating dividends payable to the policyholders. For insurance contracts in which future returns are not affected by investment yields of corresponding investment portfolios, their related residual margins are amortized based on sum assured of outstanding policies. The subsequent measurement of residual margin is independent from the reasonable estimate of future discounted cash flows and risk margin. The assumption changes have no effect on the subsequent measurement of the residual margin.

•	We have considered the impact of time value on the reserve calculation for insurance contracts.<br>

We establish liabilities for long-term traditional insurance contracts based on the following assumptions:

•

For the insurance contracts of which future insurance benefits are affected by investment yields of corresponding investment portfolios, the discount rate assumption is based on expected investment returns of the asset portfolio backing these liabilities, considering the impact of time value on liabilities. In developing discount rate assumptions, we consider investment experience, current investment portfolio and trend of the relevant yield curve. The assumed discount rates reflect the future economic outlook as well as our investment strategy. The assumed discount rates with risk margin was 4.85% as at December 31, 2017, 2018 and 2019.

For the insurance contracts of which the future insurance benefits are not affected by the investment yields of the corresponding investment portfolios, the discount rate assumption is based on the “yield curve of reserve computation benchmark for insurance contracts”, published on the “China Bond” website, with consideration of liquidity spreads, taxation and other relevant factors. The assumed spot discount rates with risk margin ranged from 3.31% to **** 4.86% **** as at December 31, 2017, from 3.47% to 4.86% as at December 31, 2018 and from 3.52% to 4.83% as at December 31, 2019, **** respectively.

There is uncertainty relating to the discount rate assumption, which is affected by factors such as future macro-economy, monetary and foreign exchange policies, capital market and availability of investment channels of insurance funds. We determine the discount rate assumption based on the information obtained at the end of each reporting period, including consideration of risk margin.

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•	The mortality and morbidity assumptions are based on the historical mortality and morbidity experience. The<br>assumed mortality rates and morbidity rates vary by age of the insured and contract type.

We base our mortality assumptions on the China Life Insurance Mortality Table (2000-2003), adjusted where appropriate to reflect our recent historical mortality experience. The main source of uncertainty with life insurance contracts is that epidemics and wide-ranging lifestyle changes could result in deterioration in future mortality experience, thus leading to an inadequate reserve. Similarly, improvements in longevity due to continuing advancements in medical care and social conditions could expose us to longevity risk.

We base our morbidity assumptions for critical illness products on analysis of historical experience and expectations of future developments. There are two main sources of uncertainty. First, wide-ranging lifestyle changes could result in future deterioration in morbidity experience. Second, future development of medical technologies and improved coverage of medical facilities available to the policyholders may bring forward the timing of diagnosing critical illness, which demands earlier payment of the critical illness benefits. Both could ultimately result in an inadequate reserving of liability if current morbidity assumptions do not properly reflect such trends.

Risk margin is considered in our mortality and morbidity assumptions.

•

The expense assumptions are based on expected unit costs with the consideration of previous expenses study and future trends. Our expense assumptions are affected by certain factors, such as future inflation and market competition which bring uncertainty to these assumptions. We consider risk margin for expense assumptions based on the information obtained at the end of each reporting period. Components of expense assumptions include cost per policy and percentage of premium**.** Our expense assumptions for each of the past three years were as follows: the percentage of premiums costs of 0.85% to 0.90% of premiums for individual life products and 0.90% for group life products, in each case plus a fixed per-policy expense.

•

The lapse rates and other assumptions are affected by certain factors, such as the future macro economy, availability of financial substitutions and market competition, which bring uncertainty to lapse rates and other assumptions. The lapse rates and other assumptions are determined with reference to creditable past experience, current conditions, future expectations and other information.

---

The method used to determine risk margin has been consistently applied. We consider risk margin for each of the discount rate, mortality and morbidity and expense assumptions to compensate for the uncertain amount and timing of future cash flow. When determining risk margin, we consider historical experience, future expectations and other factors. Risk margin is determined by us and does not include any elements imposed by regulators.

We adopted a consistent process to determine assumptions for the insurance contracts, which are detailed in Note 15 to our consolidated financial statements included elsewhere in this annual report. On each reporting date, we review the assumptions for reasonable estimates of liability and risk margin, with consideration of all available information, and taking into account our historical experience and expectation of future events.

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Universal Life Contracts and Unit-linked Contracts

Universal life contracts and unit-linked contracts are unbundled into the following components:

•	Insurance components; and
•	Non-insurance components.
---	---

The insurance components are accounted for as insurance contracts, and the non-insurance components are accounted for as investment contracts, which are stated in the investment contract liabilities.

Investment Contracts

For investment contracts with or without discretionary participating feature, our policy fee income mainly consists of acquisition cost and various fee incomes (including handling fees and management fees) over the period during which the service is provided. Policy fee income net of certain acquisition cost is amortized over the expected life of the contracts by period and recognized in revenue.

Except for unit-linked contracts, of which the liabilities for transferred financial risks are carried at fair value, the liabilities of investment contracts are carried at amortized cost.

Valuation of Investments

We classify our financial assets into the following categories: securities at fair value through profit or loss, held-to-maturity securities, loans and receivables and available-for-sale securities. Management determines the classification of our financial assets at initial recognition, with the classification depending on the purpose for which the assets are acquired. The following are the policies used:

Securities at fair value through profit or loss. This category has two sub-categories: securities held for trading and those designated as at fair value through profit or loss at inception. Securities are classified as held for trading at inception if acquired principally for the purpose of selling in the short-term or if they form part of a portfolio of financial assets in which there is evidence of short term profit-taking. Other financial assets are classified as at fair value through profit or loss if they meet the criteria in IAS 39 and designated as such at inception by us.

Held-to-maturity securities. Held-to-maturity securities are non-derivative financial assets with fixed or determinable payments and fixed maturities that we have the positive intention and ability to hold to maturity and do not meet the definition of loans and receivables nor designated as available-for-sale securities or securities at fair value through profit or loss. These investments are carried at amortized cost.

108

Loans and receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than those that we intend to sell in the short term or held as available-for-sale. Loans and receivables mainly comprise term deposits, loans, securities purchased under agreements to resell, accrued investment income and premium receivables as presented separately in the statement of financial position. These investments are carried at amortized cost.

Available-for-sale securities. Available-for-sale securities are non-derivative financial assets that are either designated in this category or not classified in any of the other categories.

Impairment of financial assets other than securities at fair value through profit or loss. Financial assets other than those accounted for as at fair value through profit or loss are adjusted for impairments, where there are declines in value that are considered to be impairment. In evaluating whether a decline in value is an impairment for these financial assets, we consider several factors including, but not limited to, the following:

•	significant financial difficulty of the issuer or debtor;
•	a breach of contract, such as a default or delinquency in payments;
---	---
•	it becomes probable that the issuer or debtor will enter into bankruptcy or other financial reorganization; and<br>
---	---
•	the disappearance of an active market for that financial asset because of financial difficulties.<br>
---	---

In evaluating whether a decline in value is impairment for equity securities, we also consider the extent or the duration of the decline. The quantitative factors include the following:

•	the market price of the equity securities was more than 50% below their cost at the reporting date;<br>
•	the market price of the equity securities was more than 20% below their cost for a period of at least six months<br>at the reporting date; and
---	---
•	the market price of the equity securities was below their cost for a period of more than one year (including one<br>year) at the reporting date.
---	---

When the decline in value is considered impairment, held-to-maturity debt securities are written down to their present value of estimated future cash flows discounted at the securities effective interest rates; available-for-sale debt securities and equity securities are written down to their fair value, and the change is recorded in net realized gains on financial assets in the period the impairment is recognized. The impairment loss is reversed through net profit if in a subsequent period the fair value of a debt security increases and the increase can be objectively related to an event occurring after the impairment loss was recognized through net profit. The impairment losses recognized in net profit on equity instruments are not reversed through net profit.

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As of December 31, 2019, debt securities of RMB 181,617 million (US$ 26,088 million) contained guarantees issued by third parties and, of those, 86.49% were guaranteed by either the Chinese government or a Chinese government controlled financial institution. Of the guarantees issued by government or government controlled financial institutions, 92.90% related to debt securities issued by a government railway infrastructure entity. We monitor the credit worthiness of the third parties which have issued these guarantees using local Chinese credit ratings which are generally only utilized within China.

The methods and assumptions used by us in measuring the fair value of the financial instrumentsare as follows:

Debt securities. The fair values of debt securities are generally based on current bid prices. Where current bid prices are not readily available, fair values are estimated using either prices observed in recent transactions, values obtained from current bid prices of comparable investments or valuation techniques when the market is not active.

Equity securities. The fair values of equity securities are generally based on current bid prices. Where current bid prices are not readily available, fair values are estimated using either prices observed in recent transactions or commonly used market pricing model. Equity securities, for which fair values cannot be measured reliably, are recognized at cost less impairment.

Securities purchased under agreements to resell, policy loans, term deposits, interest-bearing loans and borrowings, and securitiessold under agreements to repurchase. The carrying amounts of these assets in the consolidated statement of financial position approximate fair value. Fair values of other loans are obtained from valuation techniques.

Valuations are generally obtained from third party pricing services for identical or comparable assets, or through the use of valuation methodologies using observable market inputs, or recent quoted market prices. Valuation service providers typically gather, analyze and interpret information related to market transactions and other key valuation model inputs from multiple sources, and, through the use of widely accepted valuation models, provide a theoretical quote on various securities.

We utilize one pricing service for substantially all of our Chinese domestic debt securities. This pricing service provider is the only publicly-recognized pricing service provider in China, and its pricing information is used by the mutual fund industry and almost all companies in China. We utilize international pricing services for our overseas debt securities. These pricing service providers are internationally-recognized, and their pricing information is commonly used by international companies. The prices obtained from the pricing service are non-binding. Our review and testing have shown the prices obtained from our pricing service to be appropriate. As such, during the year ended December 31, 2019, we did not consider it necessary to adjust the prices obtained from our pricing service.

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As at December 31, 2019, RMB 936,372 million of RMB 1,025,989 million debt securities with prices obtained from our pricing service were issued by the Chinese government and government controlled organizations. This pricing service utilized a discounted cash flow valuation model using market observable inputs, mainly interest rates, to determine a fair value. There are no other significant market inputs. As such, we have classified these debt securities as Level 2 in the fair value hierarchy.

Management subjects the fair values provided by valuation service providers to a number of validation procedures. These procedures include a review of the valuation models utilized, as well as our own test recalculation of the prices obtained from the pricing service at each reporting date.

We consider a combination of many factors in determining whether we believe a market for a financial instrument is active or inactive. Among these factors include:

•	whether there has been any trades within past 30 days of the reporting date;
•	the volume of the trades within this 30 day period; and
---	---
•	the degree which the implied yields for a debt security for observed transactions differs from our understanding<br>of the current relevant market rates and information.
---	---

Associates and joint ventures

Associates are entities on which we have significant influence, generally together with a shareholding of between 20% and 50% of the voting rights. Significant influence is the power to participate in the financial and operating policy decisions of such entities but without control or joint control over these decisions.

Joint ventures are joint arrangements whereby the parties have joint control of the arrangement and have rights to the net assets of the joint arrangement. Joint control is the contractually-agreed sharing of control of an arrangement, which exists only when decisions on relevant activities require unanimous consent of the parties sharing control.

We determine at each reporting date whether there is any objective evidence that the investments in associates and joint ventures are impaired. If this is the case, an impairment loss is recognized at the amount of the carrying amount of investment less its recoverable amount. The recoverable amount is the higher of the fair value of investment less costs of disposal and value in use. The impairment of investment in associates and joint ventures is reviewed for possible reversal at each reporting date.

Revenue Recognition

Premiums. Premiums from long-term insurance contracts are recognized as revenue when due from the policyholders.

Premiums from the sale of short-term accident and health insurance contracts are recorded when written and are accreted to earnings on a pro-rata basis over the term of the related policy coverage.

Policy fee income. The policy fee income for investment contracts mainly consists of acquisition costs and various fee incomes (including handling fees and management fees) over the period during which service is provided. Policy fee income net of certain acquisition costs is amortized over the expected life of the contracts and recognized as other income.

Investment income. Investment income is comprised of interest income from term deposits, cash and cash equivalents, debt securities, securities purchased under agreements to resell, loans and dividend income from equity securities. Interest income is recorded on an accrual basis using the effective interest rate method. Dividend income is recognized when the right to receive a dividend payment is established.

Deferred taxation

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Substantively enacted tax rates are used in the determination of deferred income tax.

111

Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the reversal of temporary differences can be recognized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Recently Issued Accounting Standards

The following standards and amendments are adopted by us for the first time for the financial year beginning on January 1, 2019.

Standards/Amendments	Content	Effective for annual<br><br><br>periods beginning on or after
IFRS 16	Leases	January 1, 2019
IAS 28 Amendments	Long-term Interests in Associates and Joint Ventures	January 1, 2019
IAS 19 Amendments	Plan Amendment, Curtailment or Settlement	January 1, 2019
IFRIC 23	Uncertainty over Income Tax Treatments	January 1, 2019
Annual Improvements to IFRSs 2015-2017 Cycle	Amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23	January 1, 2019

IFRS 16 – Leases

IFRS 16 supersedes IAS 17 Leases, and related interpretations from International Financial Reporting Interpretation Committee and Standard Interpretation Committee. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model. Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors continue to classify leases as either operating or finance leases using similar principles as in IAS 17. Therefore, IFRS 16 did not have any financial impact on leases where we are the lessor.

We have adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application of January 1, 2019. Under this method, the standard has been applied retrospectively with the cumulative effect of initial adoption as an adjustment to the opening balance of retained earnings as at January 1, 2019, and the comparative information for 2018 was not restated and continues to be reported under IAS 17.

New definition of a lease

Under IFRS 16, at inception of a contract, an entity shall assess whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. We elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed. Therefore, the definition of a lease under IFRS 16 has been applied only to contracts entered or changed on or after January 1, 2019.

112

At inception or on reassessment of a contract that contains a lease component, we allocate the consideration in the contract to each lease and non-lease component on the basis of their stand-alone prices. A practical expedient is available to a lessee, which we have adopted, not to separate non-lease components and to account for the lease and the associated non-lease components as a single lease component.

As a lessee – Leases previously classified as operating leases

As a lessee, we previously classified leases as either finance leases or operating leases based on the assessment of whether the lease transferred substantially all the rewards and risks of ownership of assets to us. Under IFRS 16, we apply a single approach to recognize and measure right-of-use assets and lease liabilities for all leases, except for two elective exemptions for leases of low-value assets (elected on a lease by lease basis) and short-term leases (elected by class of underlying asset). We have elected not to recognize right-of-use assets and lease liabilities for (i) leases of low-value assets; and (ii) leases, that at the commencement date, have a lease term of 12 months or less. Instead, we recognize the lease payments associated with those leases as an expense on a straight-line basis over the lease term.

Lease liabilities as at January 1, 2019 were recognized based on the present value of the remaining lease payments, discounted using the incremental borrowing rate as at January 1, 2019.

The right-of-use assets were measured at the amount of the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments relating to the leases recognized in the statement of financial position immediately before January 1, 2019. All these assets were assessed for any impairment based on IAS 36 – Impairment of Assets on that date.

We have used the following elective practical expedients when applying IFRS 16 as at January 1, 2019:

•	Applied the recognition exemptions for leases of low value assets and leases with lease term that ends within 12<br>months from the date of initial application;
•	Applied a single discount rate to a portfolio of leases with reasonably similar characteristics on the<br>measurement of the lease liability;
---	---
•	Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application;
---	---
•	Used hindsight in determining the lease term where the contract contains options to extend or terminate the<br>lease; and
---	---
•	Relied on its assessment of whether leases are onerous immediately before the date of initial application. We<br>adjusted the right-of-use asset at the date of initial application by the amount of any provision for onerous leases recognized in the statement of financial position<br>immediately before the date of initial application.
---	---

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In addition to land use rights, we recognized other right-of-use assets of RMB 2,555 million and lease liabilities of RMB2,185 million at the date of initial application. Compared to the end of 2018, after the relative adjustments, total assets and total liabilities at the group level as at January 1, 2019 both increased by RMB 2,194 million. The reconciliation between the minimum unpaid lease payments of the operating leases disclosed in our financial statements for the year ended December 31, 2018, and the lease liabilities recognized in the consolidated statement of financial position at the date of initial application are as follows:


Operating lease commitments as at December 31, 2018	2,474
Less: short-term leases, those leases with a remaining lease term less than 12 months from the<br>date of initial application and leases of low-value assets	(132	)
impact of discounting at the incremental borrowing rate as at January 1, 2019	(157	)
Lease liabilities as at January 1, 2019	2,185

The weighted average incremental borrowing rate we adopted as at January 1, 2019 in calculating the lease liabilities in the consolidated statement of financial position was 3.76%.

Refer to Note 2.7 to our consolidated financial statements included elsewhere in this annual report for relevant accounting policies.

IAS 28 Amendments – Long-term interests in associatesand joint ventures

In October 2017, the IASB issued the amendments to IAS 28 which indicates that an entity applies IFRS 9 to long-term interests in an associate or joint venture to which the equity method is not applied but that, in substance, form part of the net investment in the associate or joint venture (long-term interests). The amendments also clarify that for the entity that applies the temporary exemption from IFRS 9, IAS 39 applies to the long-term interests, and those entities are not required to restate prior periods to reflect the application of amendments. The amendments are effective for annual periods beginning on or after January 1, 2019.

Our accounting treatment in the previous years is in line with the amendments, thus there has been no impact on our consolidated financial statements as a result of the amendments.

IAS 19 Amendments - Plan Amendment,Curtailment or Settlement

In February 2018, the IASB issued the amendments to IAS 19 which addresses the accounting when a plan amendment, curtailment or settlement occurs during a reporting period. The amendments are effective for annual periods beginning on or after January 1, 2019 and apply retrospectively.

We have no defined benefit plans. The amendments under IAS 19 have had no impact on our consolidated financial statements. We will adopt the amendments if such business occurs in the future.

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IFRIC 23 - Uncertainty over Income Tax Treatments

In June 2017, the IASB issued IFRIC Interpretation 23, which clarifies application of the recognition and measurement requirements in IAS 12 Income Taxes when there is uncertainty over income tax treatments. The interpretation mainly addresses the following four areas: whether an entity separately considers the uncertainty of tax treatments; assumptions adopted by an entity to address the examination of tax treatments by taxation authorities; how an entity determines taxable profit/(tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and how an entity considers changes in facts and circumstances. The interpretation is effective for annual reporting periods beginning on or after January 1, 2019.

Our accounting treatment in the previous years is in line with the clarification of the interpretation. The clarification has had no significant impact on our consolidated financial statements.

In addition, the Annual Improvements 2015-2017 Cycle issued in December 2017 set out amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23, which are effective for annual periods beginning on or after January 1, 2019. There has been no significant impact on our consolidated financial statements as a result of these amendments.

New accounting standards and amendments that are effective but a temporary exemption is applied by us for the financial year beginning onJanuary 1, 2019:

Standards/Amendments	Content	Effective for annual periodsbeginning on or after
IFRS 9	Financial Instruments	January 1, 2018

IFRS 9 – Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9, bringing together all phases of the financial instruments project to replace IAS 39 and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early adoption permitted. Based on the current assessment, we expect the adoption of IFRS 9 will have a significant impact on our consolidated financial statements. We have adopted and will continue to adopt the temporary exemption permitted in Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (“IFRS 4 Amendment”) to apply IAS 39 rather than IFRS 9, until the effective date of IFRS 17. Refer to Note 33 to our consolidated financial statements included elsewhere in this annual report for more details.

Classification and measurement

IFRS 9 requires that we classify debt instruments based on the combined effect of application of business models (hold to collect contractual cash flows, hold to collect contractual cash flows and sell financial assets or other business models) and contractual cash flow characteristics (solely payments of principal and interest on the principal amount outstanding or not). Debt instruments not giving rise to cash flows that are solely payments of principal and interest on the principal amount outstanding are to be measured at fair value through profit or loss. Other debt instruments giving rise to cash flows that are solely payments of principal and interest on the principal amount outstanding are to be measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss, based on their respective business models. We analyzed the contractual cash flow characteristics of financial assets as at December 31, 2019 and made relevant disclosures in Note 33 to our consolidated financial statements included elsewhere in this annual report in accordance with the IFRS 4 Amendments.

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Equity instruments would generally be measured at fair value through profit or loss unless we elect to measure at fair value through other comprehensive income for certain equity investments not held for trading. This will result in unrealized gains and losses on equity instruments currently classified as available-for-sale securities being recorded in income going forward. Currently, these unrealized gains and losses are recognized in other comprehensive income. If we elect to record equity investments at fair value through other comprehensive income, gains and losses would never be recognized in income except for the received dividends which do not represent a recovery of part of the investment cost.

Impairment

IFRS 9 replaces the “incurred loss” model with the “expected credit loss” model which is designed to include forward-looking information. We are in the process of developing and testing the key models required under IFRS 9 and analyzing the impact on the expected loss provision; we believe that the provision for our debt instruments under the “expected credit loss” model would be larger than that under the previous “incurred loss” model.

Hedge accounting

We do not apply the hedge accounting currently, so we expect that the new hedge accounting model under IFRS 9 will have no impact on our consolidated financial statements.

The following standards and amendments are not yet effective and have not been early adopted by us for the financial year beginning on January 1, 2019.

Standards/Amendments	Content	Effective for annual periodsbeginning on or after
IFRS 3 Amendments	Definition of a Business	January 1, 2020
IAS 1 and IAS 8 Amendments	Definition of Material	January 1, 2020
IFRS 9, IAS 39 and IFRS 7 Amendments	Interest Rate Benchmark Reform	January 1, 2020
IFRS 17	Insurance Contracts	January 1, 2021
IFRS 10 and IAS 28 Amendments	Sale or Contribution of Assets between an Investor and its Associate or Joint Venture	No mandatory effective<br><br><br>date yet determined but<br> <br>available<br>for adoption

For a detailed discussion of the recently issued accounting standards, see Note 2.1.1, Note 2.1.2 and Note 2.1.3 to our consolidated financial statements included elsewhere in this annual report.

Inflation

According to the National Statistics Bureau of China, China’s overall national inflation rates, as represented by the general consumer price index, were approximately 2.9%, **** 2.1%, 1.6%, 2.0% and 1.4% in 2019, 2018, 2017, 2016 and 2015, respectively. **** Inflation has not had a significant effect on our business during the past three years.

Foreign Currency Fluctuation

See “Item 3. Key Information—Risk Factors—Risks Relating to the People’s Republic of China—Government control of currency conversion and the fluctuation of the Renminbi may materially and adversely affect our operations and financial results” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Exchange Risk”.

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A. OPERATING RESULTS

Year Ended December 31, 2019 Compared with Year Ended December 31, 2018

Total Revenues	For the year ended December 31,
	2018			2019
	RMB			RMB
	(in millions)
Net premiums earned		532,023			560,278
Life insurance business		436,863			445,719
Health insurance business		80,279			99,575
Accident insurance business		14,881			14,984
Investment income		125,167			139,919
Investment income from securities at fair value through profit or loss		5,153			4,527
Investment income from<br>available-for-sale securities		39,483			43,196
Investment income from<br>held-to-maturity securities		34,657			38,229
Investment income from bank deposits		22,699			26,695
Investment income from loans		22,894			27,111
Other investment income		281			161
Net realized gains on financial assets		(19,591	)		1,831
Net fair value gains through profit or loss		(18,278	)		19,251
Other income		8,098			8,195
Total	****	627,419	****	****	729,474

Net Premiums Earned

Net premiums earned increased by RMB 28,255 million, or 5.3%, to RMB 560,278 million in 2019 from RMB 532,023 million in 2018.

Life Insurance Business

Net premiums earned from life insurance business increased by RMB 8,856 million, or 2.0%, to RMB 445,719 million in 2019 from RMB 436,863 million in 2018. This was primarily due to the steady growth of our life insurance business.

Health Insurance Business

Net premiums earned from health insurance business increased by RMB 19,296 million, or 24.0%, to RMB 99,575 million in 2019 from RMB 80,279 million in 2018. This was primarily due to our increased efforts to develop our health insurance business.

Accident Insurance Business

Net premiums earned from accident insurance business increased by RMB 103 million, or 0.7%, to RMB 14,984 million in 2019 from RMB 14,881 million in 2018. This was primarily due to the steady growth of our accident insurance business.

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Investment Income

Investment income increased by RMB 14,752 million, or 11.8%, from RMB 125,167 million in 2018 to RMB 139,919 million in 2019.

Investment Income from Securities at Fair Value through Profit or Loss

Investment income from securities at fair value through profit or loss decreased by RMB 626 million, or 12.1%, to RMB 4,527 million in 2019 from RMB 5,153 million in 2018. This was primarily due to a decrease in interest income resulting from a decrease in investments in commercial paper at fair value through profit or loss.

Investment Income from Available-for-Sale Securities

Investment income from available-for-sale securities increased by RMB 3,713 million, or 9.4%, to RMB 43,196 million in 2019 from RMB 39,483 million in 2018. This was primarily due to an increase in dividends from available-for-sale equity securities investment stocks.

Investment Income from Held-to-Maturity Securities

Investment income from held-to-maturity securities increased by RMB 3,572 million, or 10.3%, to RMB 38,229 million in 2019 from RMB 34,657 million in 2018. This was primarily due to an increase in interest income resulting from the increase in the allocation in government agency bonds.

Investment Income from Bank Deposits

Investment income from bank deposits increased by RMB 3,996 million, or 17.6%, to RMB 26,695 million in 2019 from RMB 22,699 million in 2018. This was primarily due to an increase in interest income resulting from the increase in the allocation in negotiated deposits.

Investment Income from Loans

Investment income from loans increased by RMB 4,217 million, or 18.4%, to RMB 27,111 million in 2019 from RMB 22,894 million in 2018. This was primarily due to an increase in interest income from trust schemes.

Net Realized Gains on Financial Assets

Net realized gains on financial assets increased by RMB 21,422 million to gains of RMB 1,831 million in 2019 from losses of RMB 19,591 million in 2018. This was primarily due to an increase in spread income of stocks and funds in available-for-sale securities.

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Net Fair Value Gains through Profit or Loss

Net fair value gains through profit or loss increased by RMB 37,529 million to gains of RMB 19,251 million in 2019 from losses of RMB 18,278 million in 2018. This was primarily due to an increase in spread income and fair value of stocks in securities at fair value through profit or loss.

Other Income

Other income increased by RMB 97 million, or 1.2%, to RMB 8,195 million in 2019 from RMB 8,098 million in 2018. This was primarily due to the business growth of China Life Pension.

Benefits, Claims and Expenses	For the year ended December 31,
	2018		2019
	RMB		RMB
	(in millions)
Insurance benefits and claims expenses
Life insurance death and other benefits		248,736		127,877
Accident and health claims and claim adjustment expenses		40,552		50,783
Increase in insurance contracts liabilities		189,931		330,807
Investment contracts benefits		9,332		9,157
Policyholder dividends resulting from participation in profits		19,646		22,375
Underwriting and policy acquisition costs		62,705		81,396
Finance costs		4,116		4,255
Administrative expenses		37,486		40,275
Other expenses		7,642		9,602
Statutory insurance fund contribution		1,097		1,163
Total	****	621,243	****	677,690
Segment information of insurance benefits and claims expenses
Life insurance business		412,876		427,673
Health insurance business		59,689		75,471
Accident insurance business		6,654		6,323
Total	****	479,219	****	509,467

Insurance Benefits and Claims Expenses

Insurance benefits and claims, net of amounts ceded through reinsurance, increased by RMB 30,248 million, or 6.3%, to RMB 509,467 million in 2019 from RMB 479,219 million in 2018.

Life insurance death and other benefits payouts decreased by RMB 120,859 million, or 48.6%, to RMB 127,877 million in 2019 from RMB 248,736 million in 2018. This was primarily due to a decrease in maturities payable. Accident and health claims and claim adjustment expenses increased by RMB 10,231 million, or 25.2%, to RMB 50,783 million in 2019 from RMB 40,552 million in 2018. This was primarily due to an increase in the volume of short-term health insurance and accident insurance business. Increase in insurance contracts liabilities increased by RMB 140,876 million, or 74.2%, to RMB 330,807 million in 2019 from RMB 189,931 million in 2018. This was primarily due to an increase in the scale of insurance business.

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Life Insurance Business

Insurance benefits and claims expenses attributable to life insurance business increased by RMB 14,797 million, or 3.6%, to RMB 427,673 million in 2019 from RMB 412,876 million in 2018. This was primarily due to an increase in the scale of life insurance business.

Health Insurance Business

Insurance benefits and claims expenses attributable to health insurance business increased by RMB 15,782 million, or 26.4%, to RMB 75,471 million in 2019 from RMB 59,689 million in 2018. This was primarily due to the growth in our health insurance business.

Accident Insurance Business

Insurance benefits and claims expenses attributable to accident insurance business decreased by RMB 331 million, or 5.0%, to RMB 6,323 million in 2019 from RMB 6,654 million in 2018. This was primarily due to a decrease in claims expenses of certain businesses.

Investment Contract Benefits

Investment contract benefits decreased by RMB 175 million, or 1.9%, to RMB 9,157 million in 2019 from RMB 9,332 million in 2018. This was primarily due to a decrease in the settlement interest rate of universal insurance accounts.

Policyholder Dividends Resulting fromParticipation in Profits

Policyholder dividends resulting from participation in profits increased by RMB 2,729 million, or 13.9%, to RMB 22,375 million in 2019 from RMB 19,646 million in 2018. This was primarily due to an increase in investment yields from participating accounts.

Underwriting and Policy Acquisition Costs

Underwriting and policy acquisition costs increased by RMB 18,691 million, or 29.8%, to RMB 81,396 million in 2019 from RMB 62,705 million in 2018. This was primarily due to an increase in commissions of regular business due to the growth of our business and the optimization of our business structure.

Finance Costs

Finance costs increased by RMB 139 million, or 3.4%, to RMB 4,255 million in 2019 from RMB 4,116 million in 2018. This was primarily due to an increase in interest paid for bonds payable.

Administrative Expenses

Administrative expenses include employees’ remuneration and other administrative expenses. Administrative expenses increased by RMB 2,789 million, or 7.4%, to RMB 40,275 million in 2019 from RMB 37,486 million in 2018. This was primarily due to the growth of our business.

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Other Expenses

Other expenses increased by RMB 1,960 million, or 25.6%, to RMB 9,602 million in 2019 from RMB 7,642 million in 2018. This was primarily due to the increase in interest from dividends.

Profit	For the year ended December 31,
	2018		2019
	RMB		RMB
	(in millions)
Profit before income tax		13,921		59,795
Life insurance business		1,630		42,418
Health insurance business		4,100		5,875
Accident insurance business		495		489
Other businesses		7,696		11,013
Income tax		1,985		781
Net profit attributable to equity holders of the company		11,395		58,287

Profit before Income Tax

Our profit before income tax increased by RMB 45,874 million, or 329.5%, to RMB 59,795 million in 2019 from RMB 13,921 million in 2018.

Life Insurance Business

Profit before income tax in the life insurance business increased by RMB 40,788 million, or 2,502.3%, to RMB 42,418 million in 2019 from RMB 1,630 million in 2018. This was primarily due to an increase in our gross investment income.

Health InsuranceBusiness

Profit before income tax in the health insurance business increased by RMB 1,775 million, or 43.3%, to RMB 5,875 million in 2019 from RMB 4,100 million in 2018. This was primarily due to an increase in our gross investment income.

Accident Insurance Business

Profit before income tax in the accident insurance business decreased by RMB 6 million, or 1.2%, to RMB 489 million in 2019 from RMB 495 million in 2018. This was primarily due to an increase in underwriting and policy acquisition costs resulting from structure adjustment of certain of our businesses.

Other Businesses

Profit before income tax in other businesses increased by RMB 3,317 million, or 43.1%, to RMB 11,013 million in 2019 from RMB 7,696 million in 2018. This was primarily due to an increase in our gross investment income.

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Income Tax

We pay income tax according to applicable Chinese enterprise income tax regulations and rules. Income tax decreased by RMB 1,204 million, or 60.7%, to RMB 781 million in 2019 from RMB 1,985 million in 2018. This was primarily due to the impact of the new policy on pre-tax deduction of underwriting and policy acquisition costs. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Policy on pre-tax deduction of underwriting and policy acquisition costs”.

Net Profit Attributable to Equity Holders of the Company

For the reasons set forth above, net profit attributable to equity holders of the Company increased by RMB 46,892 million, or 411.5%, to RMB 58,287 million in 2019 from RMB 11,395 million in 2018. This was primarily due to an increase in our gross investment income and the impact of the new policy on pre-tax deduction of underwriting and policy acquisition costs.

Major Assets	As of December 31,
	2018		2019
	RMB		RMB
	(in millions)
Investment assets^1^		3,104,014		3,573,154
Term deposits		559,341		535,260
Held-to-maturity<br>securities		806,717		928,751
Available-for-sale<br>securities		870,533		1,058,957
Securities at fair value through profit or loss		138,717		141,608
Derivative financial assets		—		428
Securities purchased under agreements to resell		9,905		4,467
Cash and cash equivalents		50,809		53,306
Loans		450,251		608,920
Statutory deposits—restricted		6,333		6,333
Investment properties		9,747		12,141
Investment in associates and joint ventures		201,661		222,983
Other assets		150,389		153,580
Total	****	3,254,403	****	3,726,734
1.	Beginning in 2018, the scope of investment assets has been revised to include investments in associates and<br>joint ventures.
---	---

Investment Assets

Our total investment assets increased by RMB 469,140 million, or 15.1%, to RMB 3,573,154 million as of December 31, 2019 from RMB 3,104,014 million as of December 31, 2018.

Term Deposits

Term deposits decreased by RMB 24,081 million, or 4.3%, to RMB 535,260 million as of December 31, 2019 from RMB 559,341 million as of December 31, 2018. This was primarily due to the maturity of term deposits.

Held-to-Maturity Securities

Held-to-maturity securities increased by RMB 122,034 million, or 15.1%, to RMB 928,751 million as of December 31, 2019 from RMB 806,717 million as of December 31, 2018. This was primarily due to an increase in the allocation of government agency bonds.

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Available-for-Sale Securities

Available-for-sale securities increased by RMB 188,424 million, or 21.6%, to RMB 1,058,957 million as of December 31, 2019 from RMB 870,533 million as of December 31, 2018. This was primarily due to an increase in the allocation of stocks in available-for-sale securities.

Securities at Fair ValueThrough Profit or Loss

Securities at fair value through profit or loss increased by RMB 2,891 million, or 2.1%, to RMB 141,608 million as of December 31, 2019 from RMB 138,717 million as of December 31, 2018. This was primarily due to an increase in the fair value of stocks in securities at fair value through profit or loss.

Securities Purchased under Agreements to Resell

Securities purchased under agreements to resell decreased by RMB 5,438 million, or 54.9%, to RMB 4,467 million as of December 31, 2019 from RMB 9,905 million as of December 31, 2018. This was primarily due to the needs for liquidity management.

Cash and Cash Equivalents

Cash and cash equivalents increased by RMB 2,497 million, or 4.9%, to RMB 53,306 million as of December 31, 2019 from RMB 50,809 million as of December 31, 2018. This was primarily due to the needs for liquidity management.

Loans

Loans increased by RMB 158,669 million, or 35.2%, to RMB 608,920 million as of December 31, 2019 from RMB 450,251 million as of December 31, 2018. This was primarily due to an increase in policy loans and certificates of deposit.

InvestmentProperties

Investment properties increased by RMB 2,394 million, or 24.6%, to RMB 12,141 million as of December 31, 2019 from RMB 9,747 million as of December 31, 2018. This was primarily due to new investments in investment properties.

Investments in associates and joint ventures

Our investments in associates and joint ventures increased by RMB 21,322 million, or 10.6%, to RMB 222,983 million as of December 31, 2019 from RMB 201,661 million as of December 31, 2018. This was primarily due to new investments in associates and joint ventures.

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Major Liabilities	As of December 31,
	2018		2019
	RMB		RMB
	(in millions)
Liabilities
Insurance contracts		2,216,031		2,552,736
Investment contracts		255,434		267,804
Securities sold under agreements to repurchase		192,141		118,088
Policyholder dividends payable		85,071		112,593
Annuity and other insurance balances payable		49,465		51,019
Interest-bearing loans and borrowings		20,150		20,045
Deferred tax liabilities		–		10,330
Other liabilities		112,821		184,777
Total	****	2,931,113	****	3,317,392

Liabilities

Our total liabilities increased by RMB 386,279 million, or 13.2%, to RMB 3,317,392 million as of December 31, 2019 from RMB 2,931,113 million as of December 31, 2018.

Insurance Contracts

Liabilities of insurance contracts increased by RMB 336,705 million, or 15.2%, to RMB 2,552,736 million as of December 31, 2019 from RMB 2,216,031 million as of December 31, 2018 . This was primarily due to the accumulation of insurance liabilities from new insurance business and renewal business. As at the date of the statement of financial position, our insurance contracts reserves passed liability adequacy testing.

Investment Contracts

The account balance of investment contracts increased by RMB 12,370 million, or 4.8%, to RMB 267,804 million as of December 31, 2019 from RMB 255,434 million as of December 31, 2018. This was primarily due to an increase in the scale of universal insurance accounts.

Securities Sold under Agreements to Repurchase

Securities sold under agreements to repurchase decreased by RMB 74,053 million, or 38.5%, to RMB 118,088 million as of December 31, 2019 from RMB 192,141 million as of December 31, 2018. This was primarily due to the needs for liquidity management.

Policyholder Dividends Payable

Policyholder dividends payable increased by RMB 27,522 million, or 32.4%, to RMB 112,593 million as of December 31, 2019 from RMB 85,071 million as of December 31, 2018. This was primarily due to an increase in investment yields from participating accounts.

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Annuity and Other Insurance Balances Payable

Annuity and other insurance balances payable increased by RMB 1,554 million, or 3.1%, to RMB 51,019 million as of December 31, 2019 from RMB 49,465 million as of December 31, 2018. This was primarily due to an increase in maturities and annuities payable.

Interest-bearing Loans and Borrowings ****

Our borrowings in foreign currency decreased in 2019. Interest-bearing loans and other borrowings include a three-year bank loan of EUR 67 million with a maturity date on January 18, 2021, a five-year bank loan of GBP 275 million with a maturity date on June 25, 2024, a five-year bank loan of US$ 860 million with a maturity date on September 16, 2024, and a six-month bank loan of EUR 127 million with a maturity date on January 11, 2020 which is automatically renewed upon maturity pursuant to the terms of the agreement, all of which are fixed rate loans, and a five-year bank loan of US$ 970 million with a maturity date on September 27, 2024, a three-year loan of EUR 400 million with a maturity date on December 6, 2020, and a one-year bank loan of US$ 18 million with a maturity date on November 6, 2020, all of which are floating rate loans.

Deferred TaxLiabilities

Deferred tax liabilities as of December 31, 2019 were RMB 10,330 million, and there were no deferred tax liabilities as of December 31, 2018. This change was primarily due to the increase in the fair value of available-for-sale securities.

Equity Attributable to Equity Holders of the Company

As of December 31, 2019, equity attributable to our equity holders was RMB 403,764 million, an increase of RMB 85,393 million, or 26.8%, from RMB 318,371 million as of December 31, 2018. This was primarily due to the combined impact of total comprehensive income and profit distributions during 2019.

Year Ended December 31, 2018 Compared with Year Ended December 31, 2017

Total Revenues	For the year ended December 31,
	2017		2018
	RMB		RMB
	(in millions)
Net premiums earned		506,910		532,023
Life insurance business		429,267		436,863
Health insurance business		63,323		80,279
Accident insurance business		14,320		14,881
Investment income		122,727		125,167
Investment income from securities at fair value through profit or loss		4,538		5,153
Investment income from<br>available-for-sale securities		46,627		39,483
Investment income from<br>held-to-maturity securities		30,669		34,657
Investment income from bank deposits		23,827		22,699
Investment income from loans		16,320		22,894
Other investment income		746		281
Net realized gains on financial assets		42		(19,591	)
Net fair value gains through profit or loss		6,183		(18,278	)
Other income		7,493		8,098
Total	****	643,355	****	627,419	****

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Net Premiums Earned

Net premiums earned increased by RMB 25,113 million, or 5.0%, to RMB 532,023 million in 2018 from RMB 506,910 million in 2017.

Life Insurance Business

Net premiums earned from life insurance business increased by RMB 7,596 million, or 1.8%, to RMB 436,863 million in 2018 from RMB 429,267 in 2017. This was primarily due to the steady growth of our life insurance business.

Health Insurance Business

Net premiums earned from health insurance business increased by RMB 16,956 million, or 26.8%, to RMB 80,279 million in 2018 from RMB 63,323 million in 2017. This was primarily due to the expansion of our health insurance business.

Accident Insurance Business

Net premiums earned from accident insurance business increased by RMB 561 million, or 3.9%, to RMB 14,881 million in 2018 from RMB 14,320 million in 2017. This was primarily due to the steady growth of our accident insurance business.

Investment Income

Investment income increased by RMB 2,440 million, or 2.0%, from RMB 122,727 million in 2017 to RMB 125,167 million in 2018.

Investment Income from Securities at Fair Value through Profit or Loss

Investment income from securities at fair value through profit or loss increased by RMB 615 million, or 13.6%, to RMB 5,153 million in 2018 from RMB 4,538 million in 2017. This was primarily due to an increase in interest income resulting from an increase in investments in corporate bonds at fair value through profit or loss.

Investment Income from Available-for-Sale Securities

Investment income from available-for-sale securities decreased by RMB 7,144 million, or 15.3%, to RMB 39,483 million in 2018 from RMB 46,627 million in 2017. This was primarily due to a decrease in dividends from available-for-sale equity securities investment funds.

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Investment Income fromHeld-to-Maturity Securities

Investment income from held-to-maturity securities increased by RMB 3,988 million, or 13.0%, to RMB 34,657 million in 2018 from RMB 30,669 million in 2017. This was primarily due to an increase in interest income resulting from the increase in the allocation in government bonds.

Investment Income fromBank Deposits

Investment income from bank deposits decreased by RMB 1,128 million, or 4.7%, to RMB 22,699 million in 2018 from RMB 23,827 million in 2017. This was primarily due to a decrease in interest income resulting from the fact that new negotiated deposits were mainly made toward the end of 2018 and the decrease in the allocation in deposits other than negotiated deposits.

Investment Income from Loans

Investment income from loans increased by RMB 6,574 million, or 40.3%, to RMB 22,894 million in 2018 from RMB 16,320 million in 2017. This was primarily due to an increase in interest income from trust schemes.

Net Realized Gains on Financial Assets

Net realized gains on financial assets decreased by RMB 19,633 million to losses of RMB 19,591 million in 2018 from gains of RMB 42 million in 2017. This was primarily due to a decrease in spread income of stocks in available-for-sale securities and an increase in equity investment assets qualified for impairment.

Net Fair Value Gains through Profit or Loss

Net fair value gains through profit or loss decreased by RMB 24,461 million to losses of RMB 18,278 million in 2018 from gains of RMB 6,183 million in 2017. This was primarily due to a decrease in spread income and fair value of stocks in securities at fair value through profit or loss.

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Other Income

Other income increased by RMB 605 million, or 8.1%, to RMB 8,098 million in 2018 from RMB 7,493 million in 2017. This was primarily due to the business growth of China Life Pension.

Benefits, Claims and Expenses	For the year ended December 31,
	2017		2018
	RMB		RMB
	(in millions)
Insurance benefits and claims expenses
Life insurance death and other benefits		259,708		248,736
Accident and health claims and claim adjustment expenses		33,818		40,552
Increase in insurance contracts liabilities		172,517		189,931
Investment contracts benefits		8,076		9,332
Policyholder dividends resulting from participation in profits		21,871		19,646
Underwriting and policy acquisition costs		64,789		62,705
Finance costs		4,601		4,116
Administrative expenses		35,953		37,486
Other expenses		6,426		7,642
Statutory insurance fund contribution		1,068		1,097
Total	****	608,827	****	621,243
Segment information of insurance benefits and claims expenses
Life insurance business		409,410		412,876
Health insurance business		50,624		59,689
Accident insurance business		6,009		6,654
Total	****	466,043	****	479,219

Insurance Benefits and Claims Expenses

Insurance benefits and claims, net of amounts ceded through reinsurance, increased by RMB 13,176 million, or 2.8%, to RMB 479,219 million in 2018 from RMB 466,043 million in 2017.

Life insurance death and other benefits payouts decreased by RMB 10,972 million, or 4.2%, to RMB 248,736 million in 2018 from RMB 259,708 million in 2017. This was primarily due to a decrease in maturities payable. Accident and health claims and claim adjustment expenses increased by RMB 6,734 million, or 19.9%, to RMB 40,552 million in 2018 from RMB 33,818 million in 2017. This was primarily due to an increase in the volume of short-term health insurance and accident insurance business. Increase in insurance contracts liabilities increased by RMB 17,414 million, or 10.1%, to RMB 189,931 million in 2018 from RMB 172,517million in 2017. This was primarily due to an increase in the scale of insurance business.

Life Insurance Business

Insurance benefits and claims expenses attributable to life insurance business increased by RMB 3,466 million, or 0.8%, to RMB 412,876 million in 2018 from RMB 409,410 million in 2017. This was primarily due to an increase in the scale of life insurance business.

Health Insurance Business

Insurance benefits and claims expenses attributable to health insurance business increased by RMB 9,065 million, or 17.9%, to RMB 59,689 million in 2018 from RMB 50,624 million in 2017. This was primarily due to the growth in our health insurance business.

Accident Insurance Business

Insurance benefits and claims expenses attributable to accident insurance business increased by RMB 645 million, or 10.7%, to RMB 6,654 million in 2018 from RMB 6,009 million in 2017. This was primarily due to an increase in claims expenses of certain businesses.

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Investment Contract Benefits

Investment contract benefits increased by RMB 1,256 million, or 15.6%, to RMB 9,332 million in 2018 from RMB 8,076 million in 2017. This was primarily due to an increase in the scale of universal insurance accounts.

Policyholder Dividends Resulting from Participation inProfits

Policyholder dividends resulting from participation in profits decreased by RMB 2,225 million, or 10.2%, to RMB 19,646 million in 2018 from RMB 21,871 million in 2017. This was primarily due to a decrease in investment yields from participating accounts.

Underwriting and Policy Acquisition Costs

Underwriting and policy acquisition costs decreased by RMB 2,084 million, or 3.2%, to RMB 62,705 million in 2018 from RMB 64,789 million in 2017. This was primarily due to the increase in the percentage of renewal premiums in gross written premiums as a result of our enhanced efforts in the adjustment of our business structure.

Finance Costs

Finance costs decreased by RMB 485 million, or 10.5%, to RMB 4,116 million in 2018 from RMB 4,601 million in 2017. This was primarily due to a decrease in interest paid due to redemptions of subordinated debts.

Administrative Expenses

Administrative expenses include employees’ remuneration and other administrative expenses. Administrative expenses increased by RMB 1,533 million, or 4.3%, to RMB 37,486 million in 2018 from RMB 35,953 million in 2017. This was primarily due to the growth of our business.

Other Expenses

Other expenses increased by RMB 1,216 million, or 18.9%, to RMB 7,642 million in 2018 from RMB 6,426 million in 2017. This was primarily due to the change in foreign exchange rates applicable to our assets and liabilities held in foreign currencies and interest from dividends.

Profit	For the year ended December 31,
	2017		2018
	RMB		RMB
	(in millions)
Profit before income tax		41,671		13,921
Life insurance business		29,315		1,630
Health insurance business		3,246		4,100
Accident insurance business		528		495
Other businesses		8,582		7,696
Income tax		8,919		1,985
Net profit attributable to equity holders of the company		32,253		11,395

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Profit before Income Tax

Our profit before income tax decreased by RMB 27,750 million, or 66.6%, to RMB 13,921 million in 2018 from RMB 41,671 million in 2017.

Life Insurance Business

Profit before income tax in the life insurance business decreased by RMB 27,685 million, or 94.4%, to RMB 1,630 million in 2018 from RMB 29,315 million in 2017. This was primarily due to a significant decrease in the gross investment income from public market equity investments due to the overall volatility and downward trend in equity markets.

Health Insurance Business

Profit before income tax in the health insurance business increased by RMB 854 million, or 26.3%, to RMB 4,100 million in 2018 from RMB 3,246 million in 2017. This was primarily due to the growth and quality improvement in the short-term health insurance business.

Accident Insurance Business

Profit before income tax in the accident insurance business decreased by RMB 33 million, or 6.3%, to RMB 495 million in 2018 from RMB 528 million in 2017. This was primarily due to fluctuation in claims expenses of certain accident insurance businesses.

OtherBusiness

Profit before income tax in other business decreased by RMB 886 million, or 10.3%, to RMB 7,696 million in 2018 from RMB 8,582 million in 2017. This was primarily due to fluctuation in exchange rates for liabilities of our subsidiaries held in foreign currencies.

Income Tax

We pay income tax according to applicable Chinese enterprise income tax regulations and rules. Income tax decreased by RMB 6,934 million, or 77.7%, to RMB 1,985 million in 2018 from RMB 8,919 million in 2017. This was primarily due to the combined impact of taxable income and deferred income tax.

Net Profit Attributable to Equity Holders of the Company

For the reasons set forth above, net profit attributable to equity holders of the Company decreased by RMB 20,858 million, or 64.7%, to RMB 11,395 million in 2018 from RMB 32,253 million in 2017. This was primarily due to a significant decrease in the gross investment income from public market equity investments due to the overall volatility and downward trend in equity markets.

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Major Assets	As of December 31,
	2017		2018
	RMB		RMB
	(in millions)
Investment assets^1^		2,753,124		3,104,014
Term deposits		449,400		559,341
Held-to-maturity<br>securities		717,037		806,717
Available-for-sale<br>securities		810,734		870,533
Securities at fair value through profit or loss		136,809		138,717
Securities purchased under agreements to resell		36,185		9,905
Cash and cash equivalents		48,586		50,809
Loans		383,504		450,251
Statutory deposits—restricted		6,333		6,333
Investment properties		3,064		9,747
Investment in associates and joint ventures		161,472		201,661
Other assets		144,467		150,389
Total	****	2,897,591	****	3,254,403
1.	Beginning in 2018, the scope of investment assets has been revised to include investments in associates and<br>joint ventures, and the amounts of investment assets for 2017 and 2016 have also been revised to conform to this revised scope.
---	---

Investment Assets

Our total investment assets increased by RMB 350,890 million, or 12.7%, to RMB 3,104,014 million as of December 31, 2018 from RMB 2,753,124 million as of December 31, 2017.

Term Deposits

Term deposits increased by RMB 109,941 million, or 24.5%, to RMB 559,341 million as of December 31, 2018 from RMB 449,400 million as of December 31, 2017. This was primarily due to an increase in the scale of the negotiated deposits.

Held-to-Maturity Securities

Held-to-maturity securities increased by RMB 89,680 million, or 12.5%, to RMB 806,717 million as of December 31, 2018 from RMB 717,037 million as of December 31, 2017. This was primarily due to an increase in the allocation of government bonds.

Available-for-Sale Securities

Available-for-sale securities increased by RMB 59,799 million, or 7.4%, to RMB 870,533 million as of December 31, 2018 from RMB 810,734 million as of December 31, 2017. This was primarily due to an increase in the allocation of financial bonds in available-for-sale securities.

Securities at Fair ValueThrough Profit or Loss

Securities at fair value through profit or loss increased by RMB 1,908 million, or 1.4%, to RMB 138,717 million as of December 31, 2018 from RMB 136,809 million as of December 31, 2017. This was primarily due to an increase in the scale of corporate bonds in securities at fair value through profit or loss.

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Cash and Cash Equivalents

Cash and cash equivalents increased by RMB 2,223 million, or 4.6%, to RMB 50,809 million as of December 31, 2018 from RMB 48,586 million as of December 31, 2017. This was primarily due to the needs for liquidity management.

Loans

Loans increased by RMB 66,747 million, or 17.4%, to RMB 450,251 million as of December 31, 2018 from RMB 383,504 million as of December 31, 2017. This was primarily due to an increase in the scale of policy loans.

Investment Properties

Investment properties increased by RMB 6,683 million, or 218.1%, to RMB 9,747 million as of December 31, 2018 from RMB 3,064 million as of December 31, 2017. This was primarily due to new investments in investment properties.

Investments inassociates and joint ventures

Our investments in associates and joint ventures increased by RMB 40,189 million, or 24.9%, to RMB 201,661 million as of December 31, 2018 from RMB 161,472 million as of December 31, 2017. This was primarily due to the fact that we increased our allocation in investments in associates and joint ventures, and that the equity of investments in associates and joint ventures increased.

Major Liabilities	As of December 31,
	2017		2018
	RMB		RMB
	(in millions)
Liabilities
Insurance contracts		2,025,133		2,216,031
Investment contracts		232,500		255,434
Securities sold under agreements to repurchase		87,309		192,141
Policyholder dividends payable		83,910		85,071
Annuity and other insurance balances payable		44,820		49,465
Interest-bearing loans and borrowings		18,794		20,150
Deferred tax liabilities		4,871		—
Other liabilities		74,944		112,821
Total	****	2,572,281	****	2,931,113

Liabilities

Our total liabilities increased by RMB 358,832 million, or 13.9%, to RMB 2,931,113 million as of December 31, 2018 from RMB 2,572,281 million as of December 31, 2017.

Insurance Contracts

Liabilities of insurance contracts increased by RMB 190,898 million, or 9.4%, to RMB 2,216,031 million as of December 31, 2018 from RMB 2,025,133 million as of December 31, 2017. This was primarily due to the accumulation of insurance liabilities from new policies and renewal business. As at the date of the statement of financial position, our insurance contracts reserves passed liability adequacy testing.

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Investment Contracts

The account balance of investment contracts increased by RMB 22,934 million, or 9.9%, to RMB 255,434 million as of December 31, 2018 from RMB 232,500 million as of December 31, 2017. This was primarily due to an increase in the scale of universal insurance accounts.

Securities Sold under Agreements to Repurchase

Securities sold under agreements to repurchase increased by RMB 104,832 million, or 120.1%, to RMB 192,141 million as of December 31, 2018 from RMB 87,309 million as of December 31, 2017. This was primarily due to the needs for liquidity management.

Policyholder Dividends Payable

Policyholder dividends payable increased by RMB 1,161 million, or 1.4%, to RMB 85,071 million as of December 31, 2018 from RMB 83,910 million as of December 31, 2017. This was primarily due to the increase of dividend on deposit.

Annuity and OtherInsurance Balances Payable

Annuity and other insurance balances payable increased by RMB 4,645 million, or 10.4%, to RMB 49,465 million as of December 31, 2018 from RMB 44,820 million as of December 31, 2017. This was primarily due to an increase in maturities payable.

Interest-bearing Loans and Borrowings

Our borrowings in foreign currency increased in 2018. Interest-bearing loans and other borrowings include a five-year bank loan of GBP 275 million with a maturity date on June 17, 2019, a three-year bank loan of US$ 970 million with a maturity date on September 27, 2019, a three-year bank loan of US$ 940 million with a maturity date on September 30, 2019, a three-year bank loan of EUR 67 million with a maturity date on January 18, 2021, a six-month bank loan of EUR 127 million with a maturity date on January 11, 2019 and to be automatically renewed upon maturity, all of which are fixed rate loans, and a three-year loan of EUR 400 million with a maturity date on December 6, 2020, which is a floating rate loan.

Deferred Tax Liabilities

Deferred tax liabilities as of December 31, 2017 were RMB 4,871 million, and there were no deferred tax liabilities as of December 31, 2018. This change was primarily due to the decrease in the fair value of available-for-sale securities.

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Equity Attributable to Equity Holders of the Company

As of December 31, 2018, equity attributable to our equity holders was RMB 318,371 million, a decrease of RMB 2,562 million, or 0.8%, from RMB 320,933 million as of December 31, 2017. This was primarily due to the combined impact of total comprehensive income and profit distributions during 2018.

B. LIQUIDITY AND CAPITAL RESOURCES

Liquidity Sources

Our principal cash inflows come from insurance premiums, deposits from investment contracts, proceeds from sales and maturity of investment assets and investment income. The primary liquidity risks with respect to these cash inflows are the risk of surrenders by contract holders and policyholders, as well as the risks of default by debtors, interest rate changes and other market volatilities. We closely monitor and manage these risks. See “Item 4. Information on the Company—Business Overview—Investments”.

Our cash and bank deposits provide us with a source of liquidity to meet normal cash outflows. As of December 31, 2019, the amount of cash and cash equivalents was RMB 53,306 million. In addition, substantially all of our term deposits with banks allow us to withdraw funds on deposit, subject to a penalty interest charge. As of December 31, 2019, the amount of term deposits was RMB 535,260 million.

Our investment portfolio also provides us with a source of liquidity to meet unexpected cash outflows. We are also subject to market liquidity risk due to the large size of our investments in some of the markets in which we invest. In some circumstances, some of our holdings of investment securities may be large enough to have an influence on the market value. These factors may adversely affect our ability to sell these investments at an adequate price, or at all.

Liquidity Uses

Our principal cash outflows primarily relate to the payables for the liabilities associated with our various life insurance, annuity, accident insurance and health insurance products, operating expenses, income taxes and dividends that may be declared and paid to our shareholders. Cash outflows arising from our insurance activities primarily relate to benefit payments under these insurance products, as well as payments for policy surrenders, policy withdrawals and policy loans.

We believe that our sources of liquidity are sufficient to meet our current cash requirements.

Consolidated Cash Flows

We have established a cash flow testing system and conduct regular tests to monitor the cash inflows and outflows under various changing circumstances and adjust accordingly the asset portfolio to ensure sufficient sources of liquidity.

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Net cash flow from operating activities amounted to a net inflow of RMB 286,032 million (US$ 41,086 million) in 2019. Net cash flow from operating activities amounted to a net inflow of RMB 147,552 million in 2018. The change was primarily due to a decrease in surrender payments and maturity payments.

Net cash flow from investing activities amounted to a net outflow of RMB 247,515 million (US$ 35,553 million) in 2019. Net cash flow from investing activities amounted to a net outflow of RMB 238,373 million in 2018. This change was primarily due to the needs for investment management.

Net cash flow from financing activities amounted to net outflow of RMB 36,075 million (US$ 5,182 million) in 2019. Net cash flow from financing activities amounted to net inflow of RMB 92,963 million in 2018. This change was primarily due to the needs for liquidity management.

Our global share offering in December 2003 provided cash proceeds of approximately RMB 24,707 million which are held in Hong Kong dollars or U.S dollars. As of the date of this annual report, a part of the cash proceeds from our global offering was held in bank deposit accounts denominated in foreign currencies in China, and part of the cash proceeds was invested in securities listed on overseas stock exchanges, multi-asset portfolios and private equity funds. We invested approximately US$ 433 million, in addition to RMB 2,282 million, in Guangdong Development Bank in December 2006. We used a total of approximately HK$ 12 billion for investments in Sino-Ocean Group Holding Limited in 2009, 2010 and 2013. **** As of December 31, 2019, we had engaged 10 third party overseas investment managers to manage US$ 1,363 million for investment in overseas public markets.

Our A share offering in December 2006 provided cash proceeds of approximately RMB 27,810 million. As at the end of 2019, the cash proceeds from our A share offering were used to increase our share capital.

Our issuance of Core Tier 2 Capital Securities in July 2015 provided cash proceeds of approximately US$ 1,274 million. As at the end of 2019, cash proceeds from the issuance of Core Tier 2 Capital Securities were used to replenish our capital and raise our solvency ratio in accordance with applicable laws and approvals by regulatory authorities.

In March 2019, we issued bonds in the principal amount of RMB 35 billion in the national inter-bank bond market. The bonds have a 10-year maturity and a fixed coupon rate of 4.28% per annum. We have a conditional right to redeem the bonds on the fifth anniversary of issuance. The proceeds from the issuance of the bonds will be used to replenish our capital so as to enhance our solvency according to applicable laws and approvals from regulatory authorities. ****

Ratio of Assetsand Liabilities

Our ratio of assets and liabilities (total liabilities divided by total assets) as at December 31, 2019, 2018 and 2017 are as follows:

	As at December 31, 2017			As at December 31, 2018			As at December 31, 2019
Ratio of assets and liabilities		88.77	%		90.07	%		89.02	%

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Insurance Solvency Requirements

We are required to maintain our solvency at a level in excess of minimum solvency levels under C-ROSS solvency regulations, which have been effective from January 1, 2016. Under C-ROSS, the core solvency adequacy ratio of an insurer is calculated by dividing the core capital of an insurer by the minimum capital it is required to meet, and the comprehensive solvency adequacy ratio of an insurer is calculated by dividing the sum of core capital and supplementary capital of an insurer by the minimum capital it is required to meet. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Solvency requirements”. The following table shows our solvency as of December 31, 2017 2018 and 2019:

	As of December 31, 2019
	(RMB in millions, except percentage data)
Core capital		952,030		761,353		706,516
Actual capital		987,067		761,367		706,623
Minimum capital		356,953		303,872		254,503
Core solvency ratio		266.71	%	250.55	%	277.61	%
Comprehensive solvency ratio		276.53	%	250.56	%	277.65	%

The increase in our solvency ratio in 2019 was primarily due to the increase of our gross investment income, improvement of our business structure and the issuance of the capital replenishment bonds in the principal amount of RMB 35 billion.

In 2018, the CBIRC conducted a review under the Solvency Aligned Risk Management Requirements and Assessment framework, or SARMRA, on the solvency aligned risk management of some insurers, including ourselves, and we received one of the highest scores among life insurers that were reviewed. The SARMRA score links the risk management capacity of insurers with capital requirements. In 2019, the CBIRC did not conduct such a review on us, and pursuant to applicable regulatory requirements, we continued to determine our capital requirements based on the score we received in the 2018 review.

Contractual Obligations and Commitments

The following table sets out our contractual obligations and commitments as of December 31, 2019.

	Notlaterthan1 year			Later than1 year butnot laterthan 3 years			Laterthan 3years butnot laterthan 5years			Laterthan5 years		Total
As of December 31, 2019	(RMB in millions)
Securities sold under agreements to repurchase		118,088			—			—			—		118,088
Bonds payable		332			2,996			37,996			—		41,324
Annuity and other insurance balances payable		51,019			—			—			—		51,019
Insurance contracts		(179,925	)		(209,603	)		35,264			5,015,173		4,660,909
Investment contracts		24,020			29,900			(23,462	)		606,662		637,120
Interest bearing loans and borrowings		4,776			1,572			16,111			—		22,459
Lease liabilities		1,331			1,491			440			74		3,336
Capital commitments		35,635			15,598			6,775			10,799		68,807
Total	****	55,276	****	****	(158,046	)	****	73,124	****	****	5,632,708	****	5,603,062

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Capital commitments mainly represent our commitments with respect to the acquisition of property, plant and equipment, and our investments.

The amounts set forth in the table above for insurance contracts and investment contracts in each column represent expected future cash inflows and outflows on policies in force as at December 31, 2019. The estimate is affected by numerous assumptions, including assumptions related to mortality, morbidity, surrenders and other expense assumptions. Many of these estimates are inherently uncertain and the actual experience may differ from our estimates.

The expected net cash outflows for our insurance contracts are negative in the period not later than 1 year and later than 1 year but not later than 3 years in the above table. This is primarily because we have increased our sales of products with regular premiums, which has resulted in an increase in the proportion of insurance contracts that are in premium payment period. As premiums for products with regular premiums are paid by installments during the premium payment period, insurance future cash inflows occur at an earlier stage of the policy term, while benefits payments and other insurance future cash outflows occur gradually throughout the entire policy period. The expected net cash outflows for our investment contracts are negative in the period later than 3 years but not later than 5 years in the above table. This is primarily because under the terms of some of our insurance contracts, survival benefits payments under these contracts will be transferred to respective investment contracts during the next three to five years, and accordingly, there is expected to be a large amount of cash inflows for some of our investment contracts during the next three to five years. Furthermore, as the expected future cashflows reported in the table above are not discounted from the date of payment back to December 31, 2019, the sum of the expected future cashflows are different from the amount of corresponding liabilities in our consolidated balance sheet as of December 31, 2019. Policyholder dividends will not become a contractual obligation until the applicable policy anniversary is reached and the dividend amount is credited to the policy benefit liability or paid to the policyholder, and hence are not included in the table above. Reinsurance recoveries have not been taken into account.

Other than as set forth under capital commitments, we had no material, individually or in the aggregate, purchase obligations as of December 31, 2019.

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

None.

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D. TREND INFORMATION

Please refer to our discussion in each section under “—Overview of Our Business”, “—Factors Affecting Our Results of Operations”, “—Critical Accounting Policies” and “—Operating Results”.

We review assumptions used in establishing reserves for long term insurance contracts and the impact of changes in these assumptions on our net profit. Changes in these assumptions may have a significant impact on our operating results. Changes in these assumptions resulted in **** a decrease of RMB **** 2,402 million in profit before income tax in 2019, an increase of RMB 3,074 million in profit before income tax in 2018 and a decrease of RMB 9,023 million in profit before income tax in 2017. The sensitivity analysis of these assumptions is as follows:

•	holding all other variables constant, if mortality rates and morbidity rates were to increase or decrease from<br>the current best estimate by 10%, pre-tax profit for the year would have been RMB 28,045 million lower or RMB 29,286 million higher, respectively.
•	holding all other variables constant, if lapse rates were to increase or decrease from the current best estimate<br>by 10%, pre-tax profit for the year would have been RMB 1,336 million lower or RMB 1,253 million higher, respectively.
---	---
•	holding all other variables constant, if the discount rates were 50 basis points higher or lower than the current<br>best estimate, pre-tax profit for the year would have been RMB 96,131 million higher or RMB 108,946 million lower, respectively.
---	---

See also Note 4.1.3 and Note 15 to our consolidated financial statements included elsewhere in this annual report.

E. OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2019, there were no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

See “—Liquidity and Capital Resources—Contractual Obligations and Commitments”.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

The following table sets forth information regarding our current directors and executive officers. Unless otherwise indicated, their business address is c/o China Life Insurance Company Limited, 16 Financial Street, Xicheng District, Beijing 100033, China.

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Name	Date of Birth	Position
Wang Bin	November 1958	Chairman of the board of directors and executive director
Su Hengxuan	February 1963	Executive director and president
Li Mingguang	July 1969	Executive director, vice president, chief actuary and board secretary
Yuan Changqing	September 1961	Non-executive director
Liu Huimin	June 1965	Non-executive director
Yin Zhaojun	July 1965	Non-executive director
Wang Junhui	July 1971	Non-executive director
Chang Tso Tung Stephen	November 1948	Independent director
Robinson Drake Pike	October 1951	Independent director
Tang Xin	September 1971	Independent director
Leung Oi-Sie Elsie	April 1939	Independent director
Ruan Qi	July 1966	Vice president
Zhan Zhong	April 1968	Vice President
Huang Xiumei	June, 1967	Vice president and person in charge of finance (subject to the approval of CBIRC)
Yang Hong	February 1967	Vice President
Zhao Guodong	November 1967	Assistant president
Xu Chongmiao	October 1969	Compliance officer

Directors

Wang Bin has been an executive director and the chairman of the board of directors of our company since December 2018, and the chairman of the board of directors and the secretary to the party committee of CLIC, the chairman of the board of directors of AMC, the chairman of the board of directors of China Life Insurance (Overseas) Company Limited and a director and the chairman of the board of directors of China Guangfa Bank Co., Ltd. Mr. Wang has successively been employed by government authorities and financial institutions with nearly 30 years of experience in financial management. He has worked at the People’s Bank of China, participating in the preparation and establishment of Agricultural Development Bank of China as an important member. Mr. Wang served as the general manager of Jiangxi Branch of Agricultural Development Bank of China, and the president of Tianjin Branch and Beijing Branch of the Bank of Communications Co., Ltd. (the “Bank of Communications”). He also served as the vice president of the Bank of Communications from 2005 to 2012 and concurrently served as an executive director of the Bank of Communications from 2010 to 2012. From March 2012 to August 2018, he served as the chairman of the board of directors and the secretary to the Party Committee of China Taiping Insurance Group Ltd. Mr. Wang holds a doctoral degree in economics. He is a researcher, a delegate to the 19th National Congress of the Communist Party of China and a member of the 12th and 13th National Committee of the Chinese People’s Political Consultative Conferences.

Su Hengxuan has been an executive director of our company since December 2018 and has been our president since April 2019. He has served as the vice president of CLIC since December 2017. He was the president of China Life Pension from March 2015 to February 2018. Mr. Su served various positions in our company from 2000 to 2015, including the deputy general manager of our Henan Branch, the general manager of the individual insurance department of our company, the general manager of the individual insurance sales department of our company and as an assistant to the president and the vice president of our company. Mr. Su graduated from Wuhan University and the University of Science and Technology of China and obtained a doctoral degree in management science and engineering from the University of Science and Technology of China in 2011. Mr. Su, a senior economist, has over 35 years of experience in the operation and management of life insurance businesses.

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Li Mingguang has been an executive director of our company since August 2019. He has been a vice president of our company since November 2014 and our chief actuary since March 2012. He has been the chief actuary of China Life Pension since May 2012. Mr. Li has been our board secretary since June 2017. Mr. Li joined our company in 1996 and subsequently served as deputy division chief, division chief, assistant to the general manager of product development department, responsible actuary of our company and general manager of our actuarial department. Mr. Li graduated from Shanghai Jiao Tong University with a bachelor’s degree in computer science in 1991, Central University of Finance and Economics majoring in monetary banking (actuarial science) with a master’s degree in 1996 and Tsinghua University with an EMBA in 2010, and also studied at the University of Pennsylvania in the United States in 2011. Mr. Li is a fellow of the China Association of Actuaries (FCAA) and a fellow of the Institute and Faculty of Actuaries (FIA). He was the chairman of the first session of the China Actuarial Working Committee and the secretary-general of the first and the second session of the China Association of Actuaries. He is currently an executive director of the China Association of Actuaries, and a member of the China National Master of Insurance Education Supervisory Committee.

Yuan Changqing has been a non-executive director of our company since February 2018. He serves as the vice chairman and president of CLIC and the deputy secretary to the party committee of CLIC. Mr. Yuan served as the chairman of the supervisory committee and the deputy secretary to the party committee of Agricultural Bank of China Limited from April 2015 to May 2017. He served as the deputy general manager and the secretary to the discipline inspection committee of China Everbright Group Corporation Limited from November 2014 to April 2015, the secretary to the discipline inspection committee of China Everbright Group Limited from December 2008 to August 2012, and an executive director, the deputy general manager and the secretary to the discipline inspection committee of China Everbright Group Limited from August 2012 to November 2014, during which he concurrently acted as the chairman of Everbright Securities Company Limited. During the period from 1995 to 2008, he served as the vice president, president and secretary to the party committee of Xinjiang branch, the president and secretary to the party committee of Henan branch, and the director of the organization department of the party committee and the general manager of the human resources department of the head office of Industrial and Commercial Bank of China Limited. During the period from 1981 to 1995, he held various professional and management positions in branch offices of the People’s Bank of China and Industrial and Commercial Bank of China. Mr. Yuan, a senior economist, graduated from the University of Hong Kong, majoring in international business administration with a master’s degree in business administration.

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Liu Huimin has been a non-executive director of our company since July 2017. He has been the vice president of CLIC since September 2013. He served as the vice president of AMC from 2004, and the president and director of the same company from 2006, during which he concurrently served as the chairman of China Life Franklin Asset Management Company Limited and the chairman of China Life AMP Asset Management Co., Ltd., etc. Mr. Liu graduated from Peking University with a doctoral degree in international law. Before that, he graduated from the School of Social Sciences of the University of Sussex in the United Kingdom with a master’s degree in development economics and the Peking University with a bachelor’s degree in national economic management, respectively.

Yin Zhaojun has been a non-executive director of our company since July 2017. He has been the president of CGB since September 2019 and the vice president of CLIC since October 2016. He joined the Bank of Communications in July 1990, and consecutively served as the assistant to the president of Beijing branch and the vice president of Shanxi branch of the Bank of Communications from 2005, and as the president of Shanxi branch, Hebei branch and Beijing branch of the Bank of Communications from 2011. Mr. Yin graduated from China University of Political Science and Law with a master’s degree in public administration. Before that, he graduated from the Faculty of Accounting of Beijing College of Finance and Commerce with a bachelor’s degree in economics.

Wang Junhu i has been a non-executive director of our company since August 2019. He has been the chief investment officer of CLIC and president of China Life Asset Management Company Limited since August 2016, the chairman of China Life Franklin Asset Management Company Limited since September 2016, and the chairman of China Life AMP Asset Management Co., Ltd. since December 2016. From 2004 to 2016, he served as an assistant to the president and the vice president of China Life Asset Management Company Limited, and the president of China Life Investment Holding Company Limited. From 2002 to 2004, he served as the director of the investment department and an assistant to the general manager of Harvest Fund Management Co., Ltd. Mr. Wang graduated from the School of Computer Science of Beijing University of Technology with a bachelor’s degree in software in 1995, and Chinese Academy of Fiscal Sciences of the Ministry of Finance of the PRC with a doctoral degree in finance in 2008. He is a senior economist.

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Chang Tso Tung Stephen has been an independent director of our company since October 2014. He served as the vice chairman of the Greater China Region of Ernst & Young, the managing partner for professional services and the chairman of auditing and consulting service of Ernst & Young until his retirement in 2004. From 2007 to 2013, Mr. Chang was an independent non-executive director of China Pacific Insurance (Group) Co., Ltd. Mr. Chang is currently an independent non-executive director of Kerry Properties Limited and Hua Hong Semiconductor Limited, all of which are listed on the Hong Kong Stock Exchange. Mr. Chang has been practicing as a certified public accountant in Hong Kong for approximately 30 years and has extensive experience in accounting, auditing and financial management. Mr. Chang holds a bachelor’s degree of science from the University of London, and is a fellow member of the Institute of Chartered Accountants in England and Wales.

Robinson Drake Pike has been an independent director of our company since July 2015. Before his retirement from Goldman Sachs in 2014, Mr. Pike served as the managing director of Goldman Sachs and the chief representative of the Beijing Representative Office of Goldman Sachs International Bank UK from August 2011 to May 2014, and the managing director of Goldman Sachs and a senior advisor and project coordinator seconded to the Industrial and Commercial Bank of China by Goldman Sachs from January 2007 to August 2011. From July 2000 to December 2006, he was Lehman Brothers’ senior vice president, deputy head and head of Asia Credit Risk Management. He has over 30 years of experience in Asian financial industry with a focus on risk management and China’s banking industry. He holds a bachelor’s degree of arts in Chinese Language and Literature from Yale University and a master’s degree of public affairs in development economics from Princeton University’s Woodrow Wilson School.

Tang Xin has been an independent director of our company since March 2016. He is a professor of the School of Law of Tsinghua University, the deputy head of the commercial law research center of Tsinghua University, an associate editor of “Tsinghua Law Review”, a member of the listing committee of the Shanghai Stock Exchange, the chairman of the independent director committee of the China Association for Public Companies, and an independent director of each of Harvest Fund Management Co., Ltd., GF Securities Co., Ltd. and Bank of Guizhou Co., Ltd. Mr. Tang was elected as a member of the first and second sessions of the merger, acquisition and reorganization review committee of the China Securities Regulatory Commission from 2008 to 2010. He served as an independent director of China Spacesat Co., Ltd. from 2008 to 2014, an independent director of each of SDIC Power Holdings Co., Ltd. and Changjiang Securities Company Limited from 2009 to 2013, and an independent director of Beijing Rural Commercial Bank Co., Ltd. from 2009 to 2015. Mr. Tang graduated from Renmin University of China with bachelor’s, master’s and doctorate degrees in law.

Leung Oi-SieElsie has been an independent director of our company since July 2016. She was previously the first Secretary for Justice of Hong Kong as well as a member of the Executive Council of Hong Kong, the deputy director of the Hong Kong Basic Law Committee of the Standing Committee of the 2nd, 3rd and 4th National People’s Congress and a consultant of Iu, Lai & Li Solicitors & Notaries. Ms. Leung served as a member of the Social Welfare Advisory Committee and the Equal Opportunities Commission, an executive committee member and a council member of the Hong Kong Federation of Women, the Chairperson and President of the International Federation of Women Lawyers and the Honorary President of the Nanhai Worldwide Friendship Federation. She is a Justice of the Peace, a notary public and a China-appointed attesting officer. She has been awarded the “Grand Bauhinia Medal” and admitted as a solicitor by the Law Societies of Hong Kong and England. Ms. Leung graduated from the University of Hong Kong with a master’s degree in law, and is a fellow of the International Academy of Matrimonial Lawyers. She has been an independent non-executive director of United Company RUSAL Plc since December 2009, an independent non-executive director of China Resources Power Holdings Company Limited since April 2010. She has been an independent non-executive director of PetroChina Company Limited since June 2017.

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Supervisors

The following table sets forth information regarding our current supervisors.

Name	Date of Birth	Position
Jia Yuzeng	June 1962	Chairperson of the board of supervisors
Luo Zhaohui	March 1974	Supervisor
Han Bing	November 1971	Supervisor
Cao Qingyang	May 1963	Employee representative supervisor
Wang Xiaoqing	October 1965	Employee representative supervisor

Jia Yuzeng has been the chairperson of our board of supervisors since July 2018. During the period from 2006 to March 2018, he served as a supervisor, the general manager of the human resources department, an assistant to the president, the vice president, the board secretary, an executive director and the compliance officer of China Life Pension Company Limited. During the period from 2004 to 2006, he served as the general manager of the work department of the Trade Union, the executive deputy director of the Trade Union and a supervisor of the company. During the period from 1988 to 2004, he successively served as the division head of the General Office and a secretary (at the deputy director level) of the PRC Ministry of Supervision, the deputy director (responsible for daily operation) of the minister office of the general supervision office under the supervision department of the Central Commission for Discipline Inspection, and an inspector (at the director level), supervisor, inspector (at the deputy bureau chief level) and special supervisor of the general office of the Central Commission for Discipline Inspection. Mr. Jia graduated from the Open University of Hong Kong in 2003, majoring in business administration with a master’s degree in business administration.

Luo Zhaohui has been a supervisor of our company since February 2018. Mr. Luo worked at the risk management department of China Life Insurance Company and the general office of CLIC from August 2002 to August 2013, and was appointed as the senior manager of the comprehensive information division of the general office of CLIC in May 2009 and an assistant to the general manager of the strategic planning department of CLIC in August 2013. Mr. Luo was seconded to our Shijiazhuang branch in Hebei Province as the deputy general manager during the period from November 2013 to October 2015, and was then appointed as the deputy general manager of the strategic planning department of CLIC in July 2016. He has served as the general manager of the strategic planning department of CLIC since November 2019. Mr. Luo has been long been involved in strategic management related work, with considerable working experience in such aspects as risk management, market analysis and research and life insurance operations, as well as strategic planning and management. Mr. Luo, a senior economist, graduated from Peking University, majoring in finance with a doctoral degree.

Han Bing has been a supervisor of our company since July 2019. He has been the general manager of the human resources department of our company since December 2018. He served as the general manager of the human resources department of China Life Pension Company Limited from March 2016 to December 2018. During the period from 2014 to 2016, he successively served as the deputy general manager and the secretary to the discipline inspection committee of Ningbo branch, and the deputy general manager and the secretary to the discipline inspection committee of Tibet Autonomous Region branch of our company. During the period from 2006 to 2014, he served as the deputy general manager of the human resources department of our company. Mr. Han graduated from Beijing College of Economics in 1994, majoring in labor economy with a bachelor’s degree in economics.

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Cao Qingyang has been a supervisor of our company since July 2019. He has been the general manager of the product development department of our company since February 2011. From 2008 to 2011, he successively served as the deputy general manager of Tianjin branch and the group leader of the statistics working group of our company. From 2004 to 2008, he successively served as the general manager of the investor relations department, the deputy secretary-general of the board secretariat and concurrently the general manager of the investor relations department, and the deputy secretary-general of the board secretariat of our company. Mr. Cao Qingyang graduated from Nankai University in 2004, majoring in finance with a doctoral degree in economics.

Wang Xiaoqing has been a supervisor of our company since December 2019. She has been serving as the deputy general manager of the risk management department of our company since April 2018. From May 2016 to April 2018, she served as the secretary to the discipline inspection committee of our Tibet branch. From 2008 to 2016, she successively served as an assistant to the general manager of the individual insurance sales department, the deputy general manager of No. 5 business management department in the Beijing branch, an assistant to the general manager and the deputy general manager of the county insurance management department, and the deputy general manager of the audit department of our company. From 2001 to 2008, she successively served as the deputy division chief of the agent training division and the deputy division chief of the sales inspection division, the division chief of the agent management division, and the division chief of the comprehensive development division of the individual insurance sales department of our company. Ms. Wang Xiaoqing graduated from Nanjing Communication Engineering College in 1988, majoring in radio communication engineering with a bachelor’s degree in engineering.

Senior Management

Su Hengxuan, **** see “—Directors and Senior Management—Directors” for his profile.

Li Mingguang see “—Directors and Senior Management—Directors” for his profile.

Ruan Qi has been a vice president of our company since April 2018. He has been the chief information technology officer of our company from January 2018 to April 2018. Mr. Ruan served as the chief information technology officer and the general manager (at the general manager level of the provincial branches) of the information technology department of our company from October 2016 to January 2018. He also served as the general manager (at the general manager level of the provincial branches) of the information technology department of our company from March 2016 to October 2016. He served as the general manager of China Life Data Center and the general manager (at the general manager level of the provincial branches) of the information technology department of our company from 2014 to 2016, and the deputy general manager and the general manager of the information technology department of our company from 2004 to 2014. He successively served as the deputy division chief of the computer division of our Fujian branch, and the deputy manager (responsible for daily operations) and the manager of the information technology department of our company from 2000 to 2004. Mr. Ruan is a senior engineer. He graduated from Beijing Institute of Posts and Telecommunications in August 1987, majoring in computer science and communications with a bachelor’s degree in engineering; and from Xiamen University with a master’s degree in business administration for senior management (EMBA) in December 2007.

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Zhan Zhong has been a vice president of our company since July 2019. He has been the marketing director of our company since August 2017. He has been the general manager (at the general manager level of the provincial branches) of the individual insurance division of our company since July 2014 and was an employee representative supervisor of our company from July 2015 to August 2017. Mr. Zhan served as the deputy general manager (responsible for daily operations) and the general manager of our Qinghai branch from 2013 to 2014. From 2009 to 2013, Mr. Zhan successively served as the deputy general manager (responsible for daily operations) and the general manager of the individual insurance division of our company. From 2005 to 2009, he successively served as the general manager of the individual insurance division of our Guangdong branch and an assistant to the general manager of our Guangdong branch. From 1996 to 2005, he successively served as the director of the marketing department of the Chengdu high-tech sub-branch, and an assistant to the manager and the manager of the marketing department of the Chengdu branch of Zhongbao Life Insurance Company, and the deputy general manager of the Chengdu branch of Taikang Life Insurance Company. Mr. Zhan graduated from Kunming Institute of Technology in July 1989, majoring in industrial electric automation with a bachelor’s degree in engineering.

Huang Xiumei has been appointed by our board of directors as our vice president and the person in charge of finance since April 23, 2020 (the qualification of her appointment is still subject to the approval of the CBIRC). **** Ms. Huang is currently the vice president, the board secretary and person in charge of finance of China Life Pension Company Limited. From 2014 to 2016, she served as the financial controller and the general manager of the financial management department of our company. From 2005 to 2014, Ms. Huang Xiumei held various positions at our Fujian branch, including the assistant to the general manager, the deputy general manager, the branch head, the deputy general manager (responsible for daily operations) and the general manager. From 1999 to 2005, she served as the deputy division chief of the planning and finance division, the manager of the planning and finance department and the manager of the finance department of our Fujian branch, and during the period from 2004 to 2005, she also served as the deputy general manager of our Fuzhou branch. Ms. Huang Xiumei graduated from Fuzhou University, majoring in accounting with a bachelor’s degree. She is a senior accountant.

YangHong has been a vice president of our company since July 2019. She has been the operating director of our company since March 2018. She has been the general manager of the operation service center of our company since January 2018. Ms. Yang successively served as the deputy general manager (responsible for daily operations) and general manager of the research and development center, the general manager (at the general manager level of the provincial branches) of the business management department and the general manager (at the general manager level of the provincial branches) of the business process management department of our company from 2011 to 2018. From 2002 to 2011, she successively served as an assistant to the general manager and the deputy general manager of the business management department, and the general manager of the customer service department of our company. Ms. Yang graduated from the Computer Science Department of Jilin University in 1989, majoring in system structure with a bachelor’s degree of science, and from the School of Economics and Management of Tsinghua University in 2013 with a master’s degree in business administration for senior management.

Zhao Guodong has been an assistant to the president of our company since October 2019. He served as the general manager of our Jiangsu branch from July 2018. During the period from 2016 to 2018, he successively served as the deputy general manager (responsible for daily operation) and the general manager of our Chongqing branch, and the general manager of our Hunan branch. From 2007 to 2016, he successively served as the deputy general manager of our Fujian branch and the deputy general manager of our Hunan branch. From 2001 to 2007, he was the deputy general manager of our Changde Branch in Hunan and the general manager of our Yiyang branch. Mr. Zhao graduated from Hunan College of Computer Science majoring in computer software in 1988, and from China Central Radio and TV University majoring in business administration in 2006.

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Xu Chongmiao has been the compliance officer of our company since July 2018. He has been the general manager of the legal and compliance department and the legal officer of our company since September 2014. From 2006 to 2014, he successively served as the deputy general manager of the legal affair department, the deputy general manager of the legal and compliance department and the legal officer at the general manager level of our company. From 2000 to 2006, he successively served as the deputy division chief of the regulations division of the development and research department and a senior regulations researcher of the legal affairs department of our company. Mr. Xu graduated from Fudan University in August 1991, majoring in economic law with a bachelor’s degree in law, and from Renmin University of China in July 1996 and July 2005, respectively, majoring in economic law with master’s and doctorate degrees in law. Mr. Xu is admitted as a lawyer and certified public accountant in the PRC.

B. COMPENSATION

Compensation of Directors, Supervisors and Officers

Our directors, supervisors and executive officers receive compensation in the form of salaries, bonuses and other benefits-in-kind, including our contribution to the pension plan on behalf of our directors, supervisors and executive officers. As required by PRC regulations, we participate in various defined contribution retirement plans organized by provincial and municipal governments for our employees, including employees who are directors, supervisors and executive officers.

The following table sets forth the amounts of compensation paid to each of our directors and supervisors for the fiscal year ended December 31, 2019. **** The total compensation package for our executive directors and chairman of the board of supervisors for the year ended December 31, 2019 has not yet been finalized in accordance with regulations of the relevant PRC authorities. The amount of the compensation not provided for is not expected to have a significant impact on our financial statements for the year ended December 31, 2019. **** We will make further disclosure of the amount of the final compensation when it is determined.

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Name	Salaries/Fees		Inducement<br>Fees		Other ^(1)^Benefits		Compensation forloss of office asdirector		Total
	RMB in ten thousands
Wang Bin		0		—		0		—		0
Su Hengxuan^(2)^		0		—		0		—		0
Li Mingguang^(3)^		143.20		—		23.00		—		166.20
Zhao Peng^(4)^		—		—		—		—		—
Yuan Changqing^^		0		—		0		—		0
Liu Huimin		0		—		0		—		0
Yin Zhaojun		0		—		0		—		0
Wang Junhui^(5)^		0		—		0		—		0
Xu Hengping^(6)^		0.85		—		1.79		—		2.64
Xu Haifeng^(7)^		60.51		—		10.09		—		70.60
Chang Tso Tung Stephen		32		—		0		—		32
Robinson Drake Pike		32		—		0		—		32
Tang Xin		32		—		0		—		32
Leung Oi-Sie Elsie		30		—		0		—		30
Jia Yuzeng		125.30		—		22.95		—		148.25
Shi Xiangming^(8)^		9.53		—		4.67		—		14.20
Luo Zhaohui		0		—		0		—		0
Han Bing^(9)^		25.28		—		16.94		—		42.22
Cao Qingyang^(10)^		28.58		—		15.41		—		43.99
Wang Xiaoqing^(11)^		3.96		—		2.82		—		6.78
Tang Yong^(12)^		4.74		—		2.78		—		7.52
Song Ping^(13)^		48.44		—		30.74		—		79.18
Huang Xin^(14)^		0		—		0		—		0
Total	****	576.39	****	—	****	131.19	****	—	****	707.58
^(1)^	Include benefits-in-kind,<br>social insurance, housing fund and enterprise annuity to be paid by the employer.
---	---
^(2)^	Appointed as executive director on December 20, 2018 and as president on April 2, 2019.<br>
---	---
^(3)^	Appointed as executive director on August 16, 2019.
---	---
^(4)^	Appointed as executive director in February 2020 and resigned as executive director in April 2020. During 2019,<br>Mr. Zhao served as a senior executive officer of our company but did not serve as a director. As a result, for the year of 2019, he did not receive compensation paid to directors. For details of the compensation we paid to him for serving as our<br>senior executive officer, please see the table below on compensation we paid to our senior executive officers.
---	---
^(5)^	Appointed as non-executive director on August 16, 2019.^^
---	---
^(6)^	Resigned as executive director on January 24, 2019.
---	---
^(7)^	Resigned as executive director on June 28, 2019.
---	---
^(8)^	Resigned as supervisor on February 18, 2019.
---	---
^(9)^	Appointed as supervisor on July 12, 2019.
---	---
^(10)^	Appointed as employee representative supervisor on July 12, 2019.
---	---
^(11)^	Appointed as employee representative supervisor on December 27, 2019.
---	---
^(12)^	Resigned as supervisor on July 22, 2019.
---	---
^(13)^	Resigned as employee representative supervisor on January 3, 2020.
---	---
^(14)^	Resigned as employee representative supervisor on July 22, 2019.
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The following table sets forth the amounts of compensation paid to each of our executive officers other than those disclosed in the table above, including vice presidents who are not our directors, our assistant president and our compliance officer, for the year ended December 31, 2019. The total compensation package for our executive officers for the year ended December 31, 2019 has not yet been finalized in accordance with regulations of the relevant PRC authorities. The amount of the compensation not provided for is not expected to have a significant impact on our financial statements for the year ended December 31, 2019. We will make further disclosure of the amount of the final compensation when it is determined.

Name	Salaries/Fees		Inducement<br>Fees		Other ^(1)^Benefits		Compensation forloss of office asdirector		Total
	RMB in ten thousands
Ruan Qi		125.30		—		22.95		—		148.25
Zhan Zhong		119.33		—		26.48		—		145.81
Yang Hong		119.33		—		26.52		—		145.85
Zhao Guodong^(2)^		16.25		—		5.71		—		21.96
Xu Chongmiao		52.80		—		31.89		—		84.69
Zhao Peng^(3)^		93.98		—		17.38		—		111.36
Zhao Lijun^(4)^		95.47		—		15.19		—		110.66
Xiao Jianyou^(5)^		52.21		—		9.84		—		62.05
Total	****	674.67	****	—	****	155.96	****	—	****	830.63
^(1)^	Include benefits-in-kind,<br>social insurance, housing fund and enterprise annuity to be paid by the employer.
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^(2)^	Appointed as assistant president on October 25, 2019.
---	---
^(3)^	Resigned as vice president in April 2020.
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^(4)^	Resigned as vice president in August 2019.
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^(5)^	Resigned as vice president in May 2019.
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The aggregate amount of compensation we paid to our five highest paid individual employees, including one director who is also our executive officer, one supervisor and three members of senior management, during the year ended December 31, 2019, **** was approximately RMB 7.54 million (US$ 1.08 million). The amount of compensation we paid to our highest paid individual employee, during the year ended December 31, 2019, was approximately RMB 1.66 million.

Senior Management Compensation

Our senior management’s compensation consists of four components, including basic salaries, performance-based salaries, fringe benefits and mid to long-term incentive compensation.

We have established a comprehensive performance management system. A performance appraisal method for our officers is used to appraise the performance of the officers annually. Measures for such appraisal include a business performance index based on our budget and targets as approved by our board of directors; a management performance index based on the duties and functions of the office position; and a risk compliance index based on risk management and compliance management of our daily operation, establishing a connection between the achievement of our major business targets and the office performance appraisal.

In accordance with relevant policies of the PRC government, no stock appreciation rights of our company were granted or exercised in 2019. **** For other details of the stock appreciation rights which were previously granted by us, please refer to Note 31 **** to our consolidated financial statements included elsewhere in this annual report.

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C. BOARD PRACTICES

General

Our board of directors consists of eleven members. Our directors are elected to serve a term of three years, which is renewable upon re-election. Our directors are elected at meetings of our shareholders, and, unless they resign at an earlier date, are deceased or removed, will serve three-year terms. The current term for our board of directors began in June 2018. Our directors are not currently entitled to severance benefits other than benefits provided by law upon termination of employment. In the event our Company is acquired, including an acquisition of control by another person, and a director leaves employment or retires following the acquisition, the director may receive severance and other payments upon approval by the shareholders in general meeting.

We have identified various board members as being “independent”, in accordance with Hong Kong laws and regulations. These requirements vary in certain respects from independence requirements under U.S. law. The members of our audit committee are independent as defined by the rules of the Securities and Exchange Act and the New York Stock Exchange which are applicable to us.

The PRC company law requires a joint stock company with limited liability to establish a board of supervisors. Our board of supervisors is responsible for monitoring our financial matters and supervising the actions of our board of directors and our management personnel. Our board of supervisors consists of five members. At least one-third of our board of supervisors must be elected by our employees. The remaining members must be elected by our shareholders in a general meeting. One member of our board of supervisors is designated as the chairman. Members of our board of supervisors may not serve as director or member of senior management. The term of office for our supervisors is three years, which is renewable upon re-election. **** The current term for our board of supervisors began in June 2018.

Board Committees

We have established the following standing committees: an audit committee, a nomination and remuneration committee, a risk management and consumer rights protection committee, a strategy and assets and liabilities management committee, and a connected transactions control committee.

The primary duties of the audit committee are to review and supervise the financial reporting process, to assess the effectiveness of our internal control system, to supervise our internal audit system and its implementation and to implement and recommend the engagement or replacement of external auditors. Our audit committee is also responsible for communications between our internal and external auditors and our internal reporting system. Our audit committee is currently comprised of Robinson Drake Pike, Chang Tso Tung Stephen and Tang Xin. Mr. Robinson Drake Pike serves as the chairman.

The primary duties of the nomination and remuneration committee are to review the structure and components of our board of directors, to formulate the appointment and successors to our board of directors and senior management, to review and recommend the nomination of our directors and senior officers, as well as to propose to our board of directors the remuneration policy for our directors, supervisors and senior management. Our nomination and remuneration committee is currently comprised of Tang Xin, Robinson Drake Pike and Yuan Changqing. Mr. Tang Xin serves as the chairman.

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The primary duties of the risk management and consumer rights protection committee are to formulate our risk control benchmark system, to discuss with and assist the management in establishing and improving our risk management and internal control system, to supervise the management and the department in charge of consumer rights protection, to review our risk preference and tolerance policy, to formulate our risk management policy, to review the assessment reports with respect to our risk management and internal control, to conduct research on important findings from internal investigations with respect to risk management and internal control and management’s responses to such findings and to coordinate and handle disagreements on risk management and sudden and significant risks or crises. Our risk management and consumer rights protection committee is currently comprised of Leung Oi-Sie Elsie, Li Mingguang, Liu Huimin and Yin Zhaojun. Ms. Leung-Oi-Sie Elsie serves as the chairman.

The primary duties of the strategy and assets and liabilities management committee are to formulate our long-term development strategies, and to conduct research and to make recommendations on significant matters and policies and systems in respect of the management of assets and liabilities, the management system for insurance fund usage and significant strategic investments. Our strategy and assets and liabilities management committee is currently comprised of Chang Tso Tung Stephen, Su Hengxuan, Wang Junhui and Leung Oi-Sie Elsie. **** Mr. Chang Tso Tung Stephen serves as the chairman.

The primary duties of the connected transactions control committee are to determine our connected persons, to administer, examine and approve connected transactions, to conduct risk control of connected transactions, with a particular focus on compliance and the fairness and necessity of connected transactions, so as to provide a basis for the decision-making by the board of directors in respect of the management of connected transactions. Our connected transactions control committee is currently comprised of four independent directors including Tang Xin, Robinson Drake Pike, Chang Tso Tung Stephen and Leung Oi-Sie Elsie. **** Mr. Tang Xin serves as the chairman.

D.EMPLOYEES

As of December 31, 2017, 2018 and 2019, we had approximately 102,297, 102,817 and 103,826 **** employees, respectively. The following table sets forth the number of our employees by their functions as of December 31, 2017, 2018 and 2019.

	As of December 31
	2017					2018					2019
	Number<br>ofemployees		%<br>of<br>total			Numberofemployees		%<br>of<br>total			Numberofemployees		%<br>of<br>total
Management and administrative staff		22,307		21.81	%		23,166		22.53	%		18,495		17.81	%
Financial and auditing staff		5,122		5.01	%		5,140		5.00	%		4,911		4.73	%
Sales and sales management staff		38,859		37.99	%		40,194		39.09	%		46,678		44.96	%
Insurance verification, claims processing and customer service staff		27,960		27.33	%		26,695		25.96	%		25,622		24.68	%
Other professional and technical<br>staff^(1)^		4,106		4.01	%		4,274		4.16	%		4,749		4.57	%
Other		3,943		3.85	%		3,348		3.26	%		3,371		3.25	%
Total^(2)^	****	102,297	****	100	%	****	102,817	****	100.00	%	****	103,826	****	100	%
(1)	Includes actuaries, product development personnel, investment management personnel and information technology<br>specialists.
---	---
(2)	Includes employees of our subsidiaries.
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As of December 31, 2017, 2018 and 2019, we had approximately **** 1,578,000****and 1,439,000 and 1,613,000 **** exclusive agents, respectively. During 2019, we continued to improve both the quantity and quality of our agent force by taking advantage of the online recruitment channel. Our agent force has been an important driver of our business growth. **** See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Regulation of Insurance Agencies, Insurance Brokers and Other Intermediaries” and “Item 3. Key Information—Risk Factors—Risks Relating to Our Business—Our growth is dependent on our ability to attract and retain productive agents.”

None of our employees is subject to collective bargaining agreements governing employment with us. We believe that our employee relations are satisfactory.

E. SHARE OWNERSHIP

As of the date of this annual report, none of our directors, supervisors or senior managers is a legal or beneficial owner of any shares of our share capital. ****

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

A. MAJOR SHAREHOLDERS

The table below sets forth information regarding the ownership of our share capital as of April 10, 2020 by all persons who are known to us to be the beneficial owners of 5% or more of each class of our share capital.

Title of Class	Identity of Person or Group	Amount Owned
A Shares	China Life Insurance (Group) Company	19,323,530,000 (Long position)	92.80	%	68.37	%
H Shares	BlackRock, Inc. ^(1)^	659,561,395 (Long position)<br><br><br>644,000 (Short position)	8.86<br> <br>0.01	% <br> <br>%	2.33<br> <br>0.00	% <br> <br>%
Note (1):	BlackRock, Inc. was interested in a total of 659,561,395 H shares in accordance with the provisions of Part XV of the SFO. Of these shares,<br>BlackRock Investment Management, LLC, BlackRock Financial Management, Inc., BlackRock Institutional Trust Company, National Association, BlackRock Fund Advisors, BlackRock Advisors, LLC, BlackRock Japan Co., Ltd., BlackRock Asset Management Canada<br>Limited, BlackRock Investment Management (Australia) Limited, BlackRock Asset Management North Asia Limited, BlackRock (Netherlands) B.V., BlackRock Advisors (UK) Limited, BlackRock International Limited, BlackRock Asset Management Ireland Limited,<br>BLACKROCK (Luxembourg) S.A., BlackRock Investment Management (UK) Limited, BlackRock Asset Management Deutschland AG, BlackRock Fund Managers Limited, BlackRock Life Limited, BlackRock (Singapore) Limited, BlackRock Asset Management (Schweiz) AG and<br>BlackRock Mexico Operadora were interested in 7,076,000 H shares, 12,931,000 H shares, 147,939,588 H shares, 195,346,000 H shares, 11,239,000 H shares, 12,208,241 H shares, 1,038,000 H shares, 7,500,000 H shares, 32,765,508 H shares, 1,086,000 H<br>shares, 2,512,000 H shares, 1,254,000 H shares, 55,831,318 H shares, 90,590,000 H shares, 33,327,060 H shares, 458,000 H shares, 38,189,155 H shares, 5,154,800 H shares, 2,711,000 H shares, 60,000 H shares and 344,725 H shares respectively. All of<br>these entities are either controlled or indirectly controlled subsidiaries of BlackRock, Inc. Of these 659,561,395 H shares, 11,038,000 H shares were cash settled unlisted derivatives.<br><br><br><br> <br>BlackRock, Inc. held by way of attribution a short position as defined under Part XV of<br>the SFO in 644,000 H shares (0.01%). Of these 644,000 H shares, 501,000 H shares were cash settled unlisted derivatives.
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151

Our A shares and H shares generally vote together as a single class, including in the election of directors. Each A share and each H share is entitled to one vote. In addition, in certain matters which affect the rights of the holders of H shares or A shares, the H shares or A shares, as the case may be, are entitled to vote as a separate class.

CLIC converted and sold 676,470,000 domestic shares in the form of H shares or ADSs in connection with our global offering in December 2003.

Based on the information provided by Deutsche Bank Trust Company Americas, our depositary bank, as of December 31, 2019 and April 10, 2020, there were, respectively, 25,347,810 **** ADRs representing 126,739,050 H shares, with **** 53 registered holders, and 24,529,235 ADRs representing 122,646,175 H shares, with 52 registered holders. Since certain of the ADSs are held by nominees, the above number may not be representative of the actual number of U.S. beneficial holders of ADSs or number of ADSs beneficially held by U.S. persons.

CLIC, our controlling shareholder, is a wholly state-owned enterprise controlled by the PRC government. See “Item 4. Information on the Company—History and Development of the Company”. None of our major shareholders has voting rights that differ from the voting rights of other shareholders, except that in certain matters which affect the rights of the holders of H shares or A shares, holders of H shares or A shares, as the case may be, are entitled to vote as a separate class. We are not aware of any arrangement which may at a subsequent date result in a change of control of our company.

B. RELATED PARTY TRANSACTIONS

As at the date of this annual report, CLIC owns approximately 68.37% of our issued share capital, a 40% equity interest in AMC, a 60% equity interest in CLPCIC, a 100% equity interest in China Life Overseas, a 100% equity interest in China Life Investment Holding Company Limited, or IHC, and a 100% equity interest in China Life E-commerce Company Limited, or China Life E-commerce. CLIC, AMC, CLPCIC, China Life Overseas, IHC and China Life E-commerce are therefore considered as our connected persons under the HKSE Listing Rules. AMC owns a direct 48% equity interest and an indirect 52% equity interest in China Life Wealth Management Company Limited, or China Life Wealth, and approximately 85.03% equity interest in China Life AMP Asset Management Co., Ltd., or AMP. China Life Wealth and AMP are therefore also considered as our connected persons under the HKSE Listing Rules. Each of AMC, China Life Wealth and AMP is also a subsidiary of the Company. Chongqing International Trust Inc., or Chongqing Trust, is an associate of CLIC and CLPCIC by virtue of its acting as the trustee of a trust scheme of which CLPCIC is a beneficiary, and is therefore also a connected person of the Company under the HKSE Listing Rules. China Life Capital Investment Company Limited, or China Life Capital, an indirect wholly owned subsidiary of CLIC, is an associate of CLIC and also a connected person of the Company under the HKSE Listing Rules.

152

During the reporting period, we entered into the following new related party transactions with these companies:

•	On May 29, 2019, we entered into a supplemental agreement to the insurance sales framework agreement with<br>CLPCIC;
•	On December 31, 2019, we and China Life Capital entered into a new cooperation framework agreement for<br>investment management with insurance funds;
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•	On December 26, 2019, we entered into a new framework agreement for daily connected transaction with CGB;<br>
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•	On December 27, 2019, we entered into a new framework agreement with Chongqing Trust in relation to daily<br>connected transactions; and
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•	On December 31, 2019, September 6, 2019, December 3, 2019 and February 17, 2020, we, CLIC,<br>CLPCIC and IHC each entered into a new framework agreement in relation to certain daily connected transactions with AMP.
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We also continued to carry out certain other continuing related party transactions with CLIC, AMC, IHC, China Life Pension, CLPCIC, China Life Capital, China Life Wealth, AMP and Chongqing Trust in the reporting period. These transactions constitute connected transactions for us under the HKSE Listing Rules. Details of these transactions are set forth below.

As at the date of this annual report, we own a 43.686% equity interest in CGB and are the largest shareholder of CGB. Our chairman and executive director, Wang Bin, serves as the chairman of CGB. CGB is therefore considered as our related party under applicable PRC laws and regulations. On December 26, 2019, we entered into a new framework agreement with CGB for daily related party transactions. We also continued to carry out continuing related party transactions with CGB in the reporting period. These transactions are not regarded as connected transactions for us under the HKSE Listing Rules. Details of these transactions are set forth below.

As at the date of this annual report, we directly own a 70.74% equity interest in China Life Pension. China Life Pension is not considered as our related party under the HKSE Listing Rules or applicable PRC laws and regulations. As our subsidiary, China Life Pension also continued to carry out continuing related party transactions with CLIC, AMC, AMP and China Life Wealth in the reporting period. These transactions are regarded as connected transactions for us under the HKSE Listing Rules. Details of these transactions are set forth below.

Continuing Related Party Transactions with CLIC

During the reporting period, we engaged in continuing related party transactions with CLIC. These transactions are governed by several agreements between CLIC and us, including a restructuring agreement, a policy management agreement, a trademark license agreement and a non-competition agreement. A detailed discussion of these agreements is set forth in Note 34 to our consolidated financial statements included elsewhere in this annual report and under the heading “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions” in our annual report on Form 20-F filed with the Securities and Exchange Commission on April 28, 2009.

153

Our policy management agreement with CLIC expired on December 31, 2017. On December 26, 2017, we and CLIC entered into a new policy management agreement for a term of three years ending on December 31, 2020. During its term, this new agreement may be terminated by either party giving to the other party not less than 90 days’ prior written notice. Pursuant to this new policy management agreement, we continued to accept CLIC’s entrustment to provide policy administration services relating to non-transferred policies, and CLIC will pay a service fee to us in cash on a semi-annual basis. The annual cap in respect of the service fees to be paid by CLIC to us under the new policy management agreement for each of the three years ending on December 31, 2020 is RMB 708 million. The service fees paid by CLIC to us under the new policy management agreement for the year ended on December 31, 2019 were RMB 574.58 million (US$ 82.5 million).

Continuing Related Party Transactions with AMC

Asset Management Agreement between AMC and Us

On December 28, 2018, we entered into an asset management agreement with AMC for a term of three years effective from January 1, 2019 and expiring on December 31, 2021. Under the asset management agreement, AMC agreed to invest and manage assets entrusted to it by us, on a discretionary basis, within the scope granted by us and in accordance with our investment guidelines. We retain the title of the entrusted assets and AMC is authorized to operate the accounts associated with the entrusted assets for and on behalf of us. We may add to or withdraw from the assets managed by AMC pursuant to the agreement. We have the right to establish, amend and change the investment guidelines and also have the right to monitor the investment management activities of AMC.

In consideration of AMC’s service in respect of investing and managing assets entrusted to it by us under the agreement, we agreed to pay service fees to AMC, which consist of a fixed service fee and a variable service fee. The fixed service fee is payable on a quarterly basis and is calculated according to the net asset value of the assets under management and a fixed management fee rate of 0.05% per annum. The variable service fee is payable on an annual basis and is determined after an appraisal has been conducted by us with respect to the assets under management and the relevant services provided by AMC each year. The variable service fee is calculated on the basis of 20% of the fixed service fee per annum, by multiplying a payment ratio determined by us based on the results of its annual appraisal of AMC. The management fee rate for directive operation investments or special projects will be separately negotiated by the parties and specified in the investment guidelines. The service fees under the agreement were determined by us and AMC based on an analysis of the cost of service, market practice, the rate charged by AMC to us in previous years, the rates charged by independent third parties for the provision of similar services, and the size and composition of the assets managed by AMC. The annual cap in respect of the service fees to be paid by us to AMC under the asset management agreement for each of the three years ending on December 31, 2021 is RMB 2,000 million. The service fees paid by us to AMC under the asset management agreement for the year ended December 31, 2019 were RMB 1,352.57 million (US$ 194.3 **** million).

154

Asset Management Agreement between AMC and CLIC

On December 29, 2018, AMC and CLIC entered into an asset management agreement for a term expiring on December 31, 2021. Under the asset management agreement, AMC agreed to invest and manage assets entrusted to it by CLIC, on a discretionary basis, subject to the investment guidelines and instructions given by CLIC. CLIC retains the title of the entrusted assets and AMC is authorized to operate the accounts associated with the entrusted assets for and on behalf of CLIC. CLIC may add to or withdraw from the assets managed by AMC pursuant to the agreement. CLIC has the right to establish, amend and change the investment guidelines and also has the right to monitor the investment management activities of AMC.

In consideration of AMC’s service in respect of investing and managing assets entrusted to it by CLIC under the agreement, CLIC agreed to pay AMC a base service fee for asset management at the rate of 0.05% per annum. Such service fee is calculated and payable on a monthly basis, by multiplying the average of book balance of the assets under management (after deducting the funds obtained and interests accrued from repurchase transactions, the principals and interest of debt investment plans, equity investment plans, project asset-backed plans and customized non-standard products) at the beginning and at the end of any given month by the rate of 0.05%, divided by 12. After the end of each fiscal year, CLIC will evaluate the investment performance with respect to the assets entrusted to AMC in the previous year, and adjust the base service fee for asset management by reference to the actual and targeted investment returns. The service fees under the agreement will be determined by CLIC and AMC based on an analysis of the cost of service, market practice, the rate charged by AMC to CLIC in previous years, the rates charged by independent third parties for the provision of similar services, and the size and composition of the assets managed by AMC. The annual cap in respect of the service fees to be paid by CLIC to AMC under the asset management agreement for the three years ending on December 31, 2021 is RMB 320 million, RMB 310 million and RMB 300 million, respectively. The service fees paid by CLIC to AMC under the asset management agreement for the year ended on December 31, 2019 were RMB 89.27 million (US$ 12.8 million).

Continuing Related Party Transactions with IHC

Property Leasing Agreement with IHC

On December 29, 2017, we entered into a property leasing agreement with IHC for a term from January 1, 2018 to December 31, 2020. Under the property leasing agreement, IHC agreed to lease to us 1,893 **** properties owned by it. The annual rent is determined by reference to market rent or, where there is no available comparison, by reference to the costs incurred by IHC in holding and maintaining the properties, plus a margin of approximately 5%.

The rent paid by us to IHC under the property leasing agreement for the year ended December 31, 2019 was approximately RMB 82.12 million (US$ 11.8 million).

155

Asset Management Agreement with IHC

On December 31, 2018, we entered into an asset management agreement with IHC, which took effect from January 1, 2019 with a term of two years. Unless a party serves the other party a written notice for non-renewal prior to 90 working days before the expiry date of the agreement, the agreement will be automatically renewed for one year from the expiry date thereof. Pursuant to the asset management agreement, IHC will invest, operate and manage the assets entrusted to it by us for investment in real property, equity interests of companies, related financial products and quasi-securitization financial products on a discretionary basis, subject to the investment guidelines and instructions given by us.

In consideration of the services provided by IHC under the asset management agreement, we agreed to pay IHC fees based on fixed return projects and non-fixed return projects, respectively. With respect to the fixed return projects, we agreed to pay IHC a basic service fee which is determined based on the investment rate of return of the projects. With respect to the non-fixed return projects, we agreed to pay IHC a basic service fee and also pay a performance-based fee at the time of exit from the projects with reference to the internal rate of return of the projects. In addition, we will make adjustments to the basic service fee for fixed return projects and non-fixed return projects based on the result of our annual business evaluation on IHC (such adjusted amount is referred to as floating management fee). In consideration of the management services for real estate operation provided by IHC or its subsidiaries, we agreed to pay IHC a real estate operation management service fee.

The basic service fee is paid on a quarterly basis, calculated separately for the projects invested prior to the execution of the agreement and those newly invested during the term of the agreement. With respect to the projects invested prior to the execution of the agreement, the basic service fee is calculated by multiplying the total amount of assets invested by the applicable management fee rate (which is set forth in the relevant entrusted investment and management agreements for alternative investments with insurance funds then in force when such projects were entrusted). With respect to the projects newly invested during the term of the agreement, the basic service fee is calculated by multiplying the total annual amount of assets newly invested by the applicable management fee rate stipulated in the agreement and our investment guidelines. The floating management fee and the performance-based fee are calculated and confirmed by both parties annually, and then paid by us to IHC upon confirmation. The real estate operation management service fee is paid on a quarterly basis, calculated separately for the well-developed real estate projects and the new real estate projects. With respect to the well-developed real estate projects, the real estate operation management service fee is calculated by multiplying the earnings before interest, taxes, depreciation of fixed assets and amortization of intangible assets, long-term deferred assets and prepaid interest (“EBITDA”) derived from the relevant real estate project in a given year, by the fee rate of 3%. With respect to the new real estate projects, the real estate operation management service fee is calculated as follows: (i) the real estate operation management service fee for the first three years will be calculated by multiplying the estimated EBITDA derived from the relevant real estate project in the fourth year by the fee rate of 3%; and (ii) commencing from the fourth year, the real estate operation management service fee will be calculated in the same manner as the well-developed real estate projects as mentioned above. In addition, the assets entrusted by us to IHC will also be partially used for the subscription of the related financial products established and issued by IHC or of which IHC has participated in the establishment and issuance, and such related financial products will be limited to infrastructure investment plans and asset-backed plans. For each of the three years ending December 31, 2021, the annual cap on the amount of the basic service fee, floating management fee, performance-based fee and the real estate operation management service fee payable by us to IHC is RMB 1,391 million, RMB 1,982 million and RMB 2,266 million, respectively. For each of the three years ending December 31, 2021, the annual cap on the contractual amount of assets newly entrusted by us to IHC for investment and management is RMB 200,000 million, RMB 200,000 million and RMB 200,000 million, respectively. For the year ending December 31, 2019, the contractual amount of assets newly entrusted by us to IHC for investment and management was RMB 13,110.00 million (US$ 1,883.1 million) and the fees paid by us to IHC were RMB 652.75 million (US$ 93.8 million).

156

Continuing Related Party Transaction with China Life Pension

On March 22, 2014, we, CLIC and AMC entered into an agreement for the entrustment and management of enterprise annuity funds with China Life Pension. This agreement will be automatically renewed for a successive three-year term, provided that no objection has been raised by any party within one month prior to the expiration of the agreement. The agreement became effective retroactively to December 2, 2013 and expired on December 31, 2016. After that, the agreement has been renewed for two successive three-year terms in 2016 and 2019, respectively. Under the agreement, China Life Pension was entrusted to serve as the trustee and account manager and to provide entrusted management services and account management services for the enterprise annuity funds of the Company, CLIC and AMC. China Life Pension was further entrusted to serve as the investment manager and to provide investment management service for the enterprise annuity funds of the Company, CLIC and AMC. In consideration of the services provided by China Life Pension, we, CLIC and AMC agreed to pay China Life Pension entrusted management fee, account management fees and investment management fee.

Continuing Related Party Transactions with CLPCIC

On January 31, 2018, we entered into an insurance sales framework agreement with CLPCIC for a term of three years from March 8, 2018 to March 7, 2021. Under the insurance sales framework agreement, CLPCIC entrusted us to act as its agent to sell selected insurance products within authorized regions, and agreed to pay us an agency service fee in cash on a monthly basis, which includes sales management fee and sales service fee. The sales management fee will be calculated by the parties on the basis of the principles of equality and fairness. The sales service fee will be determined according to the standard of service fees for specific insurance products as agreed by the branches of the parties based on market principles. The annual caps in respect of the agency service fees to be paid by CLPCIC to us under the insurance sales framework agreement for the three years ending December 31, 2020 are RMB 4,260 million, RMB 5,540 million and RMB 7,050 million, respectively. On May 29, 2019, we and CLPCIC entered into a supplemental agreement to the insurance sales framework agreement to make certain changes to the definition of management fees paid by CLPCIC to us.

The service fees paid to us for the year ended December 31, 2019 were RMB 2,297.42 million (US$ 330.0 million).

157

Continuing Related Party Transactions with China Life Capital

On June 7, 2018, we and China Life Capital entered into a cooperation framework agreement which expired on December 31, 2019. On December 31, 2019, we and China Life Capital entered into a new cooperation framework agreement with a term ending on December 31, 2022. Under this new agreement, we continued to subscribe as limited partner for the fund products in which insurance funds are permitted for investment (“Fund Products”) and of which China Life Capital or any of its subsidiaries serves as the general partner, and/or Fund Products of which China Life Capital serves as the manager. We will enter into specific agreements with the counterparties including China Life Capital (or its subsidiaries) in respect of the subscription of specific Fund Products, and such specific agreements shall be subject to the principles set out in the new framework agreement. Upon execution of the specific agreements, we will make our capital contribution as required by the payment notice of the general partner. The capital contribution to be made by us will be funded by our internal resources. As the general partner or the manager of the Fund Products, China Life Capital (or its subsidiaries) will provide daily operation, investment management and consulting services to the Fund Products. The investment scope of the Fund Products includes real estate, warehousing logistics, apartments for long-term lease, urban renewal, infrastructure assets, corporate shareholdings in relation to the operation of such underlying assets and asset securitization products in relation to such assets (including, but not limited to, asset-backed securities, real estate investment trusts and quasi-real estate investment trusts). For the three years ending December 31, 2022, the annual caps for the subscription by us as limited partner of the Fund Products of which China Life Capital or any of its subsidiaries serves as the general partner are RMB 5,000 million, RMB 5,000 million and RMB 5,000 million, respectively, and the annual caps for the management fee charged by China Life Capital as the general partner or the manager of the Fund Products are RMB 200 million, RMB 200 million and RMB 200 million respectively.

For the year ended December 31, 2019, the subscription by us as limited partner of the Fund Products of which China Life Capital or any of its subsidiaries serves as the general partner were RMB 3,010.00 million (US$ 432.4 million) and the management fee charged by China Life Capital as the general partner or the manager of the Fund Products were RMB 38.51 million (US$ 5.5 million).

Framework Agreements with China Life Wealth

Framework Agreement between China Life Wealth and Us

On December 28, 2017, we and China Life Wealth entered into a framework agreement in relation to daily connected transactions, which has a term of three years ending on December 31, 2020. Under the agreement, we will enter into certain daily transactions with China Life Wealth, including asset management services and sales agency services for asset management products. Pricing of the transactions under the agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending December 31, 2020, the annual caps on the management fee payable by us for asset management services are RMB 240 million, RMB 240 million and RMB 240 million, respectively; the annual caps on the fees payable by China Life Wealth in connection with sales agency services (including the sales commission fee, client maintenance fee, handling fee and intermediary fee) are RMB 100 million, RMB 100 million and RMB 100 million, respectively, and the annual caps on the fees for other daily transactions are RMB 100 million, RMB 100 million and RMB 100 million, respectively.

158

For the year ended December 31, 2019, the fee payable by us for asset management services was RMB 3.60 million (US$ 0.5 million), the fees in connection with the sales agency services payable by China Life Wealth (including the sales commission fee, client maintenance fee, handling fee and intermediary fee) were RMB 0 million, and the fees for other daily transactions were RMB 12.28 million (US$ 1.8 million).

Framework Agreement betweenChina Life Wealth and CLIC

On December 27, 2017, CLIC and China Life Wealth entered into a framework agreement in relation to daily connected transactions, which has a term of three years ending on December 31, 2020. Under the agreement, CLIC and China Life Wealth will conduct certain daily transactions, including asset management services and advisory services. Pricing of the transactions under the agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending on December 31, 2020, the annual caps on the management fee payable by CLIC for asset management services are RMB 50 million, RMB 120 million and RMB 180 million, respectively, and the annual caps on the advisory fee payable by CLIC for the advisory services are RMB 50 million, RMB 80 million and RMB 120 million, respectively.

For the year ended December 31, 2019, the management fee payable by CLIC for asset management services was RMB 1.35 million (US$ 0.2 million) and the advisory fee payable by CLIC was RMB 3.04 million (US$ 0.4 **** million).

Framework Agreement between China Life Wealth and CLPCIC

On December 29, 2017, CLPCIC and China Life Wealth entered into a framework agreement in relation to daily connected transactions, which has a term of three years ending on December 31, 2020. Under the agreement, CLPCIC and China Life Wealth will conduct certain daily transactions, including asset management services, advisory services and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending December 31, 2020, the annual caps on the management fee payable by CLPCIC for asset management services are RMB 50 million, RMB 150 million and RMB 240 million, respectively; the annual caps on the advisory fee payable by CLPCIC for the advisory services are RMB 40 million, RMB 80 million and RMB 120 million, respectively; and the annual caps on the fees for other daily transactions are RMB 150 million, RMB 400 million and RMB 700 million, respectively.

For the year ended December 31, 2019, the management fee payable by CLPCIC for asset management services was RMB 0.56 million (US$ 0.1 million), the advisory fee payable by CLPCIC for advisory services was RMB 5.88 million (US$ 0.8 million), and the fees for other daily transactions were RMB 0.01 million (US$ 1,436).

159

Framework Agreement between China Life Wealth and IHC

On December 20, 2017, IHC and China Life Wealth entered into a framework agreement in relation to daily connected transactions, which has a term of three years ending on December 31, 2020. Under the agreement, IHC and China Life Wealth will conduct certain daily transactions, including asset management services, advisory services and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending December 31, 2020, the annual caps on the management fee for asset management services are RMB 40 million, RMB 80 million and RMB 120 million, respectively; the annual caps on the advisory fee for the advisory services are RMB 40 million, RMB 80 million and RMB 120 million, respectively; and the annual caps on the fees for other daily transactions are RMB 20 million, RMB 80 million and RMB 160 million, respectively.

For the year ended December 31, 2019, the management fee for asset management services was RMB 0.54 million (US$ 77,566), the advisory fee for the advisory services was RMB 0 million, and the fees for other daily transactions were RMB 0 million.

FrameworkAgreement between China Life Wealth and China Life E-commerce

On December 29, 2017, China Life E-commerce and China Life Wealth entered into a framework agreement in relation to asset management services, advisory services and other daily transactions permitted by laws and regulations. The agreement has a term from January 1, 2018 to December 31, 2020. Pricing of the transactions under the agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending December 31, 2020, the annual caps on the management fee for asset management services are RMB 5 million, RMB 10 million and RMB 15 million, respectively; the annual caps on the advisory fee for the advisory services payable by China Life E-commerce for the advisory services are RMB 5 million, RMB 10 million and RMB 15 million, respectively; and the annual caps on the fees for other daily transactions are RMB 200 million, RMB 300 million and RMB 400 million, respectively.

For the year ended December 31, 2019, there was no payment made under the agreement.

Framework Agreement between China Life Wealth and China Life Pension

On March 26, 2018, China Life Pension and China Life Wealth entered into a framework agreement in relation to asset management services, advisory services and other daily transactions permitted by laws and regulations. The agreement has a term from January 1, 2018 to December 31, 2020. Pricing of the transactions under the agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending December 31, 2020, the annual caps on the management fee payable by China Life Pension for asset management services are RMB 100 million, RMB 150 million and RMB 200 million, respectively; the annual caps on the advisory fee payable by China Life Pension for the advisory services are RMB 40 million, RMB 80 million and RMB 90 million, respectively; and the annual caps on the fees for other daily transactions are RMB 90 million, RMB 180 million and RMB 270 million, respectively.

160

For the year ended December 31, 2019, the fee payable by China Life Pension for asset management services was RMB 0 million, the advisory fee for the advisory services payable by China Life Pension was RMB 0.24 million (US$ 33,474), and the fees for other daily transactions payable by China Life Pension were RMB 0 million.

Framework Agreements with AMP

Framework Agreement between AMP and Us

On December 30, 2016, we and AMP entered into a framework agreement which expired on December 31, 2019. On December 31, 2019, we and AMP entered into a new framework agreement for a term commencing on January 1, 2020 and ending on December 31, 2022 . Under the new agreement, we will continue to enter into certain daily transactions with AMP, including subscription and redemption of fund products, sales agency services, asset management for specific clients and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending December 31, 2022, the annual caps on the subscription price and corresponding subscription fee for the subscription of fund products are RMB 72,600 million, RMB 72,600 million and RMB 72,600 million, respectively; the annual caps on the redemption price and corresponding redemption fee for the redemption of fund products are RMB 72,600 million, RMB 72,600 million and RMB 72,600 million, respectively; the annual caps on the sales commission fee and client maintenance fee payable by AMP are RMB 700 million, RMB 800 million and RMB 900 million, respectively; the annual caps on the management fee (including performance-based fee) payable by us for the asset management for specific clients are RMB 300 million, RMB 400 million and RMB 500 million, respectively; and the annual caps on the fees for other daily transactions are RMB 100 million, RMB 100 million and RMB 100 million, respectively.

For the year ended December 31, 2019, the subscription price and corresponding subscription fee for the subscription of fund products was RMB 20,475.00 million (US$ 2,941.0 million), the redemption price and corresponding redemption fee for the redemption of fund products was RMB 7,951.54 million (US$ 1,142.2 million), the sales commission fee and client maintenance fee paid by AMP was RMB 0.87 million (US$ 0.1 million), the management fee (including performance-based fee) paid by us for the asset management for specific clients was RMB 31.20 million (US$ 4.5 million) and the fees for other daily transactions were RMB 6.68 million (US$ 1.0 million).

Framework Agreement between AMP and China Life Pension

On December 23, 2016, China Life Pension and AMP entered into a framework agreement which expired on December 31, 2019. Under the agreement, China Life Pension will enter into certain daily transactions with AMP, including subscription and redemption of fund products, sales agency services, asset management for specific clients and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ended December 31, 2019, the annual caps on the subscription price and corresponding subscription fee for the subscription of fund products were RMB 10,000 million, RMB 10,000 million and RMB 10,000 million, respectively; the annual caps on the redemption price and corresponding redemption fee for the redemption of fund products were RMB 10,000 million, RMB 10,000 million and RMB 10,000 million, respectively; the annual caps on the sales commission fee and client maintenance fee payable by AMP were RMB 100 million, RMB100 million and RMB 100 million, respectively; the annual caps on the management fee and performance-based fee payable by China Life Pension for the asset management for specific clients were RMB 100 million, RMB 100 million and RMB 100 million, respectively; and the annual caps on the fees for other daily transactions were RMB 100 million, RMB 100 million and RMB 100 million, respectively.

161

For the year ended December 31, 2019, the subscription price and corresponding subscription fee for the subscription of fund products was RMB 1,426.49 million (US$ 204.9 million), the redemption price and corresponding redemption fee for the redemption of fund products was RMB 1,403.22 million (US$ 201.6 million), the sales commission fee and client maintenance fee paid by AMP was RMB 0 million, the management fee (including a performance-based fee) paid by China Life Pension for asset management for specific clients was RMB 0 million, and the fees for other daily transactions were RMB 0 million.

Framework Agreement between AMP and CLIC

On December 16, 2016, **** CLIC and AMP entered into a framework agreement which expired on December 31, 2019. On September 6, 2019, CLIC and AMP entered into a new framework agreement for a term commencing on January 1, 2020 and ending on December 31, 2022. Under the new agreement, CLIC will continue to enter into certain daily transactions with AMP, including subscription and redemption of fund products and private asset management. Pricing of the transactions under the agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending December 31, 2022, the annual caps on the subscription price and corresponding subscription fee for the subscription of fund products are RMB 10,000 million, RMB 10,000 million and RMB 10,000 million, respectively; the annual caps on the redemption price and corresponding redemption fee for the redemption of fund products are RMB 10,000 million, RMB 10,000 million and RMB 10,000 million, respectively; and the annual caps on the management fee by CLIC for the private asset management (including a performance-based fee) are RMB 100 million, RMB 100 million and RMB 100 million, respectively.

For the year ended December 31, 2019, the subscription price and corresponding subscription fee for the subscription of fund products was RMB 1,100.00 million (US$ 158.0 million), the redemption price and corresponding redemption fee for the redemption of fund products was RMB 1,430.66 million (US$ 205.5 million) and the management fee (including performance-based fee) payable by CLIC for the asset management for specific clients were RMB 22.96 million (US$ 3.3 million).

Framework Agreement between AMPand CLPCIC

On December 22, 2016, CLPCIC and AMP entered into a framework agreement which expired on December 31, 2019. On December 3, 2019, CLPCIC and AMP entered into a new framework agreement for a term commencing on January 1, 2020 and ending on December 31, 2022. Under the new agreement, CLPCIC will continue to enter into certain daily transactions with AMP, including subscription and redemption of fund products, asset management for specific clients and other daily transactions permitted by laws and regulations. Pricing of the transactions under the agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the three years ending December 31, 2022, the annual caps on the subscription price for the fund products are RMB 10,000 million, RMB 10,000 million and RMB 10,000 million, respectively; the annual caps on the redemption price for the fund products are RMB 10,000 million, RMB 10,000 million and RMB 10,000 million, respectively; the annual caps for the subscription fee for the fund products are RMB 100 million, RMB 100 million and RMB 100 million, respectively; the annual caps for the redemption fee for the fund products are RMB 100 million, RMB 100 million and RMB 100 million, respectively; the annual caps on the management fee (including a performance-based fee) payable by CLPCIC for the asset management for specific clients are RMB 100 million, RMB 100 million and RMB 100 million, respectively; and the annual caps on the fees for other daily transactions are RMB 100 million, RMB 100 million and RMB 100 million, respectively.

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For the year ended December 31, 2019, the subscription price for fund products, the redemption price for fund products, the subscription fee for fund products, the redemption fee for the fund products and the sales commission fee and client maintenance fee paid by AMP were RMB 0 million, and the management fee (including a performance-based fee) payable by CLPCIC for asset management for specific clients was RMB 4.84 million (US$ 0.7 **** million) and the fees for other daily transactions were RMB 0.09 million (US$ 12,928).

Framework Agreement between AMP and IHC

On December 20, 2017, AMP and IHC entered into a framework agreement which expired on December 31, 2019. On February 17, 2020, IHC and AMP entered into a new framework agreement for a term commencing on January 1, 2020 and ending on December 31, 2022. Under this new agreement, IHC will continue to enter into certain daily transactions with AMP, including subscription and redemption of fund products, asset management for specific clients, advisory services and other daily transactions permitted by laws and regulations. Pricing of the transactions under the framework agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For each of the three years ending December 31, 2022, the annual caps on the subscription price and corresponding subscription fee for the subscription of fund products are RMB 10,000 million; the annual caps on the redemption price and corresponding redemption fee for the redemption of fund products are RMB 10,000 million; the annual caps on the management fee (including a performance-based fee) payable by IHC and its subsidiaries for the asset management for specific clients are RMB 150 million; the annual caps on the management fee (including performance-based fee) paid by subsidiaries of AMP for the asset management for specific clients are RMB 150 million; the annual caps on the advisory fee paid by IHC and its subsidiaries for the advisory services are RMB 150 million; the annual caps on the advisory fee paid by AMP and its subsidiaries for the advisory services are RMB 150 million, and the annual caps on the fees for other daily transactions are RMB 150 million.

For the year ended December 31, 2019, the subscription price and corresponding subscription fee for the subscription of fund products was RMB 104.34 million (US$ 15.0 **** million), the redemption price and corresponding redemption fee for the redemption of fund products was RMB 296.81 million (US$ 42.6 million), the management fee (including a performance-based fee) payable by IHC for asset management for specific clients was RMB 0 million, and the fees for other daily transactions were RMB 0 million.

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Agreements with Chongqing Trust

Framework Agreement between Chongqing Trust and Us

On June 21, 2017, we entered into a framework agreement with Chongqing Trust in relation to the subscription and redemption of trust products and other daily transactions. The framework agreement expired on December 31, 2019. On December 27, 2019, we entered into a new framework agreement with Chongqing Trust for a term commencing on January 1, 2020 and ending on December 31, 2022. Under the new framework agreement, we and Chongqing Trust will continue to enter into transactions including subscription and redemption of trust products and other daily transactions permitted by laws and regulations. Pricing of the transactions under the framework agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For each of the three years ending December 31, 2022, the annual caps on the total amount of subscription and redemption of trust products are RMB 30,000 million (including the trustee’s remuneration of no more than RMB500 million per year to be received by Chongqing Trust from the trust assets); and the annual caps on the fees for other daily transactions are RMB 100 million.

For the year ended December 31, 2019, the subscription amount for the subscription of trust products was RMB 14,300.63 million (US$ 2,054.2 million) (including the trustee’s remuneration of RMB 20.52 million (US$ 2.9 million) received by Chongqing Trust from the trust assets), the redemption amount for the redemption of trust products was RMB 0 million and the fees for other daily transactions were RMB 0 million.

Framework Agreement between Chongqing Trust and AMC

On November 7, 2018, AMC entered into a framework agreement with Chongqing Trust, pursuant to which AMC and Chongqing Trust will conduct certain daily transactions, mainly including the subscription of trust products and asset management services. Pricing of the transactions under the framework agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the two years ended December 31, 2019, the annual caps on the amount of subscription by AMC and the asset management products managed by it of the trust products issued by Chongqing Trust were RMB 1,200 million and RMB 1,800 million, respectively (including the trustee’s remuneration of no more than RMB100 million and RMB150 million, respectively, per year to be received by Chongqing Trust from the trust assets); the annual caps on the management fee for asset management services were RMB100 million and RMB 150 million, respectively, and the annual caps on the fees for other daily transactions were RMB 100 million and RMB 100 million, respectively. The framework agreement expired on December 31, 2019.

For the year ended December 31, 2019, there was no payment made under the agreement.

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Framework Agreement between Chongqing Trust and China Life Wealth

On December 29, 2017, China Life Wealth entered into a framework agreement with Chongqing Trust, pursuant to which China Life Wealth and Chongqing Trust will conduct certain daily transactions, mainly including the subscription of trust products, asset management services, advisory services and other daily transactions. Pricing of the transactions under the framework agreement will be determined by the parties through arm’s length negotiations with reference to industry practices. For the two years ended December 31, 2019, the annual caps on the subscription amount of the trust products were RMB 10,000 million and RMB 10,000 million, respectively (including the trustee’s remuneration of no more than RMB150 million per year to be received by Chongqing Trust from the trust assets); the annual caps on the management fee for asset management services were RMB 150 million and RMB 150 million, respectively, the annual caps on the advisory fee for advisory services were RMB 150 million and RMB 150 million, respectively; and the annual caps on the fees for other daily transactions were RMB 100 million and RMB 100 million, respectively. The framework agreement expired on December 31, 2019.

For the year ended December 31, 2019, there was no payment made under the agreement.

Continuing Related Party Transactions with CGB

During the reporting period, we engaged in continuing related party transactions with CGB pursuant to several negotiated deposit agreements between CGB and us. A detailed discussion of these agreements is set forth under the heading “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions” in our annual reports on Form 20-F filed with the Securities and Exchange Commission on April 26, 2012 and April 26, 2013, respectively.

On August 12, 2016, we entered into an insurance products cooperation agreement with CGB, pursuant to which CGB will sell our individual insurance products suitable for sale through banks, as jointly selected by CGB and us. This agreement expired in August 2018. On October 19, 2018, we entered into a new insurance products cooperation agreement with CGB. This agreement has a term of two years. Under this agreement, CGB will act as an intermediary to sell such products and will also act on our behalf to receive premiums. In return, we will pay CGB a commission fee for each such product sold by it, calculated and paid on a monthly basis, by multiplying (a) total new premiums received in such month minus the premiums for the policies cancelled during the cooling-off period in such month and (b) a fixed commission rate, which ranges from 0.8% to 38%.

On January 12, 2017, we entered into a framework agreement with CGB for daily related party transactions. This agreement expired on December 31, 2019. On December 26, 2019, we entered into a new framework agreement for daily connected transaction with CGB. Pursuant to this new framework agreement, we and the subsidiaries controlled by us will, in the ordinary course of business, carry out deposit, financial market and peer, financing, investment and wealth management, co-investment, enterprise annuity, asset management and investment consultation, entrustment, agency and other daily connected transactions with CGB based on normal commercial terms. A detailed discussion of this new agreement is set forth in our report on Form 6-K filed with the Securities and Exchange Commission on October 29, 2019.

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As at December 31, 2019, the amount of our deposit balance at CGB for deposit related party transactions was RMB 59,419.89 million, the interest income arising from these transactions was RMB 2,584.20 million, the amount of the balance for financial market and peer related party transactions was RMB 0 million and the relevant fees or incomes arising from these transactions were RMB 0 million. For the year ended December 31, 2019, the amount of the financing related party transactions was RMB 0 million, the amount of investment and wealth management related party transactions was RMB 3,844.25 million, the amount of the co-investment related party transactions was RMB 0 million, the scale of entrusted funds under enterprise annuity related party transactions was RMB 0 million, the amount of transaction fees related to enterprise annuity related party transactions (including management fee, entrustment fee, account management fee and performance-based fee) incurred was RMB 0 million, the amount of transaction fees related to asset management related party transactions (including management fee, service fee and handling fee) incurred was RMB 0 million, the amount of transaction fees related to entrustment related party transactions (including entrustment fee, service fee and handling fee) incurred was RMB 0 million, the amount of transaction fees related to agency related party transactions (including agency fee, service fee and handling fee) incurred was RMB 158.29 million and the amount of other daily related party transactions was RMB 219.19 million.

Compliance with HKSE Listing Rules

The policy management agreement between CLIC and us, the asset management agreement between AMC and us, the insurance sales framework agreement between CLPCIC and us, the framework agreements between China Life Wealth and each of CLIC, CLPCIC, IHC, China Life Pension and China Life E-commerce, the framework agreement entered into by AMP with IHC, the framework agreement respectively entered into by China Life Wealth and AMC with Chongqing Trust and the framework agreement entered into by us and China Life Capital are only subject to reporting, announcement and annual review requirements under the HKSE Listing Rules and are exempt from independent shareholders’ approval requirements. In compliance with applicable HKSE Listing Rules requirements, we made announcements disclosing these transactions on October 26, 2017, December 19, 2017, April 26, 2018, October 25, 2018, December 20, 2018, August 22, 2019 and March 25, 2020, respectively. For the year ended December 31, 2019, the transaction under the framework agreement between AMP and IHC is only subject to reporting, announcement and annual review requirements under the HKSE Listing Rules and is exempt from independent shareholders’ approval requirements. AMP and IHC renewed the framework agreement on February 17, 2020. For the three years ending December 31, 2022, the transaction under the renewed framework agreement is subject to reporting, announcement, annual review and independent shareholders’ approval requirements under the HKSE Listing Rules. We made an announcement disclosing this transaction on August 22, 2019 and obtained the approval of the shareholders’ general meeting of our company on December 19, 2019.

The new asset management agreement entered into between IHC and us on December 31, 2018 is subject to reporting, announcement, annual review and independent shareholders’ approval requirements under the HKSE Listing Rules. We made an announcement disclosing this transaction on April 26, 2018 and obtained the approval of the shareholders’ general meeting of our company on June 6, 2018.

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The framework agreements entered into by AMP with us, China Life Pension, CLIC and CLPCIC, respectively, are subject to reporting, announcement, annual review and independent shareholders’ approval requirements under the HKSE Listing Rules. In compliance with applicable HKSE Listing Rules requirements, we made announcements disclosing these transactions on October 27, 2016 and August 22, 2019 and obtained the approval of the shareholders’ general meeting of our company on December 27, 2016 and December 19, 2019. The framework agreement entered into between us and Chongqing Trust on June 21, 2017 in relation to the subscription and redemption of trust products and other daily transactions is subject to reporting, announcement, annual review and independent shareholders’ approval requirements under the HKSE Listing Rules. In compliance with applicable HKSE Listing Rules requirements, we made an announcement disclosing this transaction on March 23, 2017 and obtained the approval of the shareholders’ general meeting of our company on May 31, 2017. For the year ended December 31, 2019, the transaction under the framework agreement between us and Chongqing Trust is subject to reporting, announcement, annual review and independent shareholders’ approval requirements under the HKSE Listing Rules. We and Chongqing Trust renewed the framework agreement on December 27, 2019. For the three years ending December 31, 2022, the transaction under the renewed framework agreement is only subject to reporting, announcement and annual review requirements under the HKSE Listing Rules and is exempt from independent shareholders’ approval requirements. We made an announcement disclosing this transaction on December 19, 2019.

The remaining related party transactions discussed above, other than the transactions with CGB, are exempt from reporting, announcement and independent shareholders’ approval requirements under the HKSE Listing Rules. The related party transactions with CGB are not regarded as connected transactions for us under the HKSE Listing Rules.

Confirmation of Independent Non-executive Directors:

Our independent non-executive directors have reviewed the above continuing connected transactions that were subject to reporting, announcement, annual review and/or independent shareholders’ approval requirements under the HKSE Listing Rules and confirmed that:

1)	the transactions were entered into in the ordinary and usual course of our business;
2)	the transactions were conducted on normal commercial terms or more preferential terms;
---	---
3)	the transactions were conducted in accordance with the agreements governing those transactions and on the terms<br>that are fair and reasonable and in the interest of the shareholders; and
---	---
4)	the amounts of the transactions had not exceeded the relevant annual caps as announced by us.<br>
---	---

C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

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ITEM 8. FINANCIAL INFORMATION.

A. CONSOLIDATED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION

Our audited consolidated financial statements are set forth beginning on page F-1.

Legal and Regulatory Proceedings

We are involved in litigation and arbitration proceedings involving our insurance operations on an ongoing basis. In addition, the CBIRC, as well as other PRC governmental agencies, including tax and audit bureaus and the PBOC, from time to time make inquiries and conduct examinations, audits or investigations concerning our compliance with PRC laws and regulations. For example, in July 2018, the PBOC imposed a fine of RMB 700,000 on us for non-compliance with the anti-money laundering law and regulations during the period from July 1, 2015 to June 30, 2016. The non-compliance issues identified by the PBOC include failure to preserve clients’ identity information and transaction records and failure to submit reports on transactions of large payments and suspicious transactions to the PBOC. These litigation, arbitration and administrative proceedings have in the past resulted in damage awards, settlements or administrative sanctions, including fines, which have not been material to us. While we cannot predict the outcome of any pending or future litigation, arbitration, examination or investigation, we do not believe that any pending legal matter will have a material adverse effect on our business, financial condition or results of operations. However, we cannot assure you that any future litigation, arbitration or regulatory proceeding will not have an adverse outcome, which could have a material adverse effect on our operating results or cash flows.

We currently have control procedures in place to monitor our litigation, arbitration and regulatory exposure. We have established a systematic prevention system whereby our management at each corporate level is responsible for compliance with laws, regulations and internal codes of conduct within their individual territories or departments. Our branches at the provincial level are required to report material litigation, arbitration and regulatory matters to our corporate headquarters on a timely basis. We plan to continue to improve our control and compliance policies in the future.

We may penalize or punish our employees or exclusive agents who commit misconduct or fraud, breach the terms of their employment or agency agreements, exceed their authorization limits or fail to follow prescribed procedures in delivering insurance policies and premium payments, in each case having regard to the severity of the offense. Employees or exclusive agents are required to reimburse us for any losses suffered by us resulting from their misconduct or fraud. In serious cases, we may terminate their employment or agency agreements. We report criminal offenses to the PRC authorities and may also bring concurrent civil actions against employees or exclusive agents. We have experienced agent and employee misconduct that has resulted in litigation, arbitration and administrative actions against us and these agents and employees, and in some cases criminal proceedings and convictions against the agent or employee in question. None of these actions has resulted in material losses, damages, fines or other sanctions against us. We cannot assure you, however, that agent or employee misconduct will not lead to a material adverse effect on our business, results of operations or financial condition.

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Policy on Dividend Distributions

Our board of directors passed a resolution on March 25, 2020 to propose for approval at the annual general meeting of the declaration of final dividends of RMB 0.73 per share, totaling approximately RMB 20,633 million (US$ 2,964 million), for the year ended December 31, 2019. The proposed dividends have not been provided in our consolidated financial statements for the year ended December 31, 2019.

The payment of any dividend by us must be approved by shareholders in a shareholders’ meeting. Our board of directors intends to make its recommendations regarding the declaration of cash dividends to the shareholders in general meeting. The decision to make a recommendation for the payment of any dividend and the amount of the dividend depends on, among other things:

•	our results of operations and cash flows;
•	our financial position;
---	---
•	statutory solvency requirements as determined under CBIRC rules;
---	---
•	our shareholders’ interests;
---	---
•	general business conditions;
---	---
•	our future prospects;
---	---
•	statutory and regulatory restrictions on the payment of dividends by us; and
---	---
•	other factors that our board of directors deems relevant.
---	---

We will pay dividends out of our after-tax profits only after we have made the following allowances and allocations:

•	recovery of accumulated losses, if any;
•	allocations to the statutory common reserve fund equivalent to 10% of our<br>after-tax profits, as determined under PRC GAAP;
---	---
•	allocations to the general risks reserve fund equivalent to 10% of our<br>after-tax profits, as determined under PRC GAAP; and
---	---
•	allocations to a discretionary common reserve fund as approved by the shareholders in a shareholders’<br>meeting.
---	---

When the statutory common reserve fund reaches and is maintained at or above 50% of our registered capital, as determined under PRC GAAP, no further allocations to this fund will be required.

Under Chinese law, dividends may be paid only out of distributable profits. **** Any distributable profits that are not distributed in a given year are retained and available for distribution in subsequent years. However, ordinarily we will not pay any dividends in a year in which we do not have any distributable profits.

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Payment of dividends by us is also regulated by the PRC insurance law. If we do not meet the minimum solvency margin required by the CBIRC, we may be prohibited from paying dividends. See “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Solvency requirements”.

We paid dividends of RMB 0.42 per share in respect of 2015, RMB 0.24 per share in respect of 2016, RMB 0.40 per share in respect of 2017 and RMB 0.16 per share in respect of 2018. Our board of directors has recommended the declaration of final dividends of RMB 0.73 **** per share in respect of 2019. We expect to continue to pay dividends in line with our financial performance thereafter. We will declare dividends, if any, in Renminbi with respect to the H shares on a per share basis and will pay such dividends in Hong Kong dollars.

B. SIGNIFICANT CHANGES

As of the date of this annual report, there was no significant change since the date of the financial statements filed as part of this annual report that has or is reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

C. EMBEDDED VALUE

Background

China Life prepares financial statements to public investors in accordance with the relevant accounting standards. An alternative measure of the value and profitability of a life insurance company can be provided by the embedded value method. Embedded value is an actuarially determined estimate of the economic value of the life insurance business of an insurance company based on a particular set of assumptions about future experience, excluding the economic value of future new business. In addition, the value of one year’s sales represents an actuarially determined estimate of the economic value arising from new life insurance business issued in one year based on a particular set of assumptions about future experience.

China Life believes that reporting our embedded value and value of one year’s sales provides useful information to investors in two respects. First, the value of our in-force business represents the total amount of shareholders’ interest in distributable earnings, in present value terms, which can be expected to emerge over time, in accordance with the assumptions used. Second, the value of one year’s sales provides an indication of the value created for investors by new business activity based on the assumptions used and hence the potential of the business. However, the information on embedded value and value of one year’s sales should not be viewed as a substitute of financial measures under the relevant accounting basis. Investors should not make investment decisions based solely on embedded value information and the value of one year’s sales.

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It is important to note that actuarial standards with respect to the calculation of embedded value are still evolving. There is still no universal standard which defines the form, calculation methodology or presentation format of the embedded value of an insurance company. Hence, differences in definition, methodology, assumptions, accounting basis and disclosures may cause inconsistency when comparing the results of different companies.

Also, the calculation of embedded value and value of one year’s sales involves substantial technical complexity and estimates can vary materially as key assumptions are changed. Therefore, special care is advised when interpreting embedded value results.

The values shown below do not consider the future financial impact of transactions between China Life and CLIC, IHC, AMC, China Life Pension, CLPCIC, etc.

Definitions of Embedded Value and Value of One Year’s Sales

The embedded value of a life insurer is defined as the sum of the adjusted net worth and the value of in-force business allowing for the cost of required capital.

“Adjusted net worth” is equal to the sum of:

•	Net assets, defined as assets less corresponding policy liabilities and other liabilities valued; and<br>
•	Net-of-tax adjustments for<br>relevant differences between the market value and the book value of assets, together with relevant net-of-tax adjustments to certain liabilities.
---	---

The market value of assets can fluctuate significantly over time due to the impact of the prevailing market environment. Hence the adjusted net worth can fluctuate significantly between valuation dates.

The “value of in-force business” and the “value of one year’s sales” are defined here as the discounted value of the projected stream of future shareholders’ interest in distributable earnings for existing in-force business at the valuation date and for one year’s sales in the 12 months immediately preceding the valuation date.

The value of in-force business and the value of one year’s sales have been determined using a traditional deterministic discounted cash flow methodology. This methodology makes implicit allowance for the cost of investment guarantees and policyholder options, asset/ liability mismatch risk, credit risk, the risk of operating experience’s fluctuation and the economic cost of capital through the use of a risk-adjusted discount rate.

Preparation and Review

The embedded value and the value of one year’s sales were prepared by China Life in accordance with the “CAA Standards of Actuarial Practice: Appraisal of Embedded Value” issued by the China Association of Actuaries (“CAA”) in November 2016. Willis Towers Watson, an international firm of consultants, performed a review of China Life’s embedded value. The review statement from Willis Towers Watson is contained in the “Willis Towers Watson’s review opinion report on embedded value” section.

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Assumptions

Economic assumptions: The calculations are based upon assumed corporate tax rate of 25% for all years. The investment return is assumed to be 5% per annum. 14% grading to 18% (remaining level thereafter) of the investment return is assumed to be exempt from income tax. The investment return and tax exempt assumptions are based on our strategic asset mix and expected future returns. The risk-adjusted discount rate used is 10% per annum.

Other operating assumptions such as mortality, morbidity, lapses and expenses are based on our recent operating experience and expected future outlook.

Summary of Results

The embedded value as at December 31, 2019, the value of one year’s sales for the 12 months ended December 31, 2019, and the corresponding results as at December 31, 2018 are shown below:

Table 1

Components of Embedded Value and Value of One Year’s Sales		RMB million
ITEM		December 31, 2019			December 31, 2018
A	Adjusted Net Worth	****	482,793	****		386,054
B	Value of In-Force Business before Cost of Required Capital	****	509,515	****		454,786
C	Cost of Required Capital	****	(50,220	)		(45,788	)
D	Value of In-Force Business after Cost of Required Capital (B + C)	****	459,295	****		408,998
E	Embedded Value (A + D)	****	942,087	****		795,052
F	Value of One Year’s Sales before Cost of Required Capital	****	63,745	****		54,728
G	Cost of Required Capital	****	(5,047	)		(5,218	)
H	Value of One Year’s Sales after Cost of Required Capital (F + G)	****	58,698	****		49,511

Note: Numbers may not be additive due to rounding.

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Value of One Year’s Sales by Channel

The value of one year’s sales for the 12 months ended December 31, 2019 by channel is shown below:

Table 2

Value of One Year’s Sales by Channel	RMB million
Channel	December 31, 2019		December 31, 2018
Exclusive Individual Agent Channel	****	52,189		42,839
Bancassurance Channel	****	6,288		6,357
Group Insurance Channel	****	221		314
Total	****	58,698		49,511

Note: Numbers may not be additive due to rounding.

The new business margin of one year’s sales for the 12 months ended December 31, 2019 by channel is shown below:

Table 3

New Business Margin of One Year’s Sales by Channel
	By FYP						By APE
Channel	December 31, 2019			December 31, 2018			December 31, 2019			December 31, 2018
Exclusive Individual Agent Channel	****	45.3	%		42.2	%	****	45.3	%		42.2	%
Bancassurance Channel	****	23.8	%		18.7	%	****	23.8	%		24.3	%
Group Insurance Channel	****	0.6	%		0.8	%	****	0.6	%		0.9	%

Note: FYP (First Year Premium) is the written premium used for calculation of the value of oneyear’s sales and APE (Annual Premium Equivalent) is calculated as the sum of 100 percent of first year regular premiums and 10 percent of single premiums.

Movement Analysis

The following analysis tracks the movement of the embedded value from the start to the end of the reporting period:

Table 4

Analysis of Embedded Value Movement in 2019		RMB million
ITEM
A	Embedded Value at the Start of Year		795,052
B	Expected Return on Embedded Value		66,625
C	Value of New Business in the Period		58,698
D	Operating Experience Variance		128
E	Investment Experience Variance		31,906
F	Methodology, Model and Assumption Changes		(6,846	)
G	Market Value and Other Adjustments		3,023
H	Exchange Gains or Losses		198
I	Shareholder Dividend Distribution and Capital Injection		(4,916	)
J	Other		(1,781	)
K	Embedded Value as at December 31, 2019 (sum A through J)	****	942,087	****

Notes:

1)	Numbers may not be additive due to rounding.

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2)	Items B through J are explained below:
B	Reflects expected impact of covered business, and the expected return on investments supporting the 2019<br>opening net worth.
---	---
C	Value of one year’s sales for the 12 months ended December 31, 2019.
---	---
D	Reflects the difference between actual operating experience in 2019 (including mortality, morbidity, lapse, and<br>expenses etc.) and the assumptions.
---	---
E	Compares actual with expected investment returns during 2019.
---	---
F	Reflects the effects of appraisal methodology and model enhancement, and assumption changes.<br>
---	---
G	Change in the market value adjustment from the beginning of year 2019 to December 31, 2019 and other<br>adjustments.
---	---
H	Reflects the gains or losses due to changes in exchange rate.
---	---
I	Reflects dividends distributed to shareholders during 2019.
---	---
J	Other miscellaneous items.
---	---

Sensitivity Results

Sensitivity tests were performed using a range of alternative assumptions. In each of the sensitivity tests, only the assumption referred to was changed, with all other assumptions remaining unchanged. The results are summarized below:

Table 5

Sensitivity Results		RMB million
		Value of In-Force Business<br>after Cost of Required<br>Capital		Value of One Year’s Sales<br>after Cost of Required<br>Capital
Base case scenario			459,295		58,698
1.	Risk discount rate +50bps		438,848		55,936
2.	Risk discount rate –50bps		481,260		61,684
3.	Investment return +50bps		541,563		68,296
4.	Investment return –50bps		377,380		49,108
5.	10% increase in expenses		453,307		55,346
6.	10% decrease in expenses		465,282		62,050
7.	10% increase in mortality rate for non-annuity<br>products<br> <br>and 10% decrease in mortality rate for annuity products		456,176		57,867
8.	10% decrease in mortality rate for non-annuity<br>products<br> <br>and 10% increase in mortality rate for annuity products		462,414		59,532
9.	10% increase in lapse rates		458,735		57,534
10.	10% decrease in lapse rates		459,777		59,902
11.	10% increase in morbidity rates		452,934		56,483
12.	10% decrease in morbidity rates		465,808		60,925
13.	Using 2018 EV appraisal assumptions		458,961		59,483
14.	Allowing for diversification in calculation of VIF		492,975		—

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Willis Towers Watson’s Review Opinion Report on Embedded Value

To The Directors of China Life Insurance Company Limited

China Life Insurance Company Limited (“China Life”) has prepared embedded value results as at December 31, 2019 (“EV Results”). The disclosure of these EV Results, together with a description of the methodology and assumptions that have been used, are shown in the Embedded Value section.

China Life has engaged Towers Watson Management Consulting (Shenzhen) Co. Ltd. Beijing Branch (“Willis Towers Watson”) to review its EV Results. This report is addressed solely to China Life in accordance with the terms of our engagement letter, and sets out the scope of our work and our conclusions. To the fullest extent permitted by applicable law, we do not accept or assume any responsibility, duty of care or liability to anyone other than China Life for or in connection with our review work, the opinions we have formed, or for any statement set forth in this report.

Scope of work

Our scope of work covered:

•	a review of the methodology used to develop the embedded value and value of one year’s sales as at<br>December 31, 2019, in accordance with the “CAA Standards of Actuarial Practice: Appraisal of Embedded Value” issued by the China Association of Actuaries (“CAA”);
•	a review of the economic and operating assumptions used to develop the embedded value and value of one<br>year’s sales as at December 31, 2019; and
---	---
•	a review of the results of China Life’s calculation of the EV Results.
---	---

In carrying out our review, we have relied on the accuracy of audited and unaudited data and information provided by China Life.

Opinion

Based on the scope of work above, we have concluded that:

•	the embedded value methodology used by China Life is in accordance with the “CAA Standards of Actuarial<br>Practice: Appraisal of Embedded Value” issued by the CAA;
•	the economic assumptions used by China Life are internally consistent, have been set with regard to current<br>economic conditions, and have made allowance for the company’s current and expected future asset mix and investment strategy;
---	---
•	the operating assumptions used by China Life have been set with appropriate regard to past, current and expected<br>future experience; and
---	---
•	the EV Results have been prepared, in all material respects, in accordance with the methodology and assumptions<br>set out in the Embedded Value section.
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For and on behalf of Willis Towers Watson

Lingde Hong Victoria Xie

March 25, 2020

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ITEM 9. THE OFFER AND LISTING.

In connection with our initial public offering, our American depositary shares, or ADSs, each representing 40 H shares, were listed and commenced trading on New York Stock Exchange on December 17, 2003 under the symbol “LFC”. Our H shares were listed and commenced trading on the Hong Kong Stock Exchange on December 18, 2003 under the stock code “2628”. Prior to these listings, there was no public market for our equity securities. The New York Stock Exchange and the Hong Kong Stock Exchange are the principal trading markets for our ADSs and H shares, which are not listed on any other exchanges in or outside the United States.

On December 29, 2006, the ratio of ADSs to H shares was reduced from 40 H shares to 15 H shares. On May 26, 2015, the ratio of ADSs to H shares was further reduced from 15 H shares to 5 H shares. Our A shares were listed and commenced trading on the Shanghai Stock Exchange on January 9, 2007 under the stock code “601628”.

ITEM 10. ADDITIONAL INFORMATION.

A. SHARE CAPITAL

Not applicable.

B. ARTICLES OF ASSOCIATION

The following is a brief summary of certain provisions of our current articles of association, the PRC company law and certain other laws and regulations applicable to us. Such summary is not purported to be complete. For further information, you should refer to the full text of our articles of association and to the texts of applicable laws and regulations.

Objects and Purposes

We are organized under the PRC company law as a joint stock company. We are registered with the Beijing Administration for Market Regulation and our unified social credit registration number is 9110000071092841XX.

Our business scope, set forth in Article 12 of our articles of association, is to engage in life, accident and health insurance businesses; reinsurance business relating to the foregoing; fund investment businesses authorized by laws, regulations or the State Council; agency business, consulting business and provision of services, in each case relating to life insurance; securities investment fund sales business; and other business as approved by the insurance regulatory authority of the PRC.

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Sources of Shareholders’ Rights

The primary sources of shareholders’ rights are the PRC company law, our articles of association, Special Rules applicable to overseas listed joint stock companies promulgated by the State Council, or Special Rules, relevant CSRC regulations, the Shanghai Stock Exchange Listing Rules, **** and the Hong Kong Stock Exchange Listing Rules that, among other things, impose certain standards of conduct, fairness and disclosure on us, our directors and CLIC, our controlling shareholder. The PRC company law was enacted in December 1993 and serves as the primary body of law regulating corporate actions of companies organized in the PRC and its directors and shareholders.

Our articles of association have incorporated the provisions set forth in the Mandatory Provisions for the Articles of Association of Companies Listed Overseas, or the Mandatory Provisions, adopted in 1994 pursuant to the requirements of the CSRC and the provisions set forth in the Guidelines on the Articles of Association of Listed Companies, or the Guidelines, as amended in 2019 by the CSRC. Any amendment to the relevant mandatory provisions will only become effective after approval by the relevant governmental departments authorized by the State Council and the CSRC. The Hong Kong Stock Exchange Listing Rules require a number of provisions in addition to the Mandatory Provisions to be included in our articles of association.

According to the HKSE Listing Rules, we may not amend certain provisions of our articles of association that have been mandated by the Hong Kong Stock Exchange. These provisions include, among others:

•	varying the rights of existing classes of shares;
•	voting rights;
---	---
•	our power to purchase our own shares;
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•	rights of minority shareholders; and
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•	liquidation procedures.
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In addition, upon the listing of the H shares and for so long as the H shares are listed on the Hong Kong Stock Exchange, we are subject to the relevant ordinances, rules and regulations applicable to companies listed on the Hong Kong Stock Exchange, including, among other things, the Hong Kong Stock Exchange Listing Rules, the Securities and Futures Ordinance and the Hong Kong Codes on Takeovers and Mergers and Share Repurchases.

Unless otherwise specified, all rights, obligations and protections discussed below are derived from our articles of association and the PRC company law.

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Enforceability of Shareholders’ Rights

Enforceability of our shareholders’ rights may be limited.

In June 1999, an arrangement was made between the People’s Courts of the PRC and the courts of Hong Kong for mutual enforcement of arbitration rewards rendered in the PRC and Hong Kong according to their respective laws. This arrangement was approved by the Supreme Court of the PRC and the Hong Kong Legislative Council and became effective on February 1, 2000.

There has not been any published report of judicial enforcement in the PRC by H shareholders of their rights under charter documents of PRC joint stock companies or the PRC company law or in the application or interpretation of the PRC or Hong Kong regulatory provisions applicable to PRC joint stock companies.

The PRC company law allows shareholders to sue, on behalf of the corporation, against persons, including corporate officers, directors, who have allegedly wronged the corporation, where the corporation itself has failed to enforce such claim against such persons directly. Class action lawsuits based on violations of securities laws are generally not available. In accordance with the amended PRC Securities Law which came into effect in March 2020, in civil lawsuits based on violations of securities law including making false statements, if the subject matter of the lawsuits is the same and there are a sufficient number of plaintiffs, a representative can be selected to sue on behalf of them.

We are subject to the Hong Kong Exchange Listing Rules, the Hong Kong Securities and Futures Ordinance, or Securities and Futures Ordinance, and the Hong Kong Codes on Takeovers and Mergers and Share Repurchases. However, holders of H shares will not be able to bring actions on the basis of violations of the Hong Kong Stock Exchange Listing Rules and must instead rely on the Hong Kong Stock Exchange to enforce its rules. The Hong Kong Codes on Takeovers and Mergers and Share Repurchases do not have the force of law and are only standards of commercial conduct considered acceptable for takeover and merger transactions and share repurchases in Hong Kong as established by the Securities and Futures Commission of Hong Kong and the securities and futures industry in Hong Kong. The Securities and Futures Ordinance establishes various obligations in relation to disclosure of shareholders’ interests in Hong Kong listed companies, the violation of which is subject to prosecution by the Securities and Futures Commission of Hong Kong.

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See “Item 3. Key Information—Risk Factors—Risks Relating to the People’s Republic of China—The laws in China differ from the laws in the United States and may afford less protection to our minority shareholders” and “Item 3. Key Information—Risk Factors—Risks Relating to the People’s Republic of China—You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in the PRC based on U.S. or other foreign laws against us, our management and some of the experts named in the annual report”.

Dividends

Our board of directors may propose dividend distributions. A distribution of dividends for any fiscal year is subject to shareholders’ approval. Dividends may be distributed in the form of cash or shares or a combination of both. The H shares rank equally with A shares with regard to dividend rights. A distribution of shares must be approved by special resolution of the shareholders’ meeting.

We may only distribute dividends after allowance has been made for:

•	recovery of accumulated losses, if any;
•	allocations to the statutory common reserve fund equivalent to 10% of our<br>after-tax profits;
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•	allocations to the general risks reserve fund equivalent to 10% of our<br>after-tax profits, as determined under PRC GAAP; and
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•	allocations to a discretionary common reserve fund as approved by the shareholders in a shareholders’<br>meeting.
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Under Chinese law, dividends may be paid only out of distributable profits. Any distributable profits that are not distributed in a given year are retained and available for distribution in subsequent years. However, we will ordinarily not pay any dividends in a year when we do not have any distributable profits.

Payment of dividends by us is also regulated by the PRC insurance law. If we do not meet the solvency margin required by the CBIRC, we will be prohibited from paying dividends. See “Item 4. Information on the Company—Business Overview—Regulation and Related Matters—Insurance Company Regulation—Solvency requirements”.

Our articles of association require us to appoint, on behalf of the holders of H shares, a receiving agent that is registered as a trust corporation under the Trustee Ordinance of Hong Kong to receive dividends declared by us in respect of the H shares on behalf of such shareholders. Our articles of association require that cash dividends in respect of H shares be declared in Renminbi and paid by us in Hong Kong dollars. The depositary will convert these proceeds into U.S. dollars and will remit the converted proceeds to holders of our ADSs.

Subject to the requirements under applicable PRC laws and rules of the securities regulatory authorities of the PRC, Hong Kong and United States, we may exercise the power to forfeit unclaimed dividends, provided that such power cannot be exercised until after the expiration of applicable limitation period.

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We anticipate that our controlling shareholder, CLIC, may incur future operating losses arising in part from the runoff of policies retained by it in connection with the restructuring. Dividends received from us may become one of CLIC’s principal means of funding these losses. **** Although we believe that the reserves held by CLIC and other financial resources available to it will fund substantially all of any future operating shortfalls arising out of these policies, which should reduce CLIC’s reliance on dividends from us, subject to the relevant provisions of the PRC company law and our articles of association as described above and in “Item 8. Financial Information—Consolidated Financial Statements and Other Financial Information—Policy on Dividend Distributions”, CLIC may seek to increase the amount of dividends we pay in order to satisfy its cash flow requirements. See “Item 3. Key Information—Risk Factors—Risks Relating to the Restructuring”.

Dividend payments may be subject to Chinese withholding tax. See “—Taxation—The People’s Republic of China—Taxation of Dividends”.

Voting Rights and Shareholders’ Meetings

Our board of directors will convene a shareholders’ annual general meeting once every year within six months from the end of the preceding fiscal year. Our board of directors must convene an interim meeting within two months of the occurrence of any of the following events:

•	where the number of directors is less than the number stipulated in the PRC company law or two-thirds of the number specified in our articles of association;
•	where our unrecovered losses reach one-third of the total amount of our<br>share capital;
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•	where shareholders, individually or jointly, holding 10% or more of our issued and outstanding voting shares so<br>request in writing;
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•	whenever our board of directors deems necessary, or more than half of directors (including at least two<br>independent directors) or our board of supervisors so requests; or
---	---
•	any other event as maybe provided by applicable laws, rules, regulations or our articles of association.<br>
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All shareholders’ meetings must be convened by our board of directors by written notice given to shareholders no less than 45 days before the meeting. Shareholders holding at least one-half of our total voting shares will constitute a quorum for a shareholders’ meeting. If a quorum is not reached, we are required to notify our shareholders within five days by public announcement of the agenda, the date and the venue of the adjourned meeting. After the notice, we may conduct the shareholders’ meeting. The accidental omission by us to give notice of a meeting to, or the non-receipt of notice of a meeting by, a shareholder will not invalidate the proceedings at that shareholders’ meeting.

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Shareholders at meetings have the power, among other matters, to approve or reject our profit distribution plans, annual budget, financial statements, increases or decreases in share capital, issuances of debentures, mergers, liquidation, any equity-based incentive plan and any amendment to our articles of association. In addition, the rights of a class of shareholders may not be modified or abrogated, unless approved by a special resolution of shareholders at a general shareholders’ meeting and by a special resolution of shareholders of that class of shares at a separate meeting. Our articles of association enumerate various amendments which would be deemed to be a modification or abrogation of the rights of a class of shareholders, including, among others, increasing or decreasing the number of shares of a class disproportionate to increases or decreases of other classes of shares, removing or reducing rights to receive dividends in a particular currency or creating shares with voting or equity rights superior to those of shares of that class. There are no restrictions under PRC law or our articles of association on the ability of investors that are not Chinese residents to hold H shares and exercise voting rights, except that holders of H shares are unable to vote online and the prior approval of the CBIRC is required in respect of any acquisition which results in the acquirer holding more than 5% of the outstanding share capital of our company and the other restrictions set out under “Item 4. Information on the Company—Business Overview—Regulatory and Related Matters—Insurance Company Regulation—Restriction of ownership in joint stock insurance companies”.

Each of our ordinary shares, whether it be an A share or an H share, is entitled to one vote on all matters submitted for vote at all shareholders’ meetings, except for meetings of a special class of shareholders where only holders of shares of the affected class are entitled to vote on the basis of one vote per share of the affected class.

Shareholders are entitled to attend and vote at meetings either in person or by proxy. Proxies must be in writing and deposited at our legal address or such other place as is specified in the meeting notice, no less than 24 hours before the time for holding the meeting at which the proxy proposes to vote or the time appointed for the passing of the relevant resolution.

Resolutions on any of the following matters must be approved by more than two-thirds of the voting rights held by shareholders who are present in person or by proxy:

•	an increase or decrease in our share capital or the issuance of shares, warrants, debentures and other similar<br>securities;
•	our division, merger, dissolution or liquidation (shareholders who object to a proposed merger are entitled to<br>demand that either we or the shareholders who approved the merger purchase their shares at a fair price);
---	---
•	amendments to our articles of association;
---	---
•	purchase or sale within any single year of any material assets exceeding 30% of our latest audited total assets;<br>
---	---
•	any equity-based incentive plan; and
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•	any other matters as provided under applicable laws or regulations or determined by a majority of shareholders at<br>a general meeting to have a material impact on us and should be approved by two-thirds of the voting rights.

An amendment of shareholders’ rights of any class of shares must be approved by more than two-thirds of the voting rights held by holders of shares in the affected class who are present in person or by proxy.

All other actions taken by the shareholders will be approved by a majority of the voting rights held by shareholders who are present in person or by proxy at the shareholders’ meeting.

Any shareholder resolution that is in violation of any laws or regulations of China or the articles of association will be null and void.

Liquidation Rights

We are organized as a joint stock company with limited liability of indefinite duration, and we must submit our annual report to the SAMR. In the event of our liquidation, the H shares will rank equally with the A shares, and payment of debts out of our remaining assets is required to be made in the order of priority prescribed by applicable laws and regulations or, if no such standards exist, in accordance with such procedures as the liquidation committee that has been appointed either by us or the People’s Courts of China may consider to be fair and reasonable. After payment of debts, we are required to distribute the remaining property to shareholders in proportion to the number of shares they hold.

Information Rights

Our shareholders may, subject to reasonable fees and costs, obtain a copy of our articles of association and inspect and copy all parts of our register of shareholders, personal particulars of the directors, supervisors, president and other senior officers, reports on the state of our share capital, reports showing the aggregate par value, highest and lowest price paid in respect of each class of shares repurchased by us since the end of the last accounting year and the aggregate amount paid by us for this purpose, minutes of shareholders’ general meetings, and counterfoils of company debt securities, resolutions of board meetings, resolutions of board of supervisors.

Our fiscal year is the calendar year ending December 31. We must send to holders of H shares, no more than four months after the end of the relevant financial year, our annual report (including our annual accounts, together with a copy of the auditors’ report thereon). Further, we must publish a preliminary results announcement no later than three months after the end of the relevant fiscal year. The results announcement in respect of the relevant financial year is required to be published on the HKSE’s website no later than the time that is 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session on the next business day after approval by or on behalf of our board of directors. These and any interim financial statements must be prepared in accordance with HKFRS, IFRS or PRC GAAP in the case of a PRC issuer that has adopted PRC GAAP for the preparation of its annual financial statements. The annual financial statements must be approved by a majority of our shareholders who are present in person or by proxy at the annual general meeting.

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The HKSE Listing Rules also require us to send to holders of H shares an interim report no later than three months after the end of the first six months of each fiscal year. Further, we must publish a preliminary results announcement no later than two months after the end of the six-month period. The results announcement in respect of the relevant six-month period is required to be published on the HKSE’s website no later than the time that is 30 minutes before the earlier of the commencement of the morning trading session or any pre-opening session on the next business day after approval by or on behalf of our board of directors.

According to the HKSE Listing Rules, where in the view of the HKSE there is or there is likely to be a false market in our securities, we must, as soon as reasonably practicable after consultation with the HKSE, announce the information necessary to avoid a false market in our securities. In addition, according to the provisions of inside information under the Securities and Futures Ordinance of Hong Kong, we must, as soon as reasonably practicable after any inside information has come to our knowledge, disclose the information to the public. Inside information, in relation to a listed corporation, means specific information that—

•	is about the corporation, a shareholder or officer of the corporation, or the listed securities of the<br>corporation or their derivatives; and
•	is not generally known to the persons who are accustomed or would be likely to deal in the listed securities of<br>the corporation but would if generally known to them be likely to materially affect the price of the listed securities.
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Depending on the size of the transaction, we may also be required to disclose to the public and our shareholders details of various acquisitions or disposals of assets and other transactions (including transactions with controlling shareholders).

Restrictions on Transferability andthe Share Register

Unless otherwise permitted by relevant PRC rules or regulations or approved by relevant PRC authorities, H shares may be traded only among investors who are legal or natural persons resident outside of China, and may not be sold to investors resident within the PRC. There are no restrictions under PRC law or our articles of association on the ability of investors who are not PRC residents to hold H shares. However, under relevant PRC law, a legal person resident outside of China is only allowed to hold not more than 20% of our issued share capital and legal persons resident outside of China are only allowed to hold in aggregate not more than 25% of our issued share capital, unless otherwise approved by competent authorities.

We are required to keep a register of our shareholders comprised of various parts, including one part which is to be maintained in Hong Kong in relation to holders of H shares. Shareholders have the right to inspect and, for a reasonable charge, to copy the share register. No transfers of ordinary shares will be recorded in our share register within thirty days prior to the date of a shareholders’ general meeting or within five days prior to the record date established for the purpose of distributing a dividend.

We have appointed Computershare Hong Kong Investor Services Limited to act as the registrar of our H shares. This registrar maintains our register of holders of H shares and enters transfers of H shares in such register upon the presentation of the documents described above.

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Increases in Share Capital

Under our articles of association, issuance of new securities, including ordinary shares, securities convertible into ordinary shares, options, warrants or similar rights to subscribe for any ordinary shares or convertible securities, must be approved by at least two-thirds of the shareholders who attend the shareholders meeting in person or by proxy. In addition, the issuance of A shares or H shares must be approved by two-thirds of the class of domestic shares or H shares, as the case may be, unless the number of shares to be issued shall not exceed 20% of the number of shares of the same class then outstanding in any 12-month period.

A special resolution was passed at the shareholders’ annual general meeting held on May 30, 2019 to authorize our board of directors to issue additional shares, and amend the articles of association accordingly, in a nominal amount of no more than 20% of the aggregate nominal amount of our H shares in issue as at the date of such resolution, by the conclusion of next shareholders’ annual general meeting, or the expiration of the 12-month period following the passing of this resolution, or the date on which the resolution is otherwise revised or revoked by a special resolution of our shareholders, whichever is the earliest.

Shareholders are not liable to make any further contribution to the share capital other than according to the terms that were agreed upon by the subscriber of the relevant shares at the time of subscription. New issues of shares must also be approved by relevant Chinese authorities.

Decreases in Share Capital and Repurchases

We may reduce our registered share capital only upon obtaining the approval of at least two-thirds of the shareholders who attend the shareholders meeting in person or by proxy and, in certain circumstances, of relevant Chinese authorities. The number of H shares that may be repurchased is subject to the Hong Kong Codes on Takeovers and Mergers and Share Repurchases.

Restrictions on Ownership

Equity interests held by a single shareholder, including its related parties and persons acting in concert, must not exceed one-third of the registered capital of a single insurance company. An exception to the one-third cap applies to insurance companies establishing or investing in other insurance companies for the purposes of innovation and specialization of their business, or consolidating their operations under a single group management. See “Item 4. Information on the Company—Business Overview—Regulation and Related Matters—Insurance Company Regulation—Restriction of ownership in joint stock insurance companies”.

Restrictions on Large orControlling Shareholders

Our articles of association define a controlling shareholder as any person who acting alone or in concert with others:

•	is in a position to elect more than one-half of the board of directors;<br>

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•	has the power to exercise, or to control the exercise of, 30% or more of our voting rights;<br>
•	holds 30% or more of our issued and outstanding shares; or
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•	has de facto control of us in any other way.
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As of the date of this annual report, CLIC, a wholly state-owned enterprise, is our only controlling shareholder.

Our articles of association provide that, in addition to any obligation imposed by laws and administrative regulations or required by the Hong Kong Stock Exchange Listing Rules, a controlling shareholder shall not exercise its voting rights in a manner prejudicial to the interests of other shareholders:

•	to relieve a director or supervisor from his or her duty to act honestly in our best interests;<br>
•	to approve the appropriation by a director or supervisor, for his or her own benefit or for the benefit of any<br>other person, of our assets in any way, including without limitation opportunities which may be advantageous to us; or
---	---
•	to approve the appropriation by a director or supervisor, for his or her own benefit or for the benefit of<br>another person, of the individual rights of other shareholders, including without limitation rights to distributions and voting rights (except in accordance with a restructuring of our company which has been approved by the shareholders at a general<br>meeting in accordance with our articles of association).
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Our articles of association also provide that a controlling shareholder or an actual controlling person shall not exploit its affiliated relation in a manner prejudicial to the interest of our company, and shall be liable for any losses suffered by us as a result thereof. The controlling shareholder or actual controlling person shall have fiduciary duties to both our company and our public shareholders. The controlling shareholder shall exercise its rights as a capital contributor of our company in strict compliance with the law. The controlling shareholder shall not cause any damage to the lawful rights and interest of our company and our public shareholders through, among others, any connected transactions, profit distribution, asset restructuring, external investment, fund appropriation and loan guarantee, or impair the interest of our company and our public shareholders through its controlling position.

Board of Directors

Our non-employee directors are elected by our shareholders at shareholders’ general meetings, and employee directors are elected by our employees or other democratic means at the employee representative conference. Directors are elected for a term of three years and may serve consecutive terms if re-elected.

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Article 23 of Special Regulations on the Overseas Offering and Listing of Shares by Joint Stock Limited Companies provides that directors, supervisors, and senior officers of a company owe duties of honesty, care and diligence to their company.

Our articles of association provide that, in exercising their duties and powers, our directors, supervisors and senior officers will act with the care, diligence and skills that are expected of a reasonable person under similar circumstances, observe fiduciary principles and not place themselves in a situation where their interests conflict with the duties they are charged with performing. In addition to these fiduciary duties to our company, each director, supervisor and officer is obligated to each shareholder:

•	to act honestly in our company’s best interests;
•	not to exploit corporate assets for personal gains; and
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•	not to expropriate the rights of our shareholders.
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If directors, supervisors or officers are found to have misappropriated our company’s assets or misused their position for personal gain, the PRC company law provides that any misappropriated or misused property be returned and any illegal proceeds received by such director, supervisor or officer be confiscated, and allows us to impose punishment on them. In serious cases, criminal liability may also be imposed. According to our articles of association, our shareholders may bring a derivative suit against any director, supervisor or officer who has breached his fiduciary duties. Most disputes between H shareholders and directors, supervisors and officers are required to be resolved by final and binding arbitration.

Moreover, our articles of association provide that our directors, supervisors and senior officers must not enter into transactions or contracts with us or agree to make corporate loans to any persons or provide guarantees for loans of any shareholder or any other person with corporate assets. In particular, our directors, supervisors and senior officers have obligations to disclose to the board of directors any direct or indirect material interest they may have in any contracts or transactions with us. They may not vote on any contracts, transactions or arrangements in which they have any material interest. Further, we may not make loans or provide guarantees to directors, supervisors or senior officers, unless such loans or guarantees are approved at a shareholders’ meeting or made in the ordinary course of business and to the extent permitted by applicable laws. All decisions relating to the compensation of directors are made at shareholders’ meetings.

There are no provisions under our articles of association or PRC law which relate to:

•	the retirement or non-retirement of directors under any age limit<br>requirement;
•	directors’ borrowing power; or
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•	number of shares required for directors’ qualification.
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Subject to all relevant laws and administrative regulations, the shareholders may remove any director before the expiration of his or her term of office by a majority vote of the shareholders present in person or by proxy at shareholders’ general meetings. A director, supervisor, president, vice president or other senior officer may be relieved of liability for a specific breach of his or her duties by the consent of shareholders so long as specified conditions are met.

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Board of Supervisors

Our board of supervisors consists of five supervisors. At least one-third of our board of supervisors must be employee representatives elected by our employees. The remaining members must be elected by our shareholders in a general meeting. One member of our board of supervisors is designated as the chairman. Members of the board of supervisors may not serve as director, president, vice president or other senior management of our company. The term of office for our supervisors is three years, which is renewable upon re-election.

The primary duty of the board of supervisors is to monitor our financial matters and management. The board of supervisors’ powers are generally limited to carrying out investigations and reporting to shareholders, the China Securities Regulatory Commission and other relevant governmental authorities having jurisdiction over our affairs and to convening shareholders’ interim meetings. Reasonable expenses incurred by the board of supervisors in carrying out its duties will be paid by us.

Our supervisors owe fiduciary duties to our company and our shareholders. Please see the discussion of the duties and the nature of recourse our shareholders may have against supervisors in breach of these duties in the subsection entitled “—Board of Directors”.

The board of supervisors is accountable, and will report, to the shareholders at the shareholders’ general meetings.

Certain Differences Between PRC Company Law and Delaware Corporate Law

The PRC company law and other laws applicable to us differ in a number of respects from laws generally applicable to United States corporations and their shareholders. The description set forth below includes a summary of certain provisions of the PRC company law, Special Rules, Mandatory Provisions and the Guidelines applicable to companies listed both in the PRC and overseas, such as us, which differ from provisions of the corporate law of the State of Delaware.

General

We are a PRC joint stock company, which is a corporate entity organized under the PRC company law. Under the PRC company law, the registered capital of a joint stock company is divided into shares of equal par value. These shares are commonly called domestic ordinary shares. Each share of a joint stock company ranks equally with all other shares in its class as to voting rights (except for specified class voting rights) and rights to dividends and other distributions. Upon receiving approval from the relevant authorities, a joint stock company may offer its shares for sale to the public and seek to be listed on a stock exchange. The State Council may formulate separate regulations for the issuance of other classes of shares, including H shares. All of our issued shares are fully paid and nonassessable. Holders of H shares may transfer their shares without the approval of other shareholders. Among other things, a joint stock company must have (1) a board of directors of not fewer than five and not more than 19 members, and (2) a board of supervisors of not fewer than three members.

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The shareholders’ meeting of a joint stock company is the highest authority of the company and exercises the powers of the company with respect to significant matters, subject to applicable law and the articles of association of the company. The business of a joint stock company is under the overall management of a board of directors, subject to the PRC company law, other applicable laws and regulations (which in our case include the PRC insurance law and regulations), the company’s articles of association and duly adopted resolutions of its shareholders. The day-to-day operations of a joint stock company are under the direction of its general manager or president, subject to applicable laws and regulations, the company’s articles of association and duly adopted resolutions of the directors and shareholders. In addition, the PRC company law provides for the establishment of a board of supervisors for each joint stock company. The supervisors perform and exercise the functions and powers described below, including examination of the joint stock company’s affairs and monitoring the actions of the directors and officers of the company. The directors, supervisors and officers are not required to hold any qualifying shares in the joint stock company.

A joint stock company may be liquidated involuntarily due to insolvency or voluntarily in accordance with the terms of its articles of association or duly adopted shareholders’ resolutions. The property of a joint stock company remaining after full payment of its liquidation expenses, wages, labor insurance premiums of its employees and statutory compensations, outstanding taxes and debts, is distributed in proportion to the holdings of its shareholders.

Meetings ofshareholders

Under PRC law, shareholders are given the power to approve specified matters. See “—Voting Rights and Shareholders’ Meetings”. In addition, the Mandatory Provisions provide that at shareholders’ meetings shareholders are entitled to consider any proposals made by shareholders holding in the aggregate at least 3% of voting power over the company’s shares. These proposals must fall within the scope of powers of the shareholder’s meeting, have a clear agenda and specific matters and comply with laws, administrative regulations and articles of association of the company.

Under Delaware law, the business and affairs of a Delaware corporation are, in general, managed by or under the direction of its board of directors. Only certain fundamental matters regarding the corporation are reserved by statute to be exercised by the shareholders. These matters include, in general, election or removal of directors, retention or dismissal of the corporation’s independent auditors, mergers or other business combinations involving the corporation, amendment of the corporation’s certificate of incorporation and liquidation or dissolution of the corporation.

Shareholders’ approval by written consent

PRC law does not provide shareholders of overseas listed joint stock companies with rights to approve corporate matters by written consent. Under Delaware law, unless otherwise provided in the certificate of incorporation, any action which is required or permitted to be taken at any shareholders’ meeting may be taken without a meeting, subject to various conditions.

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Amendments of articles of association

Under PRC law, an amendment of the articles of association must be approved by an affirmative vote of two-thirds of shareholders attending a shareholders’ meeting. Amendments with respect to the Mandatory Provisions only become effective after approval by the relevant governmental department authorized by the State Council and the China Securities Regulatory Commission.

Under Delaware law, with certain exceptions, shareholder approvals must be obtained for any amendment to the certificate of incorporation. Board approvals are also required for any amendment to the certificate of incorporation, but no governmental approval is generally required.

Powers and responsibilities of directors

Under PRC law, the board of directors is responsible for specified actions, including the following functions and powers of a joint stock company:

•	convening shareholders’ meetings and reporting its work to shareholders at these meetings;<br>
•	implementing shareholders’ resolutions;
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•	determining the company’s business plans and investment proposals;
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•	formulating the company’s annual financial budgets and final accounts;
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•	formulating the company’s profit distribution plans and loss recovery plans;
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•	formulating proposals for the increase or decrease in the company’s registered capital and the issue of<br>debentures;
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•	formulating major acquisition and disposal plans and plans for the merger, division or dissolution of the<br>company;
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•	to the extent authorized by the shareholders’ meeting, deciding on such matters as external investments,<br>purchase or sale of assets, assets pledge and connected transactions of the company;
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•	deciding on the company’s internal management structure and formulating its basic management system; and<br>
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•	appointing or removing the company’s principal executive officers; appointing and removing other senior<br>officers based on the recommendation of the principal executive officer and deciding on the remuneration of the senior officers.
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In addition, the Mandatory Provisions provide that the board has the authority to formulate any proposal to amend the articles of association and to exercise any other power conferred by a decision of the shareholders’ meeting.

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Under Delaware law, the business and affairs of a Delaware corporation are managed by or under the direction of its board of directors. Their powers include fixing the remuneration of directors, except as otherwise provided by statute or in the certificate of incorporation or by-laws of the corporation.

Powers and responsibilities of supervisors

Under PRC law, a PRC joint stock company must have a board of supervisors consisting of shareholder representatives and one or more employee representatives. Supervisors attend board meetings as non-voting observers. Directors, officers and company personnel in charge of financial matters may not serve as supervisors. The supervisors perform and exercise the following functions and powers:

•	examining the company’s financial affairs;
•	monitoring compliance with laws, regulations, the articles of association of the company and the shareholders<br>resolutions by the directors and officers of the company; and suggesting removing the directors and officers who violate these laws and regulations;
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•	requiring corrective action from directors and officers whose actions are contrary to the interests of the<br>company;
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•	examining the financial information, including financial statements, operation reports and plans for profit<br>distribution, to be submitted by the board of directors to the shareholders’ meetings; and authorizing, in the company’s name, public certified accountants or licensed auditors to assist in the<br>re-examination of such information, should any doubt arise in respect thereof;
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•	proposing the holding of extraordinary shareholders’ meetings;
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•	proposing new items to be inserted in the agenda of the shareholders’ meeting;
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•	bringing lawsuits against directors or members of senior management, if they violate laws, regulations or<br>articles of association of the company; and
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•	exercising and performing other powers and functions provided for in the company’s articles of association.<br>
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In addition, the Mandatory Provisions provide that supervisors of overseas listed joint stock companies are entitled to retain auditors in the name of the company to examine any financial or business reports or profit distribution proposals to be submitted by the directors to a meeting of the shareholders which the supervisors consider questionable, and negotiate or take legal action against any director or the directors in the name of the company. The fees and expenses of attorneys and other professionals incurred by the supervisors in connection with the discharge of their duties are to be paid by the company.

Delaware law makes no provision for a comparable corporate institution.

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Duties of directors, supervisors and officers

Under PRC law, directors, supervisors and officers of a joint stock company are required to comply with relevant laws and regulations and the company’s articles of association. A director, supervisor or officer who contravenes any law, regulation or the company’s articles of association in the performance of his duties shall be personally liable to the company for any loss incurred by the company. Directors, supervisors and officers are required to carry out their duties honestly and diligently, and protect the interests of the company. They are also under a duty of confidentiality to the company and prohibited from divulging confidential information concerning the company, except as permitted by relevant laws and regulations or by a decision of a shareholders’ meeting. They may not use their position and authority in the company to seek personal gain. Directors and officers may not directly or indirectly engage in the same business as the company or in any other business detrimental to the interests of the company, and they are required to forfeit any profits from these activities to the company.

Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its shareholders.

Limitations on transactions with interested directors, supervisors and officers

Under PRC law, directors and officers of a joint stock company may not enter into any contracts or transactions with the company unless permitted by the articles of association or approved by the shareholders. A company may not provide any guarantees to shareholders or any de facto control person of the company unless such guarantees are approved by a majority of shareholders present at the shareholders’ meeting, excluding the shareholder who will be provided such guarantees. Under the Mandatory Provisions, a director, supervisor or officer is required to disclose to the board any transaction with the company in which he has a direct or indirect interest or in which there is a material conflict of interest between the company and himself. A director is not entitled to vote or be counted for quorum purposes in any board decision on any such transaction. A company may set aside any interested transaction which did not comply with these requirements, unless the other party to such transaction was honestly unaware of the breach of obligations by the interested director, supervisor or officer. A company may not loan or provide any guarantees to directors, supervisors or officers (including persons related to them), except for the loans made in accordance with employment contracts approved by the shareholders, or unless the company’s business scope allows for the provision of loans and guarantees and such loans or guarantees are made under regular commercial terms.

Under Delaware law, an interested transaction is not voidable if (1) the material facts as to the interested director’s relationship or interests are disclosed or are known to the board of directors and the board in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, (2) such material facts are disclosed or are known to the shareholders entitled to vote on such transaction and the transaction is specifically approved in good faith by vote of the majority of shares entitled to vote thereon or (3) the transaction is fair as to the corporation as of the time it is authorized, approved or ratified. Under Delaware law, the interested director could be held liable for a transaction in which such a director derived an improper personal benefit.

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Election and removal of directors

Under PRC law, the term of office of directors of a joint stock company must be specified in the articles of association, but may not exceed three years. Directors may be re-elected. No director may be removed from office without cause by shareholders prior to the expiration of the director’s term. PRC law does not contemplate a classified board of directors.

Under Delaware law, directors of a Delaware corporation can be removed from office with or without cause by the holders of a majority of shares then entitled to vote at an election of directors, provided that except where the certificate of incorporation of the Delaware corporation otherwise provides, a member of a classified board may be removed by shareholders only for cause, and in a corporation with cumulative voting, if less than all of the directors are removed, no director may be removed if the votes cast against the director’s removal is sufficient to elect the director if cumulatively voted at an election of directors. The Court of Chancery may remove a director who has been convicted of a felony or found by a court to have committed a breach of the duty of loyalty in connection with his or her duties to the corporation following application by the corporation or derivatively in the right of the corporation by any shareholder. The court may order the removal only if it determines that the director did not act in good faith in performing the acts resulting in the prior conviction or judgment and that removal is necessary to avoid irreparable harm to the corporation.

Dividend payments

Under PRC law, proposals for distribution of profits are formulated by the board of directors and submitted for shareholder approval at a shareholders’ meeting. Dividends may be distributed in the form of cash or shares.

Under Delaware law, the board of directors of a Delaware corporation may declare dividends out of distributable earnings and profits without the approval of the shareholders.

Amalgamations and business combinations; appraisal rights

Under PRC law, amalgamations and divisions involving joint stock companies are required to be approved by shareholders voting at a shareholders’ meeting. The Mandatory Provisions require an amalgamation or division involving the company to be approved by an affirmative vote of two-thirds of the votes present at the shareholders’ meeting called to consider the transaction. Any opposing shareholder may request the company or the consenting shareholders to purchase its shares at a fair price. In addition, a sale of fixed assets having a value exceeding 33% of the fixed assets as shown on the company’s latest balance sheet most recently reviewed by the shareholders’ meeting requires the approval of at least one third of the shareholders’ meeting.

Under Delaware law, with certain exceptions, a merger, consolidation or sale of all or substantially all the assets of a corporation must be approved by the board of directors and holders of a majority of the outstanding shares entitled to vote. A shareholder objecting to the merger is entitled to appraisal rights pursuant to which the shareholder may receive cash in the amount of the fair value of the shares held by such shareholder (as determined by a court) in lieu of the consideration the shareholder would otherwise receive in the transaction.

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Transactions with significant shareholders

Under Delaware law, a business combination between a Delaware corporation and an interested shareholder which takes place at any time during a period of three years commencing with the date the interested shareholder became an interested shareholder would need prior approval from the board of directors or a supermajority of the shareholders of the corporation, unless the corporation opted out of the relevant Delaware business combination statute. Under Delaware law, an interested shareholder of a corporation is someone who, together with its affiliates and associates, owns more than 15% of the outstanding common shares of the corporation. No such business combination statute or regulation applies to PRC joint stock companies.

Shareholders’ lawsuits

The PRC law provides that most disputes involving an H shareholder are to be resolved by final and binding arbitration.

Class actions and derivative actions generally are available to shareholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law.

Limitations on liability and indemnification of directorsand officers

PRC law does not provide for any specific limitations on liability or indemnification of directors and officers.

Under Delaware law, a corporation may indemnify a current director or officer of the corporation against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in defense of an action, suit or proceeding by reason of such position if (1) the director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and (2) with respect to any criminal action or proceeding, the director or officer had no reasonable cause to believe that his conduct was unlawful. **** Persons serving at the request of the corporation as directors, officers, employees or agents of another entity such as a subsidiary or an employee stock trust may receive advancement of expenses from the corporation. **** A corporation may not retroactively impair or eliminate indemnification or advancement rights by amending the corporation’s certificate of incorporation or bylaws after the occurrence of the act or omission that gives rise to indemnification or advancement rights, unless the provision contains, at the time of the act or omission, an explicit authorization of such elimination or limitation.

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Shareholders’ rights of inspection of corporate records

Under PRC law, shareholders are entitled to inspect the articles of association, register of shareholders, corporate bond counter foils, minutes of shareholders’ meetings and board meetings and reports of the financial accounts of the company. In addition, the Mandatory Provisions provide that, after paying reasonable fees, shareholders are entitled to inspect the company’s shareholder list, certain personal information on the directors, supervisors and officers, the company’s capital position and certain information regarding share repurchases conducted by the company during the most recent fiscal year.

Delaware law permits any shareholder of a Delaware corporation to examine or obtain copies of or extracts from the corporation’s shareholder list and its other books and records for any purpose reasonably related to such person’s interest as a shareholder.

C. MATERIAL CONTRACTS

See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions” for certain arrangements we have entered into with CLIC, AMC, China Life Pension, CLPCIC, IHC, China Life Capital, China Life Wealth, CGB, AMP and Chongqing Trust.

D. EXCHANGE CONTROLS

The Renminbi currently is not a freely convertible currency. The SAFE, under the authority of the PBOC, controls the conversion of Renminbi into foreign currency. Until July 20, 2005, the PBOC had been setting and publishing daily a base exchange rate with reference primarily to the supply and demand of Renminbi against the U.S. dollar in the market during the prior day. The PBOC also took into account other factors, such as the general conditions existing in the international foreign exchange markets. From 1994 to July 20, 2005, the official exchange rate for the conversion of Renminbi to U.S. dollars was generally stable. On July 21, 2005, the PRC government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. Under this system, the PBOC announces the closing price of a foreign currency traded against the Renminbi in the inter-bank foreign exchange market after the closing of the market on each working day, and makes it the central parity for the trading against the Renminbi on the following working day. On August 11, 2015, the PBOC adjusted the quotation mechanism of the Renminbi central parity to also consider demand and supply in foreign exchange markets and price movements of major currencies, in addition to the closing price on the previous working day. On May 26, 2017, the PBOC introduced the “counter-cyclical factor” into its formula that determines a central parity of the Renminbi against the U.S. dollar. Under the current mechanism, the central parity of the Renminbi against the U.S. dollar is determined based on the closing price, changes in a basket of currencies and the counter-cyclical factor. See “Item 3. Key Information—Risk Factors—Risks Relating to the People’s Republic of China—Government control of currency conversion and the fluctuation of the Renminbi may materially and adversely affect our operations and financial results”.

Although PRC governmental policies were introduced in 1996 to reduce restrictions on the convertibility of Renminbi into foreign currency for current account items, conversion of Renminbi into foreign exchange for capital items, such as foreign direct investment, loans or securities, requires the approval of the SAFE and other relevant authorities. **** Although experimental policies were introduced in certain pilot areas such as the Shanghai free trade zone to reduce foreign exchange control, restrictions on the convertibility of Renminbi into foreign currency still remain in force in most parts of China.

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In the event of shortages of foreign currencies, we may be unable to convert sufficient Renminbi into foreign currency to meet our foreign currency obligations or to pay dividends in foreign currency.

Our H shares are traded on the Hong Kong Stock Exchange. There are no limitations on the right of non-resident or foreign owners to remit dividends or capital including capital gains imposed by Hong Kong law.

E. TAXATION

The taxation of income and capital gains of holders of H shares or ADSs is subject to the laws and practices of China and of jurisdictions in which holders of H shares or ADSs are resident or otherwise subject to tax. The following summary of certain relevant taxation provisions is based on current law and practice, is subject to change and does not constitute legal or tax advice. The discussion does not deal with all possible tax consequences relating to an investment in the H shares or ADSs. In particular, the discussion does not address the tax consequences under state, local and other laws, such as non-U.S. federal laws other than the laws of the PRC and Hong Kong. Accordingly, you should consult your own tax adviser regarding the tax consequences of an investment in the H shares and ADSs. The discussion is based upon laws and relevant interpretations in effect as of the date of this annual report, all of which are subject to change.

The People’sRepublic of China

The following is a discussion of the material Chinese tax provisions relating to the ownership and disposition of H shares or ADSs held by the investors as capital assets. This discussion does not address all of the tax considerations that may be relevant to specific investors in light of their particular circumstances or to other investors subject to special treatment under the tax laws of the PRC. This discussion is based on the tax laws of China as in effect as of the date of this annual report, as well as on the Agreement between the United States of America and the People’s Republic of China for the Avoidance of Double Taxation, or the “China-U.S. Tax Treaty”, all of which are subject to change (or changes in interpretation), possibly with retroactive effect.

This discussion does not address any aspects of Chinese taxation other than income taxation, capital taxation, stamp taxation and estate taxation. Prospective investors are urged to consult their tax advisers regarding Chinese and other tax consequences of owning and disposing of H shares.

Taxation of Dividends

Individual investors. According to the PRC Individual Income Tax Law, as amended, dividends paid by Chinese companies are ordinarily subject to a Chinese withholding tax levied at a flat rate of 20%. For a foreign individual who is not a resident of China, the receipt of dividends from a company in China is normally subject to a withholding tax of 20% unless reduced pursuant to an applicable tax treaty. According to a notice issued by the Chinese State Administration of Taxation, or the SAT, on June 28, 2011, if the withholding tax rate under applicable tax treaties is 10% or less, the receipt of dividends will be subject to 10% withholding tax; and if the withholding tax rate under applicable tax treaties is between 10% and 20%, the receipt of dividends will be subject to the actual tax rate as agreed under such tax treaties.

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Enterprises. According to the PRC Enterprise Income Tax Law and its implementation rules, effective on January 1, 2008, as well as any amendments from time to time and the Circular on Issues Relating to the Withholding of Enterprise Income Tax for Dividends Distributed by Resident Enterprises in China to Non-resident Enterprises Holding H-shares of the Enterprises, issued by the SAT on November 6, 2008, resident enterprises in China are required to, in distributing dividends for 2008 or any year hereafter to non-resident enterprises holding Overseas Shares including H-shares and ADSs of the enterprises, withhold enterprise income tax for such dividends at a tax rate of 10%. Non-resident enterprises holding H shares of any resident enterprise can, after receiving dividends due to them, apply for preferential tax treatment with competent tax authorities in accordance with tax treaties.

Tax treaties. Investors who do not reside in China and reside in countries that have entered into treaties for the avoidance of double-taxation with China may be entitled to a reduction of the withholding tax imposed on the payment of dividends to our investors who do not reside in China. China currently has treaties for the avoidance of double-taxation with a number of other countries, which include Australia, Canada, France, Germany, Japan, Malaysia, the Netherlands, Singapore, the United Kingdom and the United States.

Under the China-U.S. Tax Treaty, China may tax a dividend paid by us to an Eligible U.S. Holder up to a maximum of 10% of the gross amount of the dividend. For the purposes of this discussion, an “Eligible U.S. Holder” is a U.S. holder that (i) is a resident of the United States for the purposes of the China-U.S. Tax Treaty, (ii) does not maintain a permanent establishment or fixed base in China to which H shares are attributable and through which the beneficial owner carries on or has carried on business (or, in the case of an individual, performs or has performed independent personal services) and (iii) is not otherwise ineligible for benefits under the China-U.S. Tax Treaty with respect to income and gains derived in connection with the H shares**.**

Taxation of Capital Gains

According to the PRC Enterprise Income Tax Law and its implementation rules (effective on January 1, 2008) as well as any amendments from time to time, capital gains realized by foreign enterprises which have no establishment or residence in China or whose capital gains from China do not relate to their establishment or residence in China, are ordinarily subject to enterprise income tax at the rate of 10% with respect to the gains realized within China, unless reduced pursuant to an applicable tax treaty.

According to the Announcement on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source issued by the SAT on October 17, 2017, the balance of the income from the transfer of equity less the net value of equity is taxable income. Income from transfer of equity refers to the consideration received by the transferor of equity for transfer of equity, including various cash and non-cash incomes. Net value of equity refers to the taxable base for obtaining such equity. Taxable base is the cost of capital actually paid by the equity transferor when purchasing such equity.

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According to the PRC Individual Income Tax Law, as amended, capital gains realized by individuals upon the transfer of shares, including Overseas Shares, are subject to capital gains tax levied at a flat rate of 20%; and relevant tax authorities are authorized to promulgate implementation rules in this regard. To date, the relevant tax authorities have not promulgated any implementation rules on the taxation of capital gains realized by individuals upon the transfer of shares, including Overseas Shares. If the relevant tax authorities promulgate such implementation rules in the future, a 20% tax may be levied on capital gains realized by foreign individuals in accordance with the PRC Individual Income Tax Law, as amended, unless reduced pursuant to an applicable tax treaty. To date, the relevant tax authorities have not collected capital gains tax on the income from the transfer of shares.

Additional Chinese Tax Considerations

Chinese stamp duty. Chinese stamp duty imposed on the transfer of shares of Chinese publicly traded companies under the Provisional Regulations of China Concerning Stamp Duty should not apply to the acquisition and disposal by non-Chinese investors of H shares or ADSs outside of China by virtue of the Provisional Regulations of China Concerning Stamp Duty, which became effective on October 1, 1988 and which provide that Chinese stamp duty is imposed only on documents executed or received within China that are legally binding in China and are protected under Chinese law.

Estate tax. No liability for estate tax under Chinese law will arise from non-Chinese nationals holding H shares.

Investors under the Shanghai-Hong Kong Stock Connect Program. According to the Notice on Tax Policies for the Shanghai-Hong Kong Stock Connect Pilot Program, jointly issued by the MOF, SAT and CSRC which became effective on November 17, 2014, between November 17, 2014 to November 16, 2017, gains realized by Chinese individual investors upon a transfer of H shares through the Shanghai-Hong Kong Stock Connect program were exempted from individual income tax. Gains realized by Chinese enterprise investors upon a transfer of H shares through the Shanghai-Hong Kong Stock Connect program must be included in their gross income and subject to enterprise income tax. For dividends received by Chinese individual investors and securities investment funds from investing in H shares through the Shanghai-Hong Kong Stock Connect program, the Chinese issuer of such H shares must withhold income tax at a tax rate of 20%. Dividends received by Chinese enterprise investors from investing in H shares through the Shanghai-Hong Kong Stock Connect program must be included in their gross income and subject to enterprise income tax, and the Chinese issuer of such H shares will not withhold income tax for the dividends. The enterprise investors in these circumstances must make tax filings by themselves. According to the Notice on Continuation of the Tax Policies for the Shanghai-Hong Kong Stock Connect Pilot Program, which was jointly issued by the MOF, SAT and CSRC and became effective on November 17, 2017, gains realized by Chinese individual investors upon a transfer of H shares through the Shanghai-Hong Kong Stock Connect Program are further exempted from individual income tax for the period from November 17, 2017 to December 4, 2019. According to the Announcement on Continuation of the Individual Income Tax Policies for the Shanghai-Hong Kong Stock Connect Program and Shenzhen-Hong Kong Stock Connect Program and for the Mainland-Hong Kong Mutual Recognition of Fund, which became effective on December 5, 2019, gains realized by Chinese individual investors from a transfer of shares listed on the Hong Kong Stock Exchange through the Shanghai-Hong Kong Stock Connect Program and Shenzhen-Hong Kong Stock Connect Program, as well as from sale and purchase of interest in funds set up in Hong Kong through the mutual fund recognition, are further exempted from individual income tax for the period from December 5, 2019 to December 31, 2022.

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Hong Kong

The following is a discussion of the material Hong Kong tax provisions relating to the ownership and disposition of H shares or ADSs held by the investors as capital assets. This discussion does not address all of the tax considerations that may be relevant to specific investors in light of their particular circumstances or to investors subject to special treatment under the tax laws of Hong Kong. This discussion is based on the tax laws of Hong Kong as in effect on the date of this annual report, which are subject to change (or changes in interpretation), possibly with retroactive effect. This discussion does not address any aspects of Hong Kong taxation other than income taxation, capital taxation, stamp taxation and estate taxation. Prospective investors are urged to consult their tax advisers regarding Hong Kong and other tax consequences of owning and disposing of H shares.

Tax on Dividends

Under current practice, no tax is payable in Hong Kong in respect of dividends paid by us.

Tax on Gains from Sale

No tax is imposed in Hong Kong in respect of capital gains from the sale of property. However, trading gains from the sale of property by persons carrying on a trade, profession or business in Hong Kong where the gains are derived from or arise in Hong Kong from such trade, profession or business will be chargeable to Hong Kong profits tax, which is imposed at the rate of 16.5% on corporations and at a rate of 15% on unincorporated businesses for the year of assessment 2008/09 onwards. Commencing from the year of assessment 2018/19 (i.e. on or after 1 April 2018), the profits tax rate for the first HK$2,000,000 of profits of corporations will be lowered to 8.25% while the remaining profits will continue to be taxed at the rate of 16.5%; and the profits tax rate for the first HK$2,000,000 of profits of unincorporated businesses will be lowered to 7.5%, while the remaining profits will continue to be taxed at the rate of 15%.

Trading gains from sales of H shares effected on the Hong Kong Stock Exchange will be considered to be derived from or arise in Hong Kong. Liability for Hong Kong profits tax would thus arise in respect of trading gains from sales of H shares effected on the Hong Kong Stock Exchange realized by persons carrying on a business of trading or dealing in securities in Hong Kong.

There will be no liability for Hong Kong profits tax in respect of profits from the sale of ADSs, where purchases and sales of ADSs are effected outside Hong Kong, for example, on the New York Stock Exchange.

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Stamp Duty

Hong Kong stamp duty, currently charged at the ad valorem rate of 0.1% on the higher of the consideration for, or the market value of, the H shares, will be payable by the purchaser on every purchase and by the seller on every sale of H shares (in other words, a total of 0.2% is currently payable on a typical sale and purchase transaction involving H shares). In addition, a fixed duty of HK$ 5.00 is currently payable on any instrument of transfer of H shares. If stamp duty is not paid on or before the due date, a penalty of up to ten times the duty payable may be imposed.

The withdrawal of H shares upon the surrender of ADRs, and the issuance of ADRs upon the deposit of H shares, will also attract stamp duty at the rate described above for sale and purchase transactions unless such withdrawal or deposit does not result in a passing of the beneficial interest in the H shares under Hong Kong law. The issuance of the ADRs upon the deposit of H shares issued directly to the depositary of the ADSs, or for the account of the depositary, will not be subject to any stamp duty. No Hong Kong stamp duty is payable upon the transfer of ADSs outside Hong Kong.

Estate Duty

The Revenue (Abolition of Estate Duty) Ordinance 2005 came into effect on February 11, 2006 in Hong Kong. No Hong Kong estate duty is payable and no estate duty clearance papers are needed for an application for a grant of representation in respect of holders of H shares whose deaths occur on or after February 11, 2006.

United States of America

The following is a discussion of the material United States federal income tax consequences relating to the purchase, ownership and disposition of H shares or ADSs by U.S. Holders (as defined below) that acquire H shares or ADSs for cash and hold them as capital assets. This discussion is based on the Internal Revenue Code of 1986, as amended, or “the Code”, Treasury regulations promulgated thereunder, and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect. This discussion does not address all of the tax considerations that may be relevant to specific U.S. Holders in light of their particular circumstances or to U.S. Holders subject to special treatment under U.S. federal income tax law (such as banks, insurance companies, tax-exempt entities, retirement plans, regulated investment companies, real estate investment trusts, partnerships, dealers in securities, or other U.S. Holders that generally mark their securities to market for U.S. federal income tax purposes, certain former citizens or residents of the United States, persons who have acquired our H shares or ADSs as part of a straddle, hedge, conversion, or other integrated investment, persons who own, directly or by attribution, 10% or more of the combined voting power or value of all classes of stock of China Life or persons that have a “functional currency” other than the U.S. dollar). This discussion does not address any U.S. state or local or any U.S. federal estate, gift or alternative minimum tax considerations.

As used in this discussion, the term “U.S. Holder” means a beneficial owner of H shares or ADSs that is, for U.S. federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation created or organized in or under the laws of the United States or of any state or political subdivision thereof, or therein, including the District of Columbia or (iii) an estate or trust the income of which is subject to U.S. federal income tax regardless of the source thereof.

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Investors are urged to consult their own tax advisers as to the particular tax considerations applicable to them relating to the purchase, ownership and disposition of H shares or ADSs in their individual circumstances, including the applicability of U.S. federal, state and local tax laws, any changes in applicable tax laws and any pending or proposed legislation or regulations.

Taxation of Dividends

Subject to the discussion below under “—Special Rules”, cash distributions with respect to the H shares or ADSs owned by a U.S. Holder will, upon receipt, be includible in the gross income of such U.S. Holder as ordinary dividend income to the extent of our current and accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent that the amount of any such cash distribution exceeds our current and accumulated earnings and profits as so computed, it will be treated first as a non-taxable return of capital to the extent of the U.S. Holder’s adjusted tax basis in such H shares or ADSs and, to the extent the amount of such cash distribution exceeds adjusted tax basis, will be treated as gain from the sale of such H shares or ADSs. Dividends paid by us generally will constitute income from sources outside the United States for foreign tax credit limitation purposes and will not be eligible for the “dividends received” deduction.

Dividends received by individuals from “qualified foreign corporations” are generally subject to a maximum U.S. federal income tax rate of 20%, so long as certain holding period requirements are met. A non-U.S. corporation (other than a passive foreign investment company) generally will be considered to be a qualified foreign corporation (i) if it is eligible for the benefits of a comprehensive income tax treaty with the United States which the Secretary of the Treasury determines is satisfactory for purposes of the relevant provision and which includes an exchange of information program or (ii) with respect to any dividend it pays on stock which is readily tradable on an established securities market in the United States. The Treasury Department has determined that the China-U.S. Tax Treaty as currently in effect meets the requirements described in clause (i) above. In addition, the ADSs are readily tradable on the New York Stock Exchange, an established securities market in the United States. Each U.S. Holder that is an individual is urged to consult his or her tax adviser regarding the applicability of this reduced rate to dividends received with respect to the H shares or ADSs in his particular circumstance.

The U.S. dollar value of any distribution made by us in Hong Kong dollars (or other currency that is not the U.S. dollar, or a “foreign currency”), should be calculated by reference to the exchange rate in effect on the date of receipt of such distribution by Deutsche Bank Trust Company Americas, as depositary, in the case of ADSs, or by the U.S. Holder, in the case of H shares held directly by such U.S. Holder regardless of whether the Hong Kong dollars (or such other foreign currency) so received are converted into U.S. dollars on the date of receipt. If the Hong Kong dollars (or such other foreign currency) so received are converted into U.S. dollars on the date of receipt, such U.S. Holder generally should not recognize foreign currency gain or loss on such conversion. If the Hong Kong dollars (or such other foreign currency) are not converted into U.S. dollars on the date of receipt, such U.S. Holder will have a basis in the Hong Kong dollars (or such other foreign currency) equal to their U.S. dollar value on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of the Hong Kong dollars (or such other foreign currency) generally will be treated as ordinary income or loss from sources within the United States for foreign tax credit limitation purposes.

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Subject to certain limitations, the Chinese tax withheld from dividends paid with respect to H shares or ADSs and paid over to China, as described above under “—The People’s Republic of China—Taxation of Dividends”, may be creditable against a U.S. Holder’s U.S. federal income tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the maximum 20% U.S. federal income tax rate. A U.S. Holder of H shares or ADSs that does not elect to claim a U.S. foreign tax credit may instead claim a deduction for such withheld tax, but only for a taxable year in which the U.S. Holder elects to do so with respect to all non-U.S. income taxes paid or accrued in such taxable year. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and U.S. Holders are urged to consult their own U.S. tax advisers with respect to foreign tax credit considerations in their individual circumstances.

Sale or other Disposition of H Shares or ADSs

Subject to the discussion below under “—Special Rules”, a U.S. Holder generally will recognize gain or loss for U.S. federal income tax purposes upon a sale or other disposition of H shares or ADSs that it owns in an amount equal to the difference, if any, between the amount realized from the sale or disposition and such U.S. Holder’s adjusted tax basis in such H shares or ADSs. The gain or loss generally will be a capital gain or loss and will be long-term capital gain (taxable at a reduced rate for individuals) or loss if, on the date of sale or disposition, such H shares or ADSs were held by the U.S. Holder for more than one year and will generally be U.S. source gain or loss. The claim of a deduction in respect of a capital loss may be subject to limitations.

A U.S. Holder that receives Hong Kong dollars (or other foreign currency) from the sale or disposition generally will realize an amount equal to the U.S. dollar value of the Hong Kong dollars (or such other foreign currency) on the settlement date of the sale or disposition if (i) the U.S. Holder is a cash basis or electing accrual basis taxpayer and our H shares or ADSs, as the case may be, are treated as being “traded on an established securities market” for this purpose or (ii) the settlement date is the date of the sale or disposition. If the Hong Kong dollars (or such other foreign currency) so received are converted into U.S. dollars on the settlement date, the U.S. Holder should not recognize foreign currency gain or loss on the conversion. If the Hong Kong dollars (or such other foreign currency) so received are not converted into U.S. dollars on the settlement date, the U.S. Holder will have a basis in the Hong Kong dollars (or such other foreign currency) equal to the U.S. dollar value on the settlement date. Any gain or loss on a subsequent conversion or other disposition of the Hong Kong dollars (or such other foreign currency) generally will be treated as ordinary income or loss from sources within the United States for foreign tax credit limitation purposes. A U.S. Holder should consult its own tax adviser regarding the U.S. federal income tax consequences of receiving Hong Kong dollars (or other currency) from a sale or disposition of the H shares or ADSs in cases not described in this paragraph.

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A U.S. Holder that is a non-resident enterprise may be subject to Chinese tax on the gain realized upon the sale or other disposition of H shares or ADS. See “—The People’s Republic of China—Taxation of Capital Gains” above. Holders should consult their own tax advisers concerning their ability to credit such Chinese taxes against their U.S. federal income tax liability in their particular situation.

Special Rules

Related Person Insurance Income. Certain adverse U.S. income and tax reporting rules may apply to U.S. shareholders who, directly or indirectly, own stock of a non-U.S. corporation that earns “related person insurance income” (“RPII”), if 25% or more of the non-U.S. corporation’s direct or indirect shareholders are U.S. persons. RPII is generally defined as insurance income derived from the insurance (or reinsurance) of insureds who are U.S. shareholders in the non-U.S. corporation or who are related to such U.S. shareholders. If applicable, these rules would require U.S. Holders to include in taxable income each year their pro rata share of any RPII incurred by us for the year, regardless of whether such income is distributed, and also to file IRS Form 5471, disclosing certain information regarding their direct or indirect ownership of China Life. Special rules apply for purposes of determining each U.S. shareholder’s pro rata share of any RPII. For organizations that are otherwise exempt from U.S. federal income tax under section 501(a) of the Code, any such income would constitute “unrelated business taxable income”. These rules could also apply to convert some or all of the gain recognized from the sale or disposition of H shares or ADSs from capital gain to ordinary income and to require such gain to be reported on IRS Form 5471.

Under a statutory exception, these rules do not apply if less than 20% of the non-U.S. corporation’s insurance income is RPII or if less than 25% of the non-U.S. corporation’s stock is owned by U.S. shareholders. Because CLIC holds approximately 68.37% **** of our share capital, and because we do not offer or intend to offer our products and services in the United States, it is highly unlikely that the RPII rules will apply. If more of our shares are sold to the public in the future, it is possible that such rules could apply at a later date.

Passive Foreign Investment Company. In general, a non-U.S. corporation will be a PFIC if 75% or more of its gross income constitutes “passive income” or 50% or more of its assets produce “passive income” or are held for the production of “passive income”. In determining whether we are a PFIC, we will be treated as if we directly owned our proportionate share of the assets and received our proportionate share of the income of any other corporation in which we own 25% or more of the shares by value.

For the purpose of determining whether a non-U.S. corporation is a PFIC, “passive income” is defined to include income of the kind which would be foreign personal holding company income under section 954(c) of the Code, and generally includes interest, dividends, annuities and other investment income. Passive income does not include interest income or dividends received from controlled subsidiaries or certain other related persons, to the extent properly allocable to income of such related person that is not passive income. The PFIC provisions, as modified by the TCJA, specifically exclude from the definition of “passive income” any income “derived in the active conduct of an insurance business by a qualifying insurance corporation” (the “active insurance business exception”). The active insurance business exception is intended to ensure that income derived by a bona fide insurance company is not treated as passive income. A non-U.S. corporation is a qualifying insurance corporation if it would be subject to tax as an insurance company if it were a domestic corporation and (i) loss and loss adjustment expenses and certain reserves, or “applicable insurance liabilities”, constitute more than 25% of the non-U.S. corporation’s gross assets for the relevant year or (ii) a U.S. Holder makes an election to apply an alternative facts and circumstances test that applies only in certain runoff-related or ratings-related circumstances involving the insurance business. The PFIC provisions also exclude from the definition of “passive income” any income derived in the active conduct of a banking trade or business.

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No final or temporary Treasury regulations currently exist regarding the application of the PFIC rules to an insurance company. However, the IRS released proposed Treasury regulations regarding the application of the PFIC rules to insurance companies in July 2019. These regulations are not yet in force but are proposed to be effective for taxable years of U.S. Holders beginning on or after the date that final regulations are issued. The proposed Treasury regulations provide that whether a company is engaged in the active conduct of an insurance business is a facts and circumstances test, but also introduce a “bright-line” test providing that the active conduct requirement is met only if the insurance company’s “active conduct percentage” is at least 50%. In general, a company’s active conduct percentage is determined by dividing the company’s aggregate expenses for certain insurance-related services of its officers and employees (and the officers and employees of certain affiliates) by the company’s aggregate expenses for such insurance-related services (including those paid to unaffiliated persons). The proposed regulations would also expand the circumstances in which a shareholder of a non-U.S. corporation is treated as owning shares of a subsidiary that is treated as a PFIC even if the corporation is not treated as a PFIC. If these rules are finalized in proposed form, there is a risk that we would be treated as a PFIC.

We make various simplifying assumptions to estimate the asset composition and value of our subsidiaries in order to apply the PFIC tests to the income and assets of our 25% or greater owned subsidiaries. Based on our analysis of our assets and income, which takes into account these assumptions, we believe that we were not classified as a PFIC in 2019. **** However, there is no assurance that the IRS will not take a contrary position and assert that we are a PFIC. Furthermore, an actual determination of PFIC status is inherently factual in nature and cannot be made until the close of each applicable tax year and, accordingly, no assurances can be given that we will not become a PFIC at some point in the future.

In general, a U.S. shareholder of a PFIC is subject to a special tax and an interest charge at the time of the sale of (or receipt of an “excess distribution” with respect to) its shares in the PFIC. In general, a shareholder is treated as having received an “excess distribution” if the amount of the distribution was more than 125% of the average distribution with respect to its shares during the three preceding taxable years (or shorter period during which the taxpayer held the shares). The special tax is computed by assuming that the excess distribution or, in the case of a sale, the gain with respect to the shares was earned in equal portions throughout the holder’s period of ownership. The portion allocable to each year prior to the year of sale is taxed at the maximum marginal tax rate applicable for each such period. The interest charge is determined based on the applicable rate imposed on underpayments of U.S. federal income tax for the period. The special tax and the interest charge generally will not apply to a U.S. shareholder that validly makes a “qualified electing fund” election under section 1295 of the Code with respect to the shares of the PFIC. We do not intend to comply with the requirements necessary to permit a U.S. Holder to make such an election with respect to H shares or ADSs.

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The above results may also be avoided if a “mark-to-market” election is available and a U.S. Holder validly makes such an election. If the election is made, such U.S. Holder generally will be required to take into account the difference, if any, between the fair market value of, and its adjusted tax basis in, its H shares or ADSs at the end of each taxable year as ordinary income or ordinary loss (to the extent of any net mark-to-market gain previously included in income), and to make corresponding adjustments to the tax basis of such H shares or ADSs. In addition, any gain from a sale or other disposition of H shares or ADSs will be treated as ordinary income, and any loss will be treated as ordinary loss (to the extent of any net mark-to-market gain previously included in income). A mark-to-market election is available to a U.S. Holder only if our H shares or ADSs are considered “marketable stock” for these purposes. Generally, stock will be considered marketable stock if it is “regularly traded” on a “qualified exchange” within the meaning of applicable U.S. Treasury regulations. A class of stock is regularly traded during any calendar year during which such class of stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. A non-U.S. securities exchange will constitute a qualified exchange if it is regulated or supervised by a governmental authority of the country in which the market is located and meets certain trading, listing, financial disclosure and other requirements set forth in the Treasury regulations. We do not know whether our H shares or ADSs will be treated as marketable stock for these purposes.

If we are a PFIC in any taxable year during which a U.S. Holder owns H Shares or ADSs, such U.S. Holder (i) may also suffer adverse tax consequences under the PFIC rules described above with respect to any other PFIC in which we have a direct or indirect equity interest and (ii) generally will be required to file annually a statement with its U.S. federal income tax returns. U.S. Holders should consult their own tax advisers regarding the U.S. federal income tax consequences of a direct or indirect investment in a PFIC.

Medicare Taxes

Certain U.S. Holders that are individuals, estates or trusts are subject to an additional tax at the rate of 3.8% on all or a portion of their “net investment income”, which may include all or a portion of their income arising from a distribution with respect to an ADS or an H Share and gain upon the sale, exchange or other disposition of such ADS or H Share.

Information Reporting and BackupWithholding

Under certain circumstances, information reporting and/or backup withholding may apply to U.S. Holders with respect to payments made on or proceeds from the sale, exchange or other disposition of ADSs or H Shares, unless an applicable exemption is satisfied. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a U.S. Holder’s U.S. federal income tax liability if the required information is furnished by the U.S. Holder on a timely basis to the IRS.

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Reportable Transactions

U.S. Holders that participate in “reportable transactions” (as defined in the Treasury regulations) must attach to their federal income tax returns a disclosure statement on Form 8886. We urge U.S. Holders to consult their own tax advisers as to the possible obligation to file Form 8886 with respect to the ownership or disposition of any Hong Kong dollars (or other foreign currency) received as a dividend or as proceeds from the sale of H shares or ADSs, or any other aspect of the purchase, ownership or disposition of H shares or ADSs.

Disclosure Requirements for Specified Foreign Financial Assets

Individual U.S. Holders (and certain U.S. entities to the extent specified in future IRS guidance) who, during any taxable year, hold any interest in any “specified foreign financial asset” generally will be required to file with their U.S. federal income tax returns Form 8938, setting forth certain information with respect to such asset, if the aggregate value of all such assets exceeds the applicable reporting threshold. “Specified foreign financial asset” generally includes any financial account maintained with a non-U.S. financial institution and may also include H Shares or ADSs if they are not held in an account maintained with a U.S. financial institution. Substantial penalties may be imposed for a failure to comply. U.S. Holders should consult their own tax advisers as to the possible application to them of these filing requirements.

F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G. STATEMENT BY EXPERTS

Not applicable.

H. DOCUMENTS ON DISPLAY

You may read and copy documents referred to in this annual report on Form 20-F that have been filed with the U.S. Securities and Exchange Commission, or SEC, at its public reference room located at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. The SEC also maintains a website at http://www.sec.gov that contains reports, proxy statements and other information regarding the registrations that file electronically with the SEC.

The SEC allows us to “incorporate by reference” the information we filed with the SEC. This means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this annual report on Form 20-F.

I. SUBSIDIARY INFORMATION

Not applicable.

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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Our exposure to financial market risks relates primarily to changes in interest rates, equity prices and exchange rates.

The following discussions and tables, which constitute “forward-looking statements” that involve risks and uncertainties, summarize our market-sensitive financial instruments including fair value and maturity. Such discussions address market risk only and do not present other risks which we face in the normal course of business.

For further information on our management of market risk, including the objectives and general strategies of risk management, see “Item 4 Information on the Company—Business Overview—Investments—Risk Management” and Note 4 to our consolidated financial statements included elsewhere in this annual report.

Interest Rate Risk

Our profitability is affected by changes in interest rates. Interest rates are highly sensitive to many factors, including economic growth rate, inflation, governmental monetary and tax policies, domestic and international economic and political conditions, financial regulatory requirements and other factors beyond our control. If interest rates were to increase in the future, surrenders and withdrawals of life insurance and annuity policies and contracts may increase as policy holders may seek other investments with higher perceived returns. This process may result in cash outflows requiring that we sell investment assets at a time when the prices of those assets are adversely affected by the increase in market interest rates, which may result in realized investment losses. However, if interest rates were to decline in the future, the income we realize from our investments may decrease, affecting our profitability. In addition, as instruments in our investment portfolio mature, we might have to reinvest the funds we receive in investments bearing low interest rates, which may also affect our profitability.

For the years ended December 31, 2019, 2018 and 2017, our investment yield was 5.24%, 3.29% and 5.16%, respectively. Investment contracts are generally priced with guaranteed interest rates. Dividends on participating policies are required to be at least 70% of distributable earnings attributable to such policies.

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The following tables set forth selected assets and liabilities with exposure to interest rates as of December 31, 2019, 2018 and 2017.


As of December 31, 2019		2021		2022		2023		2024		Thereafter		Total		Fairvalue

Assets
Held-to-maturity and available-for-sale debt securities
Fixed rate bonds
in RMB	37,262		64,853		84,960		57,526		35,163		1,038,319	****	1,318,083		1,357,890
Average interest rate	4.82%		4.37%		4.62%		4.91%		5.03%		4.29%	****	4.38%
in US	7,571		46		—		7		36		115	****	7,775		7,792
Average interest rate	2.36%		5.50%		—		5.97%		5.44%		4.53%	****	2.43%
Variable rate bonds
in RMB	10		—		—		—		—		207	****	217		217
Average interest rate	2.78%		—		—		—		—		4.54%	****	4.46%
Term deposits
in RMB	98,981		33,830		111,661		122,800		151,900		8,030	****	527,202		527,202
Average interest rate	4.95%		3.90%		4.47%		5.31%		4.69%		4.33%	****	4.78%
in US	8,026		—		—		—		—		—	****	8,026		8,026
Average interest rate	3.21%		—		—		—		—		—	****	3.21%
in HK	32		—		—		—		—		—	****	32		32
Average interest rate	2.57%		—		—		—		—		—	****	2.57%
Liabilities
Securities sold under agreements to repurchase	118,088		—		—		—		—		—	****	118,088		118,088
Average interest rate	1.51%		—		—		—		—		—	****	1.51%
Interest-bearing loans and other borrowings
in British pound	—		—		—		—		2,515		—	****	2,515		2,515
Average interest rate	—		—		—		—		3.08%		—	****	3.08%
in US	126		—		—		—		12,766		—	****	12,892		12,892
Average interest rate	2.70%		—		—		—		3.18%		—	****	3.18%
in Euro	4,115		523		—		—		—		—	****	4,638		4,638
Average interest rate	3.25%		2.50%		—		—		—		—	****	3.16%
Investment contracts	4,153		677		782		1,634		1,456		259,102	****	267,804		260,592
Average guaranteed interest rate	1.90%		2.30%		2.18%		2.29%		1.81%		2.40%	****	2.39%
Long-term insurance contracts	69,839		23,490		20,951		17,419		16,689		2,372,943	****	2,521,331
Average guaranteed interest rate	2.64%		2.64%		2.51%		2.49%		2.52%		2.75%	****	2.74%

All values are in US Dollars.

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As of December 31, 2018		2020		2021		2022		2023		Thereafter		Total		Fairvalue

Assets
Held-to-maturity and available-for-sale debt securities
Fixed rate bonds
in RMB	25,976		56,949		72,536		97,279		60,894		906,409	****	1,220,043		1,256,866
Average interest rate	5.19%		4.86%		4.46%		4.71%		5.06%		4.42%	****	4.52%
in US	2,241		13		21		6		35		74	****	2,390		2,393
Average interest rate	2.93%		5.33%		6.55%		5.12%		5.05%		5.05%	****	3.07%
Variable rate bonds
in RMB	—		30		—		—		—		201	****	231		231
Average interest rate	—		5.23%		—		—		—		4.66%	****	4.73%
Term deposits
in RMB	151,418		77,441		33,830		88,950		122,800		77,400	****	551,839		551,839
Average interest rate	4.48%		5.17%		3.90%		4.58%		5.31%		4.78%	****	4.78%
in US	7,502		—		—		—		—		—	****	7,502		7,502
Average interest rate	2.21%		—		—		—		—		—	****	2.21%
Liabilities
Securities sold under agreements to repurchase	192,141		—		—		—		—		—	****	192,141		192,141
Average interest rate	1.86%		—		—		—		—		—	****	1.86%
Interest-bearing loans and other borrowings
in British pound	2,385		—		—		—		—		—	****	2,385		2,385
Average interest rate	3.54%		—		—		—		—		—	****	3.54%
in US	13,108		—		—		—		—		—	****	13,108		13,108
Average interest rate	2.35%		—		—		—		—		—	****	2.35%
in Euro	993		3,139		525		—		—		—	****	4,657		4,657
Average interest rate	1.50%		3.80%		2.50%		—		—		—	****	3.16%
Investment contracts	2,867		3,213		451		986		1,296		246,621	****	255,434		245,803
Average guaranteed interest rate	1.77%		1.61%		2.21%		2.20%		2.27%		2.40%	****	2.38%
Long-term insurance contracts	62,349		24,371		22,294		26,533		16,696		2,037,551	****	2,189,794
Average guaranteed interest rate	2.59%		2.56%		2.61%		2.68%		2.49%		2.67%	****	2.67%

All values are in US Dollars.

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As of December 31, 2017		2019		2020		2021		2022		Thereafter		Total		Fairvalue

Assets
Held-to-maturity and available-for-sale debt securities
Fixed rate bonds
in RMB	59,591		52,756		59,967		56,044		93,085		786,998	****	1,108,441		1,084,377
Average interest rate	4.82%		5.23%		4.91%		4.59%		4.79%		4.56%	****	4.65%
in US	1,229		—		13		32		—		110	****	1,384		1,393
Average interest rate	0.98%		—		5.50%		6.15%		—		5.25%	****	1.48%
Variable rate bonds
in RMB	209		—		28		—		—		—	****	237		237
Average interest rate	4.66%		—		5.35%		—		—		—	****	4.74%
Term deposits
in RMB	89,332		149,833		77,441		33,300		88,950		2,800	****	441,656		441,656
Average interest rate	4.90%		4.50%		5.17%		3.90%		4.54%		5.20%	****	4.66%
in US	7,744		—		—		—		—		—	****	7,744		7,744
Average interest rate	1.96%		—		—		—		—		—	****	1.96%
Liabilities
Securities sold under agreements to repurchase	87,309		—		—		—		—		—	****	87,309		87,309
Average interest rate	5.39%		—		—		—		—		—	****	5.39%
Interest-bearing loans and other borrowings
in British pound	—		2,413		—		—		—		—	****	2,413		2,413
Average interest rate	—		3.54%		—		—		—		—	****	3.54%
in US	—		12,480		—		—		—		—	****	12,480		12,480
Average interest rate	—		2.35%		—		—		—		—	****	2.35%
in Euro	780		—		3,121		—		—		—	****	3,901		3,901
Average interest rate	1.50%		—		3.80%		—		—		—	****	3.34%
Investment contracts	2,765		1,922		2,259		591		953		224,010	****	232,500		229,222
Average guaranteed interest rate	1.42%		0.80%		1.32%		2.12%		1.69%		2.49%	****	2.44%
Long-term insurance contracts	107,665		23,963		23,861		25,615		81,730		1,736,232	****	1,999,066
Average guaranteed interest rate	2.52%		2.58%		2.57%		2.68%		3.24%		2.61%	****	2.63%

All values are in US Dollars.

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Equity Price Risk

Our investments in securities investment funds or equity securities expose us to changes in equity prices. We manage this risk on an integrated basis with other risks through our asset-liability management strategies. We also manage equity price risk through industry and issuer diversification and asset allocation techniques.

The following table sets forth our exposure to equity securities as of December 31, 2019, 2018 and 2017.

	As of December 31,
	2017				2018				2019
	Carrying amount		Fair value		Carrying amount		Fair value		Carrying amount		Fair value
(RMB in millions)
Equity securities		409,528		409,528		424,657		424,657	****	605,568	****	605,568
Securities at fair value through profit or loss		53,918		53,918		50,714		50,714	****	56,402	****	56,402
Available-for-sale		355,610		355,610		373,943		373,943	****	549,166	****	549,166

A hypothetical 10% decline in the December 31, 2019, 2018 and 2017 value of the securities at fair value through profit or loss equity securities would result in an unrealized loss charged to the income statement of approximately RMB 5,640 million, RMB 5,071 million and RMB 5,392 million, respectively.

A hypothetical 10% decline in the December 31, 2019, 2018 and 2017 value of the available-for-sale equity securities would result in an unrealized loss charged to the income statement of approximately RMB 54,917 million, RMB 37,394 million and RMB 35,561 million, respectively.

The selection of a 10% immediate change in the value of equity securities should not be construed as a prediction by us of future market events but rather as an illustration of the potential impact of such an event.

Foreign Exchange Risk

Our exposure to fluctuations in foreign currency exchange rates against RMB results primarily from our holdings in non-RMB denominated term deposits and our foreign currency-denominated loans. Our debts and capital expenditures are predominantly denominated in RMB, and the principal currencies which create foreign currency exchange rate risk in our deposits are the U.S. dollar and Hong Kong dollar. The principal currencies which expose us to foreign currency exchange risk in our loans are the British pound, U.S. dollar and Euro. **** Our borrowings in foreign currencies include a three-year bank loan of EUR 67 million with a maturity date on January 18, 2021, a five-year bank loan of GBP 275 million with a maturity date on June 25, 2024, a five-year bank loan of US$ 860 million with a maturity date on September 16, 2024, and a six-month bank loan of EUR 127 million with a maturity date on January 11, 2020 which is automatically renewed upon maturity pursuant to the terms of the agreement, all of which are fixed rate loans, and a five-year bank loan of US$ 970 million with a maturity date on September 27, 2024, a three-year loan of EUR 400 million with a maturity date on December 6, 2020, and a one-year bank loan of US$ 18 million with a maturity date on November 6, 2020, all of which are floating rate loans. **** We recorded RMB 67 million (US$ 10 million) in foreign exchange losses for the year ended December 31, 2019, resulting mainly from the change in foreign exchange rates applicable to our assets and liabilities held in foreign currencies. **** Future movements in the exchange rate of RMB against the U.S. dollar and other foreign currencies may adversely affect our results of operations and financial condition.

210

The following tables set forth assets denominated in currencies other than RMB as of December 31, 2019, 2018 and 2017.


As of December 31, 2019		2021		2022		2023		2024		Thereafter		Total		Fairvalue

Debt securities
in US	7,804		46		6		37		36		294	****	8,223		8,240
Average interest rate	2.29%		5.50%		0.12%		3.75%		5.44%		3.67%	****	2.38%
Other	—		—		1		—		3		55	****	59		59
Average interest rate	—		—		2.69%		—		0.27%		0.77%	****	0.77%
Term deposits
in US	8,026		—		—		—		—		—	****	8,026		8,026
Average interest rate	3.21%		—		—		—		—		—	****	3.21%
in HK	32		—		—		—		—		—	****	32		32
Average interest rate	2.57%		—		—		—		—		—	****	2.57%
Loans
in US	—		—		—		—		—		1,592	****	1,592		1,778
Average interest rate	—		—		—		—		—		4.12%	****	4.12%
Cash and cash equivalents
in US	1,842		—		—		—		—		—	****	1,842		1,842
Average interest rate	0.05%		—		—		—		—		—	****	0.05%
in HK	444		—		—		—		—		—	****	444		444
Average interest rate	—		—		—		—		—		—	****	—
in British pound	406		—		—		—		—		—	****	406		406
Average interest rate	—		—		—		—		—		—	****	—
in Euro	20		—		—		—		—		—	****	20		20
Average interest rate	—		—		—		—		—		—	****	—
Other	3		—		—		—		—		—	****	3		3
Average interest rate	—		—		—		—		—		—	****	—
Liabilities
Interest-bearing loans and other borrowings
in British pound	—		—		—		—		2,515		—	****	2,515		2,515
Average interest rate	—		—		—		—		3.08%		—	****	3.08%
in US	126		—		—		—		12,766		—	****	12,892		12,892
Average interest rate	2.70%		—		—		—		3.18%		—	****	3.18%
in Euro	4,115		523		—		—		—		—	****	4,638		4,638
Average interest rate	3.25%		2.50%		—		—		—		—	****	3.16%

All values are in US Dollars.

211


As of December 31, 2018		2020		2021		2022		2023		Thereafter		Total		Fairvalue

Debt securities
in US	2,814		17		25		12		35		114	****	3,017		3,019
Average interest rate	2.52%		4.33%		5.60%		2.75%		5.05%		4.04%	****	2.64%
Other	3		—		—		—		—		28	****	31		31
Average interest rate	0.14%		—		—		—		—		0.91%	****	0.85%
Term deposits
in US	7,502		—		—		—		—		—	****	7,502		7,502
Average interest rate	2.21%		—		—		—		—		—	****	2.21%
Loans
in US	—		—		—		—		—		1,766	****	1,766		1,835
Average interest rate	—		—		—		—		—		4.12%	****	4.12%
Cash and cash equivalents
in US	1,768		—		—		—		—		—	****	1,768		1,768
Average interest rate	0.01%		—		—		—		—		—	****	0.01%
in HK	261		—		—		—		—		—	****	261		261
Average interest rate	—		—		—		—		—		—	****	—
in British pound	286		—		—		—		—		—	****	286		286
Average interest rate	—		—		—		—		—		—	****	—
in Euro	43		—		—		—		—		—	****	43		43
Average interest rate	—		—		—		—		—		—	****	—
Other	—		—		—		—		—		—	****	—		—
Average interest rate	—		—		—		—		—		—	****	—
Liabilities
Interest-bearing loans and other borrowings
in British pound	2,385		—		—		—		—		—	****	2,385		2,385
Average interest rate	3.54%		—		—		—		—		—	****	3.54%
in US	13,108		—		—		—		—		—	****	13,108		13,108
Average interest rate	2.35%		—		—		—		—		—	****	2.35%
in Euro	993		3,139		525		—		—		—	****	4,657		4,657
Average interest rate	1.50%		3.80%		2.50%		—		—		—	****	3.16%

All values are in US Dollars.

212


As of December 31, 2017		2019		2020		2021		2022		Thereafter		Total		Fairvalue

Debt securities
in US	1,587		1		17		33		—		181	****	1,819		1,828
Average interest rate	0.77%		0.13%		4.12%		5.95%		—		3.79%	****	1.20%
Other	—		1		—		—		—		26	****	27		27
Average interest rate	—		0.14%		—		—		—		1.02%	****	0.98%
Term deposits
in US	7,744		—		—		—		—		—	****	7,744		7,744
Average interest rate	1.96%		—		—		—		—		—	****	1.96%
Loans
in US	—		—		—		—		—		952	****	952		952
Average interest rate	—		—		—		—		—		4.00%	****	4.00%
Cash and cash equivalents
in US	1,246		—		—		—		—		—	****	1,246		1,246
Average interest rate	0.09%		—		—		—		—		—	****	0.09%
in HK	185		—		—		—		—		—	****	185		185
Average interest rate	—		—		—		—		—		—		—
in British pound	282		—		—		—		—		—	****	282		282
Average interest rate	—		—		—		—		—		—	****	—
in Euro	128		—		—		—		—		—	****	128		128
Average interest rate	—		—		—		—		—		—	****	—
Other	3		—		—		—		—		—	****	3		3
Average interest rate	—		—		—		—		—		—	****	—
Liabilities
Interest-bearing loans and other borrowings
in British pound	—		2,413		—		—		—		—	****	2,413		2,413
Average interest rate	—		3.54%		—		—		—		—	****	3.54%
in US	—		12,480		—		—		—		—	****	12,480		12,480
Average interest rate	—		2.35%		—		—		—		—	****	2.35%
in Euro	780		—		3,121		—		—		—	****	3,901		3,901
Average interest rate	1.50%		—		3.80%		—		—		—	****	3.34%

All values are in US Dollars.

213

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.

A. DEBT SECURITIES

Not applicable.

B. WARRANTS AND RIGHTS

Not applicable.

C. OTHER SECURITIES

Not applicable.

D. AMERICAN DEPOSITARY SHARES

The table below sets forth all fees and charges that a holder of our ADRs may have to pay to the depositary bank of our ADR program, either directly or indirectly.

Category	Depositary Actions	Associated Fee
(a) Depositing or substituting the underlying shares	Each person to whom ADRs are issued against deposits of shares, including deposits and issuances in respect of:<br><br><br><br> <br>share distributions, rights, merger<br><br><br><br> <br>exchange of securities or any other transaction or event or other distribution affecting<br>the ADSs or the deposited securities	US$ 5.00 for each 100 ADSs (or portion thereof) evidenced by the new ADRs delivered
(b) Receiving or distributing dividends	Distribution of dividends	US$ 0.02 or less per ADS
(c) Selling or exercising rights	Distribution or sale of securities, the fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities	US$ 5.00 for each 100 ADSs (or portion thereof)
(d) Withdrawing an underlying security	Acceptance of ADRs surrendered for withdrawal of deposited securities	US$ 5.00 for each 100 ADSs (or portion thereof) evidenced by the ADRs surrendered
(e) Transferring, splitting or grouping receipts	Transfers, combining or grouping of depositary receipts	US$ 1.50 per ADS
(f) Expenses of the depositary	Expenses incurred on behalf of ADR holders in connection with:<br> <br><br><br><br>compliance with foreign exchange control regulations or any law or regulation relating to foreign investment;<br><br><br><br> <br>the depositary’s or its custodian’s compliance with applicable law, rule or<br>regulation;<br> <br><br> <br>stock transfer or other taxes and other governmental charges;<br><br><br><br> <br>cable, telex, facsimile transmission and delivery;<br><br><br><br> <br>expenses of the depositary in connection with the conversion of foreign currency into<br>U.S. dollars (which are paid out of such foreign currency); and<br> <br><br> <br>any other charge<br>payable by depositary or its agents.	Expenses payable at the sole discretion of the depositary by billing ADR holders or by deducting charges from one or more cash dividends or other cash distributions.

214

Deutsche Bank Trust Company Americas, or Deutsche Bank, has served as the depositary bank of our ADR program since January 4, 2010. Deutsche Bank has agreed to reimburse certain reasonable company expenses related to our ADR program and incurred by us in connection with our ADR program. The table below sets forth the amounts reimbursed from January 1, 2019 to April 10, 2020.

Category of Expenses	Amount Reimbursed<br><br><br>from January 1, 2019<br><br><br>to April 10, 2020
NYSE listing fees	US$	139,000.00
Legal fees	US$	3,530.00
Investor relations^(1)^	US$	409,649.49
Broker reimbursements^(2)^	US$	40,544.14
Total	US$	592,723.63
^(1)^	Includes expenses related to announcement of results, ADR training programs,<br>non-deal roadshows and investor relations activities.
---	---
^(2)^	Broker reimbursements are fees payable to Broadridge and other service providers for the distribution of hard<br>copy material to beneficial ADR holders holding in the Depositary Trust Company. Corporate material includes information related to shareholders’ meetings and related voting instruction cards. These fees are SEC approved.
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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.

A. MATERIAL MODIFICATION TO THE RIGHTS OF SECURITY HOLDERS

See “Item 10. Additional Information—Articles of Association”.

B. USE OF PROCEEDS

The following use of proceeds information relates to our registration statement on Form F-1 (File No. 333-110615), filed by us in connection with our initial public offering of H shares in the United States. In connection with the registration of the H shares, a registration statement on Form F-6 (File No.333-110622) was also filed for ADSs representing such H shares. Each of these two registration statements was declared effective by the SEC on December 11, 2003. Our H shares commenced trading on the Hong Kong Stock Exchange on December 18, 2003 and the ADSs on the New York Stock Exchange on December 17, 2003.

The net proceeds from the initial public offering of our shares, after deduction of fees and expenses, amounted to RMB 24,707 million and were held in either H.K. dollars or U.S. dollars. As of the date of this annual report, a part of the cash proceeds from our global offering was held in bank deposit accounts denominated in foreign currencies in China, and part of the cash proceeds was invested in securities listed on overseas stock exchanges, multi-asset portfolios and private equity funds. We invested approximately US$ 433 million, in addition to 2,282 million in Renminbi, in Guangdong Development Bank in December 2006. We used approximately HK$ 12 billion for investments in Sino-Ocean Group Holding Limited in 2009, 2010 and 2013. As of December 31, 2019, we had engaged 10 third party overseas investment managers to manage US$ 1,363 million for investment in overseas public markets.

215

ITEM 15. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, we have carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, of the effectiveness of our disclosure controls and procedures as of December 31, 2019, the end of the period covered by this annual report. Based on that evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2019.

Management’s Report on Internal Control over Financial Reporting

Management of China Life Insurance Company Limited (together with its consolidated subsidiaries, the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with applicable generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:

•	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions<br>and dispositions of the assets and liabilities of the Company;
•	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial<br>statements in accordance with the applicable generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and<br>
---	---
•	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or<br>disposition of the Company’s assets that could have a material effect on the financial statements.
---	---

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control—Integrated Framework (2013 framework). Based on this assessment, management determined that the Company’s internal control over financial reporting was effective as of December 31, 2019.

216

The Company’s internal control over financial reporting as of December 31, 2019 has been audited by Ernst & Young Hua Ming LLP, an independent registered public accounting firm, as stated in their report which is on pages F-6 and F-7 **** of this annual report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019.

Changes in Internal Control over FinancialReporting

There were no changes to the Company’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the year ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT.

Our board of directors has determined that Mr. Chang Tso Tung Stephen **** qualifies as an audit committee financial expert as defined in Item 16A of Form 20-F. Mr. Chang Tso Tung Stephen is “independent” in accordance with the applicable requirements of Rule 10A-3 of the Securities Exchange Act of 1934. Mr. Chang was appointed as an independent non-executive director and a member of the audit committee of our Company in October 2014. For Mr. Chang’s **** biographical information, see “Item 6. Directors, Senior Management and Employees”.

ITEM 16B. CODE OF ETHICS.

At the board of directors meeting held on June 29, 2004, we adopted a code of business conduct and ethics that applies to our chief executive officer, chief financial officer, controller and other senior officers of our company. We have filed the adopted code of business conduct and ethics as an exhibit to our annual report on Form 20-F for the fiscal year ended December 31, 2004, as filed on May 27, 2005.

ITEM 16C. PRINCIPAL ACCOUNTANT FEESAND SERVICES.

The following table sets forth the aggregate audit fees, audit-related fees, tax fees and all other fees paid to our principal accountants for the fiscal years of 2019 and 2018.

	Audit Fees^(1)^
	(RMB in millions)
2019		61	—	—	3
2018		60	—	—	5
(1)	Audit fees include fees billed for professional services rendered for audits of the consolidated financial<br>statements and review of interim financial statements of China Life and fees billed for performing agreed-upon procedures.
---	---
(2)	All other fees include fees billed for advisory services which do not affect the independence of our principal<br>accountants.
---	---

According to our current internal rules, before our principal accountants are engaged by us to render audit or non-audit services, the engagement must be approved by our audit committee.

217

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.

Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.

As of December 31, 2019, China Life and its subsidiaries had not purchased, sold or redeemed any of China Life’s shares.

ITEM 16F. CHANGE INREGISTRANT’S CERTIFYING ACCOUNTANT.

Not Applicable.

ITEM 16G. CORPORATE GOVERNANCE

As a Chinese company with H shares, ADSs and A shares publicly traded on the HKSE, the NYSE and the SSE, respectively, we must comply with the corporate governance standards provided by PRC company law and other laws, as well as the securities laws and regulations in Hong Kong, United States and the listing requirements of the HKSE, the NYSE and the SSE that are applicable to us. The description set forth below includes, for purpose of Section 303A.11 of the NYSE Listed Company Manual, a summary of the significant ways in which our corporate governance practices differ from those followed by U.S. domestic companies under NYSE rules.

Board Independence

We identify our independent non-executive directors in accordance with the qualifications provided by relevant PRC and Hong Kong regulations, which prohibit independent directors from having, among other things, specified interests in our securities or business, relationships with the management and financial dependence on us. These tests vary in certain respects with those set forth under Section 303A.02 of the NYSE Listed Company Manual.

Section 303A.02 of the NYSE Listed Company Manual also requires the board of directors to affirmatively determine that the director has no material relationship with the company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the company). Under the HKSE Listing Rules, each independent non-executive director must provide an annual confirmation of his independence to the listed company. Under the Tentative Guidelines on Corporate Governance of Insurance Companies issued by the CIRC in 2006 (the “Chinese Insurance Company Corporate Governance Guidelines”), each independent director must make a public announcement of the director’s independence and commitment to duties.

Section 303A.01 of the NYSE Listed Company Manual provides that a U.S. domestic issuer must have a majority of independent directors, unless more than 50% of such issuer’s voting power for the election of directors is controlled by an individual, a group or another company (a “controlled company”). Because more than 60% of our voting power is controlled by CLIC, we, as with controlled U.S. domestic companies, would not be required to comply with this independent board requirement. As of the date of this annual report, our board of directors comprised eleven directors, including three executive directors, four non-executive directors and four independent non-executive directors.

218

Section 303A.03 of the NYSE Listed Company Manual requires a U.S. domestic company to have its non-management directors meet at regularly scheduled executive sessions without management and hold an executive session including only independent directors at least once a year, or hold regular executive sessions of independent directors. Under the HKSE corporate governance rules, from January 1, 2019, the chairman of our board of directors is required to have a meeting with independent non-executive directors only without the other directors present at least once a year. On December 19, 2019, the chairman of our board convened a meeting with independent non-executive directors only without the other directors present to discuss the operational management and development reform of our company.

Nominating/Corporate Governance Committee and Compensation Committee

Under Section 303A.04 of the NYSE Listed Company Manual, a U.S. domestic company must have a nominating/corporate governance committee composed entirely of independent directors with a written charter that addresses certain specified responsibilities, unless it is a “controlled company”. Section 303A.05 of the NYSE Listed Company Manual requires a U.S. domestic company to have a compensation committee composed entirely of independent directors with a written charter that addresses certain specified duties, unless it is a “controlled company”. We, as with controlled U.S. domestic companies, are not required under NYSE rules to have such a nominating/corporate governance committee or compensation committee. We have established a nominating and remuneration committee in accordance with the HKSE Listing Rules, comprised of a majority of independent non-executive directors as required under those rules. **** The primary duties of the nomination and remuneration committee are to review the structure and components of our board of directors, to formulate the appointment and successors to our board of directors and senior management, to review and recommend the nomination of our directors and senior officers, as well as to propose to our board of directors the remuneration policy for our directors, supervisors and senior management.

The Guiding Opinions on Regulating Governance Structure of Insurance Companies require that nominating and remuneration committees of Chinese insurance companies be comprised entirely of non-executive directors with the independent directors as the Chairmen. In 2019, our nominating and remuneration committee comprised two independent non-executive directors and one non-executive director with one of the independent non-executive directors serving as the chairman. We have complied with the composition requirements of the nomination and remuneration committee as prescribed under the Chinese Insurance Company Corporate Governance Guidelines.

Audit Committee

The NYSE rules set forth two levels of audit committee standards for U.S. domestic companies and foreign private issuers. As a foreign private issuer, we are required to comply with the audit committee requirements under Section 303A.06 of the NYSE Listed Company Manual, such as audit committee independence and certain functions and powers, but are not subject to the additional qualifications, independence, function and other requirements for U.S. domestic companies provided under Section 303A.07 of the NYSE Listed Company Manual.

219

We have established an audit committee in accordance with the requirements of Section 303A.06 of the NYSE Listed Company Manual, the HKSE Listing Rules and the Chinese Insurance Company Corporate Governance Guidelines. **** In 2019, our audit committee comprised three independent non-executive directors with one of them serving as the chairman. **** The primary duties of the audit committee are to review and supervise the financial reporting process, to assess the effectiveness of our risk management and internal control system, to supervise our internal audit system and its implementation and to implement and recommend the engagement or replacement of external auditors. Our audit committee is also responsible for communications between our internal and external auditors and our internal reporting system.

Corporate Governance Guidelines

Under Section 303A.09 of the NYSE Listed Company Manual, a U.S. domestic company must adopt and disclose corporate governance guidelines that address specified key subjects. We are not required by Chinese or Hong Kong laws or requirements to, and currently do not, have such corporate governance guidelines. However, we address several of the key subjects required by the NYSE Listed Company Manual to be included in the corporate governance guidelines in our articles of association, Rules of Procedures for Board of Directors, Rules of Internal Control and other internal corporate documents.

In addition, under the HKSE Listing Rules, we are expected to comply with, but may choose to deviate from, the provisions of the Corporate Governance Code in the HKSE Listing Rules, which sets out the principles of good corporate governance for issuers. However, we are required to disclose the reasons for deviation, if any, in our interim and annual reports.

We are required by the CSRC to disclose in our annual report filed with the Shanghai Stock Exchange our actual corporate governance practice as compared with CSRC’s rules on corporate governance of listed companies. Under such rules, we are required to disclose whether there is any material difference between our actual practices and the requirements under such rules, and explain the details and reasons for such differences, if any. Accordingly, we have disclosed in our annual report for the year of 2019 filed with the Shanghai Stock Exchange that we had established a corporate governance structure with well-defined duties and responsibilities strictly in accordance with the PRC Company Law and PRC Securities Law as well as relevant rules and regulations, and that our actual corporate governance practices are generally in compliance with the applicable regulatory rules and requirements of the jurisdictions where we are listed.

Code of Business Conduct and Ethics

Section 303A.10 of the NYSE Listed Company Manual requires U.S. domestic companies to adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. We have adopted a Code of Business Conduct and Ethics for Directors and Senior Officers and Code of Conduct for Employees. We have disclosed the Code of Business Conduct and Ethics for Directors and Senior Officers in our annual report under Form 20-F for fiscal year ended December 31, 2004 and are required to disclose in the annual report under Form 20-F any waivers of the code for directors or executive officers. In addition, according to the HKSE Listing Rules, all of our directors must comply with the Model Code for Securities Transactions by Directors of Listed Companies that sets forth the required standards with which the directors of a listed company must comply in securities transactions of the listed company. Under the Listing Rules of the Shanghai Stock Exchange, any of the directors, supervisors or senior management of the listed company may not transfer any shares of such company held by him/her within one year of the listing of the company or six months after leaving the company. During his/her tenure at the company, the number of shares transferred each year must not exceed 25% of the total number of shares of the company held by him/her, provided, however, if the directors, supervisors or senior management leave the company before the expiration of his/her tenure, during the term of his/her original tenure determined at the time of his/her appointment, the number of shares transferred each year must not exceed 25% of the total number of shares of the company held by him/her and may not transfer any shares within half a year after the expiration of the term of his/her original tenure determined at the time of his/her appointment. During his/her tenure at the company, he/she must file with the Shanghai Stock Exchange for record in advance any proposed transaction in the shares of the company in accordance with the relevant rules and regulations. In case of changes in shareholdings in the company, he/she shall report the changes on a timely basis to the company, which must then make relevant announcements on the website of the Shanghai Stock Exchange.

220

Certification Requirements

Under Section 303A.12(a) of the NYSE Listed Company Manual, each U.S. domestic company Chief Executive Officer must certify to the NYSE each year that he or she is not aware of any violation by the listed company of NYSE corporate governance listing standards. There are no similar requirements under PRC or Hong Kong laws or requirements.

ITEM 16H.	MINE SAFETY DISCLOSURE.

Not applicable.

PART III

ITEM 17. FINANCIAL STATEMENTS.

We have elected to provide the financial statements and related information specified in Item 18 in lieu of Item 17.

ITEM 18. FINANCIAL STATEMENTS.

See Index to Consolidated Financial Statements for a list of all financial statements filed as part of this annual report.

ITEM 19. EXHIBITS.

(a) See Item 18 for a list of the financial statements filed as part of this annual report.

(b) Exhibits to this annual report.

221

EXHIBIT INDEX

No.	Description ofExhibit
1.1	Amended and Restated Articles of Association of the Registrant
2.1	Form of H share certificate^(1)^
2.2	Form of Deposit Agreement, including the Form of American Depositary Receipt^(2)^
2.3	Amendment No. 1 to Deposit Agreement^(3)^
2.4	Amendment No. 2 to Deposit Agreement^(4)^
2.5	Description of Rights of Each Class of Securities Registered under Section 12 of the Exchange Act
4.1	Restructuring Agreement^(1)^
4.2	Trademark License Agreement^(1)^
4.3	Policy Management Agreement^(5)^
4.4	Non-Competition Agreement^(1)^
4.5	Asset Management Agreement between China Life Insurance (Group) Company and China Life Asset Management Company Limited^(8)^
4.6	Asset Management Agreement between China Life Insurance Company Limited and China Life Investment Holding Company Limited^(8)^
4.7	Asset Management Agreement between China Life Insurance Company Limited and China Life Asset Management Company Limited^(8)^
4.8	Property Leasing Agreement^(5)^
4.9	Entrustment and Account Management Agreement for Corporate Annuity Fund^(7)^
4.10	Insurance Sales Framework Agreement between China Life Insurance Company Limited and China Life Property and Casualty Insurance Company Limited<br> (Agency Services to be Provided by China Life Insurance Company Limited)^(5)^
8.1	List of subsidiaries of the Registrant
11.1	Code of Business Conduct and Ethics^(6)^
12.1	Certification pursuant to Rule 13a-14(a)
12.2	Certification pursuant to Rule 13a-14(a)
13.1	Certification pursuant to Rule 13a-14(a) and Section 1350 of Chapter 63 of Title 18 of the United States Code
101	Interactive Data File
(1)	Incorporated by reference to the Registration Statement on Form F-1<br>(File No. 333-110615), filed with the Commission on December 9, 2003.
---	---

222

(2)	Incorporated by reference to the Registration Statement on Form F-6<br>(File No. 333-164005), filed with the Commission on January 4, 2010.
(3)	Incorporated by reference to the Post-Effective Amendment No. 1 to Form<br>F-6 (File No. 333-164005), filed with the Commission on January 27, 2015.
---	---
(4)	Incorporated by reference to the Post-Effective Amendment No. 2 to Form<br>F-6 (File No. 333-164005), filed with the Commission on May 1, 2015.
---	---
(5)	Incorporated by reference to the Annual Report on Form 20-F for the<br>fiscal year ended December 31, 2017, filed with the Commission on April 25, 2018.
---	---
(6)	Incorporated by reference to the Annual Report on Form 20-F for the<br>fiscal year ended December 31, 2004, filed with the Commission on May 27, 2005.
---	---
(7)	Incorporated by reference to the Annual Report on Form 20-F for the<br>fiscal year ended December 31, 2014, filed with the Commission on April 24, 2015.
---	---
(8)	Incorporated by reference to the Annual Report on Form 20-F for the<br>fiscal year ended December 31, 2018, filed with the Commission on April 24, 2019.
---	---

223

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

China Life Insurance Company Limited
By:	/s/ Su Hengxuan
	Name: Su Hengxuan
	Title: President and Executive Director

Date: April 29, 2020

CHINA LIFE INSURANCE COMPANY LIMITED

Contents

	Pages
Report of Independent Registered Public Accounting<br>Firm		F-2
Consolidated Statement of Financial Position		F-8
Consolidated Statement of Comprehensive Income		F-10
Consolidated Statement of Changes in Equity		F-12
Consolidated Statement of Cash Flows		F-13
Notes to the Consolidated Financial Statements		F-15

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of China Life Insurance Company Limited

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of China Life Insurance Company Limited (the Company) as of 31 December 2019 and 2018, the related consolidated statements of comprehensive income, changes in equity and cash flows for each of the three years in the period ended 31 December 2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at 31 December 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended 31 December 2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of 31 December 2019, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated 29 April 2020 expressed an unqualified opinion thereon.

Adoption of New Accounting Standard

As discussed in Note 2.1.1 to the consolidated financial statements, the Company changed its method for accounting for leases using a modified retrospective approach during the year ended 31 December 2019.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (CONTINUED)

Valuation of insurance contract liabilities

Description of the Matter

At 31 December 2019, the Group had significant insurance contract liabilities in the amount of RMB2,552.74 billion. As disclosed in Notes 2.12 and 15 to the consolidated financial statements, the Group’s insurance contract liabilities are primarily comprised of long-term insurance contract liabilities. The Group uses the discounted cash flow method to estimate the reserve of long-term insurance contracts. Auditing the Group’s long-term insurance contract liabilities was complex and required the involvement of specialists due to the complexity of the actuarial models and highly judgemental nature of the actuarial assumptions used by management to estimate the liabilities. The actuarial assumptions include mortality, morbidity, lapse rates, discount rates, and expenses. Changes in these assumptions could have significant effects on the valuation of the long-term insurance contract liabilities.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Group’s long-term insurance contract liabilities valuation processes. For example, we tested controls over management’s review of the actuarial models, the actuarial assumptions, and the data inputs used. To test the valuation of long-term insurance contract liabilities, our audit procedures included, among others, comparing the methodology, actuarial models and actuarial assumptions used by the Group to recognised actuarial practices and testing the completeness and accuracy of the underlying insurance policy data used in the valuation. We involved our actuarial specialists to assist us with assessing the reasonableness of the assumptions by comparing them to industry data, historical experiences and expectations of the Group. For a sample of selected insurance products, our actuarial specialists performed an independent recalculation of the long-term insurance contract liabilities. In addition, our actuarial specialists assessed the reasonableness of the movement of long-term insurance contract liabilities considering changes in the actuarial assumptions in the reporting period.

F-3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (CONTINUED)

The i m p ai r me n t **** te s t **** for **** i n v e st m ent **** in an **** a s soc i ate

Description of the Matter

At 31 December 2019, the Group held a material investment in an associate, Sino-Ocean Group Holding Limited (“Sino-Ocean”), a company listed on the Stock Exchange of Hong Kong Limited, with a carrying value of RMB11.39 billion. As disclosed in Note 9 to the consolidated financial statements, as the quoted market price of this investment has been continuously below its carrying value, the Group performed an impairment test, and recognised an impairment loss of RMB1.50 billion in 2019. Auditing management’s impairment test of Sino-Ocean was complex due to the significant estimates and judgements involved in management’s assessment of its value in use, including the selling prices of development properties, rental prices of investment properties included in the projection of future cash flows and the discount rates used. These estimates and judgements may be affected by unexpected changes in the future market or economic conditions.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Group’s investment impairment test of Sino-Ocean. For example, we tested controls over management’s review of the impairment test methodology and the significant assumptions used in the valuation. To test the impairment test of Sino-Ocean, our audit procedures included, among others, evaluating the Group’s valuation methodology and testing the completeness and accuracy of the underlying data used in the cash flows projection. We compared the selling prices of development properties and rental prices of investment properties used in the cash flow projection to the historical business results of Sino-Ocean and industry data. We also involved our internal valuation specialists to assist us with assessing the reasonableness of the Group’s valuation methodology with reference to valuation guidelines and industry practice. In addition, we compared the discount rate used by the Group with the discount rate developed by our valuation specialists using information of comparable companies.

F-4

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (CONTINUED)

Fair **** v alue **** of **** le v el **** III **** fina n ci a l **** a s s ets

Description of the Matter

At 31 December 2019, the Group held material investments in certain financial assets such as private equity funds, preference shares, other equity and debt investments, which are accounted for as available-for-sale securities at fair value or securities at fair value through profit or loss with a combined carrying value of RMB234.99 billion. As disclosed in Note 4.4 to the consolidated financial statements, these investments are classified as level III in the fair value hierarchy as their fair values are measured using valuation methodologies with significant unobservable inputs. Auditing the fair value measurement of the Group’s level III financial assets was complex due to the significant estimates and judgements involved in the assessment of valuation methodologies and significant unobservable inputs, including discount rates for factors such as lack of marketability and credit risk, among others. The use of different valuation methodologies and changes in significant unobservable inputs could result in significantly different fair value estimates.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Group’s fair value measurement of level III financial assets. For example, we tested management’s review controls over the valuation methodologies and the significant unobservable inputs used in the fair value measurements. To test the fair value measurement of level III financial assets, our audit procedures included, among others, evaluating the Group’s valuation methodologies, testing the significant unobservable inputs used by the Group in determining the fair values, and testing the mathematical accuracy of the Group’s valuation calculations. We involved our valuation specialists to assist us with evaluating the Group’s valuation methodologies and assessing the reasonableness of the significant unobservable inputs, including discount rates for factors such as lack of marketability and credit risk, among others used in the valuations by comparing them to information available from third-party sources and market data. For a sample of the Group’s level III financial assets, our valuation specialists also independently developed fair value estimates and compared them to the Group’s valuation results.

/s/ Ernst & Young Hua Ming LLP

We have served as the Company’s auditor since 2013.

Beijing, People’s Republic of China

29 April 2020

F-5

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of China Life Insurance Company Limited

Opinion on Internal Control over Financial Reporting

We have audited China Life Insurance Company Limited’s internal control over financial reporting as of 31 December 2019, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, China Life Insurance Company Limited (the Company) maintained, in all material respects, effective internal control over financial reporting as of 31 December 2019, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Company as of 31 December 2019 and 2018, the related consolidated statements of comprehensive income, changes in equity and cash flows for each of the three years in the period ended 31 December 2019, and the related notes, and our report dated 29 April 2020 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

F-6

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (CONTINUED)

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

/s/ Ernst & Young Hua Ming LLP

Beijing, People’s Republic of China

29 April 2020

F-7

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Financial Position

As at 31 December 2019

		As at 31<br>December<br>2019RMB million
ASSETS
Property, plant and equipment	6	****	51,758	47,281
Right-of-use assets	7	****	3,520	—
Investment properties	8	****	12,141	9,747
Investments in associates and joint ventures	9	****	222,983	201,661
Held-to-maturity securities	10.1	****	928,751	806,717
Loans	10.2	****	608,920	450,251
Term deposits	10.3	****	535,260	559,341
Statutory deposits - restricted	10.4	****	6,333	6,333
Available-for-sale securities	10.5	****	1,058,957	870,533
Securities at fair value through profit or loss	10.6	****	141,608	138,717
Derivative financial assets	10.7	****	428	—
Securities purchased under agreements to resell	10.8	****	4,467	9,905
Accrued investment income	10.9	****	41,703	48,402
Premiums receivable	12	****	17,281	15,648
Reinsurance assets	13	****	5,161	4,364
Other assets	14	****	34,029	33,437
Deferred tax assets	29	****	128	1,257
Cash and cash equivalents		****	53,306	50,809
Total assets		****	3,726,734	3,254,403

The notes on pages 15 to 110 form an integral part of these consolidated financial statements.

F-8

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Financial Position (continued)

As at 31 December 2019

		As at 31<br>December<br>2019RMB million
LIABILITIES AND EQUITY
Liabilities
Insurance contracts	15	****	2,552,736	2,216,031
Investment contracts	16	****	267,804	255,434
Policyholder dividends payable		****	112,593	85,071
Interest-bearing loans and borrowings	17	****	20,045	20,150
Lease liabilities		****	3,091	—
Bonds payable	18	****	34,990	—
Financial liabilities at fair value through profit or loss		****	3,859	2,680
Derivative financial liabilities	10.7	****	—	1,877
Securities sold under agreements to repurchase	19	****	118,088	192,141
Annuity and other insurance balances payable		****	51,019	49,465
Premiums received in advance		****	60,898	46,650
Other liabilities	20	****	81,114	58,426
Deferred tax liabilities	29	****	10,330	—
Current income tax liabilities		****	223	2,630
Statutory insurance fund	21	****	602	558
Total liabilities		****	3,317,392	2,931,113
Equity
Share capital	35	****	28,265	28,265
Other equity instruments	36	****	7,791	7,791
Reserves	37	****	197,221	149,293
Retained earnings		****	170,487	133,022
Attributable to equity holders of the Company		****	403,764	318,371
Non-controlling interests		****	5,578	4,919
Total equity		****	409,342	323,290
Total liabilities and equity		****	3,726,734	3,254,403

Approved and authorised for issue by the Board of Directors on 25 March 2020.

The notes on pages 15 to 110 form an integral part of these consolidated financial statements.

F-9

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2019


	Notes
REVENUES
Gross written premiums			567,086		535,826		511,966
Less: premiums ceded to reinsurers			(5,238	)	(4,503	)	(3,661	)
Net written premiums			561,848		531,323		508,305
Net change in unearned premium reserves			(1,570	)	700		(1,395	)
Net premiums earned			560,278		532,023		506,910
Investment income		2 2	139,919		125,167		122,727
Net realised gains on financial assets		2 3	1,831		(19,591	)	42
Net fair value gains through profit or loss		2 4	19,251		(18,278	)	6,183
Other income			8,195		8,098		7,493
Total revenues			729,474		627,419		643,355
BENEFITS, CLAIMS AND EXPENSES
Insurance benefits and claims expenses
Life insurance death and other benefits		2 5	(127,877	)	(248,736	)	(259,708	)
Accident and health claims and claim adjustment expenses		2 5	(50,783	)	(40,552	)	(33,818	)
Increase in insurance contract liabilities		2 5	(330,807	)	(189,931	)	(172,517	)
Investment contract benefits		2 6	(9,157	)	(9,332	)	(8,076	)
Policyholder dividends resulting from participation in profits			(22,375	)	(19,646	)	(21,871	)
Underwriting and policy acquisition costs			(81,396	)	(62,705	)	(64,789	)
Finance costs		2 7	(4,255	)	(4,116	)	(4,601	)
Administrative expenses			(40,275	)	(37,486	)	(35,953	)
Other expenses			(9,602	)	(7,642	)	(6,426	)
Statutory insurance fund contribution		2 1	(1,163	)	(1,097	)	(1,068	)
Total benefits, claims and expenses			(677,690	)	(621,243	)	(608,827	)
Net gains on investments of associates and joint ventures		9	8,011		7,745		7,143
Including: share of profit of associates and joint ventures			9,159		7,745		7,143
Profit before income tax		2 8	59,795		13,921		41,671
Income tax		29	(781	)	(1,985	)	(8,919	)
Net profit			59,014		11,936		32,752
Attributable to:
- Equity holders of the Company			58,287		11,395		32,253
- Non-controlling interests			727		541		499
Basic and diluted earnings per share		3 0	RMB2.05		RMB0.39		RMB1.13

The notes on pages 15 to 110 form an integral part of these consolidated financial statements.

F-10

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Comprehensive Income (continued)

For the year ended 31 December 2019


	Note
Other comprehensive income
Other comprehensive income that may be reclassified to profit or loss insubsequent periods:
Fair value gains/(losses) on available-for-sale securities			69,600		(24,591	)	(15,003	)
Amount transferred to net profit from other comprehensive income			(4,635	)	19,549		(42	)
Portion of fair value changes on available-for-sale securities attributable to<br>participating policyholders			(19,521	)	(32	)	5,605
Share of other comprehensive income of associates and joint ventures under the<br>equity method			599		735		20
Exchange differences on translating foreign operations			237		598		(865	)
Income tax relating to components of other comprehensive income		29	(11,292	)	1,716		2,359
Other comprehensive income that may be reclassified to profit or loss insubsequent periods			34,988		(2,025	)	(7,926	)
Other comprehensive income that will not be reclassified to profit or loss insubsequent periods:
Share of other comprehensive income of associates and joint ventures under the<br>equity method			(76	)	—		—
Other comprehensive income for the year, net of tax			34,912		(2,025	)	(7,926	)
Total comprehensive income for the year, net of tax			93,926		9,911		24,826
Attributable to:
- Equity holders of the Company			93,134		9,325		24,341
- Non-controlling interests			792		586		485

The notes on pages 15 to 110 form an integral part of these consolidated financial statements.

F-11

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Changes in Equity

For the year ended 31 December 2019

	Attributable to equity holders<br>of the Company										Non-<br><br><br>controlling<br><br><br>interests			Total
	Share<br>capitalRMBmillion		Other<br>equity<br>instrumentsRMBmillion		ReservesRMBmillion			Retained<br>earningsRMBmillion			RMBmillion			RMBmillion
	(Note 35)		(Note 36)		(Note 37)
As at 1 January 2017		28,265		7,791		145,007			122,558			4,027			307,648
Net profit		—		—		—			32,253			499			32,752
Other comprehensive income		—		—		(7,912	)		—			(14	)		(7,926	)
Total comprehensive income		—		—		(7,912	)		32,253			485			24,826
Transactions with owners
Appropriation to reserves (Note 37)		—		—		8,445			(8,445	)		—			—
Dividends paid (Note 32)		—		—		—			(7,164	)		—			(7,164	)
Dividends to non-controlling interests		—		—		—			—			(135	)		(135	)
Others		—		—		135			—			—			135
Total transactions with owners		—		—		8,580			(15,609	)		(135	)		(7,164	)
As at 31 December 201 7		28,265		7,791		145,675			139,202			4,377			325,310
As at 1 January 2018		28,265		7,791		145,675			139,202			4,377			325,310
Net profit		—		—		—			11,395			541			11,936
Other comprehensive income		—		—		(2,070	)		—			45			(2,025	)
Total comprehensive income		—		—		(2,070	)		11,395			586			9,911
Transactions with owners
Capital paid in by non-controlling interests		—		—		—			—			105			105
Appropriation to reserves (Note 37)		—		—		5,885			(5,885	)		—			—
Dividends paid (Note 32)		—		—		—			(11,690	)		—			(11,690	)
Dividends to non-controlling interests		—		—		—			—			(149	)		(149	)
Others		—		—		(197	)		—			—			(197	)
Total transactions with owners		—		—		5,688			(17,575	)		(44	)		(11,931	)
As at 31 December 2018		28,265		7,791		149,293			133,022			4,919			323,290
Effect of associates’ adoption of new accounting standards<br>(Note 9)	****	—	****	—	****	16	****	****	(2,905	)	****	—	****	****	(2,889	)
As at 1 January 2019	****	28,265	****	7,791	****	149,309	****	****	130,117	****	****	4,919	****	****	320,401	****
Net profit	****	—	****	—	****	—	****	****	58,287	****	****	727	****	****	59,014	****
Other comprehensive income	****	—	****	—	****	34,847	****	****	—	****	****	65	****	****	34,912	****
Total comprehensive income	****	—	****	—	****	34,847	****	****	58,287	****	****	792	****	****	93,926	****
Transactions with owners
Appropriation to reserves (Note 37)	****	—	****	—	****	13,087	****	****	(13,087	)	****	—	****	****	—	****
Dividends paid (Note 32)	****	—	****	—	****	—	****	****	(4,916	)	****	—	****	****	(4,916	)
Dividends to non-controlling interests	****	—	****	—	****	—	****	****	—	****	****	(133	)	****	(133	)
Reserves to retained earnings(Note 37)	****	—	****	—	****	(86	)	****	86	****	****	—	****	****	—	****
Others	****	—	****	—	****	64	****	****	—	****	****	—	****	****	64	****
Total transactions with owners	****	—	****	—	****	13,065	****	****	(17,917	)	****	(133	)	****	(4,985	)
As at 31 December 2019	****	28,265	****	7,791	****	197,221	****	****	170,487	****	****	5,578	****	****	409,342	****

The notes on pages 15 to 110 form an integral part of these consolidated financial statements.

F-12

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Cash Flows

For the year ended 31 December 2019

	2019			2018			2017
	RMB million			RMB million			RMB million
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income tax	****	59,795	****		13,921			41,671
Adjustments for:
Investment income	****	(139,919	)		(125,167	)		(122,727	)
Net realised and unrealised losses/(gains) on financial assets	****	(21,082	)		37,869			(6,225	)
Insurance contracts	****	335,971	****		190,210			176,148
Depreciation and amortisation	****	4,379	****		2,638			2,240
Foreign exchange losses/(gains)	****	67	****		194			(52	)
Net gains on investments of associates and joint ventures	****	(8,011	)		(7,745	)		(7,143	)
Changes in operating assets and liabilities:
Decrease/(increase) in securities at fair value through profit or loss,<br>net	****	6,858	****		(9,020	)		76,378
Financial liabilities at fair value through profit or loss	****	1,213	****		1,114			931
Receivables and payables	****	50,622	****		48,838			38,967
Income tax paid	****	(8,636	)		(9,991	)		(4,473	)
Interest received—securities at fair value through profit or loss	****	3,811	****		3,527			4,497
Dividends received—securities at fair value through profit or<br>loss	****	964	****		1,164			778
Net cash inflow/(outflow) from operating activities	****	286,032	****		147,552			200,990
CASH FLOWS FROM INVESTING ACTIVITIES
Disposals and maturities:
Disposals of debt investments	****	112,182	****		48,942			30,540
Maturities of debt investments	****	133,519	****		110,425			142,845
Disposals of equity investments	****	450,014	****		278,003			506,306
Disposals of property, plant and equipment	****	72	****		274			103
Disposals of subsidiaries	****	1,432	****		—			—
Purchases:
Debt investments	****	(504,292	)		(294,238	)		(516,051	)
Equity investments	****	(545,657	)		(335,301	)		(500,737	)
Property, plant and equipment	****	(11,415	)		(19,546	)		(9,619	)
Investments in associates and joint ventures	****	(23,389	)		(34,928	)		(37,304	)
Decrease/(increase) in term deposits, net	****	24,102	****		(109,590	)		92,148
Decrease in securities purchased under agreements to resell, net	****	5,468	****		26,258			6,981
Interest received	****	116,846	****		106,342			98,012
Dividends received	****	25,169	****		19,503			29,014
Increase in policy loans, net	****	(32,707	)		(34,208	)		(15,515	)
Cash paid related to other investing activities	****	—	****		(309	)		(399	)
Cash received related to other investing activities	****	1,141	****		—			—
Net cash inflow/(outflow) from investing activities	****	(247,515	)		(238,373	)		(173,676	)

The notes on pages 15 to 110 form an integral part of these consolidated financial statements.

F-13

CHINA LIFE INSURANCE COMPANY LIMITED

Consolidated Statement of Cash Flows (continued)

For the year ended 31 December 2019

	2019			2018			2017
	RMB million			RMB million			RMB million
CASH FLOWS FROM FINANCING ACTIVITIES
Increase/(decrease) in securities sold under agreements to repurchase,<br>net	****	(73,552	)		104,832			6,228
Interest paid	****	(3,072	)		(3,990	)		(5,671	)
Repayment of borrowings	****	(365	)		—			—
Dividends paid to equity holders of the Company	****	(4,916	)		(11,690	)		(7,164	)
Dividends paid to non-controlling<br>interests	****	(133	)		(149	)		(135	)
Proceeds from issue of bonds	****	34,988	****		—			—
Cash received from borrowings	****	123	****		727			3,121
Payment of principal portion of lease liabilities	****	(1,348	)		—			—
Capital injected into subsidiaries by<br>non-controlling interests	****	12,961	****		3,560			4,034
Cash repaid to lenders	****	—	****		—			(38,000	)
Cash paid related to other financing activities	****	(761	)		(327	)		(8,008	)
Net cash inflow/(outflow) from financing activities	****	(36,075	)		92,963			(45,595	)
Foreign exchange gains/(losses) on cash and cash equivalents	****	55	****		81			(179	)
Net increase/(decrease) in cash and cash equivalents	****	2,497	****		2,223			(18,460	)
Cash and cash equivalents
Beginning of the year	****	50,809	****		48,586			67,046
End of the year	****	53,306	****		50,809			48,586
Analysis of balances of cash and cash equivalents
Cash at banks and in hand	****	52,800	****		50,792			47,444
Short-term bank deposits	****	506	****		17			1,142

The notes on pages 15 to 110 form an integral part of these consolidated financial statements.

F-14

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

1	ORGANISATION AND PRINCIPAL ACTIVITIES

China Life Insurance Company Limited (the “Company”) was established in the People’s Republic of China (“China” or the “PRC”) on 30 June 2003 as a joint stock company with limited liability as part of a group restructuring of China Life Insurance (Group) Company (“CLIC”, formerly China Life Insurance Company) and its subsidiaries (the “Restructuring”). The Company and its subsidiaries are hereinafter collectively referred to as the “Group”. The Group’s principal activities are the writing of life, health, accident and other types of personal insurance business; reinsurance business for personal insurance business; fund management business permitted by national laws and regulations or approved by the State Council of the People’s Republic of China, etc.

The Company is a joint stock company incorporated in the PRC with limited liability. The address of its registered office is 16 Financial Street, Xicheng District, Beijing, the PRC. The Company is listed on the New York Stock Exchange, the Stock Exchange of Hong Kong Limited, and the Shanghai Stock Exchange.

These consolidated financial statements are presented in millions of Renminbi (“RMB million”) unless otherwise stated. These consolidated financial statements have been approved and authorised for issue by the Board of Directors on 25 March 2020.

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1	Basis of preparation

The Group has prepared these consolidated financial statements in accordance with International Financial Reporting Standards (“IFRSs”), amendments to IFRSs and interpretations issued by the International Accounting Standards Board (“IASB”). These consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and the applicable disclosure requirements of the Hong Kong Companies Ordinance. The Group has prepared the consolidated financial statements under the historical cost convention, except for financial assets and liabilities at fair value through profit or loss, available for sale securities, insurance contract liabilities and certain property, plant and equipment at deemed cost as part of the Restructuring process. The preparation of financial statements in compliance with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.

2.1.1	New accounting standards and amendments adopted by the Group for the first time for the financial yearbeginning on 1 January 2019
Standards/Amendments	Content	Effective for annual periodsbeginning on or after
---	---	---	---
IFRS 16	Leases		1 January 2019
IAS 28 Amendments	Long-term Interests in Associates and Joint Ventures		1 January 2019
IAS 19 Amendments	Plan Amendment, Curtailment or Settlement		1 January 2019
IFRIC 23	Uncertainty over Income Tax Treatments		1 January 2019
Annual Improvements to IFRSs 2015-2017 Cycle	Amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23		1 January 2019

F-15

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.1	Basis of preparation (continued)
---	---
2.1.1	New accounting standards and amendments adopted by the Group for the first time for the financial yearbeginning on 1 January 2019 (continued)
---	---

IFRS 16 – Leases ****

IFRS 16 supersedes IAS 17 Leases, and related interpretations from International Financial Reporting Interpretation Committee and Standard Interpretation Committee. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model. Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors continue to classify leases as either operating or finance leases using similar principles as in IAS 17. Therefore, IFRS 16 did not have any financial impact on leases where the Group is the lessor.

The Group has adopted IFRS 16 using the modified retrospective method of adoption with the date of initial application of 1 January 2019. Under this method, the standard has been applied retrospectively with the cumulative effect of initial adoption as an adjustment to the opening balance of retained earnings as at 1 January 2019, and the comparative information for 2018 was not restated and continues to be reported under IAS 17.

New definition of a lease

Under IFRS 16, at inception of a contract, an entity shall assess whether the contract is, or contains, a lease. A contract is, or contains a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed. Therefore, the definition of a lease under IFRS 16 has been applied only to contracts entered or changed on or after 1 January 2019.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component on the basis of their stand-alone prices. A practical expedient is available to a lessee, which the Group has adopted, not to separate non-lease components and to account for the lease and the associated non-lease components as a single lease component.

As a lessee – Leases previously classified as operating leases

As a lessee, the Group previously classified leases as either finance leases or operating leases based on the assessment of whether the lease transferred substantially all the rewards and risks of ownership of assets to the Group. Under IFRS 16, the Group applies a single approach to recognise and measure right-of-use assets and lease liabilities for all leases, except for two elective exemptions for leases of low-value assets (elected on a lease by lease basis) and short-term leases (elected by class of underlying asset). The Group has elected not to recognise right-of-use assets and lease liabilities for (i) leases of low-value assets; and (ii) leases, that at the commencement date, have a lease term of 12 months or less. Instead, the Group recognises the lease payments associated with those leases as an expense on a straight-line basis over the lease term.

Lease liabilities as at 1 January 2019 were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate as at 1 January 2019.

The right-of-use assets were measured at the amount of the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments relating to the leases recognised in the statement of financial position immediately before 1 January 2019. All these assets were assessed for any impairment based on IAS 36 – Impairment of Assets on that date.

F-16

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.1	Basis of preparation (continued)
---	---
2.1.1	New accounting standards and amendments adopted by the Group for the first time for the financial yearbeginning on 1 January 2019 (continued)
---	---
IFRS 16 – Leases (continued)
---

As a lessee – Leases previously classified as operating leases (continued)

The Group has used the following elective practical expedients when applying IFRS 16 as at 1 January 2019:

•	Applied the recognition exemptions for leases of low value assets and leases with lease term that ends within<br>12 months from the date of initial application;
•	Applied a single discount rate to a portfolio of leases with reasonably similar characteristics on the<br>measurement of the lease liability;
---	---
•	Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial<br>application;
---	---
•	Used hindsight in determining the lease term where the contract contains options to extend or terminate the<br>lease;
---	---
•	Relied on its assessment of whether leases are onerous immediately before the date of initial application. The<br>Group adjusted the right-of-use asset at the date of initial application by the amount of any provision for onerous leases recognised in the statement of financial position immediately before the date of initial application.
---	---

In addition to land use rights, the Group recognised other right-of-use assets of RMB2,555 million and lease liabilities of RMB2,185 million at the date of initial application. Compared to the end of 2018, after the relative adjustments, total assets and total liabilities at the group level as at 1 January 2019 both increased by RMB2,194 million. The reconciliation between the minimum unpaid lease payments of the operating leases disclosed in the Group’s financial statements for the year ended 31 December 2018, and the lease liabilities recognised in the consolidated statement of financial position at the date of initial application are as follows:


Operating lease commitments as at 31 December 2018	2,474
Less: short-term leases, those leases with a remaining lease term less<br>than 12<br> <br>months from the date<br>of initial application and leases of low-value assets	(132	)
impact of discounting at the incremental borrowing rate as at 1 January 2019	(157	)
Lease liabilities as at 1 January 2019	2,185

The weighted average incremental borrowing rate the Group adopted as at 1 January 2019 in calculating the lease liabilities in the consolidated statement of financial position was 3.76%.

Refer to Note 2.7 for relevant accounting policies.

F-17

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.1	Basis of preparation (continued)
---	---
2.1.1	New accounting standards and amendments adopted by the Group for the first time for the financial yearbeginning on 1 January 2019 (continued)
---	---

IAS 28 Amendments – Long-term interests in associates andjoint ventures

The Group’s accounting treatment in the previous years is in line with the amendments, thus there has been no impact on the Group’s consolidated financial statements as a result of the amendments.

IAS 19 Amendments – **** Plan Amendment, Curtailment or Settlement

The Group has no defined benefit plans. The amendments under IAS 19 have had no impact on the Group’s consolidated financial statements. The Group will adopt the amendments if such business occurs in the future.

IFRIC 23 – Uncertainty over Income Tax Treatments

In June 2017, the IASB issued IFRIC Interpretation 23 which clarifies application of the recognition and measurement requirements in IAS 12 Income Taxes when there is uncertainty over income tax treatments. The interpretation mainly addresses the following four areas: whether an entity separately considers the uncertainty of tax treatments; assumptions adopted by an entity to address the examination of tax treatments by taxation authorities; how an entity determines taxable profit/(tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and how an entity considers changes in facts and circumstances. The interpretation is effective for annual reporting periods beginning on or after 1 January 2019.

The Group’s accounting treatment in the previous years is in line with the clarification of the interpretation. The clarification has had no significant impact on the Group’s consolidated financial statements.

Annual Improvementsto IFRSs 2015-2017 Cycle – Amendments to IFRS 3, IFRS 11, IAS **** 12 and IAS **** 23 ****

In December 2017, the Annual Improvements 2015-2017 Cycle issued set out amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23, which are effective for annual periods beginning on or after 1 January 2019. There has been no significant impact on the Group’s consolidated financial statements as a result of these amendments.

F-18

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.1	Basis of preparation (continued)
---	---
2.1.2	New accounting standards and amendments that are effective but temporary exemption is applied by theGroup for the financial year beginning on 1 January 2019
---	---
Standards/Amendments	Content	Effective for annual periodsbeginning on or after
---	---	---	---
IFRS 9	Financial Instruments		1 January 2018

IFRS 9 – Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9, bringing together all phases of the financial instruments project to replace IAS 39 and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early adoption permitted. Based on the current assessment, the Group expects that the adoption of IFRS 9 will have a significant impact on the Group’s consolidated financial statements. The Group adopts the temporary exemption permitted in Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (“IFRS 4 Amendment”) to apply IAS 39 rather than IFRS 9, until the effective date of IFRS 17. Refer to Note 33 for more details.

Classification and measurement ****

IFRS 9 requires that the Group classifies debt instruments based on the combined effect of application of business models (hold to collect contractual cash flows, hold to collect contractual cash flows and sell financial assets or other business models) and contractual cash flow characteristics (solely payments of principal and interest on the principal amount outstanding or not). Debt instruments not giving rise to cash flows that are solely payments of principal and interest on the principal amount outstanding would be measured at fair value through profit or loss. Other debt instruments giving rise to cash flows that are solely payments of principal and interest on the principal amount outstanding would be measured at amortised cost, fair value through other comprehensive income (“FVOCI”) or fair value through profit or loss, based on their respective business models. The Group analysed the contractual cash flow characteristics of financial assets as at 31 December 2019 and made relevant disclosures in Note 33.

Equity instruments would generally be measured at fair value through profit or loss unless the Group elects to measure at FVOCI for certain equity investments not held for trading. This will result in unrealised gains and losses on equity instruments currently classified as available-for-sale securities being recorded in income going forward. Currently, these unrealised gains and losses are recognised in other comprehensive income (“OCI”). If the Group elects to record equity investments at FVOCI, gains and losses would never be recognised in income except for the received dividends which do not represent a recovery of part of the investment cost.

Impairment ****

IFRS 9 replaces the “incurred loss” model with the “expected credit loss” model which is designed to include forward-looking information. The Group is in the process of developing and testing the key models required under IFRS 9 and analysing the impact on the expected loss provision; the Group believed that the provision for debt instruments of the Group under the “expected credit loss” model would be larger than that under the previous “incurred loss” model.

Hedge accounting ****

The Group does not apply the hedge accounting currently, so the Group expects that the new hedge accounting model under IFRS 9 will have no impact on the Group’s consolidated financial statements.

F-19

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.1	Basis of preparation (continued)
---	---
2.1.3	New accounting standards and amendments that are not yet effective and have not been early adopted by theGroup for the financial year beginning on 1 January 2019
---	---
Standards/Amendments	Content	Effective for annual periods<br>beginning on or after
---	---	---	---
IFRS 3 Amendments	Definition of a Business		1 January 2020
IAS 1 and IAS 8 Amendments	Definition of Material		1 January 2020
IFRS 9, IAS 39 and IFRS 7 Amendments	Interest Rate Benchmark Reform		1 January 2020
IFRS 17	Insurance Contracts		1 January 2021
IFRS 10 and IAS 28 Amendments	Sale or Contribution of Assets between an Investor andits Associate or Joint Venture		No mandatory effective date yet<br>determined but available for adoption

The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

IFRS 3 Amendments – Definition of a business ****

In October 2018, the IASB issued amendments to the definition of a business in IFRS 3 Business Combinations. The amendments clarify and provide additional guidance on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. A business can exist without including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The amendments are effective for annual reporting periods beginning on or after 1 January 2020 and apply prospectively. Earlier application is permitted. The Group expects to adopt the amendments from 1 January 2020. The amendments are not expected to have any significant impact on the Group’s consolidated financial statements.

IAS 1 and IAS 8 Amendments – Definition of Material ****

In October 2018, the IASB issued amendments to IAS 1 Presentation of Financial Statements and IAS 8 AccountingPolicies, Changes in Accounting Estimates and Errors to provide a new definition of material. The new definition states that information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments clarify that materiality will depend on the nature or magnitude of information. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. The amendments are effective for annual reporting periods beginning on or after 1 January 2020 and apply prospectively. Earlier application is permitted. The Group expects to adopt the amendments from 1 January 2020. The amendments are not expected to have any significant impact on the Group’s consolidated financial statements.

IFRS 9, IAS 39 and IFRS 7 Amendments – Interest Rate Benchmark Reform ****

In September 2019, the IASB issued the amendments to IFRS 9 Financial Instruments, IAS 39 Financial Instruments:Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures to respond to the hedge accounting induced in the Interbank Offered Rates (IBOR) reform. The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark. The amendments are effective for annual reporting periods beginning on or after 1 January 2020 and apply retrospectively. Earlier application is permitted. Because the Group has no interbank offered transactions and has no hedge accounting, the amendments are not expected to have any significant impact on the Group’s consolidated financial statements.

F-20

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.1	Basis of preparation (continued)
---	---
2.1.3	New accounting standards and amendments that are not yet effective and have not been early adopted by theGroup for the financial year beginning on 1 January 2019 (continued)
---	---

IFRS 17 – Insurance Contracts ****

In May 2017, the IASB issued IFRS 17 Insurance Contracts, a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure, which replaces IFRS 4 Insurance Contracts.

In contrast to the requirements in IFRS 4, which are largely based on grandfathering previous local accounting policies for measurement purposes, IFRS 17 provides a comprehensive model (the general model) for insurance contracts, supplemented by the variable fee approach for contracts with direct participation features and the premium allocation approach mainly for short-duration which typically applies to certain non-life insurance contracts.

The main features of the new accounting model for insurance contracts are as follows:

•	The fulfilment cash flows including the expected present value of future cash flows and explicit risk<br>adjustment, remeasured every reporting period;
•	A contractual service margin represents the unearned profitability of the insurance contracts and is<br>recognised in profit or loss over the coverage period;
---	---
•	Certain changes in the expected present value of future cash flows are adjusted against the contractual<br>service margin and thereby recognised in profit or loss over the remaining coverage period;
---	---
•	The effect of changes in discount rates will be reported in either profit or loss or OCI, determined by an<br>accounting policy choice;
---	---
•	The recognition of insurance revenue and insurance service expenses in the statement of comprehensive income<br>based on the concept of services provided during the period;
---	---
•	Amounts that the policyholder will always receive, regardless of whether an insured event happens<br>(non-distinct investment components), are not presented in the statement of comprehensive income, but are recognised directly in the statement of financial position;
---	---
•	Insurance services results are presented separately from the insurance finance income or expense;<br>
---	---
•	Extensive disclosures to provide information on the recognised amounts from insurance contracts and the nature<br>and extent of risks arising from these contracts.
---	---

IFRS 17 is effective for annual reporting periods beginning on or after 1 January 2021. Early application is permitted, provided the entity also applies IFRS 9 and IFRS 15 on or before the date it first applies IFRS 17. Retrospective application is required, with comparative figures required. However, if full retrospective application for a group of insurance contracts is impracticable, the entity is required to choose either the modified retrospective approach or the fair value approach.

In March 2020, the IASB decided to defer the effective date for IFRS 17 by two years to reporting periods beginning on or after 1 January 2023. The IASB also decided to extend the exemption currently in place for qualifying insurers regarding the application of IFRS 9, meaning that they could apply both standards for the first time to reporting periods beginning on or after 1 January 2023. As at the approval date of the consolidated financial statements, the amendments to IFRS 17 have not yet been issued by the IASB.

The Group is currently assessing the impact of the standard upon adoption.

IFRS 10 and IAS 28 Amendments – Sale or Contribution of Assets between an Investor and its Associate or JointVenture ****

Amendments to IFRS 10 and IAS 28 address an inconsistency between the requirements in IFRS 10 and IAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require a full recognition of a gain or loss when the sale or contribution of assets between an investor and its associate or joint venture constitutes a business. For a transaction involving assets that do not constitute a business, a gain or loss resulting from the transaction is recognised in the investor’s profit or loss only to the extent of the unrelated investor’s interest in that associate or joint venture. The IASB has deferred the effective date of these amendments indefinitely, but an entity that early adopts the amendments must apply them prospectively. The Group will apply these amendments when they become effective.

F-21

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.2	Consolidation
---	---

The consolidated financial statements include the financial statements of the Company and its subsidiaries for the year ended 31 December 2019. Subsidiaries are those entities which are controlled by the Group (including the structured entities controlled by the Group). Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

•	power over the investee (i.e., existing rights that give it the current ability to direct the relevant<br>activities of the investee);
•	exposure, or rights, to variable returns from its involvement with the investee; and
---	---
•	the ability to use its power over the investee to affect its returns.
---	---

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

•	the contractual arrangement with the other vote holders of the investee;
•	rights arising from other contractual arrangements; and
---	---
•	the Group’s voting rights and potential voting rights.
---	---

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.

Profit or loss and each component of OCI are attributed to the equity holders of the Company and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full upon consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

•	derecognises the assets (including goodwill) and liabilities of the subsidiary;
•	derecognises the carrying amount of any non-controlling interests;
---	---
•	derecognises the cumulative translation differences recorded in equity;
---	---
•	recognises the fair value of the consideration received;
---	---
•	recognises the fair value of any investment retained;
---	---
•	recognises any surplus or deficit in profit or loss; and
---	---
•	reclassifies the Group’s share of components previously recognised in OCI to profit or loss or retained<br>earnings, as appropriate, as if the Group had directly disposed of the related assets or liabilities.
---	---

F-22

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.2	Consolidation (continued)
---	---

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interest issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

The excess of the aggregate of the consideration transferred, the fair value of any non-controlling interest in the acquiree, and the fair value of any previous equity interest in the acquiree at the acquisition date over the fair value of the net identifiable assets acquired and liabilities assumed is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed, and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. If there is any indication that goodwill is impaired, recoverable amount is estimated and the difference between carrying amount and recoverable amount is recognised as an impairment charge. Impairment losses on goodwill are not reversed in subsequent periods. Gains or losses on the disposal of an entity take into consideration the carrying amount of goodwill relating to the entity sold.

The investments in subsidiaries are accounted for only in the Company’s statement of financial position at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable.

Transactions with non-controlling interests

The Group treats transactions with non-controlling interests that do not result in loss of controls as equity transactions. For shares purchased from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposal of shares to non-controlling interests are also recorded in equity.

When the Group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in OCI in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in OCI are reclassified to profit or loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in OCI is reclassified to profit or loss as appropriate.

F-23

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.3	Associates and joint ventures
---	---

Associates are entities over which the Group has significant influence, generally accompanying a shareholding of between 20% and 50% of the voting rights of the investee. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

Joint ventures are the type of joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

Investments in associates and joint ventures are accounted for using the equity method of accounting and are initially recognised at cost.

The Group’s share of post-acquisition profit or loss of its associates and joint ventures is recognised in net profit, and its share of post-acquisition movements in OCI is recognised in the consolidated statement of comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint venture, including any other unsecured receivables, the Group does not recognise further losses unless it has obligations to make payments on behalf of the associate or joint venture.

Unrealised gains on transactions between the Group and its associates or joint ventures are eliminated to the extent of the Group’s interests in the associates or joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Associates and joint ventures’ accounting policies have been changed where necessary to ensure consistency with the policies adopted by the Group.

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of acquired associates or joint ventures at the date of acquisition. Goodwill on acquisitions of associates and joint ventures is included in investments in associates and joint ventures and is tested for impairment as part of the overall balance. Impairment losses on goodwill are not reversed. Gains or losses on the disposal of an entity take into consideration the carrying amount of goodwill relating to the entity sold.

The Group determines at each reporting date whether there is any objective evidence that the investments in associates and joint ventures are impaired. If this is the case, an impairment loss is recognised for the amount by which the investment’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the investment’s fair value less costs of disposal and value in use. The impairment of investments in the associates and joint ventures is reviewed for possible reversal at each reporting date.

The investments in associates and joint ventures are stated at cost less impairment in the Company’s statement of financial position. The results of associates and joint ventures are accounted for by the Company on the basis of dividends received and receivable.

2.4	Segment reporting

The Group’s operating segments are presented in a manner consistent with the internal management reporting provided to the operating decision maker - president office for deciding how to allocate resources and for assessing performance.

Operating segment refers to the segment within the Group that satisfies the following conditions: i) the segment generates income and incurs costs from daily operating activities; ii) management evaluates the operating results of the segment to make resource allocation decision and to evaluate the business performance; and iii) the Group can obtain relevant financial information of the segment, including financial condition, operating results, cash flows and other financial performance indicators.

F-24

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.5	Foreign currency translation
---	---

The Company’s functional currency is RMB. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. The reporting currency of the consolidated financial statements of the Group is RMB. Transactions in foreign currencies are translated at the exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rates ruling at the end of the reporting period. Exchange differences arising in these cases are recognised in net profit.

2.6	Property, plant and equipment

Property, plant and equipment, are stated at historical costs less accumulated depreciation and any accumulated impairment losses, except for those acquired prior to 30 June 2003, which are stated at deemed cost less accumulated depreciation and any accumulated impairment losses.

The historical costs of property, plant and equipment comprise its purchase price, including import duties and non-refundable purchase taxes, and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after terms of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the statement of comprehensive income in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the assets as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation

Depreciation is computed on a straight-line basis to write down the cost of each asset to its residual value over its estimated useful lives as follows:

Estimated useful lives
Buildings	15 to 35 years
Office equipment, furniture and fixtures	3 to 11 years
Motor vehicles	4 to 8 years
Leasehold improvements	Over the shorter of the remaining term of<br> <br>the lease and the useful<br>lives

The residual values, depreciation method and useful lives are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment.

Assets under construction mainly represent buildings under construction, which are stated at cost less any impairment losses and are not depreciated, except for those acquired prior to 30 June 2003, which are stated at deemed cost less any accumulated impairment losses. Cost comprises the direct costs of construction and capitalised borrowing costs on related borrowed funds during the period of construction. Assets under construction are reclassified to the appropriate category of property, plant and equipment, investment properties or other assets when completed and ready for use.

Impairment and gains or losses on disposals

Property, plant and equipment are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in net profit for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of an asset’s net selling price and value in use.

The gain or loss on disposal of an item of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in net profit.

F-25

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.7	Leases
---	---
(i)	Applicable from 1 January 2019
---	---

At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of a time, the Group assesses whether, throughout the period of use, the lessee has the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset.

As a lessee

Initial measurement

At the commencement date of the lease, the Group recognises right-of-use assets representing the right to use the leased assets, including buildings and land use rights, etc. The Group measures the lease liability at the present value of the lease payments that are not paid at that date, except for short-term leases and leases of low-value assets. In calculating the present value of the lease payments, the lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the Group uses its own incremental borrowing rate.

The lease term is the non-cancellable period of a lease when the Group has the right to use lease assets. When the Group has an option to extend a lease and is reasonably certain to exercise that option to extend a lease, the lease term also comprises the periods covered by the option to extend the lease. When the Group has an option to terminate the lease and is reasonably certain not to exercise that option, the lease term also comprises the periods covered by the option to terminate the lease. The Group reassesses whether it is reasonably certain to exercise an extension option, to exercise a purchase option or not to exercise a termination option, upon the occurrence of either a significant event or a significant change in circumstances that are within the control of the Group and affects whether the Group is reasonably certain to exercise the commensurate options.

F-26

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.7	Leases (continued)
---	---
(i)	Applicable from 1 January 2019 (continued)
---	---

As a lessee (continued)

Subsequent measurement

The Group applies the straight-line method in depreciating the right-of-use assets. If it is reasonably certain that ownership of a leased asset transfers to the Group at the end of the lease term, the leased asset is depreciated under the remaining useful life of the asset. If it cannot be reasonably determined that ownership of a leased asset transfers to the Group at the end of the lease term, the Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the lease term or the end of the useful life of the right-of-use asset.

The Group uses a constant periodic rate of interest to calculate interest on the lease liability in each period during the lease term and recognises the interest in profit or loss.

Variable lease payments not included in the measurement of the lease liability are recognised in profit or loss in the period in which the event or condition that triggers the payment occurs.

After the commencement date of a lease, when there is a change in in-substance fixed payments, a change in the amounts expected to be payable under a residual value guarantee, a change in future lease payments resulting from a change in an index or a rate used to determine those payments, a change in the assessment or actual exercise situation of a purchase option, an extension option or a termination option, the Group uses the changed present value of lease payments to remeasure the lease liability. If the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Group recognises any remaining amount of the remeasurement in profit or loss.

The Group assesses whether there is any indication that a right-of-use asset may be impaired at the end of reporting period. If any such indication exists, the Group performs the impairment test. An impairment loss is recognised in net profit for the amount by which the carrying amount of the right-of-use asset exceeds its recoverable amount, which is the higher of the right-of-use asset’s net selling price and value in use.

As a lessor

At the commencement date of the lease, leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss.

(ii)	Applicable before 1 January 2019

As for leased assets, leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental expenses of operating leases are recognised in the cost of assets or profit or loss on a straight-line basis. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss.

F-27

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.8	Investment properties
---	---

Investment properties are interests in land use rights and buildings that are held to earn rental income and/or for capital appreciation, rather than for the supply of services or for administrative purposes.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and any impairment loss.

Depreciation is computed on the straight-line basis over the estimated useful lives. The estimated useful lives of investment properties are 15 to 35 years.

Overseas investment properties, that are held by the Group in the form of property ownership, equity investment, or other forms, have expected useful lives not longer than 50 years, determined based on the usage in their locations.

The useful lives and depreciation method are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from the individual investment properties.

An investment property is derecognised when either it has been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in the statement of comprehensive income in the year of retirement or disposal. A transfer to, or from, an investment property is made when, and only when, there is evidence of a change in use.

2.9	Financial assets
2.9.a	Classification
---	---

The Group classifies its financial assets into the following categories: securities at fair value through profit or loss, held-to-maturity securities, loans and receivables and available-for-sale securities. Management determines the classification of its financial assets at initial recognition which depends on the purpose for which the assets are acquired. The Group’s investments in securities fall into the following four categories:

(i)	Securities at fair value through profit or loss

This category has two sub-categories: securities held for trading and those designated as at fair value through profit or loss at inception. Securities are classified as held for trading at inception if acquired principally for the purpose of selling in the short-term or if they form part of a portfolio of financial assets in which there is evidence of taking short-term profit. The Group may classify other financial assets as at fair value through profit or loss if they meet the criteria in IAS 39 and designated as such at inception.

(ii)	Held-to-maturity securities

Held-to-maturity securities are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group has the positive intention and ability to hold to maturity and do not meet the definition of loans and receivables nor designated as available-for-sale securities or securities at fair value through profit or loss.

(iii)	Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than those that the Group intends to sell in the short-term or held as available-for-sale. Loans and receivables mainly comprise term deposits, loans, securities purchased under agreements to resell, accrued investment income and premium receivables as presented separately in the statement of financial position.

(iv)	Available-for-sale securities

Available-for-sale securities are non-derivative financial assets that are either designated in this category or not classified in any of the other categories.

F-28

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.9	Financial assets (continued)
---	---
2.9.b	Recognition and measurement
---	---

Purchase and sale of investments are recognised on the trade date, when the Group commits to purchase or sell assets. Investments are initially recognised at fair value plus, in the case of all financial assets not carried at fair value through profit or loss, transaction costs that are directly attributable to their acquisition. Investments are derecognised when the rights to receive cash flows from the investments have expired or when they have been transferred and the Group has also transferred substantially all risks and rewards of ownership.

Securities at fair value through profit or loss and available-for-sale securities are carried at fair value. Equity investments that do not have a quoted price in an active market and whose fair value cannot be reliably measured are carried at cost, net of allowance for impairments. Held-to-maturity securities are carried at amortised cost using the effective interest method. Investment gains and losses on sales of securities are determined principally by specific identification. Realised and unrealised gains and losses arising from changes in the fair value of the securities at fair value through profit or loss category, and the change of fair value of available-for-sale debt securities due to foreign exchange impact on the amortised cost are included in net profit in the period in which they arise. The remaining unrealised gains and losses arising from changes in the fair value of available-for-sale securities are recognised in OCI. When securities classified as available-for-sale securities are sold or impaired, the accumulated fair value adjustments are included in net profit as realised gains on financial assets.

Term deposits primarily represent traditional bank deposits which have fixed maturity dates and are stated at amortised cost.

Loans are carried at amortised cost, net of allowance for impairment.

The Group purchases securities under agreements to resell substantially identical securities. These agreements are classified as secured loans and are recorded at amortised cost, i.e., their costs plus accrued interests at the end of the reporting period, which approximates fair value. The amounts advanced under these agreements are reflected as assets in the consolidated statement of financial position. The Group does not take physical possession of securities purchased under agreements to resell. Sale or transfer of the securities is not permitted by the respective clearing house on which they are registered while the lent capital is outstanding. In the event of default by the counterparty, the Group has the right to the underlying securities held by the clearing house.

2.9.c	Impairment of financial assets other than securities at fair value through profit or loss

Financial assets other than those accounted for as at fair value through profit or loss are adjusted for impairment, where there are declines in value that are considered to be impairment. In evaluating whether a decline in value is an impairment for these financial assets, the Group considers several factors including, but not limited to, the following:

•	significant financial difficulty of the issuer or debtor;
•	a breach of contract, such as a default or delinquency in payments;
---	---
•	it becomes probable that the issuer or debtor will enter into bankruptcy or other financial reorganisation;<br>and
---	---
•	the disappearance of an active market for that financial asset because of financial difficulties.<br>
---	---

F-29

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.9	Financial assets (continued)
---	---
2.9.c	Impairment of financial assets other than securities at fair value through profit or loss (continued)
---	---

In evaluating whether a decline in value is impairment for equity securities, the Group also considers the extent or the duration of the decline. The quantitative factors include the following:

•	the market price of the equity securities was more than 50% below their cost at the reporting date;<br>
•	the market price of the equity securities was more than 20% below their cost for a period of at least six<br>months at the reporting date; and
---	---
•	the market price of the equity securities was below their cost for a period of more than one year (including<br>one year) at the reporting date.
---	---

When the decline in value is considered impairment, held-to-maturity debt securities are written down to their present value of estimated future cash flows discounted at the securities’ effective interest rates, available-for-sale debt securities and equity securities are written down to their fair value, and the change is recorded in net realised gains on financial assets in the period the impairment is recognised. The impairment loss is reversed through net profit if in a subsequent period the fair value of a debt security increases and the increase can be objectively related to an event occurring after the impairment loss was recognised through net profit. The impairment losses recognised in net profit on equity instruments are not reversed through net profit.

2.10	Fair value measurement

The Group measures financial instruments, such as securities at fair value through profit or loss and available-for-sale securities, at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement of assets and liabilities is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

•	in the principal market for the asset or liability, or
•	in the absence of a principal market, in the most advantageous market for the asset or liability.<br>
---	---

The principal or the most advantageous market must be accessible by the Group at the measurement date.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorised within the fair value hierarchy, described in Notes 4.4, 8 and 11 based on the lowest level input that is significant to the fair value measurement as a whole.

For assets and liabilities that are measured at fair value on a recurring basis, the Group determines whether transfers have occurred between each level in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

F-30

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.11	Cash and cash equivalents
---	---

Cash amounts represent cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments with original maturities of 90 days or less, whose carrying value approximates fair value.

2.12	Insurance contracts and investment contracts
2.12.1	Classification
---	---

The Group issues contracts that transfer insurance risk or financial risk or both. The contracts issued by the Group are classified as insurance contracts and investment contracts. Insurance contracts are those contracts that transfer significant insurance risk. They may also transfer financial risk. Investment contracts are those contracts that transfer financial risk without significant insurance risk. A number of insurance and investment contracts contain a discretionary participating feature (“DPF”). This feature entitles the policyholders to receive additional benefits or bonuses that are, at least in part, at the discretion of the Group.

2.12.2	Insurance contracts
2.12.2.a	Recognition and measurement
---	---
(i)	Short-term insurance contracts
---	---

Premiums from the sale of short duration accident and health insurance products are recorded when written and are accreted to earnings on a pro-rata basis over the term of the related policy coverage. Reserves for short duration insurance products consist of unearned premium reserve and expected claims and claim adjustment expenses reserve. Actual claims and claim adjustment expenses are charged to net profit as incurred.

The unearned premium reserve represents the portion of the premiums written net of certain acquisition costs relating to the unexpired terms of coverage.

Reserves for claims and claim adjustment expenses consist of the reserves for reported and unreported claims and reserves for claims expenses with respect to insured events. In developing these reserves, the Group considers the nature and distribution of the risks, claims cost development, and experiences in deriving the reasonable estimated amount and the applicable margins. The methods used for reported and unreported claims include the case-by-case estimation method, average cost per claim method, chain ladder method, etc. The Group calculates the reserves for claims expenses based on the reasonable estimates of the future payments for claims expenses.

(ii)	Long-term insurance contracts

The Group uses the discounted cash flow method to estimate the reserve of long-term insurance contracts. The reserve of long-term insurance contracts consists of a reasonable estimate of liability, a risk margin and a residual margin. The long-term insurance contract liabilities are calculated using various assumptions, including assumptions on mortality rates, morbidity rates, lapse rates, discount rates, and expense assumptions, and based on the following principles:

F-31

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.12	Insurance contracts and investment contracts (continued)
---	---
2.12.2	Insurance contracts (continued)
---	---
2.12.2.a	Recognition and measurement (continued)
---	---
(ii)	Long-term insurance contracts (continued)
---	---
(a)	The reasonable estimate of liability for long-term insurance contracts is the present value of reasonable<br>estimates of future cash outflows less future cash inflows. The expected future cash inflows include cash inflows of future premiums arising from the undertaking of insurance obligations, with consideration of decrement mostly from death and<br>surrenders. The expected future cash outflows are cash outflows incurred to fulfil contractual obligations, consisting of the following:
---	---
•	guaranteed benefits based on contractual terms, including payments for deaths, disabilities, diseases,<br>survivals, maturities and surrenders;
---	---
•	additional non-guaranteed benefits, such as policyholder dividends; and
---	---
•	reasonable expenses incurred to manage insurance contracts or to process claims, including maintenance<br>expenses and claim settlement expenses. Future administration expenses are included in the maintenance expenses. Expenses are determined based on expense analysis with consideration of future inflation and the Group’s expense management<br>control.
---	---

On each reporting date, the Group reviews the assumptions for reasonable estimates of liability and risk margins, with consideration of all available information, taking into account the Group’s historical experience and expectation of future events. Changes in assumptions are recognised in net profit. Assumptions for the amortisation of residual margin are locked in at policy issuance and are not adjusted at each reporting date.

(b)	Margin has been taken into consideration while computing the reserve of insurance contracts, measured<br>separately and recognised in net profit in each period over the life of the contracts. At the inception of the contracts, the Group does not recognise Day 1 gain, whereas on the other hand, Day 1 loss is recognised in net profit immediately.<br>

Margin comprises risk margin and residual margin. Risk margin is the reserve accrued to compensate for the uncertain amount and timing of future cash flows. At the inception of the contract, the residual margin is calculated net of certain acquisition costs, mainly consist of underwriting and policy acquisition costs, by the Group representing Day 1 gain and will be amortised over the life of the contracts. For insurance contracts of which future returns are affected by investment yields of corresponding investment portfolios, their related residual margins are amortised based on estimated future participating dividends payable to policyholders. For insurance contracts of which future returns are not affected by investment yields of corresponding investment portfolios, their related residual margins are amortised based on sum assured of outstanding policies. The subsequent measurement of the residual margin is independent from the reasonable estimate of future discounted cash flows and risk margin. The assumption changes have no effect on the subsequent measurement of the residual margin.

(c)	The Group has considered the impact of time value on the reserve calculation for insurance contracts.<br>
(iii)	Universal life contracts and unit-linked contracts
---	---

Universal life contracts and unit-linked contracts are unbundled into the following components:

•	insurance components
•	non-insurance components
---	---

The insurance components are accounted for as insurance contracts; and the non-insurance components are accounted for as investment contracts (Note 2.12.3), which are stated in the investment contract liabilities.

F-32

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.12	Insurance contracts and investment contracts (continued)
---	---
2.12.2	Insurance contracts (continued)
---	---
2.12.2.b	Liability adequacy test
---	---

The Group assesses the adequacy of insurance contract reserves using the current estimate of future cash flows with available information at the end of each reporting period. If that assessment shows that the carrying amount of its insurance liabilities (less related intangible assets, if applicable) is inadequate in light of the estimated future cash flows, the insurance contract reserves will be adjusted accordingly, and any changes of the insurance contract liabilities will be recognised in net profit.

2.12.2.c	Reinsurance contracts held

Contracts with reinsurers under which the Group is compensated for losses on one or more contracts issued by the Group and that meet the classification requirements for insurance contracts are classified as reinsurance contracts held. Contracts with reinsurers that do not meet these classification requirements are classified as financial assets. Insurance contracts entered into by the Group under which the contract holder is another insurer (inwards reinsurance) are included with insurance contracts.

The benefits to which the Group is entitled under its reinsurance contracts held are recognised as reinsurance assets. Amounts recoverable from or due to reinsurers are measured consistently with the amounts associated with the reinsured insurance contracts and in accordance with the terms of each reinsurance contract. Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are recognised as expenses when due.

The Group assesses its reinsurance assets for impairment as at the end of reporting period. If there is objective evidence that the reinsurance asset is impaired, the Group reduces the carrying amount of the reinsurance asset to its recoverable amount and recognises that impairment loss in net profit.

2.12.3	Investment contracts

For investment contracts with or without DPF, the Company’s policy fee income mainly consists of acquisition cost and various fees (handling fees and management fees, etc.) over the period of which the service is provided. Policy fee income net of certain acquisition cost is amortised over the expected life of the contracts by period and recognised in revenue.

Except for unit-linked contracts, of which the liabilities are carried at fair value, the liabilities of investment contracts are carried at amortised cost.

2.12.4	DPF in long-term insurance contracts and investment contracts

DPF is contained in certain long-term insurance contracts and investment contracts. These contracts are collectively called participating contracts. The Group is obligated to pay to the policyholders of participating contracts as a group at the higher of 70% of accumulated surplus available and the rate specified in the contracts. The accumulated surplus available mainly arises from net investment income and gains and losses arising from the assets supporting these contracts. To the extent unrealised gains or losses from available-for-sale securities are attributable to policyholders, shadow adjustments are recognised in OCI. The surplus owed to policyholders is recognised as policyholder dividend payable whether it is declared or not. The amount and timing of distribution to individual policyholders of participating contracts are subject to future declarations by the Group.

F-33

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.13	Financial liabilities at fair value through profit or loss
---	---

Financial liabilities at fair value through profit or loss are the portions owned by the external investors in the consolidated structured entities (open-ended funds). Such financial liabilities are designated at fair value upon initial recognition, and all realised or unrealised gains or losses are recognised in net profit.

2.14	Securities sold under agreements to repurchase

The Group retains substantially all the risk and rewards of ownership of securities sold under agreements to repurchase which generally mature within 180 days from the transaction date. Therefore, securities sold under agreements to repurchase are classified as secured borrowings. The Group may be required to provide additional collateral based on the fair value of the underlying securities. Securities sold under agreements to repurchase are recorded at amortised cost, i.e., their cost plus accrued interest at the end of the reporting period. It is the Group’s policy to maintain effective control over securities sold under agreements to repurchase which includes maintaining physical possession of the securities. Accordingly, such securities continue to be carried on the consolidated statement of financial position.

2.15	Bonds payable

Bonds payable are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any discount or premium at acquisition and transaction costs.

2.16	Derivative instruments

Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at their fair value. The resulting gain or loss of derivative financial instruments is recognised in net profit. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.

Embedded derivatives that are not closely related to their host contracts and meet the definition of a derivative are separated and fair valued through profit or loss. The Group does not separately measure embedded derivatives that meet the definition of an insurance contract or embedded derivatives that are closely related to host insurance contracts including embedded options to surrender insurance contracts for a fixed amount (or an amount based on a fixed amount and an interest rate).

2.17	Employee benefits

Pension benefits

Full-time employees of the Group are covered by various government-sponsored pension plans under which the employees are entitled to a monthly pension based on certain formulae. These government agencies are responsible for the pension liability to these employees upon retirement. The Group contributes on a monthly basis to these pension plans. In addition to the government-sponsored pension plans, the Group established an employee annuity fund pursuant to the relevant laws and regulations in the PRC, whereby the Group is required to contribute to the schemes at fixed rates of the employees’ salary costs. Contributions to these plans are expensed as incurred. Under these plans, the Group has no legal or constructive obligation for retirement benefit beyond the contributions made.

Housing benefits

All full-time employees of the Group are entitled to participate in various government-sponsored housing funds. The Group contributes on a monthly basis to these funds based on certain percentages of the salaries of the employees. The Group’s liability in respect of these funds is limited to the contributions payable in each year.

F-34

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.17	Employee benefits (continued)
---	---

Stock appreciation rights

Compensation under the stock appreciation rights is measured based on the fair value of the liabilities incurred and is expensed over the vesting period. Valuation techniques including option pricing models are used to estimate fair value of relevant liabilities. The liability is re-measured at the end of each reporting period to its fair value until settlement. Fair value changes in the vesting period are included in administrative expenses and changes after the vesting period are included in net fair value gains through profit or loss in net profit. The related liability is included in other liabilities.

2.18	Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of equity instruments are shown in equity as a deduction, net of tax, from the proceeds.

2.19	Other equity instruments

Other equity instruments are Core Tier 2 Capital Securities issued by the Group. These securities contain no contractual obligation to deliver cash or another financial asset; or to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the Group; or to be settled in the Group’s own equity instruments. Therefore, the Group classifies these securities as other equity instruments. Fees, commissions and other transaction costs of these securities’ issuance are deducted from equity. The distributions of the securities are recognised as profit distribution at the time of declaration.

2.20	Revenue recognition

Turnover of the Group represents the total revenues which include the following:

Premiums

Premiums from long-term insurance contracts are recognised as revenue when due from the policyholders.

Policy fee income

The policy fee income for investment contracts mainly consists of acquisition costs and various fees (handling fees and management fees, etc.) over the period of which the service is provided. Policy fee income net of certain acquisition costs is amortised over the expected life of the contracts and recognised as other income.

Investment income

Investment income comprises interest income from term deposits, cash and cash equivalents, debt securities, securities purchased under agreements to resell, loans and dividend income from equity securities. Interest income is recorded on an accrual basis using the effective interest rate method. Dividend income is recognised when the right to receive dividend payment is established.

F-35

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.21	Finance costs
---	---

Interest expenses for bonds payable, securities sold under agreements to repurchase, interest-bearing loans, borrowings and lease liabilities are recognised within finance costs in net profit using the effective interest rate method.

2.22	Current and deferred income taxation

Income tax expense for the period comprises current and deferred tax. Income tax is recognised in net profit, except to the extent that it relates to items recognised directly in OCI where the income tax is recognised in OCI.

Current income tax assets and liabilities for the current period are calculated on the basis of the tax laws enacted or substantively enacted at the end of each reporting period in the jurisdictions where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken with respect to situations in which applicable tax regulations are subject to interpretation.

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. Substantively enacted tax rates are used in the determination of deferred income tax.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Conversely, previously unrecognised deferred tax assets are reassessed by the end of each reporting period and are recognised to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income tax levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

F-36

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.23	Provisions and contingencies
---	---

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required, or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised in the consolidated statement of financial position but is disclosed in the notes to the consolidated financial statements. When a change in the probability of an outflow occurs so that such outflow is probable and can be reliably measured, it will then be recognised as a provision.

2.24	Dividend distribution

Dividend distribution to the Company’s equity holders is recognised as a liability in the Group’s consolidated financial statements in the year in which the dividends are approved by the Company’s equity holders.

3	CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates and judgements are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group exercises significant judgement in making appropriate assumptions.

Areas susceptible to changes in critical estimates and judgements, which affect the carrying value of assets and liabilities, are set out below. It is possible that actual results may be different from the estimates and judgements referred to below.

3.1	Estimates of future benefit payments and premiums arising from long-term insurance contracts

The determination of the liabilities under long-term insurance contracts is based on estimates of future benefit payments, premiums and relevant expenses made by the Group and the margins. Assumptions about mortality rates, morbidity rates, lapse rates, discount rates, expense assumptions and policy dividend assumptions are made based on the most recent historical analysis and current and future economic conditions. The liability uncertainty arising from uncertain future benefit payments, premiums and relevant expenses is reflected in the risk margin.

The residual margin relating to the long-term insurance contracts is amortised over the expected life of the contracts, based on the assumptions (mortality rates, morbidity rates, lapse rates, discount rates, expenses assumption and policy dividend assumptions) that are determined at inception of the contracts and remain unchanged for the duration of the contracts.

The judgements exercised in the valuation of insurance contract liabilities (including contracts with DPF) affect the amounts recognised in the consolidated financial statements as insurance contract benefits and insurance contract liabilities.

The impact of the various assumptions and their changes are described in Note 15.

F-37

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

3	CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)
3.2	Financial instruments
---	---

The Group’s principal investments are debt securities, equity securities, term deposits and loans. The critical estimates and judgements are those associated with the recognition of impairment and the measurement of fair value.

The Group considers a wide range of factors in the impairment assessment as described in Note 2.9.c.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When the fair values of financial assets and liabilities recorded in the consolidated statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques which require a degree of judgements. The methods and assumptions used by the Group in measuring the fair value of financial instruments are as follows:

•	debt securities: fair values are generally based upon current bid prices. Where current bid prices are not<br>readily available, fair values are estimated using either prices observed in recent transactions, values obtained from current bid prices of comparable investments or valuation techniques when the market is not active.
•	equity securities: fair values are generally based upon current bid prices. Where current bid prices are not<br>readily available, fair values are estimated using either prices observed in recent transactions or commonly used market pricing models. Equity securities, for which fair values cannot be measured reliably, are recognised at cost less impairment.<br>
---	---
•	securities purchased under agreements to resell, policy loans, term deposits, interest-bearing loans and<br>borrowings, and securities sold under agreements to repurchase: the carrying amounts of these assets in the consolidated statement of financial position approximate fair value.
---	---
•	fair values of other loans are obtained from valuation techniques.
---	---

For the description of valuation techniques, please refer to Note 4.4. Using different valuation techniques and parameter assumptions may lead to some differences of fair value estimations.

3.3	Impairment of investments in associates and joint ventures

The Group assesses whether there are any indicators of impairment for investments in associates and joint ventures at the end of each reporting period. Investments in associates and joint ventures are tested for impairment when there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying value of investments in associates and joint ventures exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The calculation of the fair value less costs of disposal is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing of investments in associates and joint ventures. When value in use calculations are undertaken, the Group must estimate the expected future cash flows from investments in associates and joint ventures and choose a suitable discount rate in order to calculate the present value of those cash flows.

3.4	Income tax

The Group is subject to income tax in numerous jurisdictions. During the normal course of business, certain transactions and activities for which the ultimate tax determination is uncertain, the Group needs to exercise significant judgement when determining the income tax. If the final settlement results of the tax matters are different from the amounts recorded, these differences will impact the final income tax expense and deferred tax for the period.

F-38

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

3	CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)
3.5	Determination of control over investee
---	---

The Group applies its judgement to determine whether the control indicators set out in Note 2.2 indicate that the Group controls structured entities such as funds and asset management products.

The Group issues certain structured entities (e.g. funds and asset management plans), and acts as a manager for such entities according to the contracts. In addition, the Group may be exposed to variability of returns as a result of holding shares of the structured entities. Determining whether the Group controls such structured entities usually focuses on the assessment of the aggregate economic interests of the Group in the entities (including any carried interests and expected management fees) and the decision-making rights on the entity. As at 31 December 2019, the Group has consolidated some funds issued and managed by the Company’s subsidiary, China Life AMP Asset Management Company (“CL AMP”), some debt investment schemes and asset management products issued and managed by the Company’s subsidiary, China Life Asset Management Company Limited (“AMC”) and some trust schemes and debt investment schemes issued and managed by third parties in the consolidated financial statements.

4	RISK MANAGEMENT

Risk management is carried out by the Company’s Risk Management Committee under policies approved by the Company’s Board of Directors.

The Group issues contracts that transfer insurance risk or financial risk or both. This section summarises these risks and the way the Group manages them.

4.1	Insurance risk
4.1.1	Types of insurance risks
---	---

The risk under any one insurance contract is the possibility that an insured event occurs and the uncertainty about the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and therefore unpredictable. For a portfolio of insurance contracts where the theory of probability is applied to the pricing and provisioning, the principal risk that the Group faces under its insurance contracts is that the actual claims and benefit payments are less favourable than the underlying assumptions used in establishing the insurance liabilities. This occurs when the frequency or severity of claims and benefits exceeds the estimates. Insurance events are random, and the actual number of claims and the amount of benefits paid will vary each year from estimates established using statistical techniques.

Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability of the expected outcome will be. In addition, a more diversified portfolio is less likely to be affected across the board by a change in any subset of the portfolio. The Group has developed its insurance underwriting strategy to diversify the types of insurance risks accepted and within each of these categories to achieve a sufficiently large population to reduce the variability of the expected outcome. The Group manages insurance risk through underwriting strategies, reinsurance arrangements and claims handling.

The Group manages insurance risks through two types of reinsurance agreements, ceding on a quota share basis or a surplus basis, to cover insurance liability risk. Reinsurance contracts cover almost all products, which contain risk liabilities. The products reinsured include: life insurance, accident and health insurance or death, disability, accident, illness and assistance in terms of product category or function, respectively. These reinsurance agreements spread insured risk to a certain extent and reduce the effect of potential losses to the Group. However, the Group’s direct insurance liabilities to the policyholder are not eliminated because of the credit risk associated with the failure of reinsurance companies to fulfil their responsibilities.

4.1.2	Concentration of insurance risks

All insurance operations of the Group are located in the PRC. There are no significant differences among the regions where the Group underwrites insurance contracts.

F-39

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.1	Insurance risk (continued)
---	---
4.1.2	Concentration of insurance risks (continued)
---	---

The table below presents the Group’s major products of long-term insurance contracts:

Product name	For the year ended 31 December
	2019				2018
	RMB million		%		RMB million		%
Premiums of long-term insurance contracts
Xin Fu Ying Jia Annuity (a)	****	37,024	****	7.44%		38,397		7.99%
Xin Xiang Jin Sheng Annuity (Type A) (b)	****	36,345	****	7.30%		257		0.05%
Xin Ru Yi Annuity (c)	****	21,276	****	4.28%		21,960		4.57%
Kang Ning Whole Life (d)	****	19,701	****	3.96%		20,667		4.30%
Hong Ying Participating Endowment (e)	****	558	****	0.11%		1,448		0.30%
Others (f)	****	382,666	****	76.91%		397,767		82.79%
Total	****	497,570	****	100.00%		480,496		100.00%
Insurance benefits of long-term insurance contracts
Xin Fu Ying Jia Annuity (a)	****	1,799	****	2.25%		1,847		1.37%
Xin Xiang Jin Sheng Annuity (Type A) (b)	****	12	****	0.01%		—		—
Xin Ru Yi Annuity (c)	****	3,512	****	4.38%		3,526		2.62%
Kang Ning Whole Life (d)	****	5,119	****	6.39%		4,663		3.47%
Hong Ying Participating Endowment (e)	****	7,906	****	9.87%		28,741		21.38%
Others (f)	****	61,776	****	77.10%		95,621		71.16%
Total	****	80,124	****	100.00%		134,398		100.00%
	As at 31 December 2019				As at 31 December 2018
	RMB million		%		RMB million		%
Liabilities of long-term insurance contracts
Xin Fu Ying Jia Annuity (a)	****	86,876	****	3.45%		52,440		2.39%
Xin Xiang Jin Sheng Annuity (Type A) (b)	****	27,554	****	1.09%		193		0.01%
Xin Ru Yi Annuity (c)	****	90,379	****	3.58%		71,571		3.27%
Kang Ning Whole Life (d)	****	309,519	****	12.28%		289,230		13.21%
Hong Ying Participating Endowment (e)	****	35,403	****	1.40%		42,969		1.96%
Others (f)	****	1,971,600	****	78.20%		1,733,391		79.16%
Total	****	2,521,331	****	100.00%		2,189,794		100.00%

F-40

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.1	Insurance risk (continued)
---	---
4.1.2	Concentration of insurance risks (continued)
---	---
(a)	Xin Fu Ying Jia Annuity is an annuity insurance contract with the options for regular premium of 3 years, 5<br>years or 10 years. Its insured period extends from the effective date of Xin Fu Ying Jia Annuity to the corresponding date when policyholders reach the age of 88. This product is applicable to healthy policyholders between 28-day-old and 70-year-old. From the effective date to the contractual date starting to claim<br>of Xin Fu Ying Jia Annuity, the annuity payment of first policy year is paid at 20% of the first premium of the product, and the following annuity payments are paid at 20% of the basic sum insured by Xin Fu Ying Jia Annuity. From the first<br>corresponding date after the contractual date starting to claim of annuity, to the corresponding date when the policyholders reach the age of 88-year-old, annuity is<br>paid at 3% of the basic sum insured during the insured period if policyholders live to the annual corresponding effective date; annuity is paid at the premium received (without interest) during the insured period if policyholders live to the<br>contractual date starting to claim of annuity; the contract terminates and death benefit is paid at the premium received (without interest) or the cash value of the contract, whichever greater when death incurred before the contractual date starting<br>to claim of annuity; the contract terminates and death benefit is paid at the cash value of the contract when death incurred after contractual date starting to claim of annuity; the contract terminates and accidental death benefit is paid at the<br>premium received (without interest) less any death benefit paid when accidents occurred and due to which death incurred within 180 days. Death benefit and accidental death benefit are paid only once.
---	---
(b)	Xin Xiang Jin Sheng Annuity (Type A) is an annuity insurance contract with the options for regular premium<br>of 3 years and 5 years paid annually or monthly. Its insured period is 15 years. This product is applicable to healthy policyholders between 28-day-old and 65-year-old. To the first effective date after the fifth policy years and the first effective date after the sixth policy years, if the policyholders live, the special<br>survival payment shall be paid at 50% of the annual premium according to the basic sum insured if the payment period is 3 years; and the survival payment shall be paid at 100% of the annual premium according to the basic sum insured if the payment<br>period is 5 years. From the first effective date to the seventh policy years after the expiration date, if the policyholders live to the annual corresponding effective date, the annuity payment shall be paid at 24% of annual premium according to the<br>basic sum insured if the payment period is 3 years; and the annuity payment shall be paid at 32% of annual premium according to the basic sum insured if the payment period is 5 years. If the policyholders live to the annual corresponding effective<br>date of the expiration period, the contract terminates and maturity benefit is paid at the basic sum insured. If death incurred over insured period, the contract terminates and death benefit is paid at the premium received (without interest).<br>
---	---
(c)	Xin Ru Yi Annuity is an annuity insurance contract with the options for regular premium of 3 years, 5 years<br>or 10 years. Its insured period extends from the effective date of Xin Ru Yi Annuity to the corresponding date when policyholders reach the age of 80. This product is applicable to healthy policyholders between 28-day-old and 70-year-old. From the effective date to the contractual date starting to claim of Xin Ru Yi Annuity, the annuity<br>payment of the first policy year is paid at 10% of the first premium of the product, and the following annuity payments are paid at the basic sum insured by Xin Ru Yi Annuity. From the first corresponding date after the contractual date starting to<br>claim of annuity to the corresponding date when the policyholders reach the age of 80-year-old, the annuity payment of the first policy year is paid at 110% of the basic<br>sum insured during the insured period if policyholders live to the annual corresponding effective date; the following annuity payments increase by 10% of the basic sum on the basis of the previous payment. The maturity insurance premium is paid at<br>the premium paid (without interest). The death benefit is paid at the larger value of the insurance premium (without interest) and the cash value of the contract at the time of the death of the insured.
---	---

F-41

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.1	Insurance risk (continued)
---	---
4.1.2	Concentration of insurance risks (continued)
---	---
(d)	Kang Ning Whole Life is a whole life insurance contract with the options for single premium or regular<br>premium of 10 years or 20 years. This product is applicable to healthy policyholders under 70-year-old. The critical illness benefit is paid at 200% of the basic sum<br>insured. If the critical illness benefits are paid within the payment period, the insurance premium of each subsequent period shall be exempted, and the contract shall continue to be valid from the date of the payment of the critical illness<br>benefits. Both death and disability benefits are paid at 300% of the basic sum insured less any critical illness benefits paid.
---	---
(e)	Hong Ying Participating Endowment is a participating endowment insurance contract with the options for<br>single premium or regular premium of 3 years, 5 years or 10 years. Its insured period can be 6 years, 10 years or 15 years. This product is applicable to healthy policyholders between<br>30-day-old and 70-year-old. Maturity benefit of a single premium policy is paid at the<br>basic sum insured, while that of a regular premium policy is paid at the basic sum insured multiplied by the number of years of the premium payments. Disease death benefit incurred within the first policy year is paid at the premium received<br>(without interest). Disease death benefit incurred after the first policy year is paid at the basic sum insured for a single premium policy or the basic sum insured multiplied by the number of years of premium payments for a regular premium policy.<br>When accidents occurred during taking a train, a ship or a flight period, death benefit is paid at the basic sum multiplied by 3 insured for a single premium policy or the basic sum multiplied by 3 and times the number of years of premium payments<br>insured for a regular premium policy. When accidents occurred out of the period of taking a train, a ship or a flight, death benefit is paid at the basic sum multiplied by 2 insured for a single premium policy or the basic sum multiplied by 2 and<br>times the number of years of premium payments insured for a regular premium policy.
---	---
(f)	Others consist of various long-term insurance contracts with no significant concentration.<br>
---	---
4.1.3	Sensitivity analysis
---	---

Sensitivity analysis of long-term insurance contracts

Liabilities for long-term insurance contracts and liabilities unbundled from universal life insurance contracts and unit-linked insurance contracts with insurance risk are calculated based on the assumptions on mortality rates, morbidity rates, lapse rates and discount rates. Changes in insurance contract reserve assumptions reflect the Company’s actual operating results and changes in its expectation of future events. The Company considers the potential impact of future risk factors on its operating results and incorporates such potential impact in the determination of assumptions.

Holding all other variables constant, if mortality rates and morbidity rates were to increase or decrease from the current best estimate by 10%, pre-tax profit for the year would have been RMB28,045 million or RMB29,286 million (as at 31 December 2018: RMB23,322 million or RMB24,177 million) lower or higher, respectively.

Holding all other variables constant, if lapse rates were to increase or decrease from the current best estimate by 10%, pre-tax profit for the year would have been RMB1,336 million or RMB1,253 million (as at 31 December 2018: RMB1,672 million or RMB1,535 million) lower or higher, respectively.

Holding all other variables constant, if the discount rates were 50 basis points higher or lower than the current best estimate, pre-tax profit for the year would have been RMB96,131 million or RMB108,946 million (as at 31 December 2018: RMB83,634 million or RMB95,212 million) higher or lower, respectively.

F-42

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.1	Insurance risk (continued)
---	---
4.1.3	Sensitivity analysis (continued)
---	---

Sensitivity analysis of short-term insurance contracts

The assumptions of reserves for claims and claim adjustment expenses may be affected by other variables such as claims payment of short-term insurance contracts, which may result in the synchronous changes to reserves for claims and claim adjustment expenses.

Holding all other variables constant, if claim ratios are 100 basis points higher or lower than the current assumption, pre-tax profit is expected to be RMB670 million (as at 31 December 2018: RMB551 million) lower or higher, respectively.

The following table indicates the claim development for short-term insurance contracts without taking into account the impacts of ceded business:

	Short-term insurance contracts (accident year)
Estimated claims expenses	2015			2016			2017			2018			2019			Total
Year end		20,497			27,120			33,926			40,601		****	49,727	****
1 year later		21,427			27,303			34,845			42,785
2 years later		21,422			26,851			34,328
3 years later		21,422			26,851
4 years later		21,422
Estimated accumulated claims expenses		21,422			26,851			34,328			42,785		****	49,727	****	****	175,113	****
Accumulated claims expenses paid		(21,422	)		(26,851	)		(34,328	)		(40,864	)	****	(33,244	)	****	(156,709	)
Unpaid claims expenses		—			—			—			1,921		****	16,483	****	****	18,404	****

F-43

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.1	Insurance risk (continued)
---	---
4.1.3	Sensitivity analysis (continued)
---	---

The following table indicates the claim development for short-term insurance contracts taking into account the impacts of ceded business:

	Short-term insurance contracts (accident year)
Estimated claims expenses	2015			2016			2017			2018			2019			Total
Year end		20,359			26,897			33,700			40,157		****	49,175	****
1 year later		21,262			27,107			34,560			42,280
2 years later		21,259			26,655			34,045
3 years later		21,259			26,655
4 years later		21,259
Estimated accumulated claims expenses		21,259			26,655			34,045			42,280		****	49,175	****	****	173,414	****
Accumulated claims expenses paid		(21,259	)		(26,655	)		(34,045	)		(40,374	)	****	(32,822	)	****	(155,155	)
Unpaid claims expenses		—			—			—			1,906		****	16,353	****	****	18,259	****
4.2	Financial risk
---	---

The Group’s activities are exposed to a variety of financial risks. The key financial risk is that proceeds from the sale of financial assets will not be sufficient to fund the obligations arising from the Group’s insurance and investment contracts. The most important components of financial risk are market risk, credit risk and liquidity risk.

The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. Risk management is carried out by a designated department under policies approved by management. The responsible department identifies, evaluates and manages financial risks in close cooperation with the Group’s operating units. The Group provides written principles for overall risk management, as well as written policies covering specific areas, such as managing market risk, credit risk, and liquidity risk.

The Group manages financial risk by holding an appropriately diversified investment portfolio as permitted by laws and regulations designed to reduce the risk of concentration in any one specific industry or issuer. The structure of the investment portfolio held by the Group is disclosed in Note 10.

The sensitivity analyses below are based on a change in an assumption while holding all other assumptions constant. In practice this is unlikely to occur, and changes in some of the assumptions may be correlated, such as change in interest rate and change in market price.

F-44

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.2	Financial risk (continued)
---	---
4.2.1	Market risk
---	---
(i)	Interest rate risk
---	---

Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Group’s financial assets are principally composed of term deposits, debt securities and loans which are exposed to interest rate risk. Changes in the level of interest rates could have a significant impact on the Group’s overall investment return. Many of the Group’s insurance policies offer guaranteed returns to policyholders. These guarantees expose the Group to interest rate risk.

The Group manages interest rate risk through adjustments to portfolio structure and duration, and, to the extent possible, by monitoring the mean duration of its assets and liabilities.

The sensitivity analysis for interest rate risk illustrates how changes in interest income and the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates at the end of the reporting period.

As at 31 December 2019, if market interest rates were 50 basis points higher or lower with all other variables held constant, pre-tax profit for the year would have been RMB528 million higher or lower (as at 31 December 2018: RMB145 million lower or higher ), respectively, mainly as a result of higher or lower interest income on floating rate cash and cash equivalents, term deposits, statutory deposits—restricted, debt securities and loans and the fair value losses or gains on debt securities assets at fair value through profit or loss. Pre-tax available-for-sale reserve in equity would have been RMB9,854 million lower or higher (as at 31 December 2018: RMB13,749 million lower or RMB10,045 million higher), as a result of a decrease or increase in the fair value of available-for-sale securities.

(ii)	Price risk

Price risk arises mainly from the volatility of prices of equity securities held by the Group. Prices of equity securities are determined by market forces. The Group is subject to increased price risk mainly because China’s capital markets are relatively volatile.

The Group manages price risk by holding an appropriately diversified investment portfolio as permitted by laws and regulations designed to reduce the risk of concentration in any one specific industry or issuer.

As at 31 December 2019, if the prices of all the Group’s equity securities had increased or decreased by 10% with all other variables held constant, pre-tax profit for the year would have been RMB5,641 million (as at 31 December 2018: RMB5,073 million) higher or lower, respectively, mainly as a result of an increase or decrease in fair value of equity securities excluding available-for-sale securities. Pre-tax available-for-sale reserve in equity would have been RMB38,559 million (as at 31 December 2018: RMB24,898 million or RMB34,474 million) higher or lower, respectively, as a result of an increase or decrease in fair value of available-for-sale equity securities. If prices decreased to the extent that the impairment criteria were met, a portion of such decrease of the available-for-sale equity securities would reduce pre-tax profit through impairment.

(iii)	Currency risk

Currency risk is the volatility of fair value or future cash flows of financial instruments resulted from changes in foreign currency exchange rates. The Group’s currency risk exposure mainly arises from cash and cash equivalents, term deposits, debt investments, equity investments, interest-bearing loans and borrowings denominated in currencies other than the functional currency, such as US dollar, HK dollar, GB pound and EUR, etc.

F-45

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.2	Financial risk (continued)
---	---
4.2.1	Market risk (continued)
---	---
(iii)	Currency risk (continued)
---	---

The following table summarises primary financial assets and financial liabilities denominated in currencies other than RMB as at 31 December 2019 and 2018, expressed in RMB equivalent:

As at 31 December 2019	US dollar		HK dollar		GB pound		Others		Total
Financial assets
Equity securities
-<br>Available-for-sale securities	****	11,086	****	95,428	****	—	****	—	****	106,514
- Securities at fair value through profit or loss	****	4,549	****	660	****	871	****	1,292	****	9,538
Debt securities
-<br>Held-to-maturity securities	****	218	****	—	****	—	****	—	****	218
- Loans	****	1,592	****	—	****	—	****	—	****	1,592
-<br>Available-for-sale securities	****	7,557	****	—	****	—	****	—	****	7,557
- Securities at fair value through profit or loss	****	448	****	—	****	35	****	9	****	507
Term deposits	****	8,026	****	32	****	—	****	—	****	8,058
Cash and cash equivalents	****	1,842	****	444	****	406	****	3	****	2,715
Total	****	35,318	****	96,564	****	1,312	****	1,304	****	136,699
Financial liabilities
Interest-bearing loans and other borrowings	****	12,892	****	—	****	2,515	****	—	****	20,045
Total	****	12,892	****	—	****	2,515	****	—	****	20,045
As at 31 December 2018	US dollar		HK dollar		GB pound		Others		Total
Financial assets
Equity securities
-<br>Available-for-sale securities		9,994		41,379		—		—		51,373
- Securities at fair value through profit or loss		4,511		163		951		1,076		9,016
Debt securities
-<br>Held-to-maturity securities		150		—		—		—		150
- Loans		1,766		—		—		—		1,766
-<br>Available-for-sale securities		2,240		—		—		—		2,240
- Securities at fair value through profit or loss		627		—		19		4		657
Term deposits		7,502		—		—		—		7,502
Cash and cash equivalents		1,768		261		287		—		2,358
Total		28,558		41,803		1,257		1,080		75,062
Financial liabilities
Interest-bearing loans and other borrowings		13,108		—		2,385		—		20,150
Total		13,108		—		2,385		—		20,150

All values are in Euros.

F-46

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.2	Financial risk (continued)
---	---
4.2.1	Market risk (continued)
---	---
(iii)	Currency risk (continued)
---	---

As at 31 December 2019, if RMB had strengthened or weakened by 10% against US dollar, HK dollar, GB pound, EUR and other foreign currencies, with all other variables held constant, pre-tax profit for the year would have been RMB1,013 million (as at 31 December 2018: RMB353 million) lower or higher, respectively, mainly as a result of foreign exchange losses or gains on translation of US dollar, HK dollar, GB pound, EUR and other foreign currencies denominated financial assets and financial liabilities other than the available-for-sale equity securities included in the table above. Pre-tax available-for-sale reserve in equity would have been RMB10,423 million (as at 31 December 2018: RMB4,909 million) lower or higher, respectively, as a result of foreign exchange losses or gains on translation of the available-for-sale equity securities at fair value. The actual exchange losses in 2019 were RMB67 million (2018: exchange losses of RMB194 million).

4.2.2	Credit risk

Credit risk is the risk that one party of a financial transaction or the issuer of a financial instrument will fail to discharge its obligation and cause another party to incur a financial loss. Because the Group’s investment portfolio is restricted to the types of investments as permitted by the China Banking and Insurance Regulatory Commission (“CBIRC”) and a significant portion of the portfolio is in government bonds, government agency bonds, corporate bonds with higher credit rating and term deposits with the state-owned commercial banks, the Group’s overall exposure to credit risk is relatively low.

Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. The Group manages credit risk through in-house research and analysis of the Chinese economy and the underlying obligors and transaction structures. Where appropriate, the Group obtains collateral in the form of rights to cash, securities, property and equipment to lower the credit risk.

Credit risk exposure

The carrying amount of financial assets included on the consolidated statement of financial position represents the maximum credit risk exposure at the reporting date without taking account of any collateral held or other credit enhancements attached. The Group has no credit risk exposure relating to off-balance sheet items as at 31 December 2019 and 2018.

Collateral and other credit enhancements

Securities purchased under agreements to resell are pledged by counterparties’ debt securities or term deposits of which the Group could take the ownership if the owner of the collateral defaults. Policy loans and most of premium receivables are collateralised by their policies’ cash value according to the terms and conditions of policy loan contracts and policy contracts, respectively.

Credit quality

The Group’s debt securities investment mainly includes government bonds, government agency bonds, corporate bonds and subordinated bonds or debts, and most of the debt securities are guaranteed by either the Chinese government or Chinese government controlled financial institutions. As at 31 December 2019, 99.8% (as at 31 December 2018: 99.9%) of the corporate bonds held by the Group or the issuers of these corporate bonds had credit ratings of AA/A-2 or above. As at 31 December 2019, 100% (as at 31 December 2018: 99.9%) of the subordinated bonds or debts held by the Group either had credit ratings of AA/A-2 or above, or were issued by national commercial banks. The bonds, debts or their issuers’ credit ratings are assigned by a qualified appraisal institution in the PRC and updated at each reporting date.

As at 31 December 2019, 99.7% (as at 31 December 2018: 99.9%) of the Group’s bank deposits are with the four largest state-owned commercial banks, other national commercial banks and China Securities Depository and Clearing Corporation Limited (“CSDCC”) in the PRC. The Group believes these commercial banks, and CSDCC have a high credit quality. The Group’s most other loans excluding policyholder loans, are guaranteed by third parties or with pledge, or have the fiscal annual budget income as the source of repayment, or have higher credit rating borrowers. As a result, the Group concludes that the credit risk associated with term deposits and accrued investment income thereof, statutory deposits—restricted, other loans, and cash and cash equivalents has not caused a material impact on the Group’s consolidated financial statements as at 31 December 2019 and 2018.

The credit risk associated with securities purchased under agreements to resell, policy loans and most of premium receivables has not caused a material impact on the Group’s consolidated financial statements taking into consideration their sufficient collateral held and maturity terms of no more than one year as at 31 December 2019 and 2018.

F-47

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.2	Financial risk (continued)
---	---
4.2.3	Liquidity risk
---	---

Liquidity risk is the risk that the Group is unable to obtain funds at a reasonable funding cost when required to meet a repayment obligation and fund its asset portfolio within a certain time.

In the normal course of business, the Group attempts to match the maturity of financial assets to the maturity of insurance and financial liabilities.

The following tables set forth the contractual and expected undiscounted cash flows for financial assets and liabilities and insurance liabilities:

						Contractual and expected cash flows (undiscounted)
As at 31 December 2019	Carrying<br>value		Without<br>maturity			Not<br>later<br>than 1<br>year			Later than 1<br>year but not<br>later than 3<br>years			Later than 3<br>years but not<br>later than 5<br>years			Later<br>than 5<br>years
Financial assets
Contractual cash inflows
Equity securities	****	605,996	****	605,996	****	****	—	****	****	—	****	****	—	****	****	—	****
Debt securities	****	1,523,748	****	—	****	****	107,632	****	****	319,656	****	****	250,805	****	****	1,701,886	****
Loans	****	608,920	****	—	****	****	232,715	****	****	174,260	****	****	117,001	****	****	191,290	****
Term deposits	****	535,260	****	—	****	****	119,827	****	****	184,707	****	****	294,477	****	****	8,087	****
Statutory deposits - restricted	****	6,333	****	—	****	****	479	****	****	2,315	****	****	4,594	****	****	—	****
Securities purchased under agreements to resell	****	4,467	****	—	****	****	4,467	****	****	—	****	****	—	****	****	—	****
Accrued investment income	****	41,703	****	—	****	****	40,710	****	****	561	****	****	432	****	****	—	****
Premiums receivable	****	17,281	****	—	****	****	17,281	****	****	—	****	****	—	****	****	—	****
Cash and cash equivalents	****	53,306	****	—	****	****	53,306	****	****	—	****	****	—	****	****	—	****
Subtotal	****	3,397,014	****	605,996	****	****	576,417	****	****	681,499	****	****	667,309	****	****	1,901,263	****
Financial and insurance liabilities					****
Expected cash outflows
Insurance contracts	****	2,552,736	****	—	****	****	179,925	****	****	209,603	****	****	(35,264	)	****	(5,015,173	)
Investment contracts	****	267,804	****	—	****	****	(24,020	)	****	(29,900	)	****	23,462	****	****	(606,662	)
Contractual cash outflows
Securities sold under agreements to repurchase	****	118,088	****	—	****	****	(118,088	)	****	—	****	****	—	****	****	—	****
Financial liabilities at fair value through profit or loss	****	3,859	****	(3,859	)	****	—	****	****	—	****	****	—	****	****	—	****
Annuity and other insurance balances payable	****	51,019	****	—	****	****	(51,019	)	****	—	****	****	—	****	****	—	****
Interest-bearing loans and other borrowings	****	20,045	****	—	****	****	(4,776	)	****	(1,572	)	****	(16,111	)	****	—	****
Bonds payable	****	34,990	****	—	****	****	(332	)	****	(2,996	)	****	(37,996	)	****	—	****
Lease liabilities	****	3,091	****	—	****	****	(1,331	)	****	(1,491	)	****	(440	)	****	(74	)
Subtotal	****	3,051,632	****	(3,859	)	****	(19,641	)	****	173,644	****	****	(66,349	)	****	(5,621,909	)
Net cash inflow/(outflow)	****	345,382	****	602,137	****	****	556,776	****	****	855,143	****	****	600,960	****	****	(3,720,646	)

F-48

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.2	Financial risk (continued)
---	---
4.2.3	Liquidity risk (continued)
---	---
						Contractual and expected cash flows (undiscounted)
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
As at 31 December 2018	Carrying<br>value		Without<br>maturity			Not<br>later<br>than 1<br>year			Later than 1<br>year but not<br>later than 3<br>years			Later than 3<br>years but not<br>later than 5<br>years			Later<br>than 5<br>years
Financial assets
Contractual cash inflows
Equity securities		422,780		422,780			—			—			—			—
Debt securities		1,391,310		—			80,801			290,449			298,644			1,417,910
Loans		450,251		—			182,978			101,149			88,718			172,050
Term deposits		559,341		—			172,525			145,634			237,508			77,961
Statutory deposits - restricted		6,333		—			782			739			6,005			—
Securities purchased under agreements to resell		9,905		—			9,905			—			—			—
Accrued investment income		48,402		—			47,834			540			28			—
Premiums receivable		15,648		—			15,648			—			—			—
Cash and cash equivalents		50,809		—			50,809			—			—			—
Subtotal		2,954,779		422,780			561,282			538,511			630,903			1,667,921
Financial and insurance liabilities					****
Expected cash outflows
Insurance contracts		2,216,031		—			197,289			222,170			(13,489	)		(4,391,739	)
Investment contracts		255,434		—			(13,098	)		(10,293	)		(11,422	)		(629,318	)
Contractual cash outflows
Securities sold under agreements to repurchase		192,141		—			(192,141	)		—			—			—
Financial liabilities at fair value through profit or loss		2,680		(2,680	)		—			—			—			—
Annuity and other insurance balances payable		49,465		—			(49,465	)		—			—			—
Interest-bearing loans and other borrowings		20,150		—			(16,977	)		(3,798	)		—			—
Subtotal		2,735,901		(2,680	)		(74,392	)		208,079			(24,911	)		(5,021,057	)
Net cash inflow/(outflow)		218,878		420,100			486,890			746,590			605,992			(3,353,136	)

The amounts set forth in the tables above for insurance and investment contracts in each column are the undiscounted cash flows representing expected future benefit payments taking into consideration of future premiums payments or deposits from policyholders. The excess cash inflows from matured financial assets will be reinvested to cover any future liquidity exposures. The estimate is subject to assumptions related to mortality, morbidity, the lapse rate, the loss ratio of short-term insurance contracts, expense and other assumptions. Actual experience may differ from estimates.

F-49

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.2	Financial risk (continued)
---	---
4.2.3	Liquidity risk (continued)
---	---

The liquidity analysis above does not include policyholder dividends payable of RMB112,593 million as at 31 December 2019 (as at 31 December 2018: RMB85,071 million). As at 31 December 2019, declared dividends of RMB77,512 million (as at 31 December 2018: RMB74,932 million) included in policyholder dividends payable have a maturity not later than one year. For the remaining policyholder dividends payable, the amount and timing of the undiscounted cash flows are indeterminate due to the uncertainty of future experiences including investment returns and are subject to future declarations by the Group.

Although all investment contracts with DPF and investment contracts without DPF contain contractual options to surrender that can be exercised immediately by all policyholders at any time, the Group’s expected cash flows as shown in the above tables are based on past experience and future expectations. Should these contracts be surrendered immediately, it would cause a cash outflow of RMB61,178 million and RMB204,037 million, respectively for the year ended 31 December 2019 (2018: RMB58,669 million and RMB194,290 million, respectively), payable within one year.

4.2.4	Capital management

The Group’s objectives for managing capital are to comply with the insurance capital requirements based on the minimum capital and actual capital required by the CBIRC, prevent risk in operation and safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for equity holders and benefits for other stakeholders. The Group replenishes capital to improve the solvency ratio by issuing Core Tier 2 Capital Securities and bonds for capital replenishment according to the relevant laws and the approval of the relevant authorities.

The Group is also subject to other local capital requirements, such as statutory deposits - restricted requirement, statutory insurance fund requirement, statutory reserve fund requirement and general reserve requirement discussed in detail in Note 10.4, Note 21 and Note 37, respectively.

The Group manages capital to ensure its continuous and full compliance with the regulations mainly through monitoring its quarterly solvency ratios, as well as the solvency ratio based on annual stress testing.

The table below summarises the core and comprehensive solvency ratio, core capital, actual capital and minimum capital of the Company under Insurance Institution Solvency Regulations (No.1 - No.17):

	As at 31 December 2019RMB million
Core capital	****	952,030	761,353
Actual capital	****	987,067	761,367
Minimum capital	****	356,953	303,872
Core solvency ratio	****	267%	251%
Comprehensive solvency ratio	****	277%	251%

According to the solvency ratios results mentioned above, and the unquantifiable evaluation results of operational risk, strategic risk, reputational risk and liquidity risk of insurance companies, the CBIRC evaluates the comprehensive solvency of insurance companies and supervises insurance companies by classifying them into four categories:

(i)	Category A: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational<br>risk and liquidity risk are very low;
(ii)	Category B: solvency ratios meet the requirements, and the operational risk, strategic risk, reputational<br>risk and liquidity risk are low;
---	---
(iii)	Category C: solvency ratios do not meet the requirements or solvency ratios meet the requirements but one or<br>several risks in operation, strategy, reputation and liquidity are high;
---	---
(iv)	Category D: solvency ratios do not meet the requirements or solvency ratios meet the requirements but one or<br>several risks in operation, strategy, reputation and liquidity are severe.
---	---

According to the Supervision Information System of the China Risk Oriented Solvency System, the latest Integrated Risk Rating result of the Company was Category A.

F-50

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.3	Disclosures about interest in unconsolidated structured entities
---	---

The Group’s interest in unconsolidated structured entities are recorded as securities at fair value through profit or loss, available-for-sale securities and loans. These structured entities typically raise funds by issuing securities or other beneficiary certificates. The purpose of these structured entities is primarily to generate management service fees, or provide finance to public and private infrastructure construction. Refer to Note 3.5 for the Group’s consolidation judgements related to structured entities.

These structured entities that the Group has interest in are guaranteed by third parties with higher credit ratings, or by pledging, or by having the fiscal budget income as the source of repayment, or by borrowers with higher credit ratings.

The Group did not guarantee or provide any financing support for the structured entities that the Group had interest in or sponsored.

(i)	The unconsolidated structured entities that the Group has interest in

The Group believes that the maximum exposure approximates the carrying amount of interest in these unconsolidated structured entities. The size of unconsolidated structured entities as well as the Group’s carrying amount of the assets recognised in the financial statements relating to its interest in unconsolidated structured entities and the Group’s maximum exposure are shown below:

	Unconsolidated structured entities
As at 31 December 2019	SizeRMB Million		Carrying<br>amount<br>of assetsRMB Million		Maximum<br>exposureRMB Million		Interest held by<br>the Group
Funds managed by affiliated entities	****	185,158	****	6,497	****	6,497	****	Investment incomeand service fee
Funds managed by third parties	****	Note 1	****	106,205	****	106,205	****	Investment income
Trust schemes managed by affiliated entities	****	6,400	****	3,588	****	3,588	****	Investment incomeand service fee
Trust schemes managed by third parties	****	Note 1	****	71,707	****	71,707	****	Investment income
Debt investment schemes managed by affiliated entities	****	34,025	****	14,832	****	14,832	****	Investment incomeand service fee
Debt investment schemes managed by third parties	****	Note 1	****	37,112	****	37,112	****	Investment income
Others managed by affiliated entities ^Note 2^	****	452,814	****	10,827	****	10,827	****	Investment incomeand service fee
Others managed by third parties<br>^Note 2^	****	Note 1	****	98,003	****	98,003	****	Investment income

F-51

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.3	Disclosures about interest in unconsolidated structured entities (continued)
---	---
(i)	The unconsolidated structured entities that the Group has interest in (continued)
---	---
	Unconsolidated structured entities
---	---	---	---	---	---	---	---	---
As at 31 December 2018	Size<br>RMB Million		Carrying<br>amount<br>of assets<br>RMB Million		Maximum<br>exposure<br>RMB Million		Interest held by<br>the Group
Funds managed by affiliated entities		120,797		629		629		Investment income<br>and service fee
Funds managed by third parties		Note 1		104,678		104,678		Investment income
Trust schemes managed by affiliated entities		3,800		2,680		2,680		Investment income<br>and service fee
Trust schemes managed by third parties		Note 1		89,769		89,769		Investment income
Debt investment schemes managed by affiliated entities		59,456		32,029		32,029		Investment income<br>and service fee
Debt investment schemes managed by third parties		Note 1		33,330		33,330		Investment income
Others managed by affiliated entities ^Note 2^		422,006		9,502		9,502		Investment income<br>and service fee
Others managed by third parties<br>^Note 2^		Note 1		110,035		110,035		Investment income
Note 1:	Funds, trust schemes, debt investment schemes and others managed by third parties were sponsored by third<br>party financial institutions and the information related to size of these structured entities were not publicly available.
---	---
Note 2:	Others included wealth management products, special asset management schemes, and asset-backed plans, etc.<br>
---	---
(ii)	The unconsolidated structured entities that the Group has sponsored but does not have interest in
---	---

As at 31 December 2019, the size of the unconsolidated structured entities that the Group sponsored but had no interest was RMB600,223 million (as at 31 December 2018: RMB400,419 million), which were mainly funds, special asset management schemes, pension security products and pension products, etc., sponsored by the Group to generate management service fee income. In 2019, the management service fee from these structured entities was RMB1,749 million (2018: RMB1,338 million), which was recorded as other income. The Group did not transfer assets to these structured entities.

F-52

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.4	Fair value hierarchy
---	---

Level 1 fair value is based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can obtain at the measurement date.

Other than Level 1 quoted prices, Level 2 fair value is based on valuation techniques using significant inputs, that are observable for the asset being measured, either directly or indirectly, for substantially the full term of the asset through corroboration with observable market data. Observable inputs generally used to measure the fair value of securities classified as Level 2 include quoted market prices for similar assets in active markets; quoted market prices in markets that are not active for identical or similar assets and other market observable inputs. This level includes the debt securities for which quotations are available from pricing services providers. Fair values provided by pricing services providers are subject to a number of validation procedures by management. These procedures include a review of the valuation models utilised and the results of these models, as well as the recalculation of prices obtained from pricing services at the end of each reporting period.

Under certain conditions, the Group may not receive a price quote from independent third-party pricing services. In this instance, the Group’s valuation team may choose to apply an internally developed valuation method to the assets or liabilities being measured, determine the main inputs for valuation, and analyse the change of the valuation and report it to management. Key inputs involved in internal valuation services are not based on observable market data. They reflect assumptions made by management based on judgements and experiences. The assets or liabilities valued by this method are generally classified as Level 3.

As at 31 December 2019, assets classified as Level 1 accounted for approximately 35.11% of assets measured at fair value on a recurring basis. Fair value measurements classified as Level 1 include certain debt securities, equity securities that are traded in an active exchange market or interbank market and open-ended funds with public market price quotation. The Group considers a combination of certain factors to determine whether a market for a financial instrument is active, including the occurrence of trades within the specific period, the respective trading volume, and the degree which the implied yields for a debt security for observed transactions differs from the Group’s understanding of the current relevant market rates and information. Trading prices from the Chinese interbank market are determined by both trading counterparties and can be observed publicly. The Company adopted this price of the debt securities traded on the Chinese interbank market at the reporting date as their fair market value and classified the investments as Level 1. Open-ended funds also have active markets. Fund management companies publish the net asset value of these funds on their websites on each trade date. Investors subscribe for and redeem units of these funds in accordance with the funds’ net asset value published by the fund management companies on each trade date. The Company adopted the unadjusted net asset value of the funds at the reporting date as their fair market value and classified the investments as Level 1.

As at 31 December 2019, assets classified as Level 2 accounted for approximately 44.98% of assets measured at fair value on a recurring basis. They primarily include certain debt securities and equity securities. Valuations are generally obtained from third party pricing services for identical or comparable assets, or through the use of valuation methodologies using observable market inputs, or recent quoted market prices. Valuation service providers typically gather, analyse and interpret information related to market transactions and other key valuation model inputs from multiple sources, and through the use of widely accepted internal valuation models, provide a theoretical quote on various securities. Debt securities are classified as Level 2 when they are valued at recent quoted prices from the Chinese interbank market or from valuation service providers.

At 31 December 2019, assets classified as Level 3 accounted for approximately 19.91% of assets measured at fair value on a recurring basis. They primarily include unlisted equity securities and unlisted debt securities. Fair values are determined using valuation techniques, including discounted cash flow valuations, the comparable companies approach, etc. The determination of Level 3 is primarily based on the significance of certain unobservable inputs.

For the accounting policies regarding the determination of fair values of financial assets and liabilities, see Note 3.2.

F-53

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.4	Fair value hierarchy (continued)
---	---

The following table presents the Group’s quantitative disclosures of fair value measurement hierarchy for assets and liabilities measured at fair value as at 31 December 2019:

	Fair value measurement using
	Quoted prices<br>in active<br>marketsLevel 1<br>RMB million			Significant<br>observable<br>inputsLevel 2RMB million		Significant<br>unobservable<br>inputsLevel 3RMB million		Total <br><br><br><br><br> <br>RMB million
Assets measured at fair value
Available-for-sale<br>securities
- Equity securities
Funds	****	102,349	****	****	—	****	—	****	102,349	****
Common stocks	****	214,206	****	****	22,117	****	—	****	236,323	****
Preferred stocks	****	—	****	****	—	****	58,314	****	58,314	****
Wealth management products	****	—	****	****	32,640	****	—	****	32,640	****
Others	****	—	****	****	28,319	****	70,585	****	98,904	****
- Debt securities
Government bonds	****	2,620	****	****	21,138	****	—	****	23,758	****
Government agency bonds	****	24,305	****	****	146,884	****	—	****	171,189	****
Corporate bonds	****	5,360	****	****	143,095	****	—	****	148,455	****
Subordinated bonds/debts	****	1,069	****	****	52,853	****	—	****	53,922	****
Others	****	—	****	****	6,817	****	105,650	****	112,467	****
Securities at fair value through profit or loss
- Equity securities
Funds	****	16,023	****	****	78	****	—	****	16,101	****
Common stocks	****	40,070	****	****	211	****	—	****	40,281	****
Others	****	—	****	****	20	****	—	****	20	****
- Debt securities
Government bonds	****	33	****	****	8	****	—	****	41	****
Government agency bonds	****	362	****	****	6,497	****	—	****	6,859	****
Corporate bonds	****	7,999	****	****	69,200	****	16	****	77,215	****
Others	****	—	****	****	1,091	****	—	****	1,091	****
Derivative financial assets	****	—	****	****	—	****	428	****	428	****
Total	****	414,396	****	****	530,968	****	234,993	****	1,180,357	****
Liabilities measured at fair value
Financial liabilities at fair value through profit or loss	****	(3,859	)	****	—	****	—	****	(3,859	)
Investment contracts at fair value through profit or loss	****	(10	)	****	—	****	—	****	(10	)
Total	****	(3,869	)	****	—	****	—	****	(3,869	)

F-54

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.4	Fair value hierarchy (continued)
---	---

The following table presents the changes in Level 3 assets and liabilities for the year ended 31 December 2019:

	Available-for-salesecurities						Securities at fair<br>value through<br>profit or loss		Derivativefinancialassets		Totalassets			Derivativefinancialliabilities			Totalliabilities
	Debt<br>securitiesRMBmillion			Equity<br>securitiesRMBmillion			Debt<br>securities<br>RMB<br>million		RMBmillion		RMBmillion			RMBmillion			RMBmillion
Opening balance	****	79,248	****	****	100,000	****	****	—	****	—	****	179,248	****	****	(1,877	)	****	(1,877	)
Purchases	****	35,453	****	****	46,561	****	****	—	****	—	****	82,014	****	****	—	****	****	—	****
Transferred into Level 3	****	—	****	****	—	****	****	16	****	—	****	16	****	****	—	****	****	—	****
Transferred out of Level 3	****	—	****	****	(15,866	)	****	—	****	—	****	(15,866	)	****	—	****	****	—	****
Total gains/(losses) recorded in profit or loss	****	—	****	****	—	****	****	—	****	428	****	428	****	****	404	****	****	404	****
Total gains/(losses) recorded in other comprehensive income	****	221	****	****	3,205	****	****	—	****	—	****	3,426	****	****	—	****	****	—	****
Disposals	****	(200	)	****	(4,000	)	****	—	****	—	****	(4,200	)	****	1,473	****	****	1,473	****
Maturity	****	(9,072	)	****	(1,001	)	****	—	****	—	****	(10,073	)	****	—	****	****	—	****
Closing balance	****	105,650	****	****	128,899	****	****	16	****	428	****	234,993	****	****	—	****	****	—	****

F-55

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.4	Fair value hierarchy (continued)
---	---

The following table presents the Group’s quantitative disclosures of fair value measurement hierarchy for assets and liabilities measured at fair value as at 31 December 2018:

	Fair value measurement using
	Quoted prices<br>in active<br>markets<br>Level 1<br>RMB million			Significant<br>observable<br>inputs<br>Level 2<br>RMB million		Significant<br>unobservable<br>inputs<br>Level 3<br>RMB million			Total<br><br> <br><br><br><br>RMB million
Assets measured at fair value
Available-for-sale<br>securities
- Equity securities
Funds		92,260			44		—			92,304
Common stocks		113,750			15,871		13,848			143,469
Preferred stocks		—			—		32,707			32,707
Wealth management products		—			31,348		—			31,348
Others		34			—		53,445			53,479
- Debt securities
Government bonds		2,587			25,853		—			28,440
Government agency bonds		53,433			126,840		—			180,273
Corporate bonds		10,206			175,514		—			185,720
Subordinated bonds/debts		—			21,314		200			21,514
Others		—			1,595		79,048			80,643
Securities at fair value through profit or loss
- Equity securities
Funds		13,891			76		—			13,967
Common stocks		34,392			849		—			35,241
Wealth management products		—			1,506		—			1,506
- Debt securities
Government bonds		82			36		—			118
Government agency bonds		1,556			5,204		—			6,760
Corporate bonds		7,052			72,722		—			79,774
Others		—			1,351		—			1,351
Total		329,243			480,123		179,248			988,614
Liabilities measured at fair value
Financial liabilities at fair value through profit or loss		(2,680	)		—		—			(2,680	)
Investment contracts at fair value through profit or loss		(9	)		—		—			(9	)
Derivative financial liabilities		—			—		(1,877	)		(1,877	)
Total		(2,689	)		—		(1,877	)		(4,566	)

F-56

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.4	Fair value hierarchy (continued)
---	---

The following table presents the changes in Level 3 assets and liabilities for the year ended 31 December 2018:

	Available-for-sale<br>securities						Securities at fair<br>value through<br>profit or loss			Total<br>assets			Derivative<br>financial<br>liabilities			Total<br>liabilities
	Debt<br>securities<br>RMB<br>million			Equity<br>securities<br>RMB<br>million			Equity<br>securities<br>RMB<br>million			RMB<br>million			RMB<br>million			RMB<br>million
Opening balance		57,333			89,111			655			147,099			—			—
Purchases		19,755			7,891			—			27,646			—			—
Transferred into Level 3		—			180			—			180			—			—
Transferred out of Level 3		—			(467	)		(655	)		(1,122	)		—			—
Total gains/(losses) recorded in profit or loss		—			—			—			—			(1,877	)		(1,877	)
Total gains/(losses) recorded in other comprehensive income		3,024			3,446			—			6,470			—			—
Disposals		—			(161	)		—			(161	)		—			—
Maturity		(864	)		—			—			(864	)		—			—
Closing balance		79,248			100,000			—			179,248			(1,877	)		(1,877	)

The assets and liabilities whose fair value measurements are classified under Level 3 above do not have material impact on the profit or loss of the Group.

For the assets and liabilities measured at fair value on a recurring basis, during the year ended 31 December 2019, RMB13,307 million (2018: RMB11,215 million) debt securities were transferred from Level 1 to Level 2 within the fair value hierarchy, whereas RMB9,716 million (2018: RMB16,119 million) debt securities were transferred from Level 2 to Level 1. No material equity securities were transferred from Level 1 to Level 2 (2018: RMB3,491 million were transferred from Level 1 to Level 2), whereas RMB853 million equity securities were transferred from Level 2 to Level 1 (2018: no material transfer).

For the years ended 31 December 2019 and 2018, there were no significant changes in the business or economic circumstances that affected the fair value of the Group’s financial assets and liabilities. There were also no reclassifications of financial assets.

As at 31 December 2019 and 2018, significant unobservable inputs such as discount rate and discounts for lack of marketability were used in the valuation of primarily assets and liabilities at fair value classified as Level 3. The fair value was not significantly sensitive to reasonable changes in these significant unobservable inputs.

F-57

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

4	RISK MANAGEMENT (CONTINUED)
4.4	Fair value hierarchy (continued)
---	---

The table below presents information about the significant unobservable inputs used for primary assets and liabilities at fair value classified as Level 3 as at 31 December 2019 and 31 December 2018:

	Fair value	Valuationtechniques	Significant<br><br><br>unobservableinputs	Range	Relationships<br><br><br>between fairvalue and<br><br><br>unobservableinputs
Equity securities	31 December 2019: 26,265<br><br><br>31 December 2018: 34,388	Comparable companies approach	Discounts for lack of marketability	31 December 2019: 11%-35%<br><br><br>31 December 2018: 5%-25%	The fair value is inversely related to the discounts for lack of<br>marketability
	31 December 2019: 28,346<br><br><br>31 December 2018: 23,976	Net asset value method	N/A	N/A	N/A
	31 December 2019: 72,477<br><br><br>31 December 2018: 37,847	Discounted cash flow method	Discount rate	31 December 2019: 3.80%-6.38%<br><br><br>31 December 2018: 3.80%-7.50%	The fair value is inversely related to discount rate
Debt securities	31 December 2019: 105,666<br><br><br>31 December 2018: 79,248	Discounted cash flow method	Discount rate	31 December 2019: 3.02%-6.22%<br><br><br>31 December 2018: 4.00%-6.60%	The fair value is inversely related to discount rate
Derivative financial instruments	31 December 2019: 428<br><br><br>31 December 2018: (1,877)	Comparable companies approach	Discounts for lack of marketability	31 December 2019: 15%<br><br><br>31 December 2018: 11%	The fair value is inversely related to the discounts for lack of<br>marketability

F-58

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

5	SEGMENT INFORMATION
5.1	Operating segments
---	---

The Group operates in four operating segments:

(i)	Life insurance business (Life)

Life insurance business relates primarily to the sale of life insurance policies, including those life insurance policies without significant insurance risk transferred.

(ii)	Health insurance business (Health)

Health insurance business relates primarily to the sale of health insurance policies, including those health insurance policies without significant insurance risk transferred.

(iii)	Accident insurance business (Accident)

Accident insurance business relates primarily to the sale of accident insurance policies.

(iv)	Other businesses (Others)

Other businesses relate primarily to income and cost of the agency business in respect of transactions with CLIC, etc., as described in Note 34, net share of profit of associates and joint ventures, income and expenses of subsidiaries, and unallocated income and expenditure of the Group.

5.2	Allocation basis of income and expenses

Investment income, net realised gains on financial assets, net fair value gains through profit or loss and foreign exchange gains/(losses) within other expenses are allocated among segments in proportion to the respective segments’ average liabilities of insurance contracts and investment contracts at the beginning and end of the year. Administrative expenses are allocated among segments in proportion to the unit cost of respective products in the different segments. Unallocated other income and other expenses are presented in the “Others” segment directly. Income tax is not allocated.

5.3	Allocation basis of assets and liabilities

Financial assets, securities sold under agreements to repurchase and derivative financial liabilities are allocated among segments in proportion to the respective segments’ average liabilities of insurance contracts and investment contracts at the beginning and end of the year. Insurance and investment contract liabilities are presented under the respective segments. The remaining assets and liabilities are not allocated.

F-59

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

5	SEGMENT INFORMATION (CONTINUED)
	For the year ended 31 December 2019
---	---	---	---	---	---	---	---	---	---	---	---	---	---
	****	Life	****	Health	****	Accident	****	Others	****	Elimination	****	Total	****
	RMB million
Revenues
Gross written premiums	****	446,562	****	105,581	****	14,943	****	—	****	—	****	567,086	****
- Term life	****	2,584	****	—	****	—	****	—	****	—	****
- Whole life	****	61,612	****	—	****	—	****	—	****	—	****
- Endowment	****	113,950	****	—	****	—	****	—	****	—	****
- Annuity	****	268,416	****	—	****	—	****	—	****	—	****
Net premiums earned	****	445,719	****	99,575	****	14,984	****	—	****	—	****	560,278	****
Investment income	****	129,334	****	7,849	****	443	****	2,293	****	—	****	139,919	****
Net realised gains on financial assets	****	1,646	****	100	****	6	****	79	****	—	****	1,831	****
Net fair value gains through profit or loss	****	16,947	****	1,027	****	58	****	1,219	****	—	****	19,251	****
Other income	****	1,110	****	60		—	****	8,698		(1,673	)	8,195
Including: inter-segment revenue	****	—	****	—	****	—	****	1,673	****	(1,673	)	—	****
Segment revenues	****	594,756	****	108,611	****	15,491	****	12,289	****	(1,673	)	729,474	****
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits	****	(124,194	)	(3,649	)	(34	)	—	****	—	****	(127,877	)
Accident and health claims and claim adjustment expenses	****	—	****	(44,613	)	(6,170	)	—	****	—	****	(50,783	)
Increase in insurance contract liabilities	****	(303,479	)	(27,209	)	(119	)	—	****	—	****	(330,807	)
Investment contract benefits	****	(8,810	)	(347	)	—	****	—	****	—	****	(9,157	)
Policyholder dividends resulting from participation in profits	****	(22,251	)	(124	)	—	****	—	****	—	****	(22,375	)
Underwriting and policy acquisition costs	****	(57,071	)	(16,554	)	(5,443	)	(2,328	)	—	****	(81,396	)
Finance costs	****	(3,288	)	(200	)	(12	)	(755	)	—	****	(4,255	)
Administrative expenses	****	(25,328	)	(9,075	)	(2,962	)	(2,910	)	—	****	(40,275	)
Other expenses	****	(7,120	)	(692	)	(169	)	(3,294	)	1,673	****	(9,602	)
Including: inter-segment expenses	****	(1,573	)	(95	)	(5	)	—	****	1,673	****	—	****
Statutory insurance fund contribution	****	(797	)	(273	)	(93	)	—	****	—	****	(1,163	)
Segment benefits, claims and expenses	****	(552,338	)	(102,736	)	(15,002	)	(9,287	)	1,673	****	(677,690	)
Net gains on investments of associates and joint ventures	****	—	****	—	****	—	****	8,011	****	—	****	8,011	****
Including: share of profit of associates and joint ventures	****	—	****	—	****	—	****	9,159	****	—	****	9,159	****
Segment results	****	42,418	****	5,875	****	489	****	11,013	****	—	****	59,795	****
Income tax												(781	)
Net profit												59,014	****
Attributable to
- Equity holders of the Company												58,287	****
- Non-controlling interests												727	****
Other comprehensive income attributable to equity holders of theCompany	****	31,861	****	1,931	****	109	****	946	****	—	****	34,847	****
Depreciation and amortisation	****	2,671	****	917	****	312	****	479	****	—	****	4,379	****

F-60

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

5	SEGMENT INFORMATION (CONTINUED)
	As at 31 December 2019
---	---	---	---	---	---	---	---	---	---	---	---	---
	Life		Health		Accident		Others		Elimination		Total
	RMB million
Assets
Financial assets	****	3,111,140	****	183,142	****	10,080	****	76,907	****	—	****	3,381,269
Others	****	8,953	****	12,109	****	572	****	222,983	****	—	****	244,617
Segment assets	****	3,120,093	****	195,251	****	10,652	****	299,890	****	—	****	3,625,886
Unallocated
Property, plant and equipment											****	51,758
Others											****	49,090
Total											****	3,726,734
Liabilities
Insurance contracts	****	2,385,407	****	158,800	****	8,529	****	—	****	—	****	2,552,736
Investment contracts	****	252,362	****	15,442	****	—	****	—	****	—	****	267,804
Securities sold under agreements to repurchase	****	106,377	****	6,447	****	365	****	4,899	****	—	****	118,088
Others	****	80,820	****	5,687	****	346	****	23,904	****	—	****	110,757
Segment liabilities	****	2,824,966	****	186,376	****	9,240	****	28,803	****	—	****	3,049,385
Unallocated
Others											****	268,007
Total											****	3,317,392

F-61

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

5	SEGMENT INFORMATION (CONTINUED)
	For the year ended 31 December 2018
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Life			Health			Accident			Others			Elimination			Total
	RMB million
Revenues
Gross written premiums		437,540			83,614			14,672			—			—			535,826
- Term life		3,145			—			—			—			—
- Whole life		46,375			—			—			—			—
- Endowment		126,318			—			—			—			—
- Annuity		261,702			—			—			—			—
Net premiums earned		436,863			80,279			14,881			—			—			532,023
Investment income		116,721			6,393			441			1,612			—			125,167
Net realised gains on financial assets		(18,439	)		(1,008	)		(70	)		(74	)		—			(19,591	)
Net fair value gains through profit or loss		(16,946	)		(927	)		(65	)		(340	)		—			(18,278	)
Other income		1,088			84			—			8,505			(1,579	)		8,098
Including: inter-segment revenue		—			—			—			1,579			(1,579	)		—
Segment revenues		519,287			84,821			15,187			9,703			(1,579	)		627,419
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits		(245,786	)		(2,922	)		(28	)		—			—			(248,736	)
Accident and health claims and claim adjustment expenses		—			(33,801	)		(6,751	)		—			—			(40,552	)
Increase in insurance contract liabilities		(167,090	)		(22,966	)		125			—			—			(189,931	)
Investment contract benefits		(9,020	)		(312	)		—			—			—			(9,332	)
Policyholder dividends resulting from participation in profits		(19,523	)		(123	)		—			—			—			(19,646	)
Underwriting and policy acquisition costs		(43,108	)		(11,806	)		(4,808	)		(2,983	)		—			(62,705	)
Finance costs		(3,304	)		(181	)		(12	)		(619	)		—			(4,116	)
Administrative expenses		(23,728	)		(7,881	)		(2,982	)		(2,895	)		—			(37,486	)
Other expenses		(5,339	)		(487	)		(140	)		(3,255	)		1,579			(7,642	)
Including: inter-segment expenses		(1,492	)		(82	)		(5	)		—			1,579			—
Statutory insurance fund contribution		(759	)		(242	)		(96	)		—			—			(1,097	)
Segment benefits, claims and expenses		(517,657	)		(80,721	)		(14,692	)		(9,752	)		1,579			(621,243	)
Net gains on investments of associates and joint ventures		—			—			—			7,745			—			7,745
Including: share of profit of associates and joint ventures		—			—			—			7,745			—			7,745
Segment results		1,630			4,100			495			7,696			—			13,921
Income tax																	(1,985	)
Net profit																	11,936
Attributable to
- Equity holders of the Company																	11,395
- Non-controlling interests																	541
Other comprehensive income attributable to equity holders of theCompany		(2,579	)		(141	)		(10	)		660			—			(2,070	)
Depreciation and amortisation		1,589			505			202			342			—			2,638

F-62

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

5	SEGMENT INFORMATION (CONTINUED)
	As at 31 December 2018
---	---	---	---	---	---	---	---	---	---	---	---	---
	Life		Health		Accident		Others		Elimination		Total
	RMB million
Assets
Financial assets		2,743,378		145,889		9,835		43,383		—		2,942,485
Others		9,696		8,975		610		201,661		—		220,942
Segment assets		2,753,074		154,864		10,445		245,044		—		3,163,427
Unallocated
Property, plant and equipment												47,281
Others												43,695
Total												3,254,403
Liabilities
Insurance contracts		2,081,822		125,743		8,466		—		—		2,216,031
Investment contracts		240,152		15,282		—		—		—		255,434
Derivative financial liabilities		1,773		97		7		—		—		1,877
Securities sold under agreements to repurchase		178,499		9,759		674		3,209		—		192,141
Others		46,328		3,607		211		22,830		—		72,976
Segment liabilities		2,548,574		154,488		9,358		26,039		—		2,738,459
Unallocated
Others												192,654
Total												2,931,113

F-63

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

5	SEGMENT INFORMATION (CONTINUED)
	For the year ended 31 December 2017
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Life			Health			Accident			Others			Elimination			Total
	RMB million
Revenues
Gross written premiums		429,822			67,708			14,436			—			—			511,966
- Term life		4,110			—			—			—			—
- Whole life		36,496			—			—			—			—
- Endowment		198,418			—			—			—			—
- Annuity		190,798			—			—			—			—
Net premiums earned		429,267			63,323			14,320			—			—			506,910
Investment income		115,316			5,454			456			1,501			—			122,727
Net realised gains on financial assets		41			2			—			(1	)		—			42
Net fair value gains through profit or loss		5,690			269			23			201			—			6,183
Other income		1,276			75			—			7,268			(1,126	)		7,493
Including: inter-segment revenue		—			—			—			1,126			(1,126	)		—
Segment revenues		551,590			69,123			14,799			8,969			(1,126	)		643,355
Benefits, claims and expenses
Insurance benefits and claims expenses
Life insurance death and other benefits		(257,300	)		(2,383	)		(25	)		—			—			(259,708	)
Accident and health claims and claim adjustment expenses		—			(27,992	)		(5,826	)		—			—			(33,818	)
Increase in insurance contract liabilities		(152,110	)		(20,249	)		(158	)		—			—			(172,517	)
Investment contract benefits		(7,798	)		(278	)		—			—			—			(8,076	)
Policyholder dividends resulting from participation in profits		(21,748	)		(123	)		—			—			—			(21,871	)
Underwriting and policy acquisition costs		(48,781	)		(8,494	)		(4,565	)		(2,949	)		—			(64,789	)
Finance costs		(3,967	)		(187	)		(16	)		(431	)		—			(4,601	)
Administrative expenses		(24,286	)		(5,615	)		(3,423	)		(2,629	)		—			(35,953	)
Other expenses		(5,508	)		(376	)		(147	)		(1,521	)		1,126			(6,426	)
Including: inter-segment expenses		(1,071	)		(51	)		(4	)		—			1,126			—
Statutory insurance fund contribution		(777	)		(180	)		(111	)		—			—			(1,068	)
Segment benefits, claims and expenses		(522,275	)		(65,877	)		(14,271	)		(7,530	)		1,126			(608,827	)
Share of profit of associates and joint ventures, net		—			—			—			7,143			—			7,143
Segment results		29,315			3,246			528			8,582			—			41,671
Income tax																	(8,919	)
Net profit																	32,752
Attributable to
- Equity holders of the Company																	32,253
- Non-controlling interests																	499
Other comprehensive income attributable to equity holder s of theCompany		(7,838	)		(370	)		(31	)		327			—			(7,912	)
Depreciation and amortisation		1,513			351			216			160			—			2,240

F-64

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

6	PROPERTY, PLANT AND EQUIPMENT
	Buildings			Office<br><br><br>equipment,<br><br><br>furniture and<br><br><br>fixtures			Motor<br><br><br>vehicles			Assets under<br><br><br>construction			Leasehold<br><br><br>improvements			Total
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	RMB million
Cost
As at 1 January 2019	****	37,262	****	****	7,658	****	****	1,340	****	****	16,902	****	****	2,191	****	****	65,353	****
Transfers upon completion	****	7,171	****	****	288	****	****	—	****	****	(8,164	)	****	532	****	****	(173	)
Additions	****	415	****	****	1,026	****	****	195	****	****	8,656	****	****	3	****	****	10,295	****
Transfers into investment properties	****	—	****	****	—	****	****	—	****	****	(2,977	)	****	—	****	****	(2,977	)
Disposals	****	(77	)	****	(604	)	****	(171	)	****	(39	)	****	(107	)	****	(998	)
As at 31 December 2019	****	44,771	****	****	8,368	****	****	1,364	****	****	14,378	****	****	2,619	****	****	71,500	****
Accumulated depreciation
As at 1 January 2019	****	(10,414	)	****	(5,443	)	****	(813	)	****	—	****	****	(1,377	)	****	(18,047	)
Charge for the year	****	(1,397	)	****	(620	)	****	(190	)	****	—	****	****	(283	)	****	(2,490	)
Other additions	****	(48	)	****	—	****	****	—	****	****	—	****	****	—	****	****	(48	)
Disposals	****	48	****	****	579	****	****	162	****	****	—	****	****	79	****	****	868	****
As at 31 December 2019	****	(11,811	)	****	(5,484	)	****	(841	)	****	—	****	****	(1,581	)	****	(19,717	)
Impairment
As at 1 January 2019	****	(24	)	****	—	****	****	—	****	****	(1	)	****	—	****	****	(25	)
Charge for the year	****	—	****	****	—	****	****	—	****	****	—	****	****	—	****	****	—	****
Disposals	****	—	****	****	—	****	****	—	****	****	—	****	****	—	****	****	—	****
As at 31 December 2019	****	(24	)	****	—	****	****	—	****	****	(1	)	****	—	****	****	(25	)
Net book value
As at 1 January 2019	****	26,824	****	****	2,215	****	****	527	****	****	16,901	****	****	814	****	****	47,281	****
As at 31 December 2019	****	32,936	****	****	2,884	****	****	523	****	****	14,377	****	****	1,038	****	****	51,758	****

F-65

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

6	PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
	Buildings			Office<br><br><br>equipment,<br> <br>furniture and<br><br><br>fixtures			Motor<br><br><br>vehicles			Assets under<br><br><br>construction			Leasehold<br><br><br>improvements			Total
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	RMB million
Cost
As at 1 January 2018		32,457			6,873			1,403			16,696			1,830			59,259
Transfers upon completion		4,889			123			—			(5,500	)		393			(95	)
Additions		85			932			282			11,416			54			12,769
Transfers into investment properties		—			—			—			(5,634	)		—			(5,634	)
Disposals		(169	)		(270	)		(345	)		(76	)		(86	)		(946	)
As at 31 December 2018		37,262			7,658			1,340			16,902			2,191			65,353
Accumulated depreciation
As at 1 January 2018		(9,248	)		(5,122	)		(955	)		—			(1,203	)		(16,528	)
Charge for the year		(1,196	)		(578	)		(151	)		—			(212	)		(2,137	)
Disposals		30			257			293			—			38			618
As at 31 December 2018		(10,414	)		(5,443	)		(813	)		—			(1,377	)		(18,047	)
Impairment
As at 1 January 2018		(24	)		—			—			—			—			(24	)
Charge for the year		—			—			—			(1	)		—			(1	)
Disposals		—			—			—			—			—			—
As at 31 December 2018		(24	)		—			—			(1	)		—			(25	)
Net book value
As at 1 January 2018		23,185			1,751			448			16,696			627			42,707
As at 31 December 2018		26,824			2,215			527			16,901			814			47,281

As at 31 December 2019, the net book value of buildings above which were in process to obtain title certificates was RMB8,852 million (as at 31 December 2018: RMB6,798 million).

F-66

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

7	LEASES
(a)	Right-of-useassets
---	---
	Buildings			Others			Total
---	---	---	---	---	---	---	---	---	---
	RMB million
Cost
As at 1 January 2019	****	2,554	****	****	1	****	****	2,555	****
Additions	****	2,262	****	****	1	****	****	2,263	****
Deductions	****	(130	)	****	—	****	****	(130	)
As at 31 December 2019	****	4,686	****	****	2	****	****	4,688	****
Accumulated depreciation
As at 1 January 2019	****	—	****	****	—	****	****	—	****
Charge for the year	****	(1,196	)	****	(1	)	****	(1,197	)
Deductions	****	29	****	****	—	****	****	29	****
As at 31 December 2019	****	(1,167	)	****	(1	)	****	(1,168	)
Impairment
As at 1 January 2019	****	—	****	****	—	****	****	—	****
Charge for the year	****	—	****	****	—	****	****	—	****
Deductions	****	—	****	****	—	****	****	—	****
As at 31 December 2019	****	—	****	****	—	****	****	—	****
Net book value
As at 1 January 2019	****	2,554	****	****	1	****	****	2,555	****
As at 31 December 2019	****	3,519	****	****	1	****	****	3,520	****

The Group had no significant profit or loss from subleasing right-of-use assets or sale and leaseback transactions for the year ended 31 December 2019.

The Group’s right-of-use assets include the above assets and land use rights disclosed in Note 14.

(b)	The amounts recognised in profit or loss in relation to leases are as follows:<br>
	31 December 2019
---	---	---
	RMB million
Interest on lease liabilities	****	106
Depreciation charge of right-of-use<br>assets	****	1,197
Expense relating to short-term leases	****	440
Expense relating to leases of low-value<br>assets<br> <br>(except for short-term lease liabilities)	****	3
Total	****	1,746

F-67

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

8	INVESTMENT PROPERTIES
	BuildingsRMB million
---	---	---	---
Cost
As at 1 January 2019	****	10,227	****
Additions	****	3,022	****
Deductions	****	(351	)
As at 31 December 2019	****	12,898	****
Accumulated depreciation
As at 1 January 2019	****	(480	)
Additions	****	(325	)
Deductions	****	48	****
As at 31 December 2019	****	(757	)
Net book value
As at 1 January 2019	****	9,747	****
As at 31 December 2019	****	12,141	****
Fair value
As at 1 January 2019	****	12,449	****
As at 31 December 2019	****	14,870	****
	Buildings<br>RMB million
Cost
As at 1 January 2018		3,366
Additions		6,875
Deductions		(14	)
As at 31 December 2018		10,227
Accumulated depreciation
As at 1 January 2018		(302	)
Additions		(186	)
Deductions		8
As at 31 December 2018		(480	)
Net book value
As at 1 January 2018		3,064
As at 31 December 2018		9,747
Fair value
As at 1 January 2018		4,629
As at 31 December 2018		12,449

F-68

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

8	INVESTMENT PROPERTIES (CONTINUED)

The Company leases part of its investment properties to its subsidiaries and charges rentals based on the areas occupied by the respective entities. These properties are categorised as property, plant and equipment of the Group in the consolidated statement of financial position.

The Group has no restrictions on the use of its investment properties and no contractual obligations to each investment property purchased, constructed or developed or for repairs, maintenance and enhancements.

As at 31 December 2019, the net book value of investment properties which were in process to obtain title certificates was RMB5,809 million (as at 31 December 2018: RMB3,407million).

The fair value of investment properties of the Group as at 31 December 2019 amounted to RMB14,870 million (as at 31 December 2018: RMB12,449 million), which was estimated by the Group having regards to valuations performed by independent appraisers. The investment properties were classified as Level 3 in the fair value hierarchy.

The Group uses the market comparison approach as its primary method to estimate the fair value of its investment properties. Under the market comparison approach, the estimated fair value of a property is based on the average sale price of comparable properties recently sold, with consideration of the comprehensive adjustment coefficient, which is composed of a number of adjusting factors, including the time and the conditions of sale, the geographical location, age, decoration, floor area, lot size of the property and other factors.

Under the market comparison approach, an increase (decrease) in the comprehensive adjustment coefficient will result in an increase (decrease) in the fair value of investment properties.

9	INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
	2019RMBmillion			2018<br>RMB<br>million
---	---	---	---	---	---	---
As at 31 December 2018/ 31 December 2017	****	201,661	****		161,472
Adjustment (i)	****	(2,889	)		—
As at 1 January	****	198,772	****		161,472
Change of the cost	****	18,590	****		34,229
Share of profit or loss	****	9,159	****		7,745
Declared dividends	****	(3,227	)		(2,903	)
Other equity movements	****	1,189	****		1,118
Impairment	****	(1,500	)		—
As at 31 December	****	222,983	****		201,661

F-69

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

9	INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED)
												Movement
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Accountingmethod		Cost		As at<br>31 December2018		Adjustment (i)			As at<br>1 January<br>2019		Change of<br>the cost		Share of<br>profitor loss			Declared<br>dividends			Otherequity<br>movements			Provision<br>of<br>impairment			As at31 December2019		Percentage<br>of equityinterest		Accumulated<br>amount of<br>impairment
Associates
China Guangfa Bank Co., Ltd. (“CGB”) (ii)		Equity Method		45,176		72,655		(2,841	)		69,814		—		5,374			(284	)		276			—		****	75,180		43.686%		—
Sino-Ocean Group Holding Limited (“Sino-Ocean”) (iii)		Equity Method		11,245		12,812		—			12,812		—		545			(369	)		(101	)		(1,500	)	****	11,387		29.59%		(2,510	)
China Life Property & Casualty Insurance Company Limited<br>(“CLP&C”)		Equity Method		6,000		7,963		—			7,963		—		849			—			520			—		****	9,332		40.00%		—
COFCO Futures Company Limited (“COFCO Futures”)		Equity Method		1,339		1,501		—			1,501		—		49			—			—			—		****	1,550		35.00%		—
Sinopec Sichuan to East China Gas Pipeline Co., Ltd. (“Pipeline<br>Company”)		Equity Method		20,000		21,387		—			21,387		—		1,146			(1,104	)		4			—		****	21,433		43.86%		—
China United Network Communications Limited (“China Unicom”)<br>(iv)		Equity Method		21,829		21,892		(48	)		21,844		—		453			(170	)		(59	)		—		****	22,068		10.29%		—
Others (v)		Equity Method		29,231		23,524		—			23,524		5,566		725			(460	)		400			—		****	29,755				—
Subtotal				134,820		161,734		(2,889	)		158,845		5,566		9,141			(2,387	)		1,040			(1,500	)	****	170,705				(2,510	)
Joint ventures
Joy City Commercial Property Fund L.P. (“Joy City”)		Equity Method		6,281		5,787		—			5,787		—		224			(162	)		—			—		****	5,849		66.67%		—
Mapleleaf Century Limited (“MCL”)		Equity Method		7,656		5,741		—			5,741		17		(596	)		—			(22	)		—		****	5,140		75.00%		—
Others (v)		Equity Method		41,921		28,399		—			28,399		13,007		390			(678	)		171			—		****	41,289				—
Subtotal				55,858		39,927		—			39,927		13,024		18			(840	)		149			—		****	52,278				—
Total			****	190,678	****	201,661	****	(2,889	)	****	198,772	****	18,590	****	9,159	****	****	(3,227	)	****	1,189	****	****	(1,500	)	****	222,983			****	(2,510	)

F-70

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

INVESTMENT IN ASSOCIATES AND JOINT VENTURES (CONTINUED)

(i)

On 1 January 2019, CGB began to adopt IFRS 9. The cumulative effect of initial adoption of IFRS 9 was adjusted to its equity as at 1 January 2019. Accordingly, the impact was adjusted by the Group based on its percentage of holding. As at 1 January 2019, The Group’s retained earnings were decreased by RMB2,857 million and reserves were increased by RMB16 million. The Group’s equity as at 1 January 2019 was decreased by RMB2,841 million in total.

---

On 1 January 2019, China Unicom began to adopt IFRS 16. The cumulative effect of initial adoption of IFRS 16 was adjusted to its equity as at 1 January 2019. Accordingly, the impact was adjusted by the Group based on its percentage of holding. The Group’s retained earnings as at 1 January 2019 were decreased by RMB48 million.

(ii)

The 2018 final dividend of RMB0.033 in cash per ordinary share was approved and declared in the Annual General Meeting of CGB on 16 August 2019. The Company received a cash dividend of RMB284 million.

(iii)

The 2018 final dividend of HKD0.073 in cash per ordinary share was approved and declared in the Annual General Meeting of Sino-Ocean on 16 May 2019. The Company received a cash dividend equivalent to RMB145 million. The 2019 interim dividend of HKD0.110 in cash per ordinary share was approved and declared by the board of directors of Sino-Ocean on 21 August 2019. The Company received a cash dividend equivalent to RMB224 million.

---

Sino-Ocean, the Group’s associate is listed in Hong Kong. On 31 December 2019, the stock price of Sino-Ocean was HKD3.13 per share. As at 31 December 2018, the cumulative impairment loss of RMB1.01 billion for the investment in Sino-Ocean had been recognised by the Group. The Group performed an impairment test to this investment on 31 December 2019. An impairment loss of RMB1.50 billion was recognised for this investment valued using the discounted future cash flow method for the year ended 31 December 2019. In the valuation, the Group separated the development property and investment property by considering the different future cash flow features. The discount rates applied in the valuation were 10% and 8% for development property and investment property, respectively.

(iv)	The 2018 final dividend of RMB0.0533 in cash per ordinary share was approved and declared in the Annual<br>General Meeting of China Unicom on 8 May 2019. The Company received a cash dividend of RMB170 million. As at 31 December 2019, China Unicom’s share price is RMB5.89 per share.
(v)	The Group invested in real estate, industrial logistics assets and other industries through these<br>enterprises.
---	---
(vi)	Except for the non-publicly issued stock of China Unicom having a 36-month period restricted for sale, there<br>is no significant restriction for the Group to dispose of its other associates and joint ventures.
---	---

F-71

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

9	INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED)

As at 31 December 2019, the major associates and joint ventures of the Group are as follows:

Name	Place of incorporation		Percentage of equity interest held
Associates
CGB	****	PRC	****	43.686%
Sino-Ocean	****	Hong Kong, PRC	****	29.59%
CLP&C	****	PRC	****	40.00%
COFCO Futures	****	PRC	****	35.00%
Pipeline Company	****	PRC	****	43.86%
China Unicom	****	PRC	****	10.29%
Joint ventures
Joy City	****	The British Cayman Islands	****	66.67%
MCL	****	The British Virgin Islands	****	75.00%

As at 31 December 2018, the major associates and joint ventures of the Group are as follows:

Name
Associates
CGB	PRC	43.686%
Sino-Ocean	Hong Kong, PRC	29.59%
CLP&C	PRC	40.00%
COFCO Futures	PRC	35.00%
Pipeline Company	PRC	43.86%
China Unicom	PRC	10.29%
Joint ventures
Joy City	The British Cayman Islands	66.67%
MCL	The British Virgin Islands	75.00%

F-72

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

9	INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED)

The following table illustrates the financial information of the Group’s major associates and joint ventures as at 31 December 2019 and for the year ended 31 December 2019:

	CGBRMB million		Sino-OceanRMB million			CLP&CRMB million		COFCO FuturesRMB million		Pipeline CompanyRMB million		China UnicomRMB million			Joy CityRMB million			MCLRMB million
Total assets	****	2,632,798	****	243,700	****	****	91,167	****	12,671	****	36,327	****	564,231	****	****	10,281	****	****	24,381	****
Total liabilities	****	2,423,234	****	178,088	****	****	67,837	****	9,792	****	777	****	240,735	****	****	168	****	****	13,620	****
Total equity	****	209,564	****	65,612	****	****	23,330	****	2,879	****	35,550	****	323,496	****	****	10,113	****	****	10,761	****
Total equity attributable to equity holders of the associates and joint<br>ventures	****	164,573	****	49,909	****	****	23,330	****	2,872	****	35,550	****	143,327	****	****	10,113	****	****	10,761	****
Total adjustments (i)	****	412	****	(6,209	)	****	—	****	—	****	449	****	17,454	****	****	(1,339	)	****	(3,908	)
Total equity attributable to equity holders of the associates and joint ventures<br>after adjustments	****	164,985	****	43,700	****	****	23,330	****	2,872	****	35,999	****	160,781	****	****	8,774	****	****	6,853	****
Proportion of the Group’s ownership	****	43.686%	****	29.59%	****	****	40.00%	****	35.00%	****	43.86%	****	10.29%	****	****	66.67%	****	****	75.00%	****
Gross carrying value of the investments	****	75,180	****	13,897	****	****	9,332	****	1,550	****	21,433	****	22,068	****	****	5,849	****	****	5,140	****
Impairment	****	—	****	(2,510	)	****	—	****	—	****	—	****	—	****	****	—	****	****	—	****
Net carrying value of the investments	****	75,180	****	11,387	****	****	9,332	****	1,550	****	21,433	****	22,068	****	****	5,849	****	****	5,140	****
Total revenues	****	76,312	****	56,704	****	****	69,498	****	793	****	5,008	****	291,435	****	****	306	****	****	795	****
Net profit/(loss)	****	12,581	****	4,166	****	****	2,123	****	153	****	2,635	****	11,264	****	****	287	****	****	348	****
Other comprehensive income	****	643	****	152	****	****	1,310	****	1	****	—	****	(501	)	****	—	****	****	—	****
Total comprehensive income	****	13,224	****	4,318	****	****	3,433	****	154	****	2,635	****	10,763	****	****	287	****	****	348	****

F-73

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

9	INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED)

The following table illustrates the financial information of the Group’s major associates and joint ventures as at 31 December 2018 and for the year ended 31 December 2018:

	CGB<br>RMB million
Total assets		2,373,291	249,362		83,561		8,986	36,467	541,762		10,243		22,266
Total liabilities		2,214,781	186,224		63,654		6,246	1,043	224,822		265		11,897
Total equity		158,510	63,138		19,907		2,740	35,424	316,940		9,978		10,369
Total equity attributable to equity holders of the associates and joint<br>ventures		158,510	48,385		19,907		2,732	35,424	140,144		9,978		10,369
Total adjustments (i)		933	(4,938	)	—		—	470	17,926		(1,297	)	(2,714	)
Total equity attributable to equity holders of the associates and joint ventures<br>after adjustments		159,443	43,447		19,907		2,732	35,894	158,070		8,681		7,655
Proportion of the Group’s ownership		43.686%	29.59%		40.00%		35.00%	43.86%	10.29%		66.67%		75.00%
Gross carrying value of the investments		72,655	13,822		7,963		1,501	21,387	21,892		5,787		5,741
Impairment		—	(1,010	)	—		—	—	—		—		—
Net carrying value of the investments		72,655	12,812		7,963		1,501	21,387	21,892		5,787		5,741
Total revenues		59,279	48,821		65,564		643	4,746	290,877		457		458
Net profit/(loss)		10,707	4,666		121		98	2,545	9,301		438		609
Other comprehensive income		4,160	(1,518	)	(503	)	1	—	(245	)	—		—
Total comprehensive income		14,867	3,148		(382	)	99	2,545	9,056		438		609
(i)	Including adjustments for the difference of accounting policies, fair value and others.<br>
---	---

The Group had no contingent liabilities with the associates and joint ventures as at 31 December 2019 and 31 December 2018. The Group had a capital contribution commitment of RMB24,430 million with joint ventures as at 31 December 2019 (as at 31 December 2018: RMB20,768 million). The capital contribution commitment amount has been included in the capital commitments in Note 40.

F-74

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

10	FINANCIAL ASSETS
10.1	Held-to-maturitysecurities
---	---
	As at 31December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Debt securities
Government bonds	****	215,928		179,943
Government agency bonds	****	401,799		266,986
Corporate bonds	****	198,322		212,709
Subordinated bonds/debts	****	112,702		147,079
Total	****	928,751		806,717
Debt securities
Listed in Mainland, PRC	****	209,123		109,597
Listed in Hong Kong, PRC	****	157		130
Listed overseas	****	62		20
Unlisted (i)	****	719,409		696,970
Total	****	928,751		806,717
(i)	Unlisted debt securities include those traded on the Chinese interbank market.
---	---

As at 31 December 2019, an accumulated impairment loss of RMB17 million (2018: RMB42 million) for the investment of held-to-maturity securities has been recognised by the Group.

	As at 31December 2019						As at 31<br>December 2018
Debt securities - fair value hierarchy	Level 1RMBmillion		Level 2RMBmillion		TotalRMBmillion		Level 1<br>RMB<br>million		Level 2<br>RMB<br>million		Total<br>RMB<br>million
Government bonds	****	15,749	****	212,449	****	228,198		15,387		175,622		191,009
Government agency bonds	****	57,955	****	357,058	****	415,013		72,455		204,029		276,484
Corporate bonds	****	7,914	****	198,879	****	206,793		10,965		209,302		220,267
Subordinated bonds/debts	****	—	****	118,571	****	118,571		—		155,783		155,783
Total	****	81,618	****	886,957	****	968,575		98,807		744,736		843,543
Debt securities - Contractual maturityschedule	As at 31<br>December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Maturing:
Within one year	****	24,454		16,907
After one year but within five years	****	128,266		137,840
After five years but within ten years	****	241,372		279,086
After ten years	****	534,659		372,884
Total	****	928,751		806,717

F-75

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

10	FINANCIAL ASSETS (CONTINUED)
10.2	Loans
---	---
	As at 31December 2019RMB million			As at 31<br>December 2018<br>RMB million
---	---	---	---	---	---
Policy loans (i)	****	174,872	****		142,165
Other loans	****	436,766	****		308,086
Total	****	611,638	****		450,251
Impairment	****	(2,718	)		—
Net value	****	608,920	****		450,251
	As at 31December 2019RMB million			As at 31<br>December 2018<br>RMB million
Maturing:
Within one year	****	213,937	****		167,498
After one year but within five years	****	229,415	****		138,939
After five years but within ten years	****	129,596	****		99,501
After ten years	****	38,690	****		44,313
Total	****	611,638	****		450,251
Impairment	****	(2,718	)		—
Net value	****	608,920	****		450,251
(i)	As at 31 December 2019, maturities of policy loans were within 6 months (as at 31 December 2018:<br>same).
---	---
10.3	Term deposits
---	---
	As at 31December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Maturing:
Within one year	****	107,039		158,920
After one year but within five years	****	420,191		323,021
After five years but within ten years	****	8,030		77,400
Total	****	535,260		559,341

As at 31 December 2019, the Group’s term deposits of RMB3,491 million (as at 31 December 2018: RMB16,691 million) were deposited in banks to back overseas borrowings and are restricted to use.

In September 2016, CL Hotel Investor, L.P. and Glorious Fortune Forever Limited, subsidiaries of the Company, entered into a loan agreement with the New York and Seoul branches of Agricultural Bank of China, respectively. In December 2016, Sunny Bamboo Limited and Golden Bamboo Limited, subsidiaries of the Company, entered into a loan agreement with the Hong Kong branch of Agricultural Bank of China. The Company arranged deposits with Beijing Xicheng branch of Agricultural Bank of China to back these loans. As at 31 December 2019, the amounts of such term deposits were RMB361 million, RMB380 million and RMB750 million, respectively (as at 31 December 2018: RMB6,861 million, RMB7,080 million and RMB750 million).

On 6 December 2017, New Fortune Wisdom Limited and New Capital Wisdom Limited, subsidiaries of Ningbo Meishan Bonded Port Area Guo Yang Guo Sheng Investment Partnership (Limited Partnership) (“Guo Yang Guo Sheng”), a subsidiary of the Company, entered into a loan agreement with a subsidiary of Agricultural Bank of China. Guo Yang Guo Sheng arranged deposits with Beijing Xicheng branch of the Agricultural Bank of China to back these loans. As at 31 December 2019, the amounts of such term deposits and current deposits were RMB2,000 million (as at 31 December 2018: same) and RMB1,069 million (as at 31 December 2018: RMB1,274 million), respectively.

F-76

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

10	FINANCIAL ASSETS (CONTINUED)
10.4	Statutory deposits - restricted
---	---
	As at 31December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Contractual maturity schedule:
Within one year	****	180		500
After one year but within five years	****	6,153		5,833
Total	****	6,333		6,333

Insurance companies in China are required to deposit an amount that equals 20% of their registered capital with banks in compliance with regulations of the CBIRC. These funds may not be used for any purpose other than for paying off debts during liquidation proceedings.

10.5	Available-for-salesecurities
	As at 31December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Available-for-sale securities, at fair value
Debt securities
Government bonds	****	23,758		28,440
Government agency bonds	****	171,189		180,273
Corporate bonds	****	148,455		185,720
Subordinated bonds/debts	****	53,922		21,514
Others (i)	****	112,467		80,643
Subtotal	****	509,791		496,590
Equity securities
Funds	****	102,349		92,304
Common stocks	****	236,323		143,469
Preferred stocks	****	58,314		32,707
Wealth management products	****	32,640		31,348
Others (i)	****	98,904		53,479
Subtotal	****	528,530		353,307
Available-for-sale securities, at cost
Equity securities
Others (i)	****	20,636		20,636
Total	****	1,058,957		870,533
(i)	Other available-for-sale<br>securities mainly include unlisted equity investments, private equity funds, trust schemes and perpetual bonds.
---	---

F-77

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

10	FINANCIAL ASSETS (CONTINUED)
10.5	Available-for-salesecurities (continued)
---	---
	As at 31December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Debt securities
Listed in Mainland, PRC	****	46,505		53,933
Unlisted	****	463,286		442,657
Subtotal	****	509,791		496,590
Equity securities
Listed in Mainland, PRC	****	152,293		102,190
Listed in Hong Kong, PRC	****	95,428		55,066
Listed overseas	****	1,458		162
Unlisted	****	299,987		216,525
Subtotal	****	549,166		373,943
Total	****	1,058,957		870,533

Unlisted debt securities include those traded on the Chinese interbank market and those not publicly traded. Unlisted equity securities include those not traded on stock exchanges, which are mainly open-ended funds with public market price quotation, wealth management products and private equity funds.

Debt securities - Contractual maturityschedule	As at 31December 2019RMB million
Maturing:
Within one year	****	26,075	11,511
After one year but within five years	****	155,110	170,606
After five years but within ten years	****	226,421	214,826
After ten years	****	102,185	99,647
Total	****	509,791	496,590

F-78

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

10	FINANCIAL ASSETS (CONTINUED)
10.6	Securities at fair value through profit or loss
---	---
	As at 31December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Debt securities
Government bonds	****	41		118
Government agency bonds	****	6,859		6,760
Corporate bonds	****	77,215		79,774
Others	****	1,091		1,351
Subtotal	****	85,206		88,003
Equity securities
Funds	****	16,101		13,967
Common stocks	****	40,281		35,241
Wealth management products	****	—		1,506
Others	****	20		—
Subtotal	****	56,402		50,714
Total	****	141,608		138,717
Debt securities
Listed in Mainland, PRC	****	35,804		39,145
Listed in Hong Kong, PRC	****	102		108
Listed overseas	****	167		202
Unlisted	****	49,133		48,548
Subtotal	****	85,206		88,003
Equity securities
Listed in Mainland, PRC	****	39,770		31,962
Listed in Hong Kong, PRC	****	611		97
Listed overseas	****	6,418		6,552
Unlisted	****	9,603		12,103
Subtotal	****	56,402		50,714
Total	****	141,608		138,717

10.7	Derivative financial instruments
	As at 31<br>December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Derivative financial assets
Forward contract	****	428		—
Derivative financial Liabilities
Forward contract	****	—		1,877
Note:	The derivative financial instruments of the Company above are all forward contracts to purchase equity<br>securities. The fair value is based on active quoted price of the equity security with consideration of discounts for lack of marketability, which is classified as Level 3.
---	---

F-79

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

10	FINANCIAL ASSETS (CONTINUED)
10.8	Securities purchased under agreements to resell
---	---
	As at 31December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Maturing:
Within 30 days	****	4,467		9,905
Total	****	4,467		9,905
10.9	Accrued investment income
---	---
	As at 31December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Bank deposits	****	12,310		19,805
Debt securities	****	25,048		23,486
Others	****	4,345		5,111
Total	****	41,703		48,402
Current	****	40,710		47,834
Non-current	****	993		568
Total	****	41,703		48,402
11	FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
---	---

The table below presents the carrying value and estimated fair value of major financial assets and liabilities, and investment contracts:

	Carrying value						Estimated fair value (i)
	As at 31December2019RMBmillion			As at 31<br>December<br>2018<br>RMB<br>million			As at 31December2019RMBmillion			As at 31<br>December<br>2018<br>RMB<br>million
Held-to-maturity<br>securities (ii)	****	928,751	****		806,717		****	968,575	****		843,543
Loans (iii)	****	608,920	****		450,251		****	623,840	****		458,669
Term deposits	****	535,260	****		559,341		****	535,260	****		559,341
Statutory deposits - restricted	****	6,333	****		6,333		****	6,333	****		6,333
Available-for-sale<br>securities, at fair value	****	1,038,321	****		849,897		****	1,038,321	****		849,897
Securities at fair value through profit or loss	****	141,608	****		138,717		****	141,608	****		138,717
Derivative financial assets	****	428	****		—		****	428	****		—
Securities purchased under agreements to resell	****	4,467	****		9,905		****	4,467	****		9,905
Cash and cash equivalents	****	53,306	****		50,809		****	53,306	****		50,809
Investment contracts (iii)	****	(267,804	)		(255,434	)	****	(260,592	)		(245,803	)
Financial liabilities at fair value through profit or loss	****	(3,859	)		(2,680	)	****	(3,859	)		(2,680	)
Derivative financial liabilities	****	—	****		(1,877	)	****	—	****		(1,877	)
Securities sold under agreements to repurchase	****	(118,088	)		(192,141	)	****	(118,088	)		(192,141	)
Bonds payable	****	(34,990	)		—		****	(35,551	)		—
Interest-bearing loans and borrowings	****	(20,045	)		(20,150	)	****	(20,045	)		(20,150	)

F-80

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

11	FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
(i)	The estimates and judgements to determine the fair value of financial assets are described in Note 3.2.<br>
---	---
(ii)	The fair value of<br>held-to-maturity securities is determined by reference with other debt securities which are measured by fair value. Please refer to Note 4.4.
---	---
(iii)	Investment contracts at fair value through profit or loss have quoted prices in active markets, and<br>therefore, their fair value was classified as Level 1.
---	---

The fair value of policy loans approximated its carrying value. The fair values of other loans and investment contracts at amortised cost were determined using valuation techniques, with consideration of the present value of expected cash flows arising from contracts using a risk-adjusted discount rate, allowing for the risk-free rate available on the valuation date, credit risk and risk margin associated with the future cash flows. The fair values of other loans and investment contracts at amortised cost were classified as Level 3.

12	PREMIUMS RECEIVABLE

As at 31 December 2019, the carrying value of premiums receivable within one year was RMB17,205 million (as at 31 December 2018: RMB15,607 million).

13	REINSURANCE ASSETS
	As at 31December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Long-term insurance contracts ceded (Note 15)	****	3,839		3,123
Due from reinsurance companies	****	808		731
Ceded unearned premiums (Note 15)	****	369		370
Claims recoverable from reinsurers (Note 15)	****	145		140
Total	****	5,161		4,364
Current	****	1,318		1,241
Non-current	****	3,843		3,123
Total	****	5,161		4,364
14	OTHER ASSETS
---	---
	As at 31December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Land use rights (i)	****	7,830		7,906
Disbursements	****	5,946		4,162
Tax prepaid	****	5,615		—
Automated policy loans	****	3,377		3,269
Investments receivable and prepaid	****	2,665		8,885
Prepayments to constructors	****	847		504
Due from related parties	****	757		725
Others	****	6,992		7,986
Total	****	34,029		33,437
Current	****	24,175		23,533
Non-current	****	9,854		9,904
Total	****	34,029		33,437
(i)	The Group’s<br>right-of-use assets include the above land use rights and right-of-use assets disclosed<br>in Note 7.
---	---

F-81

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

15	INSURANCE CONTRACTS
(a)	Process used to decide on assumptions
---	---
(i)	For the insurance contracts of which future insurance benefits are affected by investment yields of the<br>corresponding investment portfolios, the discount rate assumption is based on expected investment returns of the asset portfolio backing these liabilities, considering the impacts of time value on reserves.
---	---

In developing discount rate assumptions, the Group considers investment experience, the current investment portfolio and trend of the relevant yield curves. The assumed discount rates reflect the future economic outlook as well as the Group’s investment strategy. The assumed discount rates with risk margin are as follows:

	Discount rate assumptions
As at 31 December 2019		4.85%
As at 31 December 2018		4.85%

For the insurance contracts of which future insurance benefits are not affected by investment yields of the corresponding investment portfolios, the discount rate assumption is based on the “Yield curve of reserve computation benchmark for insurance contracts”, published on the “China Bond” website with consideration of liquidity spreads, taxation and other relevant factors. The assumed spot discount rates with risk margin for the past two years are as follows:

	Discount rate assumptions
As at 31 December 2019		3.52%~4.83%
As at 31 December 2018		3.47%~4.86%

There is uncertainty on the discount rate assumption, which is affected by factors such as future macro-economy, monetary and foreign exchange policies, capital market and availability of investment channels of insurance funds. The Group determines the discount rate assumption based on the information obtained at the end of each reporting period including consideration of risk margin.

(ii)	The mortality and morbidity assumptions are based on the Group’s historical mortality and morbidity<br>experience. The assumed mortality rates and morbidity rates vary with the age of the insured and contract type.

The Group bases its mortality assumptions on China Life Insurance Mortality Table (2000-2003), adjusted where appropriate to reflect the Group’s recent historical mortality experience. The main source of uncertainty with life insurance contracts is that epidemics and wide-ranging lifestyle changes could result in deterioration in future mortality experience, thus leading to an inadequate reserving of liability. Similarly, improvements in longevity due to continuing advancements in medical care and social conditions may expose the Group to longevity risk.

The Group bases its morbidity assumptions for critical illness products on analysis of historical experience and expectations of future developments. There are two main sources of uncertainty. Firstly, wide-ranging lifestyle changes could result in future deterioration in morbidity experience. Secondly, future development of medical technologies and improved coverage of medical facilities available to policyholders may bring forward the timing of diagnosing critical illness, which demands earlier payment of the critical illness benefits. Both could ultimately result in an inadequate reserving of liability if current morbidity assumptions do not properly reflect such trends.

Risk margin is considered in the Group’s mortality and morbidity assumptions.

F-82

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

15	INSURANCE CONTRACTS (CONTINUED)
(a)	Process used to decide on assumptions (continued)
---	---
(iii)	Expense assumptions are based on expected unit costs with the consideration of previous expense studies and<br>future trends. Expense assumptions are affected by certain factors such as future inflation and market competition which bring uncertainty to these assumptions. The Group determines expense assumptions based on information obtained at the end of<br>each reporting period and risk margin. Components of expense assumptions include the cost per policy and percentage of premium as follows:
---	---
	Individual Life				Group Life
---	---	---	---	---	---	---	---	---
	RMB Per Policy		% of Premium		RMB Per Policy		% of Premium
As at 31 December 2019		45.00		0.85%~0.90%		25.00		0.90%
As at 31 December 2018		45.00		0.85%~0.90%		25.00		0.90%
(iv)	The lapse rates and other assumptions are affected by certain factors, such as future macro-economy,<br>availability of financial substitutions, and market competition, which bring uncertainty to these assumptions. The lapse rates and other assumptions are determined with reference to creditable past experience, current conditions, future expectations<br>and other information.
---	---
(v)	The Group applied a consistent method to determine risk margin. The Group considers risk margin for discount<br>rate, mortality and morbidity and expense assumptions to compensate for the uncertain amount and timing of future cash flows. When determining risk margin, the Group considers historical experience, future expectations and other factors. The Group<br>determines the risk margin level by itself as the regulations have not imposed any specific requirement on it.
---	---

The Group adopted a consistent process to decide on assumptions for the insurance contracts disclosed in this note. On each reporting date, the Group reviews the assumptions for reasonable estimates of liability and risk margin, with consideration of all available information, and taking into account the Group’s historical experience and expectation of future events.

(b)	Net liabilities of insurance contracts
	As at 31December 2019RMB million			As at 31<br>December 2018<br>RMB million
---	---	---	---	---	---	---
Gross
Long-term insurance contracts	****	2,521,331	****		2,189,794
Short-term insurance contracts
- Claims and claim adjustment expenses	****	18,404	****		14,805
- Unearned premiums	****	13,001	****		11,432
Total, gross	****	2,552,736	****		2,216,031
Recoverable from reinsurers
Long-term insurance contracts (Note 13)	****	(3,839	)		(3,123	)
Short-term insurance contracts
- Claims and claim adjustment expenses (Note 13)	****	(145	)		(140	)
- Unearned premiums (Note 13)	****	(369	)		(370	)
Total, ceded	****	(4,353	)		(3,633	)
Net
Long-term insurance contracts	****	2,517,492	****		2,186,671
Short-term insurance contracts
- Claims and claim adjustment expenses	****	18,259	****		14,665
- Unearned premiums	****	12,632	****		11,062
Total, net	****	2,548,383	****		2,212,398

F-83

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

15	INSURANCE CONTRACTS (CONTINUED)
(c)	Movements in liabilities of short-term insurance contracts
---	---

The table below presents movements in claims and claim adjustment expense reserve:

	2019RMB million
Notified claims	****	2,536	****	2,672
Incurred but not reported	****	12,269	****	11,106
Total as at 1 January - Gross	****	14,805	****	13,778
Cash paid for claims settled
- Cash paid for current year claims	****	(33,244	)	(27,165	)
- Cash paid for prior year claims	****	(14,551	)	(12,876	)
Claims incurred
- Claims arising in current year	****	49,727	****	40,601
- Claims arising in prior years	****	1,667	****	467
Total as at 31 December - Gross	****	18,404	****	14,805
Notified claims	****	2,781	****	2,536
Incurred but not reported	****	15,623	****	12,269
Total as at 31 December - Gross	****	18,404	****	14,805

The table below presents movements in unearned premium reserves:

	Gross			2019RMB millionCeded			Net
As at 1 January	****	11,432	****	****	(370	)	****	11,062	****	12,289		(527	)	11,762
Increase	****	13,001	****	****	(369	)	****	12,632	****	11,432		(370	)	11,062
Release	****	(11,432	)	****	370	****	****	(11,062	)	(12,289	)	527		(11,762	)
As at 31 December	****	13,001	****	****	(369	)	****	12,632	****	11,432		(370	)	11,062

F-84

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

15	INSURANCE CONTRACTS (CONTINUED)
(d)	Movements in liabilities of long-term insurance contracts
---	---

The table below presents movements in the liabilities of long-term insurance contracts:

	2019RMB million
As at 1 January	****	2,189,794	****	1,999,066
Premiums	****	497,570	****	480,496
Release of liabilities (i)	****	(282,189	)	(385,761	)
Accretion of interest	****	114,234	****	99,618
Change in assumptions
- Change in discount rates	****	(4,906	)	(6,020	)
- Change in other assumptions (ii)	****	7,308	****	2,946
Other movements	****	(480	)	(551	)
As at 31 December	****	2,521,331	****	2,189,794
(i)	The release of liabilities mainly consists of release due to death or other benefits and related expenses,<br>release of residual margin and change of reserves for claims and claim adjustment expenses.
---	---
(ii)	For the year ended 31 December 2019, the change in other assumptions was mainly caused by the change in<br>morbidity rate assumptions of certain products, which increased insurance contract liabilities by RMB4,737 million. This change reflected the Group’s most recent experience and future expectations about the morbidity rates as at the<br>reporting date. Changes in assumptions other than morbidity rates increased insurance contract liabilities by RMB2,571 million.
---	---

For the year ended 31 December 2018, the change in other assumptions was mainly caused by the change in morbidity rate assumptions of certain products, which increased insurance contract liabilities by RMB3,877 million. This change reflected the Group’s most recent experience and future expectations about the morbidity rates as at the reporting date. Changes in assumptions other than morbidity rates decreased insurance contract liabilities by RMB931 million.

16	INVESTMENT CONTRACTS
	As at 31December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Investment contracts with DPF at amortised cost	****	61,657		59,129
Investment contracts without DPF
- At amortised cost	****	206,137		196,296
- At fair value through profit or loss	****	10		9
Total	****	267,804		255,434

The table below presents movements of investment contracts with DPF:

	2019RMB million
As at 1 January	****	59,129	****	57,153
Deposits received	****	4,238	****	4,096
Deposits withdrawn, payments on death and other benefits	****	(2,959	)	(3,318	)
Policy fees deducted from account balances	****	(38	)	(38	)
Interest credited	****	1,287	****	1,236
As at 31 December	****	61,657	****	59,129

F-85

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

17	INTEREST-BEARING LOANS AND BORROWINGS
	Maturity date		Interest rate			As at 31<br>December 2018<br>RMB million
---	---	---	---	---	---	---	---
Guaranteed loans		11 January 2019		1.50%	—		993
Guaranteed loans		17 June 2019		3.54%	—		2,385
Guaranteed loans		27 September 2019		2.30%	—		6,657
Guaranteed loans		30 September 2019		2.40%	—		6,451
Guaranteed loans		11 January 2020		1.50%	989		—
Credit loans		6 November 2020		LIBOR+2.70%(i)	126		—
Guaranteed loans		6 December 2020		IBOR +3.80%(ii)	3,126		3,139
Credit loans		18 January 2021		2.50%	523		525
Credit loans		25 June 2024		3.08%	2,515		—
Credit loans		16 September 2024		3.30%	5,999		—
Credit loans		27 September 2024		LIBOR+1.00%	6,767		—
Total					20,045		20,150

All values are in Euros.

(i)	2.70% when LIBOR is negative.
(ii)	3.80% when EURIBOR is negative.
---	---
18	BONDS PAYABLE
---	---

As at 31 December 2019, all bonds payable were the bonds for capital replenishment (the “Bond”) with a total carrying value of RMB34,990 million (as at 31 December 2018: nil), and the fair value of RMB35,551 million (as at 31 December 2018: nil). The fair value of the Bond was classified as level 2 in the fair value hierarchy. The following table presents the par value of the bonds payable:

Issue<br>date	Maturity date		Interest rate p.a.		As at 31December 2019<br>RMB million		As at 31<br>December 2018<br>RMB million
22 March 2019		22 March 2029		4.28%	****	35,000		—
Total					****	35,000		—

The fair value of bonds payable is based on the valuation results of China Central Depository & Clearing Co., Ltd.

On 20 March 2019, the Company issued a bond in the national inter-bank bond market at a principal amount of RMB35 billion, and completed the issuance on 22 March 2019. The bond has a 10-year maturity and a fixed coupon rate of 4.28% per annum. The Company has a conditional right to redeem the bonds at the end of the fifth year. If the Company does not redeem the bonds at the end of the fifth year, the coupon rate per annum for the remaining 5 years will be raised to 5.28%.

Bonds payable are measured at amortised cost as described in Note 2.15.

F-86

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

19	SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
	As at 31December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Interbank market	****	63,631		125,788
Stock exchange market	****	54,457		66,353
Total	****	118,088		192,141
Maturing:
Within 30 days	****	117,928		192,141
After 90 days	****	160		—
Total	****	118,088		192,141

As at 31 December 2019, bonds with a carrying value of RMB92,011 million (as at 31 December 2018: RMB139,784 million) were pledged as collateral for financial assets sold under agreements to repurchase resulting from repurchase transactions entered into by the Group in the interbank market.

For debt repurchase transactions through the stock exchange, the Group is required to deposit certain exchange-traded bonds into a collateral pool with fair value converted at a standard rate pursuant to the stock exchange’s regulation which should be no less than the balance of the related repurchase transaction. As at 31 December 2019, the carrying value of securities deposited in the collateral pool was RMB256,700 million (as at 31 December 2018: RMB174,323 million). The collateral is restricted from trading during the period of the repurchase transaction.

20	OTHER LIABILITIES
	As at 31December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Payable to the third-party holders of consolidated structured entities	****	21,400		9,407
Interest payable to policyholders	****	14,113		11,739
Salary and welfare payable	****	11,475		11,199
Brokerage and commission payable	****	7,418		5,268
Payable to constructors	****	3,329		3,479
Agent deposits	****	1,998		1,793
Interest payable of debt instruments	****	1,327		252
Stock appreciation rights (Note 31)	****	748		490
Tax payable	****	674		666
Others	****	18,632		14,133
Total	****	81,114		58,426
Current	****	81,114		58,426
Non-current	****	—		—
Total	****	81,114		58,426

F-87

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

21	STATUTORY INSURANCE FUND

As required by the CIRC Order [2008] No. 2, “Measures for Administration of Statutory Insurance Fund”, all insurance companies have to pay the statutory insurance fund contribution from 1 January 2009. The Group is subject to the statutory insurance fund contribution, (i) at 0.15% and 0.05% of premiums and accumulated policyholder deposits from life policies with guaranteed benefits and life policies without guaranteed benefits, respectively; (ii) at 0.8% and 0.15% of premiums from short-term health policies and long-term health policies, respectively; (iii) at 0.8% of premiums from accident insurance contracts, at 0.08% and 0.05% of accumulated policyholder deposits from accident investment contracts with guaranteed benefits and without guaranteed benefits, respectively. When the accumulated statutory insurance fund contributions reach 1% of total assets, no additional contribution to the statutory insurance fund is required.

22	INVESTMENT INCOME
	For the year ended 31 December
---	---	---	---	---	---	---
	2019RMB million		2018<br>RMB million		2017<br>RMB million
Debt securities
-<br>held-to-maturity securities	****	38,229		34,657		30,669
-<br>available-for-sale securities	****	21,373		22,991		19,608
- at fair value through profit or loss	****	3,546		3,869		3,618
Equity securities
-<br>available-for-sale securities	****	21,823		16,492		27,019
- at fair value through profit or loss	****	981		1,284		920
Bank deposits	****	26,695		22,699		23,827
Loans	****	27,111		22,894		16,320
Securities purchased under agreements to resell	****	161		281		746
Total	****	139,919		125,167		122,727

For the year ended 31 December 2019, the interest income included in investment income was RMB117,115 million (2018: RMB107,391 million, 2017: RMB94,788 million). All interest income was accrued using the effective interest method.

23	NET REALISED GAINS ON FINANCIAL ASSETS
	For the year ended 31 December
---	---	---	---	---	---	---	---	---	---
	2019RMB million			2018<br>RMB million			2017<br>RMB million
Debt securities
Realised gains (i)	****	3,714	****		399			(9	)
Impairment (ii)	****	(3,749	)		(42	)		(114	)
Subtotal	****	(35	)		357			(123	)
Equity securities
Realised gains (i)	****	4,504	****		(11,785	)		2,808
Impairment (ii)	****	(2,638	)		(8,163	)		(2,643	)
Subtotal	****	1,866	****		(19,948	)		165
Total	****	1,831	****		(19,591	)		42
(i)	Realised gains were generated mainly from<br>available-for-sale securities.
---	---

During the year ended 31 December 2019, the Group recognised an impairment charge of RMB888 million (2018: RMB4,542 million, 2017: RMB619 million) of available-for-sale funds, an impairment charge of RMB1,750 million (2018: RMB3,621 million, 2017: RMB2,024 million) of available-for-sale equity securities, an impairment charge of RMB1,027 million (2018: nil, 2017: RMB114 million) of available-for-sale debt securities, an impairment charge of RMB2,718 million (2018: nil, 2017: nil) of loans and an impairment charge of RMB4 million (2018: RMB42 million, 2017: nil) of held-to maturity securities, for which the Group determined that objective evidence of impairment existed.

F-88

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

24	NET FAIR VALUE GAINS THROUGH PROFIT OR LOSS
	For the year ended 31 December
---	---	---	---	---	---	---	---	---	---
	2019RMB million			2018<br>RMB million			2017<br>RMB million
Debt securities	****	778	****		2,006			(1,542	)
Equity securities	****	18,279	****		(18,938	)		8,179
Stock appreciation rights	****	(258	)		343			(179	)
Financial liabilities at fair value through profit or loss	****	(380	)		188			(275	)
Derivative financial instruments	****	832	****		(1,877	)		—
Total	****	19,251	****		(18,278	)		6,183
25	INSURANCE BENEFITS AND CLAIMS EXPENSES
---	---
	GrossRMB million		CededRMB million			NetRMB million
---	---	---	---	---	---	---	---
For the year ended 31 December 2019
Life insurance death and other benefits	****	130,975	****	(3,098	)	****	127,877
Accident and health claims and claim adjustment expenses	****	51,394	****	(611	)	****	50,783
Increase in insurance contract liabilities	****	331,523	****	(716	)	****	330,807
Total	****	513,892	****	(4,425	)	****	509,467
For the year ended 31 December 2018
Life insurance death and other benefits		250,627		(1,891	)		248,736
Accident and health claims and claim adjustment expenses		41,056		(504	)		40,552
Increase in insurance contract liabilities		190,703		(772	)		189,931
Total		482,386		(3,167	)		479,219
For the year ended 31 December 2017
Life insurance death and other benefits		260,853		(1,145	)		259,708
Accident and health claims and claim adjustment expenses		34,101		(283	)		33,818
Increase in insurance contract liabilities		173,085		(568	)		172,517
Total		468,039		(1,996	)		466,043
26	INVESTMENT CONTRACT BENEFITS
---	---

Benefits of investment contracts are mainly the interest credited to investment contracts.

F-89

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

27	FINANCE COSTS
	For the year ended 31 December
---	---	---	---	---	---	---
	2019RMB million		2018<br>RMB million		2017<br>RMB million
Interest expenses for securities sold under agreements to repurchase	****	2,392		3,565		3,144
Interest expenses for interest-bearing loans and borrowings	****	589		551		424
Interest expenses for bonds payable	****	1,168		—		1,033
Interest on lease liabilities	****	106		—		—
Total	****	4,255		4,116		4,601
28	PROFIT BEFORE INCOME TAX
---	---

Profit before income tax is stated after charging/(crediting) the following:

	For the year ended 31 December
	2019RMB million		2018<br>RMB million		2017<br>RMB million
Employee salaries and welfare costs	****	20,125		19,268		18,741
Housing benefits	****	1,189		1,061		933
Contribution to the defined contribution pension plan	****	2,905		2,531		2,357
Depreciation and amortisation	****	4,379		2,638		2,240
Foreign exchange losses/(gains)	****	67		194		(52	)
Remuneration in respect of audit services provided by auditors	****	60		59		59
29	TAXATION
---	---

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax relates to the same tax authority.

(a)	The amount of taxation charged to net profit represents:
	For the year ended 31 December
---	---	---	---	---	---	---	---	---
	2019RMB million		2018<br>RMB million			2017<br>RMB million
Current taxation - Enterprise income tax	****	614		6,397			9,457
Deferred taxation	****	167		(4,412	)		(538	)
Total tax charges	****	781		1,985			8,919
(b)	The reconciliation between the Group’s effective tax rate and the statutory tax rate of 25% in<br>the PRC (2018: 25%, 2017: 25%) is as follows:
---	---
	For the year ended 31 December
---	---	---	---	---	---	---	---	---	---
	2019RMB million			2018<br>RMB million			2017<br>RMB million
Profit before income tax	****	59,795	****		13,921			41,671
Tax computed at the statutory tax rate	****	14,949	****		3,480			10,418
Adjustment on current income tax of previous period (i)	****	(5,228	)		(324	)		(40	)
Non-taxable income (ii)	****	(9,589	)		(6,771	)		(7,807	)
Expenses not deductible for tax purposes (ii)	****	313	****		5,319			6,105
Unused tax losses	****	239	****		25			6
Tax losses utilised from previous periods	****	—	****		(86	)		(15	)
Others	****	97	****		342			252
Income tax at the effective tax rate	****	781	****		1,985			8,919

F-90

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

29	TAXATION (CONTINUED)
(b)	The reconciliation between the Group’s effective tax rate and the statutory tax rate of 25% in<br>the PRC (2018: 25%, 2017: 25%) is as follows (continued):
---	---
(i)	According to Cai Shui [2019] No.72, Notice on Pre-tax Deduction<br>Policy of Commissions and Handling Charges for Insurance Companies, the commissions and handling charges incurred by insurance companies related to its operating activities, which do not exceed 18% of the total premium income of the year after<br>deducting surrender premium, etc., are allowed to be deducted in calculating the taxable income, and the excessive part is allowed to be brought forward to the subsequent years. This notice issued above was effective from 1 January 2019 and<br>applicable to the final settlement and payment of enterprise income tax filing for the year ended 31 December 2018. Accordingly, the Company’s current income tax was deducted by RMB5,154 million regarding to the final settlement and<br>payment.
---	---
(ii)	Non-taxable income mainly includes interest income from government<br>bonds, and dividend income from applicable equity securities, etc. Expenses not deductible for tax purposes mainly include donations and other expenses that do not meet the criteria for deduction according to the relevant tax regulations.<br>
---	---
(c)	As at 31 December 2019 and 31 December 2018, the amounts of deferred tax assets and<br>liabilities are as follows:
---	---
	As at31 December 2019RMB million			As at<br>31 December 2018<br>RMB million
---	---	---	---	---	---	---
Deferred tax assets	****	13,352	****		10,160
Deferred tax liabilities	****	(23,554	)		(8,903	)
Net deferred tax assets	****	128	****		1,257
Net deferred tax liabilities	****	(10,330	)		—

As at 31 December 2019 and 31 December 2018, deferred income tax was calculated in full on temporary differences under the liability method using the principal tax rate of 25%. The movements in net deferred income tax assets and liabilities during the period are as follows:

Net deferred tax assets/(liabilities)

	InsuranceRMB million			InvestmentsRMB million			OthersRMB million		TotalRMB million
	(i)			(ii)			(iii)
As at 1 January 2018		(6,737	)		(494	)		2,360		(4,871	)
(Charged)/credited to net profit		1,421			2,713			278		4,412
(Charged)/credited to other comprehensive income
- Available-for-sale<br> securities		—			1,673			—		1,673
- Portion of fair value changes on available-for-sale securities attributable to participating policyholders		8			—			—		8
- Others		—			35			—		35
As at 31 December 2018		(5,308	)		3,927			2,638		1,257
As at 1 January 2019	****	(5,308	)	****	3,927	****	****	2,638	****	1,257	****
(Charged)/credited to net profit	****	1,985	****	****	(2,428	)	****	276	****	(167	)
(Charged)/credited to other comprehensive income
- Available-for-sale<br> securities	****	—	****	****	(16,260	)	****	—	****	(16,260	)
- Portion of fair value changes on available-for-sale securities attributable to participating policyholders	****	4,880	****	****	—	****	****	—	****	4,880	****
- Others	****	—	****	****	88	****	****	—	****	88	****
As at 31 December 2019	****	1,557	****	****	(14,673	)	****	2,914	****	(10,202	)

F-91

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

29	TAXATION (CONTINUED)
(c)	As at 31 December 2019 and 31 December 2018, the amounts of deferred tax assets and<br>liabilities are as follows (continued):
---	---
(i)	The deferred tax liabilities arising from the insurance category are mainly related to the change of<br>long-term insurance contract liabilities at 31 December 2008 as a result of the first time adoption of IFRSs in 2009 and the temporary differences of short-term insurance contract liabilities and policyholder dividends payable.<br>
---	---
(ii)	The deferred tax arising from the investments category is mainly related to the temporary differences of<br>unrealised gains/(losses) on available-for-sale securities, securities at fair value through profit or loss, and others.
---	---
(iii)	The deferred tax arising from the others category is mainly related to the temporary differences of employee<br>salaries and welfare costs payable.
---	---

Unrecognised deductible tax losses of the Group amounted to RMB1,321 million as at 31 December 2019 (as at 31 December 2018: RMB365 million). Unrecognised deductible temporary differences of the Group amounted to RMB1 million as at 31 December 2019 (as at 31 December 2018: RMB378 million).

(d)	The analysis of net deferred tax assets and deferred tax liabilities is as follows:<br>
	As at 31December 2019RMB million			As at 31<br>December 2018<br>RMB million
---	---	---	---	---	---	---
Deferred tax assets:
- deferred tax assets to be recovered after 12 months	****	7,508	****		3,947
- deferred tax assets to be recovered within 12 months	****	5,844	****		6,213
Subtotal	****	13,352	****		10,160
Deferred tax liabilities:
- deferred tax liabilities to be settled after 12 months	****	(19,906	)		(7,490	)
- deferred tax liabilities to be settled within 12 months	****	(3,648	)		(1,413	)
Subtotal	****	(23,554	)		(8,903	)
Net deferred tax liabilities	****	(10,202	)		1,257
30	EARNINGS PER SHARE
---	---

There is no difference between the basic and diluted earnings per share. The basic and diluted earnings per share for the year ended 31 December 2019 are calculated based on the net profit for the year attributable to ordinary equity holders of the Company and the weighted average of 28,264,705,000 ordinary shares (2018: same).

F-92

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

31	STOCK APPRECIATION RIGHTS

The Board of Directors of the Company approved, on 5 January 2006, an award of stock appreciation rights of 4.05 million units and on 21 August 2006, another award of stock appreciation rights of 53.22 million units to eligible employees. The exercise prices of the two awards were HKD5.33 and HKD6.83, respectively, the average closing price of shares in the five trading days prior to 1 July 2005 and 1 January 2006, the dates for vesting and exercise price setting purposes of this award. Upon the exercise of stock appreciation rights, exercising recipients will receive payments in RMB, subject to any withholding tax, equal to the number of stock appreciation rights exercised times the difference between the exercise price and market price of the H shares at the time of exercise.

Stock appreciation rights have been awarded in units, with each unit representing the value of one H share. No shares of common stock will be issued under the stock appreciation rights plan. According to the Company’s plan, all stock appreciation rights will have an exercise period of five years from the date of award and will not be exercisable before the fourth anniversary of the date of award unless specific market or other conditions have been met. On 26 February 2010, the Board of Directors of the Company extended the exercise period of all stock appreciation rights, which is also subject to government policy.

As at 31 December 2019, there were 55.01 million units outstanding and exercisable (as at 31 December 2018: same). As at 31 December 2019, the amount of intrinsic value for the vested stock appreciation rights was RMB735 million (as at 31 December 2018: RMB477 million).

The fair value of the stock appreciation rights is estimated on the date of valuation at each reporting date using lattice-based option valuation models based on expected volatility from 30% to 36%, an expected dividend yield of no higher than 3% and a risk-free interest rate ranging from 1.42% to 1.82%.

The Company recognised a loss of RMB258 million in the net fair value through profit or loss in the consolidated comprehensive income representing the fair value change of the rights during the year ended 31 December 2019 (2018: fair value gain of RMB343 million, 2017: fair value losses of RMB179 million). RMB735 million and RMB13 million were included in salary and staff welfare payable included under other liabilities for the units not exercised and exercised but not paid as at 31 December 2019 (as at 31 December 2018: RMB477 million and RMB13 million), respectively. There was no unrecognised compensation cost for the stock appreciation rights as at 31 December 2019 (as at 31 December 2018: nil).

32	DIVIDENDS

Pursuant to the shareholders’ approval at the Annual General Meeting on 30 May 2019, a final dividend of RMB0.16 (inclusive of tax) per ordinary share totalling RMB4,522 million in respect of the year ended 31 December 2018 was declared and paid in 2019. The dividend has been recorded in the consolidated financial statements for the year ended 31 December 2019.

Pursuant to the shareholders’ approval at the Annual General Meeting on 6 June 2018, a final dividend of RMB0.40 (inclusive of tax) per ordinary share totalling RMB11,306 million in respect of the year ended 31 December 2017 was declared and paid in 2018. The dividend has been recorded in the consolidated financial statements for the year ended 31 December 2018.

Pursuant to the shareholders’ approval at the Annual General Meeting on 31 May 2017, a final dividend of RMB0.24 (inclusive of tax) per ordinary share totalling RMB6,784 million in respect of the year ended 31 December 2016 was declared and paid in 2017. The dividend has been recorded in the consolidated financial statements for the year ended 31 December 2017.

A distribution of RMB394 million (inclusive of tax) to the holders of Core Tier 2 Capital Securities was approved by management in 2019 according to the authorisation by the Board of Directors, which was delegated by the General Meeting.

A distribution of RMB384 million (inclusive of tax) to the holders of Core Tier 2 Capital Securities was approved by management in 2018 according to the authorisation by the Board of Directors, which was delegated by the General Meeting.

A distribution of RMB380 million (inclusive of tax) to the holders of Core Tier 2 Capital Securities was approved by management in 2017 according to the authorisation by the Board of Directors, which was delegated by the General Meeting.

Pursuant to a resolution passed at the meeting of the Board of Directors on 25 March 2020, a final dividend of RMB0.73 (inclusive of tax) per ordinary share totalling approximately RMB20,633 million for the year ended 31 December 2019 was proposed for shareholders’ approval at the forthcoming Annual General Meeting. The dividend has not been recorded in the consolidated financial statements for the year ended 31 December 2019.

F-93

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

33	DISCLOSURES ABOUT THE TEMPORARY EXEMPTION FROM IFRS 9

According to IFRS 4 Amendments, the Company made the assessment based on the Group’s financial position of 31 December 2015, concluding that the carrying amount of the Group’s liabilities arising from contracts within the scope of IFRS 4, which includes any deposit components or embedded derivatives unbundled from insurance contracts, was significant compared to the total carrying amount of all its liabilities. And the percentage of the total carrying amount of its liabilities connected with insurance relative to the total carrying amount of all its liabilities is greater than 90 percent. There had been no significant change in the activities of the Group since then that requires reassessment. Therefore, the Group’s activities are predominantly connected with insurance, meeting the criteria to apply temporary exemption from IFRS 9.

Sino-Ocean, China Unicom and certain associates of the Group, have adopted IFRS 9. CGB, an associate of the Group, has adopted IFRS 9 since 1 January 2019. According to IFRS 4 Amendments, the Group elected not to apply uniform accounting policies when using the equity method for these associates. The effects of adopting new accounting standards by CGB upon the Group’s consolidated statement of financial position are disclosed in Note 9.

(a)	The tables below present the fair value of the following groups of financial assets^(i)^ under IFRS 9 as at 31 December 2019 and 31 December 2018 and fair value changes for the years ended 31 December 2019 and 31 December 2018:
	Fair value<br><br><br>as at 31 December
---	---	---	---	---	---
	2019RMB million		2018<br>RMB million
Held for trading financial assets	****	141,608		138,717
Financial assets that are managed and whose performance are evaluated on a fair<br>value basis	****	—		—
Other financial assets
- Financial assets with contractual terms that give rise on specified dates to<br>cash flows that are solely payments of principal and interest on the principal amount outstanding (“SPPI”)	****	1,615,856		1,502,203
- Financial assets with contractual terms that do not give rise on SPPI	****	860,644		528,377
Total	****	2,618,108		2,169,297
	Fair value changes<br><br><br>for the year ended 31 December
	2019RMB million		2018<br>RMB million
Held for trading financial assets	****	19,057		(16,932	)
Financial assets that are managed and whose performance are evaluated on a fair<br>value basis	****	—		—
Other financial assets
-Financial assets with contractual terms that give rise on SPPI	****	6,029		95,480
-Financial assets with contractual terms that do not give rise on SPPI	****	77,741		(40,447	)
Total	****	102,827		38,101
(i)	Only including securities at fair value through profit or loss, loans (excluding policy loans), available-for-sale securities and held-to-maturity securities.
---	---

F-94

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

33	DISCLOSURES ABOUT THE TEMPORARY EXEMPTION FROM IFRS 9 (CONTINUED)
(b)	The table below presents the credit risk exposure<br>^(ii)^ for aforementioned financial assets with contractual terms that give rise on SPPI:
---	---
	Carrying amount ^(iii)^
---	---	---	---	---
	As at 31 December<br>2019<br>RMB Million		As at 31 December<br>2018<br>RMB Million
Domestic
Rating not required<br>^(iv)^	****	657,905		653,328
AAA	****	893,336		787,908
AA+	****	7,671		13,026
AA	****	1,163		1,152
AA-	****	3,000		70
Subtotal	****	1,563,075		1,455,484
Overseas
AAA	****	30		—
A+	****	4,014		—
A	****	3,541		1,755
A-	****	35		493
BBB+	****	135		118
BBB-	****	14		14
Not rated	****	25		24
Subtotal	****	7,794		2,404
Total	****	1,570,869		1,457,888
(c)	The table below presents financial assets without low credit risk for aforementioned financial assets with<br>contractual terms that give rise on SPPI:
---	---
	As at 31 December 2019
---	---	---	---	---
	Carrying amount ^(iii)^RMB Million		Fair value<br>RMB Million
Domestic	****	11,834	****	8,237
Overseas	****	25	****	9
Total	****	11,859	****	8,246
	As at 31 December 2018
	Carrying amount ^(iii)^<br>RMB Million		Fair value<br>RMB Million
Domestic		14,248		14,539
Overseas		24		12
Total		14,272		14,551
(ii)	Credit risk ratings for domestic assets are provided by domestic qualified external rating agencies and<br>credit risk ratings for overseas assets are provided by overseas qualified external rating agencies.
---	---
(iii)	For financial assets measured at amortised cost, carrying amount before adjusting impairment allowance is<br>disclosed here.
---	---
(iv)	Mainly including government bonds and policy financial bonds.
---	---

F-95

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

34	SIGNIFICANT RELATED PARTY TRANSACTIONS
(a)	Related parties with control relationship
---	---

Information of the parent company is as follows:

Name	Location ofregistration	Principal business	Relationship withthe Company	Nature ofownership	Legalrepresentative
CLIC	Beijing, China	Insurance services including receipt of premiums and payment of benefits in respect of the<br>in-force life, health, accident and other types of personal insurance business, and the reinsurance business; holding or investing in domestic and overseas insurance companies or other financial insurance<br>institutions; fund management business permitted by national laws and regulations or approved by the State Council of the People’s Republic of China; and other businesses approved by insurance regulatory agencies.	Immediate and ultimate holding company	State-owned	Wang Bin
(b)	Subsidiaries
---	---

Refer to Note 34(f) for the basic and related information of subsidiaries.

(c)	Associates and joint ventures

Refer to Note 9 for the basic and related information of associates and joint ventures.

(d)	Other related parties
Significant related parties	Relationship with the Company
---	---
China Life Real Estate Co., Limited (“CLRE”)	Under common control of CLIC
China Life Insurance (Overseas) Company Limited<br>(“CL<br>Overseas”)	Under common control of CLIC
China Life Investment Holding Company Limited (“CLI”)	Under common control of CLIC
China Life Ecommerce Company Limited (“CL Ecommerce”)	Under common control of CLIC
China Life Enterprise Annuity Fund (“EAP”)	A pension fund jointly set up by the Company and others

F-96

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

34	SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
(e)	Registered capital of related parties with control relationship and changes during the year
---	---
Name of related party	As at 31<br>December 2018million			Decreasemillion			As at 31<br>December 2019million
---	---	---	---	---	---	---	---	---
CLIC		RMB4,600	—		—			RMB4,600
AMC		RMB4,000	—		—			RMB4,000
China Life Pension Company Limited (“Pension Company”)		RMB3,400	—		—			RMB3,400
China Life (Suzhou) Pension and Retirement Investment Company Limited<br>(“Suzhou Pension Company”)		RMB1,991	—		—			RMB1,991
CL AMP		RMB1,288	—		—			RMB1,288
CL Wealth		RMB200	—		—			RMB200
Shanghai Rui Chong Investment Co., Limited (“Rui Chong<br>Company”)		RMB6,800	—		—			RMB6,800
China Life (Beijing) Health Management Co., Limited (“CL Health”)<br>(i)		RMB1,730	—		RMB(200	)		RMB1,530
China Life Franklin (Shenzhen) Equity Investment Fund Management Co., Limited<br>(“Franklin Shenzhen Company”)		2	—		—			USD2
Xi’an Shengyi Jingsheng Real Estate Co., Ltd. (“Shengyi<br>Jingsheng”)		RMB1,131	—		—			RMB1,131
Dalian Hope Building Company Ltd. (“Hope Building”)		RMB484	—		—			RMB484

All values are in US Dollars.

(i)	The Group reduced its capital contribution to CL Health by RMB200 million for the year ended 31 December<br>2019. As at 4 September 2019, CL Health completed the business registration modification procedure for the registered capital with the amount reduced from RMB1,730 million to RMB1,530 million.
(ii)	The table above does not include the partnerships and the subsidiaries which were not set up or invested in<br>Mainland China that having control relationship with the Group. These partnerships and subsidiaries do not have related information about registered capital.
---	---

F-97

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

34	SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
(f)	Percentages of holding of related parties with control relationship and changes during the year
---	---
Shareholder	As at 31 December 2018								As at 31 December 2019
---	---	---	---	---	---	---	---	---	---	---	---
	Amount<br>million		Percentage of<br><br><br>holding	Increasemillion		Decreasemillion			Amountmillion		Percentage ofholding
CLIC		RMB19,324	68.37%		—		—		****	RMB19,324	68.37%
Subsidiaries	As at 31 December 2018								As at 31 December 2019
	Amount<br>million		Percentage of<br><br><br>holding	Increasemillion		Decreasemillion			Amountmillion		Percentage ofholding
AMC		RMB1,680	60.00% directly		—		—		****	RMB1,680	60.00% directly
Pension Company		RMB2,746	74.27% directly<br><br><br>and indirectly		—		—		****	RMB2,746	74.27% directly<br><br><br>and indirectly
China Life Franklin Asset Management Company Limited (“AMC HK”)		HKD130	50.00% indirectly		—		—		****	HKD130	50.00% indirectly
Suzhou Pension Company		RMB1,586	100.00% directly		RMB200		—		****	RMB1,786	100.00% directly
CL AMP		RMB1,095	85.03% indirectly		—		—		****	RMB1,095	85.03% indirectly
CL Wealth		RMB200	100.00% indirectly		—		—		****	RMB200	100.00% indirectly
Golden Phoenix Tree Limited		—	100.00% directly		—		—		****	—	100.00% directly
King Phoenix Tree Limited		—	100.00% indirectly		—		—		****	—	100.00% indirectly
Rui Chong Company		RMB6,800	100.00% directly		—		—		****	RMB6,800	100.00% directly
New Aldgate Limited		RMB1,167	100.00% directly		—		—		****	RMB1,167	100.00% directly
Glorious Fortune Forever Limited		—	100.00% directly		—		—		****	—	100.00% directly
CL Hotel Investor, L.P.		—	100.00% directly		—		—		****	—	100.00% directly
Golden Bamboo Limited		RMB1,993	100.00% directly		—		—		****	RMB1,993	100.00% directly
Sunny Bamboo Limited		RMB1,876	100.00% directly		—		—		****	RMB1,876	100.00% directly
Fortune Bamboo Limited		RMB2,435	100.00% directly		—		—		****	RMB2,435	100.00% directly
China Century Core Fund Limited		USD1,125	100.00% indirectly		—		—		****	USD1,125	100.00% indirectly
CL Health		RMB1,730	100.00% directly		—		RMB(200	)	****	RMB1,530	100.00% directly
Franklin Shenzhen Company		USD2	100.00% indirectly		—		—		****	USD2	100.00% indirectly

F-98

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

34	SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
(f)	Percentages of holding of related parties with control relationship and changes during the year(continued)
---	---
Subsidiaries (continued)	As at 31 December 2018								As at 31 December 2019
---	---	---	---	---	---	---	---	---	---	---	---
	Amount<br>million		Percentage of<br><br><br>holding	Increasemillion		Decreasemillion			Amountmillion		Percentage ofholding
Guo Yang Guo Sheng		RMB3,250	99.997% directly		—		RMB(100	)	****	RMB3,150	99.997% directly
New Capital Wisdom Limited		—	100.00% indirectly		—		—		****	—	100.00% indirectly
New Fortune Wisdom Limited		—	100.00% indirectly		—		—		****	—	100.00% indirectly
Wisdom Forever Limited Partnership		USD452	100.00% indirectly		—		—		****	USD452	100.00% indirectly
Shanghai Yuan Shu Yuan Jiu Investment Management Partnership (Limited<br>Partnership)		RMB606	99.98% directly		—		—		****	RMB606	99.98% directly
Shanghai Yuan Shu Yuan Pin Investment Management Partnership (Limited<br>Partnership)		RMB606	99.98% directly		—		—		****	RMB606	99.98% directly
Shanghai Wansheng Industry Partnership (Limited Partnership)		RMB4,000	99.98% directly		—		—		****	RMB4,000	99.98% directly
Ningbo Meishan Bonded Port Area Bai Ning Investment Partnership (Limited<br>Partnership)		RMB1,680	99.98% directly		—		—		****	RMB1,680	99.98% directly
Hope Building		RMB484	100.00% indirectly		—		—		****	RMB484	100.00% indirectly
Wuhu Yuanxiang Tianfu Investment Management Partnership (Limited<br>Partnership)		RMB533	99.98% directly		—		—		****	RMB533	99.98% directly
Wuhu Yuanxiang Tianyi Investment Management Partnership (Limited<br>Partnership)		RMB533	99.98% directly		—		—		****	RMB533	99.98% directly
Shengyi Jingsheng		RMB1,063	100.00% indirectly		—		—		****	RMB1,063	100.00% indirectly
CBRE Global Investors U.S. Investments I, LLC (“CG Investments”)<br>(i)		—	—		RMB2,859		—		****	RMB2,859	99.99% directly
China Life Guangde (Tianjin) Equity Investment Fund Partnership (Limited<br>Partnership) (“CL Guang De”) (i)		—	—		RMB10		—		****	RMB10	99.95% directly
(i)	CG Investments and CL Guang De were newly included in the consolidated financial statements of the Group for<br>the year ended 31 December 2019.
---	---

F-99

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

34	SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
(g)	Transactions with significant related parties
---	---

The following table summarises significant transactions carried out by the Group with its significant related parties:

			For the year ended 31 December
			2019		2018		2017
	Notes		RMB million		RMB million		RMB million
Transactions with CLIC and its subsidiaries
Policy management fee received from CLIC		(i) (vii)	****	575		629		740
Asset management fee received from CLIC		(ii.a)	****	89		100		107
Payment of dividends from the Company to CLIC			****	3,092		7,729		4,638
Distribution of profits from AMC to CLIC			****	122		128		125
Asset management fee received from CL Overseas		(ii.b)	****	86		63		119
Asset management fee received from CLP&C		(ii.c)	****	14		14		14
Payment of insurance premium to CLP&C			****	48		47		44
Claim and other payments received from CLP&C			****	16		14		16
Agency fee received from CLP&C		(iii) (vii)	****	2,297		2,959		3,030
Rental and a service fee received from CLP&C			****	51		50		59
Dividend from CLP&C			****	—		66		69
Payment of rental, project fee and other expenses to CLRE			****	43		45		50
Property leasing expenses charged by CLI		(iv)	****	78		83		78
Payment of an asset management fee to CLI		(ii.d) (vii)	****	653		529		396
Property leasing income received from CLI			****	39		37		37
Payment of a business management service fee to CL Ecommerce			****	—		53		64
Transactions between CGB and the Group
Interest on deposits received from CGB			****	2,584		1,425		1,382
Dividend from CGB (Note 9)			****	284		—		—
Commission expenses charged by CGB		(v)	****	158		112		92
Capital contribution to CGB			****	—		13,012		—
Transactions between Sino-Ocean and the Group
Dividend from Sino-Ocean (Note 9)			****	369		558		553
Interest of corporate bonds received from Sino-Ocean			****	27		27		27
Project management fee paid to Sino-Ocean			****	—		2		55
Transactions between EAP and the Group
Contribution to EAP			****	1,003		593		700
Transaction between other associates and joint ventures and theGroup
Distribution of profits from other associates and joint ventures to the Group (Note<br>9)			****	2,574		2,279		1,240
Transactions between AMC and the Company
Payment of an asset management fee to AMC		(ii.e) (vii)	****	1,353		1,326		1,154
Distribution of profits from AMC			****	183		193		187
Transactions between Pension Company and the Company
Rental received from Pension Company			****	54		45		43
Agency fee received from Pension Company for entrusted sales of annuity funds and<br>other businesses		(vi)	****	54		43		42
Marketing fee income for promotion of annuity business from Pension<br>Company			****	8		13		10
Transactions between AMC HK and the Company
Payment of an investment management fee to AMC HK		(ii.f)	****	18		18		14
Transactions between Suzhou Pension Company and the Company
Capital contribution to Suzhou Pension Company			****	200		—		260
Transactions between Rui Chong Company and the Company
Capital contribution to Rui Chong Company			****	—		—		601
Rental fee charged by Rui Chong Company			****	47		47		—
Transactions between the Guo Yang Guo Sheng and the Company
Capital withdrawal from Guo Yang Guo Sheng			****	100		—		—
Transactions between the CL Health and the Company
Capital withdrawal from CL Health			****	200		—		—
Transactions between other associates and joint ventures and theCompany
Distribution of profits from other associates and joint ventures to the<br>Company			****	2,210		1,424		203
Transactions between the consolidated structured entities/other subsidiaries andthe Company
Distribution of profits from the consolidated structured entities to the<br>Company			****	10,965		8,247		3,944
Distribution of profits from the other subsidiaries to the Company			****	206		426		70

F-100

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

34	SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
(g)	Transactions with significant related parties (continued)
---	---

Notes:

(i)	On 26 December 2017, the Company and CLIC renewed a renewable insurance agency agreement, effective<br>from 1 January 2018 to 31 December 2020. The Company performs its duties of insurance agents in accordance with the agreement, but does not acquire any rights and profits or assume any obligations, losses and risks as an insurer of the non-transferable policies. The policy management fee was payable semi-annually, and is equal to the sum of (1) the number of policies in force as at the last day of the period, multiplied by RMB8.0 per policy<br>and (2) 2.5% of the actual premiums and deposits received during the period, in respect of such policies. The policy management fee income is included in other income in the consolidated statement of comprehensive income.
(ii.a)	In December 2018, CLIC renewed an asset management agreement with AMC, entrusting AMC to manage and make<br>investments for its insurance funds. The agreement is effective from 1 January 2019 to 31 December 2021. In accordance with the agreement, CLIC paid AMC a basic service fee at the rate of 0.05% per annum for the management of insurance<br>funds. The service fee was calculated on a monthly basis and payable on a seasonal basis, by multiplying the average book value of the assets under management (after deducting the funds obtained from and interests accrued for repurchase<br>transactions, deducting the principal and interests of debt and equity investment schemes, project asset-backed schemes, customised non-standard products) at the beginning and the end of any given month by the<br>rate of 0.05%, divided by 12. According to specific projects, debt investment schemes, equity investment plans, project asset-backed plans, and customised non-standard products are based on contractual agreed<br>rate, without paying for extra management fee. At the end of each year, CLIC assessed the investment performance of the assets managed by AMC, compared the actual results against benchmark returns and made adjustment to the basic service fee.<br>
---	---
(ii.b)	In 2018, CL Overseas renewed an investment management agreement with AMC HK, effective from 1 January<br>2018 to 31 December 2022. In accordance with the agreement, CL Overseas entrusted AMC HK to manage and make investments for its insurance funds and paid AMC HK a basic investment management fee and an investment performance fee. The basic<br>investment management fee was accrued by multiplying the weighted average total funds by the basic fee rate. The investment performance fee was calculated based on the difference between the total actual annual yields and predetermined net realised<br>yield. The basic investment management fee was calculated and payable on a semi-annual basis. The investment performance fee was payable according to the total actual annual yield at the end of each year.
---	---
(ii.c)	On 15 May 2018, CLP&C renewed an agreement for the management of insurance funds with AMC,<br>entrusting AMC to manage and make investments for its insurance funds, effective from 1 January 2018 to 31 December 2019. The agreement was subject to an automatic one-year renewal if no objections<br>were raised by both parties upon expiry. In accordance with the agreement, CLP&C paid AMC a fixed service fee and a variable service fee. The fixed service fee was calculated on a monthly basis and payable on an annual basis, by multiplying the<br>average net asset value of assets of each category under management at the beginning and the end of any given month by the responding annual investment management fee rate, divided by 12. The variable service fee was payable on an annual basis, and<br>linked to investment performance.
---	---
(ii.d)	On 31 December 2018, the Company and CLI renewed a management agreement of alternative investment of<br>insurance funds, effective from 1 January 2019 to 31 December 2020. In accordance with the agreement, the Company entrusted CLI to engage in investment, operation and management of equities, real estate and related financial products, and<br>securitised financial products under the instructions of the annual guidelines. The Company paid CLI an asset management fee and a performance related bonus based on the agreement. For fixed-income projects, the management fee rate was between 0.05%<br>and 0.6% according to different ranges of returns; for non-fixed-income projects, the management fee rate for invested projects was 0.3%, the management fee rates for newly signed projects were between 0.05%<br>and 0.3% according to CLI’s involvement in project management and the performance-related bonus is based on the internal return rate upon expiry of the project. In addition, the Company adjusts the investment management fees for fixed-income<br>projects and non-fixed-income projects based on the annual evaluation results on CLI’s performance. The adjustment (variable management fee) ranges from negative 10% to positive 15% of the investment<br>management fee in the current period.
---	---

F-101

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

34	SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
(g)	Transactions with significant related parties (continued)
---	---

Notes (continued):

(ii.e)	On 28 December 2018, the Company and AMC renewed a renewable agreement for the management of insurance<br>funds, effective from 1 January 2019 to 31 December 2021. In accordance with the agreement, the Company entrusted AMC to manage and make investments for its insurance funds and paid AMC a fixed investment management service fee and a<br>variable investment management service fee. The fixed annual service fee was calculated and payable on a seasonal basis, by multiplying the average net value of the assets under management by the rate of 0.05%; the variable investment management<br>service fee was payable annually, based on the results of performance evaluation, at 20% of the fixed service fee per annum. Asset management fees charged to the Company by AMC are eliminated in the consolidated statement of comprehensive income.<br>
(ii.f)	On 31 December 2018, the Company and AMC HK renewed the management agreement of insurance funds<br>investment, which is effective from 1 January 2019 to 31 December 2021. In accordance with the agreement, the Company entrusted AMC HK to manage and make investments for its insurance funds and paid AMC HK an asset management fee on a<br>seasonal basis and the maximum investment management fee paid annually is RMB30 million. The management fee rate for financial products, such as investment plans, project asset-backed plans, customised products and insurance asset management<br>products, set up by AMC HK in the industry permitted by regulatory policies, is set according to contractual terms. The management fee rate for the directive investment operation of term deposits, common stocks, funds, financial products and other<br>investment products, universal account B-2 and entrusted assets account alike was 0.02%; the management fee rate for unlisted equity investment was 0.3%; the management fee rate for customised investment<br>portfolio was agreed upon the management fee of market-oriented entrusted investment. Asset management fees charged to the Company by AMC HK are eliminated in the consolidated statement of comprehensive income.
---	---
(iii)	On 31 January 2018, the Company and CLP&C signed a new framework insurance agency agreement,<br>whereby CLP&C entrusted the Company to act as an agent to sell designated P&C insurance products in certain authorised jurisdictions. The agency fee was determined based on cost (tax included) plus a margin. The agreement is effective for<br>three years, from 8 March 2018 to 7 March 2021.
---	---
(iv)	On 29 December 2017, the Company renewed a property leasing agreement with CLI, effective from<br>1 January 2018 to 31 December 2020, pursuant to which CLI leased to the Company certain buildings of its own. Annual rental payable by the Company to CLI in relation to the CLI properties is determined either by reference to the market<br>rent, or, the costs incurred by CLI in holding and maintaining the properties, plus a margin of approximately 5%. The rental was paid on a semi-annual basis, and each payment was equal to one half of the total annual rental.
---	---
(v)	On 19 October 2018, the Company and CGB renewed an insurance agency agreement to distribute insurance<br>products. All individual insurance products suitable for distribution through bancassurance channels are included in the agreement. CGB provides agency services, including the sale of insurance products, collecting premiums and paying benefits. The<br>Company paid the agency commission by multiplying the net amount of total premiums received from the sale of each category individual insurance products after deducting the surrender premiums in the hesitation period, by the responding fixed<br>commission rate. The commission rates for various insurance products sold by CGB are agreed based on arm’s length transactions. The commissions are payable on a monthly basis. The agreement is effective from the signing date to 16 August 2020.<br>
---	---

On 28 December 2018, the Company and CGB signed another insurance agency agreement to distribute corporate group insurance products. The corporate group insurance products suitable for distribution through bancassurance channels are included in the agreement. The Company paid the agency commission by multiplying the net amount of total premiums received from the sale of each category group insurance product after deducting the surrender premiums, by the responding fixed commission rate. The commission rates for various insurance products sold by CGB are agreed by reference to comparable market prices of independent third-parties. The commissions are paid on a monthly basis. The agreement is effective for two years from 1 January 2019, with an automatic one-year renewal if no objections were raised by either party upon expiry.

F-102

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

34	SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
(g)	Transactions with significant related parties (continued)
---	---

Notes (continued):

(vi)

On 1 January 2019, the Company and Pension Company renewed an entrusted agency agreement for pension business acted by life business. The agreement is effective from 1 January 2019 to 31 December 2021. The business means that Pension Company entrusted the Company to sell enterprise annuity funds, pension security business, occupational pension business and the third-party asset management business. The commissions agreed upon in the agreement include the daily business commissions and the annual promotional plans commissions. According to the agreement, the commissions for the entrusting service of enterprise annuity fund management, which is the core business of Pension Company, are calculated at 30% to 80% of the annual entrusting management fee revenues, depending on the duration of the agreement. The commissions for account management service are calculated at 60% of the first year’s account management fee and were only charged for the first year, regardless of the duration of the agreement. The commissions for investment management services, in accordance with the duration of the agreement, are calculated at 60% to 3% of the annual investment management fee (excluding risk reserves for investment), and decreased annually. The commissions of the group pension plan are, in accordance with the duration of the contracts, calculated at 50% to 3% of the annual investment management fee, and decreased annually; the commissions of the personal pension plan are calculated at 30% to 50% of the annual investment management fee according to the various rates of daily management fee applied to the various individual pension management products in all of the management years; the commissions of occupation annuity and third-party asset management business are in accordance with the provision of annual promotional plans, which should be determined by both parties on a separate occasion. The commissions charged to Pension Company by the Company are eliminated in the consolidated statement of comprehensive income of the Group.

(vii)

These transactions constitute continuing connected transactions which are subject to reporting and announcement requirements but are exempt from independent shareholders’ approval requirements under Chapter 14A of the Listing Rules. The Company has complied with the disclosure requirements in accordance with Chapter 14A of the Listing Rules.

---

F-103

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

34	SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
(h)	Amounts due from/to significant related parties
---	---

The following table summarises the balances due from and to significant related parties. The balances of the Group are all unsecured. The balance of the Group are non-interest-bearing and have no fixed repayment dates except for deposits with CGB, wealth management products and other securities of CGB, and corporate bonds issued by Sino-Ocean.

	As at 31 December 2019			As at 31 December 2018
	RMB million			RMB million
The resulting balances due from and to significant related parties of theGroup
Amount due from CLIC	****	334	****		350
Amount due from CL Overseas		56			68
Amount due from CLP&C		334			284
Amount due to CLP&C		(31	)		(9	)
Amount due from CLI		18			15
Amount due to CLI		(401	)		(362	)
Amount due from CLRE		2			2
Amount deposited with CGB		59,420			61,880
Wealth management products and other securities of CGB		8 44			115
Amount due from CGB		894			1,557
Amount due to CGB		( 75	)		(63	)
Corporate bonds of Sino-Ocean		605			593
Amount due from Sino-Ocean		8			8
Amount due from CL Ecommerce		13			6
Amount due to CL Ecommerce		( 68	)		(67	)
The resulting balances due from and to subsidiaries of the Company
Amount due to AMC		(381	)		(218	)
Amount due to AMC HK		(9	)		(10	)
Amount due from Pension Company		30			25
Amount due to Pension Company		(35	)		(28	)
Amount due from Rui Chong Company		118			18
(i)	Key management personnel compensation
---	---
	For the year ended 31 December
---	---	---	---	---	---	---
	2019		2018		2017
	RMB million		RMB million		RMB million
Salaries and other benefits	****	15		34		28

The total compensation package for the Company’s key management personnel for the year ended 31 December 2019 has not yet been finalised in accordance with regulations of the relevant PRC authorities. The final compensation will be disclosed in a separate announcement when determined. The compensation of 2018 has been approved by the relevant authorities. The total compensation of 2018 was RMB34 million, including a deferred payment about RMB7 million.

F-104

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

34	SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED)
(j)	Transactions with state-owned enterprises
---	---

Under IAS 24 Related Party Disclosures (“IAS 24”), business transactions between state-owned enterprises controlled by the PRC government are within the scope of related party transactions. CLIC, the ultimate holding company of the Group, is a state-owned enterprise. The Group’s key business is insurance and investment related and therefore the business transactions with other state-owned enterprises are primarily related to insurance and investment activities. The related party transactions with other state-owned enterprises were conducted in the ordinary course of business. Due to the complex ownership structure, the PRC government may hold indirect interests in many companies. Some of these interests may, in themselves or when combined with other indirect interests, be controlling interests which may not be known to the Group. Nevertheless, the Group believes that the following captures the material related parties and has applied IAS 24 exemption and disclosed only qualitative information.

As at 31 December 2019, most of the bank deposits of the Group were with state-owned banks; the issuers of corporate bonds and subordinated bonds held by the Group were mainly state-owned enterprises. For the year ended 31 December 2019, a large portion of group insurance business of the Group was with state-owned enterprises; the majority of bancassurance commission charges were paid to state-owned banks and postal offices; and the majority of the reinsurance agreements of the Group were entered into with a state-owned reinsurance company.

35	SHARE CAPITAL
	As at 31 December 2019				As at 31 December 2018
---	---	---	---	---	---	---	---	---
	No. of shares		RMB million		No. of shares		RMB million
Registered, authorised, issued and fully paid
Ordinary shares of RMB1 each	****	28,264,705,000	****	28,265		28,264,705,000		28,265

As at 31 December 2019, the Company’s share capital was as follows:

			As at 31 December 2019
	No. of shares		RMB million
Owned by CLIC (i)	****	19,323,530,000	****	19,324
Owned by other equity holders	****	8,941,175,000	****	8,941
Including: domestic listed	****	1,500,000,000	****	1,500
overseas listed (ii)	****	7,441,175,000	****	7,441
Total	****	28,264,705,000	****	28,265
(i)	All shares owned by CLIC are domestic listed shares.
---	---
(ii)	Overseas listed shares are traded on the Stock Exchange of Hong Kong Limited and the New York Stock<br>Exchange.
---	---

F-105

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

36	OTHER EQUITY INSTRUMENTS
(a)	Basic information
---	---
	As at 31<br>December 2018<br>RMB million		IncreaseRMB million		DecreaseRMB million		As at 31<br>December 2019RMB million
---	---	---	---	---	---	---	---	---
Core Tier 2 Capital Securities		7,791	****	—	****	—		7,791
Total		7,791	****	—	****	—		7,791

The Company issued Core Tier 2 Capital Securities at par with the nominal value of USD1,280 million on 3 July 2015, and listed such securities on the Stock Exchange of Hong Kong Limited on 6 July 2015. The securities were issued in the specified denomination of USD200,000 and integral multiples of USD1,000 in excess thereof. After a deduction of the issue expense, the total amount of the proceeds raised from this issuance was USD1,274 million or RMB7,791 million. The issued capital securities have a term of 60 years, extendable upon expiry. Distributions shall be payable on the securities semi-annually and the Company has the option to redeem the securities at the end of the fifth year after issuance and on any distribution payment date thereafter. The initial distribution rate for the first five interest-bearing years is 4.00%, if the Company does not exercise this option, the rate of distribution will be reset based on the comparable US treasury yield plus a margin of 2.294% at the end of the fifth year and every five years thereafter.

(b)	Equity attributable to equity holders
	As at 31<br>December 2019RMB million		As at 31<br>December 2018<br>RMB million
---	---	---	---	---
Equity attributable to equity holders of the Company	****	403,764		318,371
Equity attributable to ordinary equity holders of the Company	****	395,973		310,580
Equity attributable to other equity instruments holders of the Company	****	7,791		7,791
Equity attributable to non-controlling<br>interests	****	5,578		4,919
Equity attributable to ordinary equity holders of<br>non-controlling interests	****	5,578		4,919

Refer to Note 32 for the information of distribution to other equity instruments holders of the Company for the year ended 31 December 2019. As at 31 December 2019, there were no accumulated distributions unpaid attributable to other equity instrument holders of the Company.

F-106

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

37	RESERVES
	Share<br><br><br>premium<br> <br>RMB<br><br><br>million		Other<br><br><br>reserves<br> <br>RMB<br><br><br>million			Unrealised<br><br><br>gains/<br> <br>(losses)<br><br><br>from<br> <br>available-<br> <br>for-sale<br><br><br>securities<br> <br>RMB<br><br><br>million			Other<br><br><br>comprehensive<br><br><br>income<br><br><br>reclassifiable<br><br><br>to profit or loss<br><br><br>under the<br> <br>equitymethod<br> <br>RMB<br><br><br>million			Statutory<br><br><br>reserve<br> <br>fund<br><br><br>RMB<br> <br>million		Discretionary<br><br><br>reserve fund<br> <br>RMB<br><br><br>million		General<br><br><br>reserve<br> <br>RMB<br><br><br>million		Exchange<br><br><br>differences<br> <br>on<br><br><br>translating<br> <br>foreign<br><br><br>operations<br> <br>RMB<br><br><br>million			Other<br><br><br>comprehensive<br> <br>income non-<br> <br>reclassifiable<br><br><br>to profit or loss<br><br><br>under the<br> <br>equitymethod<br> <br>RMB<br><br><br>million			Total<br><br><br>RMB<br> <br>million
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
												(a)		(b)		(c)
As at 1 January 2017		53,860		1,146			5,100			(738	)		30,166		28,225		27,241		7			—			145,007
Other comprehensive income for the year		—		—			(7,086	)		21			—		—		—		(847	)		—			(7,912	)
Appropriation to reserves		—		—			—			—			3,218		1,927		3,300		—			—			8,445
Others		—		135			—			—			—		—		—		—			—			135
As at 31 December 201 7		53,860		1,281			(1,986	)		(717	)		33,384		30,152		30,541		(840	)		—			145,675
As at 1 January 2018		53,860		1,281			(1,986	)		(717	)		33,384		30,152		30,541		(840	)		—			145,675
Other comprehensive income for the year		—		—			(3,426	)		770			—		—		—		586			—			(2,070	)
Appropriation to reserves		—		—			—			—			1,275		3,218		1,392		—			—			5,885
Others		—		(197	)		—			—			—		—		—		—			—			(197	)
As at 31 December 2018		53,860		1,084			(5,412	)		53			34,659		33,370		31,933		(254	)		—			149,293
Effect of associates’ adoption of new accounting standards (Note9)		—		—			—			16			—		—		—		—			—			16
As at 1 January 2019	****	53,860	****	1,084	****	****	(5,412	)	****	69	****	****	34,659	****	33,370	****	31,933	****	(254	)	****	—	****	****	149,309	****
Other comprehensive income for the year	****	—	****	—	****	****	34,006	****	****	687	****	****	—	****	—	****	—	****	230	****	****	(76	)	****	34,847	****
Appropriation to reserves	****	—	****	—	****	****	—	****	****	—	****	****	5,857	****	1,275	****	5,955	****	—	****	****	—	****	****	13,087	****
Other comprehensive income to retained earnings	****	—	****	—	****	****	—	****	****	—	****	****	—	****	—	****	—	****	—	****	****	(86	)	****	(86	)
Others	****	—	****	64	****	****	—	****	****	—	****	****	—	****	—	****	—	****	—	****	****	—	****	****	64	****
As at 31 December 2019	****	53,860	****	1,148	****	****	28,594	****	****	756	****	****	40,516	****	34,645	****	37,888	****	(24	)	****	(162	)	****	197,221	****
(a)	Pursuant to the relevant PRC laws, the Company appropriated 10% of its net profit under Chinese Accounting<br>Standards (“CAS”) to statutory reserve which amounted to RMB5,857 million for the year ended 31 December 2019 (2018: RMB1,275 million, 2017: RMB3,218 million).
---	---
(b)	Approved at the Annual General Meeting in May 2019, the Company appropriated RMB1,275 million to the<br>discretionary reserve fund for the year ended 31 December 2018 based on net profit under CAS (2018: RMB3,218 million, 2017: RMB1,927 million).
---	---
(c)	Pursuant to “Financial Standards of Financial Enterprises - Implementation Guide” issued by<br>the Ministry of Finance of the PRC on 30 March 2007, for the year ended 31 December 2019, the Company appropriated 10% of net profit under CAS which amounted to RMB5,857 million to the general reserve for future uncertain<br>catastrophes, which cannot be used for dividend distribution or conversion to share capital increment (2018: RMB1,275 million, 2017: RMB3,218 million). In addition, pursuant to the CAS, the Group appropriated RMB98 million to the general<br>reserve of its subsidiaries attributable to the Company in the consolidated financial statements (2018: RMB117 million, 2017: RMB82 million).
---	---

Under related PRC law, dividends may be paid only out of distributable profits. Any distributable profits that are not distributed in a given year are retained and available for distribution in the subsequent years.

F-107

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

38	NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

Changes in liabilities arising from financing activities

	Interest-<br>bearing<br>loans and<br>borrowings<br>RMB million			Bonds<br>payable<br>RMB million			Lease<br>liabilities<br>RMB million			Securities<br>sold under<br>agreements<br>to<br>repurchase<br>RMB million			Other<br>liability-<br>payable to<br>thethird-<br>party holders<br>of<br>consolidated<br>structured<br>entities<br>RMB million		Other<br>liability-<br>interest<br>payable<br>related to<br>financing<br>activities<br>RMB million			Total<br>RMB million
At 1 January 2017		16,170			37,998			—			81,088			5,488		813			141,557
Changes from financing **** cash flows		3,121			(38,000	)		—			6,228			764		(5,671	)		(33,558	)
Foreign exchange **** movement		(497	)		—			—			—			—		—			(497	)
Changes arising from ** losing control of consolidated structured**entities		—			—			—			(7	)		—		—			(7	)
Interest expense		—			2			—			—			—		4,985			4,987
At 31 December 2017		18,794			—			—			87,309			6,252		127			112,482
At 1 January 2018		18,794			—			—			87,309			6,252		127			112,482
Changes from financing cash flows		727			—			—			104,832			3,155		(3,990	)		104,724
Foreign exchange movement		629			—			—			—			—		—			629
Interest expense		—			—			—			—			—		4,115			4,115
At 31 December 2018		20,150			—			—			192,141			9,407		252			221,950
At 1 January 2019	****	20,150	****	****	—	****	****	2,185	****	****	192,141	****	****	9,407	****	252	****	****	224,135	****
Changes from financing cash flows		(242	)		34,988			(1,348	)		(73,552	)		11,993		(3,072	)		(31,233	)
Foreign exchange movement		137			—			—			—			—		—			137
Changes arising from losing control of consolidated structured entities		—			—			—			(501	)		—		—			(501	)
New leases		—			—			2,239			—			—		—			2,239
Interest expense		—			2			106			—			—		4,147			4,255
Others		—			—			(91	)		—			—		—			(91	)
At 31 December 2019		20,045			34,990			3,091			118,088			21,400		1,327			198,941
39	PROVISIONS AND CONTINGENCIES
---	---

The following is a summary of the significant contingent liabilities:

	As at 31<br>December 2019<br>RMB million		As at 31<br>December 2018<br>RMB million
Pending lawsuits	****	523		488

The Group involves in certain lawsuits arising from the ordinary course of business. In order to accurately disclose the contingent liabilities for pending lawsuits, the Group analysed all pending lawsuits case by case at the end of each interim and annual reporting period. A provision will only be recognised if management determines, based on third-party legal advice, that the Group has present obligations and the settlement of which is expected to result in an outflow of the Group’s resources embodying economic benefits, and the amount of such obligations could be reasonably estimated. Otherwise, the Group will disclose the pending lawsuits as contingent liabilities. As at 31 December 2019 and 2018, the Group had other contingent liabilities but disclosure of such was not practical because the amounts of liabilities could not be reliably estimated and were not material in aggregate.

F-108

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

40	COMMITMENTS
(a)	Capital commitments
---	---

The Group had the following capital commitments relating to property development projects and investments:

	As at 31December 2019<br>RMB million
Contracted, but not provided for
Investments	****	64,866	81,217
Property, plant and equipment	****	3,941	4,930
Total	****	68,807	86,147
(b)	Operating lease commitments - as lessee
---	---

The future minimum lease payments under non-cancellable operating leases are as follows:

	As at 31<br>December 2018<br>RMB million
Not later than one year		1,049
Later than one year but not later than five years		1,373
Later than five years		52
Total		2,474

The Group adopted IFRS 16 as at the date of 1 January 2019. As a lessee, the Group measured, presented and disclosed its operating lease commitments as at 31 December 2019 based on IFRS 16 and did not restate the comparative information. Please refer to Note 2.1.

(c)	Operating lease commitments - as lessor

The future minimum rentals receivable under non-cancellable operating leases are as follows:

	As at 31December 2019<br>RMB million
Not later than one year	****	578	530
Later than one year but not later than five years	****	1,133	1,306
Later than five years	****	231	300
Total	****	1,942	2,136

F-109

CHINA LIFE INSURANCE COMPANY LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2019

41	SUBSEQUENT EVENTS

Since the outbreak of Novel Coronavirus (“COVID-19”) pneumonia in the beginning of 2020, the Group has completely implemented the arrangement of the prevention and control policies of “COVID-19” required by the government. While taking comprehensive measures that effectively curbed the spread of the disease, the Group took full advantage of its supporting and safeguarding function provided by the insurance business in response to the pandemic and played an active role in coping with the potential hazardous impact on business operations that could be brought by “COVID-19”.

“COVID-19” made a major impact on general economic operation. At present, domestic situation of the containment of the pandemic is making continuous progress. With the premise that prevention and control measures have become normalized, the order of life and production is being restored at an increasing pace and the economic and social orders tend to stabilize. However, the “COVID-19” outbreak has further spread globally. If a global economy recession continues, the impact of the pandemic on domestic economy needs to be further evaluated and the volatility in the capital market might continue for a longer time. As of the issue date of these consolidated financial statements, the pandemic and the execution of containment policies towards it have brought certain challenges to the Group’s development of insurance business. Meanwhile, the stability of the investment portfolio as well as the investment income was also affected to some degree. The Group has taken various measures to actively respond and ensure the orderly operation of business. However, the long-term business and related financial impact of “COVID-19” on the Group cannot be reasonably estimated at this time.

The Group will continue to closely focus on both global and domestic situation of “COVID-19”, concerning its prevention and control, and cope with the related impacts on the Company actively.

F-110

EX-1.1

Exhibit 1.1

Articles of Association

China Life Insurance Company Limited

May 30, 2019

If there is any discrepancy between English version and Chinese version, Chinese version shall prevail.

Table of Content

Chapter 1	General Provisions	3
Chapter 2	The Company’s Objectives and Scope of Business	5
Chapter 3	Shares and Registered Capital	6
Chapter 4	Reduction of Capital and Repurchase of Shares	9
Chapter 5	Financial Assistance for Acquisition of Shares	12
Chapter 6	Share Certificates and Register of Shareholders	14
Chapter 7	Party Organization (Party Committee)	20
Chapter 8	Shareholders’ Rights and Obligations	21
Chapter 9	Shareholders’ General Meetings	27
Chapter 10	Special Procedures for Voting by A Class of Shareholders	44
Chapter 11	Board of Directors	47
Chapter 12	Secretary of the Board of Directors	58
Chapter 13	Committees under the Board of Directors	59
Chapter 14	President	59
Chapter 15	Supervisory Board	61
Chapter 16	The Qualifications and Duties of the Directors, Supervisors, President, Vice Presidents and Other Senior Officers of the Company	64
Chapter 17	Financial and Accounting Systems, Profit Distribution and Audit	71
Chapter 18	Engagement of Auditors	78
Chapter 19	Insurance	81
Chapter 20	The Company’s Basic Management System	81
Chapter 21	Trade Unions	83
Chapter 22	Merger and Division of the Company	83
Chapter 23	Dissolution and Liquidation	84
Chapter 24	Procedures for Amendment of the Company’s Articles of Association	87
Chapter 25	Dispute Resolution	88
Chapter 26	Notices and Public Announcements	89
Chapter 27	Special Matters of Corporate Governance	90
Chapter 28	Supplementary	91

Record for the Formulation of and

Amendments to the Articles of Association

No.	Formulation of the Articles of Association	Date of Resolution	Name of the Meetings	CBIRC’s Approval Document Number
1	Formulation of the Articles of Association	April 29, 2003	Inaugural Meeting	Bao Jian Fu [2003] No. 115
2	1st amendment	September 11, 2003	Second Extraordinary General Meeting in 2003	Bao Jian Fu [2003] No. 190
3	2nd amendment	November 12, 2003	Third Extraordinary General Meeting in 2003	Bao Jian Fu [2003] No. 221
4	3rd amendment	June 18, 2004	Annual General Meeting in 2004	Bao Jian Fa Gai [2004] No. 1592
5	4th amendment	June 16, 2005	Annual General Meeting in 2005	Bao Jian Fa Gai [2005] No. 924
6	5th amendment	March 16, 2006	First Extraordinary General Meeting in 2006	Bao Jian Fa Gai [2006] No. 319
7	6th amendment	June 16, 2006	Annual General Meeting in 2006	Bao Jian Fa Gai [2006] No. 830
8	7th amendment	October 16, 2006	Second Extraordinary General Meeting in 2006	Bao Jian Fa Gai [2006] No. 1431
9	8th amendment	January 31, 2007	Interim Meeting of the Board of Directors	Bao Jian Fa Gai [2007] No. 323
10	9th amendment	October 27, 2008	First Extraordinary General Meeting in 2008	Bao Jian Fa Gai [2008] No. 1746
11	10th amendment	May 25, 2009	Annual General Meeting in 2009	Bao Jian Fa Gai [2009] No. 1035
12	11th amendment	June 4, 2010	2009 Annual General Meeting	Bao Jian Fa Gai [2010] No. 959
13	12th amendment	June 3, 2011	2010 Annual General Meeting	Bao Jian Fa Gai [2011] No. 1166
14	13th amendment	May 22, 2012	2011 Annual General Meeting	Bao Jian Fa Gai [2012] No. 771
15	14th amendment	February 19, 2013	First Extraordinary General Meeting in 2013	Bao Jian Fa Gai [2013] No. 360
16	15th amendment	February 19, 2013	First Extraordinary General Meeting in 2013	Bao Jian Xu Ke [2013] No. 313
17	16th amendment	June 5, 2013	2012 Annual General Meeting	Bao Jian Xu Ke [2013] No. 130
18	17th amendment	May 29, 2014	2013 Annual General Meeting	Bao Jian Xu Ke [2014] No. 568
19	18th amendment	May 28, 2015	2014 Annual General Meeting	Bao Jian Xu Ke [2016] No. 289
20	19th amendment	May 30, 2019	2018 Annual General Meeting	Yin Bao Jian Fu [2019] No. 822

Chapter 1 General Provisions

Article 1.

China Life Insurance Company Limited (the “Company”) is a joint stock limited company established in accordance with the Insurance Law of the People’s Republic of China (the “Insurance Law”), the Company Law of the People’s Republic of China (the “Company Law”), the Securities Law of the People’s Republic of China (the “Securities Law”), the State Council’s Special Regulations on the Overseas Offering and Listing of Shares by Joint Stock Limited Companies (the “Special Regulations”), and other relevant national laws and administrative regulations.

The Company was established by way of promotion with China Life Insurance Company as the sole promoter, and with the approval of the former China Insurance Regulatory Commission (which was renamed as the China Banking and Insurance Regulatory Commission, the “CBIRC”), as evidenced by the approving document Bao Jian Fu [2003] No. 115. It is registered with, and has obtained a business license from, the State Administration for Industry and Commerce on June 30, 2003. The Company’s unified social credit code is 9110000071092841XX.

The promoter of the Company is China Life Insurance (Group) Company (“CLIC”).

The predecessor of China Life Insurance (Group) Company is China Life Insurance Company. China Life Insurance Company was changed to China Life Insurance (Group) Company after obtaining the approval of the former CIRC (Bao Jian Fu [2003] No. 108).

Article 2.

The registered Chinese name of the Company is: 中国人寿保险股份有限公司.

The short name for the registered Chinese name of the Company is: 中国人寿.

The English name of the Company is: China Life Insurance Company Limited.

The short name for the English name of the Company is: China Life.

Article 3.

Address of the Company:	16 Financial Street, Xicheng District, Beijing
Telephone Number:	010-63633333
Fax Number:	010-66575722
Post Code:	100033

Article 4.

The Company’s legal representative is the Chairman of the Board of Directors of the Company.

Article 5.

The Company is a joint stock limited company that has perpetual existence.

The shareholders of the Company shall exercise their rights and bear their liabilities to the extent of their respective shareholdings in the Company. The Company shall be liable for the debts of the Company to the extent of all the property of the Company.

The Company is an independent legal person under the jurisdiction and protection of the laws and administrative regulations of the People’s Republic of China.

Article 6.

Pursuant to the Company Law, the Insurance Law, the Special Regulations, the Mandatory Provisions Governing the Articles of Association of Overseas Listed Companies (hereinafter referred to as the “Mandatory Provisions”), the Guidelines on the Articles of Association of Listed Companies, the Guidelines on the Articles of Association of Insurance Companies and other applicable national laws and administrative regulations, the Company has amended its previous Articles of Association (the “Previous Articles of Association”) and formulated these Articles of Association (the “Company’s Articles of Association” or these “Articles of Association”) by a special resolution of the shareholders’ general meeting of the Company on May 30, 2019.

Article 7.

From the date on which these Articles of Association come into effect, they shall constitute a legally binding document regulating the Company’s organization and activities, and the rights and obligations between the Company and each shareholder and among the shareholders, and are binding on the Company and its shareholders, directors, supervisors, president, vice presidents (i.e. the manager and deputy manager as provided under the Company Law and the Mandatory Provisions) and other senior officers of the Company; all of whom are entitled, in accordance with the Company’s Articles of Association, to make claims with respect to the affairs of the Company.

A shareholder may take action against the Company pursuant to the Company’s Articles of Association. The Company may take action against shareholders, directors, supervisors, president, vice president and other senior officers of the Company pursuant to the Company’s Articles of Association. A shareholder may also take action against other shareholders and the directors, supervisors, president, vice presidents and other senior officers of the Company pursuant to the Company’s Articles of Association.

The actions referred to in the preceding paragraph include court proceedings and arbitrations.

“Other senior officers” as used in these Articles of Association refer to assistants to the president, the secretary to the Board of Directors, chief financial officer, chief compliance officer, chief risk officer, chief actuary, and audit controller of the Company, as well as other senior officers determined by the Board of Directors.

Article 8.

The Company must comply with laws and regulations, implement unified national financial guidelines and policies, and be subject to the supervision of the CBIRC.

Article 9.

The Company shall establish an organization of the Communist Party of China in accordance with the relevant requirements of the Constitution of the Communist Party of China and the Company Law. The Party Committee shall play the core leadership role, providing direction, managing the overall situation and ensuring implementation. The Company shall also establish the working organs of the Party, which shall be equipped with sufficient staff to deal with Party affairs and provided with sufficient funds to operate the Party organization.

Article 10.

The Company may invest in any other enterprise. However, unless otherwise stipulated by law, the Company shall not become an investor which, together with the other investors of the enterprise, shall be jointly and severally liable for the indebtedness of such enterprise.

Chapter 2 The Company’s Objectives and Scope of Business

Article 11.

The Company’s objectives are: to conform to the ideal of “mutual benefit” in operation; to observe the operational policy of fiduciary principle and steadfast operation; to improve the operation and management of the Company, with the concentration on economical benefits and market-oriented direction; to facilitate the continual healthy growth of the Company; and to ensure the interests of the Company, its employees and shareholders.

Article 12.

The Company’s scope of business shall be consistent with and subject to the scope of business approved by the insurance regulatory authority of the PRC and the authority responsible for company registrations.

The Company’s scope of business includes: life insurance, health insurance, accident insurance and other life insurance; reinsurance of life insurance; the operation of funds as allowed by laws or regulations or approved by the State Council; various services, consulting and agency businesses relating to life insurance; sales business of securities investment fund; and other business as approved by the insurance regulatory authority of the PRC.

The Company may, according to the demand and supply of domestic and international markets, the Company’s ability to develop and the requirements of the Company’s business, adjust its scope of business in accordance with laws.

Subject to compliance with the laws and administrative regulations of the People’s Republic of China (“PRC”), the Company has the power to raise and borrow money, which power includes, without limitation, borrowing money, issuance of corporate debt securities, collateralizing or pledging all or part of its interests and providing external guarantees in accordance with applicable regulatory provisions.

Chapter 3 Shares and Registered Capital

Article 13.

There must, at all times, be ordinary shares in the Company, which shall include Domestic-Invested and Foreign-Invested Shares. Subject to the approval by the company approving department authorized by the State Council, the Company may, according to its requirements, create different classes of shares.

Article 14.

The shares issued by the Company shall each have a par value of Renminbi one (1) yuan.

“Renminbi” means the lawful currency of the PRC.

Article 15.

Subject to the approval by the securities regulatory authority under the State Council, the Company may issue shares to Domestic Investors and Foreign Investors.

“Foreign Investors” means those investors who subscribe for the shares of the Company and who are located in foreign countries and in the regions of Hong Kong, Macau or Taiwan. “Domestic Investors” means those investors who subscribe for the shares of the Company and who are located within the territory of the PRC (excluding the regions of Hong Kong, Macau and Taiwan).

Article 16.

Shares which the Company issues to Domestic Investors for subscription in Renminbi shall be referred to as “Domestic-Invested Shares”. Shares which the Company issues to Foreign Investors for subscription in foreign currencies shall be referred to as “Foreign-Invested Shares”. Foreign-Invested Shares which are listed overseas are called “Overseas-Listed Foreign-Invested Shares”.

The aforementioned “foreign currencies” means the lawful currencies of countries or regions outside the PRC which are recognized by the State's foreign exchange authority and which can be used to pay the share purchase price to the Company.

The Domestic-Invested Shares of the Company are centrally deposited with the Shanghai Branch of China Securities Depository and Clearing Corporation Limited. The Overseas-Listed Foreign-Invested Shares of the Company are principally deposited with Hong Kong Securities Clearing Company Limited.

Domestic-Invested Shares issued by the Company shall be referred to as “A Shares”. Overseas-Listed Foreign-Invested Shares issued by the Company and which are listed in Hong Kong shall be referred to as “H Shares”. H Shares are shares that have been admitted for listing on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), the par value of which is denominated in Renminbi and which are subscribed for and traded in Hong Kong dollars. H Shares can also be listed on a stock exchange in the United States in the form of American Depository Receipts.

Article 17.

Subject to the approval of the approval authority authorized by the State Council, ordinary shares issuable by the Company may not exceed a total of 28,264,705,882 shares, of which 20 billion ordinary shares, representing 70.8% of the total number, were issued to CLIC, the promoter, at the time when the Company was established.

Information about the promoter of the Company and its shareholding in the Company at the time of establishment of the Company is set out in the table below:

Name ofthe promoter	Capital contribution (RMB in 100 million)	Number of shares Subscribed (100 million shares)	Percentage of the total share capital (%)	Form of capital contribution	Date of capital contribution
China Life Insurance (Group) Company	200	200	100	Net<br>asset	June 30,<br>2003

Article 18.

The share capital structure of the Company shall, following the initial public offering of H Shares by the Company, comprise 26,764,705,000 ordinary shares, of which 19,323,530,000 shares, which represent 72.2% of the Company’s share capital, will be held by CLIC, the promoter; and 7,441,175,000 shares, which represent 27.8% of the Company’s share capital, will be held by overseas shareholders.

After the aforesaid H Share issue, with the approvals of shareholders at the general meeting by way of special resolutions, and of approval authority authorized by the State Council, the Company has issued A Shares. Upon the aforesaid capital increase by issuing A Shares, the Company’s share capital structure is as follows:

The Company has issued a total of 28,264,705,000 ordinary shares, of which CLIC, as the promoter, holds 19,323,530,000 shares, representing approximately 68.4% of the total share capital, other holders of Domestic-Invested Shares hold 1,500,000,000 shares, representing approximately 5.3% of the total share capital, and overseas shareholders hold 7,441,175,000 shares, representing 26.3% of the total share capital.

After the issue of the above mentioned H Shares and A Shares has been completed, the share structure of the Company is set out as follows:

Full name/ classificationof shareholders	Classification of shares	Number of shares	Shareholding ratio (approximately)	Lock-up period	Remark
Shareholders holding<br>A Shares	A Shares	20,823,530,000	73.7%
Including: China<br>Life Insurance (Group) Company	A Shares	19,323,530,000	68.4%	From January 9, 2007 to January 11,<br>2010	On December 18, 2003, the<br>Company made an initial public offering of H Shares. CLIC sold 10% of the total number of offer shares pursuant to the Provisional Measures of the State Council on Reducing State Shares to Raise Social Security Funds (Guo Fa [2001] No.<br>22).
19 strategic<br>investors	A Shares	600,000,000	2.12%	From January 9, 2007 to January<br>9, 2008
279 institutional<br>investors through offline placement	A Shares	300,000,000	1.06%	From January 9, 2007 to April<br>10, 2007
Other shareholders<br>holding A Shares	A Shares	600,000,000	2.12%
Shareholders holding<br>H Shares	H Shares	7,441,175,000	26.3%
Total	A Shares and H Shares	28,264,705,000	100%

Article 19.

The Company’s Board of Directors may take all the necessary actions for the issuance of Overseas-Listed Foreign-Invested Shares and Domestic-Invested Shares after proposals for the issuance of the same have been approved by the securities regulatory authority under the State Council.

The Company may implement its proposal to issue Overseas-Listed Foreign- Invested Shares and Domestic-Invested Shares pursuant to the preceding paragraph within fifteen (15) months from the date of approval by the securities regulatory authority under the State Council.

Article 20.

When the total number of shares stated in the proposal for the issuance of shares includes Overseas-Listed Foreign-Invested Shares and Domestic-Invested Shares, such shares shall be fully subscribed for in a single time at their respective offerings. If the shares cannot be fully subscribed for in a single time due to special circumstances, the shares may, subject to approval by the securities regulatory authority under the State Council, be issued in separate batches.

Article 21.

The registered capital of the Company shall be RMB 28,264,705,000.

Article 22.

The Company may, based on its operating and development needs, authorize the increase of its capital pursuant to the Company’s Articles of Association.

The Company may increase its capital in the following ways:

(1)	by offering new shares for subscription to unspecified investors;
(2)	by placing new shares to its existing shareholders;
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(3)	by allotting bonus shares to its existing shareholders;
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(4)	by capitalizing the common reserve fund; and
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(5)	by other means as permitted by laws and administrative regulations.
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After the Company’s increase of share capital by means of the issuance of new shares has been approved in accordance with the provisions of the Company’s Articles of Association, the issuance thereof shall be made in accordance with the relevant national laws, administrative regulations, the relevant requirements of the CBIRC and other regulatory authorities, and the procedures specified in these Articles of Association.

Article 23.

Unless otherwise stipulated in the relevant laws and administrative regulations, shares in the Company shall be freely transferable and are not subject to any lien.

Chapter 4 Reduction of Capital and Repurchase of Shares

Article 24.

According to the provisions of the Company’s Articles of Association, the Company may reduce its registered capital.

Article 25.

The Company must prepare a balance sheet and a list of its assets when it reduces its registered capital.

The Company shall notify its creditors within ten (10) days of the date of the Company’s resolution for reduction of registered capital and shall publish an announcement in a newspaper within thirty (30) days of the date of such resolution. A creditor has the right, within thirty (30) days of receipt of the notice from the Company or, in the case of creditor who does not receive such notice, within forty-five (45) days of the date of announcement, to require the Company to repay its debts or to provide a corresponding guarantee for such debt.

The Company’s registered capital shall not, after the reduction of capital, be less than the minimum amount required by law.

The reduction by the Company of its registered capital shall be made in accordance with the Company Law, the relevant requirements of the CBIRC and other regulatory authorities, and the procedures specified in these Articles of Association.

Article 26.

The Company, in accordance with the procedures set out in the Company’s Articles of Association and upon the approval by the relevant governing authority of the State or other regulatory authorities, may repurchase its issued shares under the following circumstances:

(1)	cancellation of shares for the purpose of reducing its registered capital;
(2)	merging with another company that holds shares in the Company;
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(3)	applying shares for employee stock ownership plans or equity incentives;
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(4)	any shareholder requesting the Company to repurchase his shares due to his objection to any resolution adopted at the<br>shareholders’ general meeting in respect of the merger or division of the Company;
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(5)	applying shares for converting convertible corporate bonds issued by the Company;
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(6)	protecting the corporate value and the rights and interests of shareholders as the Company deems necessary;<br>or
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(7)	other circumstances permitted by laws and administrative regulations.
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Article 27.

The Company may repurchase shares in any of the following ways, with the approval of the relevant governing authority of the State or other regulatory authorities:

(1)	by making a repurchase offer to all of its shareholders on a pro rata basis;

(2)	by repurchasing shares through public dealing on a stock exchange;
(3)	by repurchasing shares by means of an off-market agreement; or
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(4)	by other ways that are permitted by laws, administrative regulations and securities regulatory authority of the State<br>Council.
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Where the Company repurchases its own shares, it shall fulfill the obligation of information disclosure pursuant to the requirements of the Securities Law. Where the Company purchases its own shares in the circumstance described in sub-paragraph (3), (5) or (6) of Article 26 hereof, it shall conduct such purchases through centralized public transaction.

Article 28.

The Company must obtain the prior approval of the shareholders at a general meeting (in the manner provided in the Company’s Articles of Association) before it can repurchase shares outside of the stock exchange by means of an off-market agreement. The Company may, by obtaining the prior approval of the shareholders at a general meeting (in the same manner as above), release, vary or waive its rights under an agreement that has been so entered into.

An agreement for the repurchase of shares referred to in the preceding paragraph includes (without limitation) an agreement to become liable to repurchase shares or an agreement to have the right to repurchase shares.

The Company may not assign an agreement for the repurchase of its shares or any right contained in such an agreement.

Article 29.

If the Company purchases its own shares due to any reason listed in sub-paragraph (1) or (2) of Article 26 hereof, it shall be resolved in a shareholders’ general meeting. If the Company purchases its own shares in the circumstance described in sub-paragraph (3), (5) or (6) of Article 26, it may be resolved by more than two-thirds of the directors present at a meeting of the Board of Directors pursuant to these Articles of Association or the authorization given by a shareholders’ general meeting. After the Company purchases its own shares in accordance with the requirements set out in Article 26, and if the purchase is made as described in sub-paragraph (1) of Article 26, the shares purchased shall be cancelled within ten (10) days after the purchase. If the purchase is made as described in sub-paragraph (2) or (4), the shares purchased shall be transferred or cancelled within six (6) months. If the purchase is made as described in sub-paragraph (3), (5) or (6), the aggregate number of shares held by the Company shall not exceed 10% of the total issued shares of the Company, and such shares shall be transferred or cancelled within three (3) years.

The aggregate par value of the cancelled shares shall be deducted from the Company’s registered capital.

The Company shall report any change of its registered capital to the CBIRC for approval and complete the registration of such change with the registration authority according to law.

Article 30.

Unless the Company has entered the course of liquidation, it shall comply with the following provisions in relation to a repurchase of its issued shares:

(1)	where the Company repurchases shares at par value, payment shall be made out of book surplus distributable profits of<br>the Company or out of the proceeds of a new issue of shares made for that purpose;
(2)	where the Company repurchases shares of the Company at a premium to its par value, payment up to the par value shall be<br>made out of book surplus distributable profits of the Company or out of the proceeds of a new issue of shares made for that purpose. Payment of the portion in excess of the par value shall be effected as follows:
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(I).	if the shares being repurchased were issued at par value, payment shall be made out of the book surplus of its<br>distributable profits;
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(II).	if the shares being repurchased were issued at a premium to its par value, payment shall be made out of the book<br>surplus of its distributable profits or out of the proceeds of a new issue of shares made for that purpose, provided that the amount paid out of the proceeds of the new issue shall not exceed the aggregate amount of the premiums received by the<br>Company on the issue of the shares repurchased nor shall it exceed the book value of the Company’s capital common reserve account (including the premiums on the new issue) at the time of the repurchase;
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(3)	The Company shall make the following payment out of the Company’s distributable profits:
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(I).	payment for the acquisition of the right to repurchase its own shares;
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(II).	payment for the variation of any contract for the repurchase of its shares;
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(III).	payment for the release of its obligation(s) under any contract for the repurchase of shares;
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(4)	After the Company’s registered capital has been reduced by the aggregate par value of the cancelled shares in<br>accordance with the relevant provisions, the amount deducted from the distributable profits of the Company for payment of the par value of shares which have been repurchased shall be transferred to the account of Company’s capital common<br>reserve.
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Chapter 5 Financial Assistance for Acquisition of Shares

Article 31.

The Company and its subsidiaries shall not, at any time, provide any form of financial assistance to a person who is acquiring or proposes to acquire shares in the Company. This includes any person who directly or indirectly incurs obligations as a result of acquiring shares in the Company (the “Obligor”).

The Company and its subsidiaries shall not, at any time, provide any form of financial assistance to the Obligor for the purposes of reducing or discharging the obligations assumed by such person.

This Article shall not apply to the circumstances specified in Article 33 this Chapter.

Article 32.

For the purpose of this Chapter, “financial assistance” includes (but is not limited to) the following:

(1)	gift;
(2)	guarantee (including the assumption of liabilities by the guarantor or the provision of assets by the guarantor to<br>secure the performance of obligations by the Obligor), compensation (other than the compensation in respect of the Company’s own fault), or release or waiver of any rights;
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(3)	provision of loan or any other agreement under which the obligations of the Company are to be fulfilled before the<br>obligations of another party, or the change in parties to, or the assignment of the rights under, such loan or agreement; and
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(4)	any other form of financial assistance given by the Company when the Company is insolvent or has no net assets or when<br>its net assets would thereby be reduced to a material extent.
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For the purpose of this Chapter, “assumption of obligations” includes the assumption of obligations by way of contract or by way of arrangement (irrespective of whether such contract or arrangement is enforceable or not and irrespective of whether such obligation is to be borne solely by the Obligor or jointly with other persons) or by any other means which results in a change in the financial situation.

Article 33.

The following actions shall not be deemed to be activities prohibited by Article 31 this Chapter:

(1)	the provision of financial assistance by the Company where the financial assistance is given in good faith in the<br>interests of the Company, and the principal purpose of which is not for the acquisition of shares in the Company, or the giving of financial assistance is an incidental part of a particular plan of the Company;

(2)	the lawful distribution of the Company’s assets by way of dividend;
(3)	the distribution of share dividends;
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(4)	a reduction of registered capital, a repurchase of shares of the Company or a reorganization of the shareholding<br>structure of the Company effected in accordance with the Company’s Articles of Association;
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(5)	the lending of money by the Company within its scope of business and in the ordinary course of its business (provided<br>that the net assets of the Company are not thereby reduced or that, to the extent that the assets are thereby reduced, the financial assistance is provided out of the distributable profits); and
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(6)	contributions made by the Company to the employee share ownership schemes (provided that the net assets of the Company<br>are not thereby reduced or that, to the extent that the assets are thereby reduced, the financial assistance is provided out of the distributable profits).
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Chapter 6 Share Certificates and Register of Shareholders

Article 34.

The share certificates of the Company shall be in registered form.

The share certificates of the Company shall, in addition to the matters required by the Company Law and the Special Regulations, also contain other matters required to be stated therein by the stock exchange(s) on which the Company’s shares are listed.

Article 35.

Share certificates of the Company shall be signed by the Chairman of the Company’s Board of Directors. Where the stock exchange(s) on which the Company’s shares are listed require other senior officer(s) of the Company to sign on the share certificates, the share certificates shall also be signed by such senior officer(s). The share certificates shall take effect after being sealed with the seal of the Company. The share certificates shall only be sealed with the Company’s seal under the authorization of the Board of Directors. The signatures of the Chairman of the Board of Directors or other senior officer(s) may be printed in mechanical form.

Article 36.

The Company shall not accept its shares being held as security under a pledge.

Article 37.

Shares of the Company may be legally transferred but the transfer shall be in compliance with the relevant requirements of the CBIRC and the relevant regulatory authorities and the provisions of these Articles of Association.

The directors, supervisors, president, vice president and other senior officers of the Company shall report to the Company their shareholdings in the Company and any changes thereto, and shall not transfer more than 25% of their total shares in the Company each year during their terms of office, save for the changes in shareholding caused by judicial enforcement, inheritance, bequest and legal division of assets. Any of the directors, supervisors, presidents, vice presidents and other senior officers of the Company who holds not more than 1,000 shares in the Company may transfer all of their shares at one time without being subject to the restriction on transfer ratio as mentioned above.

Under any of the following circumstances, the directors, supervisors, president, vice president and other senior officers of the Company shall not transfer their shares in the Company:

(1)	within one (1) year of the date of listing of the Company’s shares;
(2)	within six (6) months after the directors, supervisors, president, vice president and other senior officers of the<br>Company leave office;
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(3)	if the directors, supervisors, president, vice president and other senior officers of the Company undertake not to<br>transfer any share during a certain period, within such period; or
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(4)	other circumstances as set out by laws, regulations, the securities regulatory authority under the State Council and<br>the stock exchanges.
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Article 38.

Where directors, supervisors, president, vice president and other senior officers of the Company and any shareholder holding more than 5% of the voting shares in the Company, through selling his shares in the Company within a period of six (6) months following the purchase of such shares or through repurchasing shares issued by the Company within a period of six (6) months following the sale of his shares, proceeds obtained therefrom shall belong to the Company and be recovered by the Board of Directors of the Company. The six-month period restrictions shall not apply to a securities company that holds more than 5% of the shares in the Company due to its purchase of any remaining shares as the underwriter.

Where the Board of Directors of the Company fails to comply with the foregoing, the shareholders shall have the right to demand the Board of Directors to do so within thirty (30) days. If the Board of Directors of the Company fails to do so within the prescribed time period, the shareholders shall have the right to directly initiate legal proceedings at the court in their own names for the interest of the Company.

Where the Board of Directors of the Company does not act as provided in the first paragraph above, the responsible directors shall be jointly and severally liable.

Article 39.

The Company shall keep a register of shareholders which shall contain the following particulars:

(1)	the name (title), the address (residence), the occupation or nature of each shareholder;
(2)	the class and quantity of shares held by each shareholder;
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(3)	the amount paid up or agreed to be paid up for the shares held by each shareholder;
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(4)	the share certificate number of the shares held by each shareholder;
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(5)	the date on which each shareholder was entered in the register as a shareholder of the Company;<br>and
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(6)	the date on which each shareholder ceases to be a shareholder.
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Unless there is evidence to the contrary, the register of shareholders shall be sufficient evidence of the shareholders’ shareholdings in the Company.

Article 40.

The Company may, in accordance with mutual understanding and agreements made between the securities regulatory authority under the State Council and overseas securities regulatory authorities, maintain the register of shareholders of Overseas-Listed Foreign-Invested Shares overseas and appoint overseas agent(s) to manage such register of shareholders. The original register of shareholders for holders of H Shares shall be maintained in Hong Kong.

A duplicate copy of the register of shareholders for the holders of Overseas-Listed Foreign-Invested Shares shall be maintained at the Company. The appointed overseas agent(s) shall ensure consistency between the original and the duplicate copy of the register of shareholders at all times.

If there is any inconsistency between the original and the duplicate copy of the register of shareholders for the holders of Overseas-Listed Foreign-Invested Shares, the original register of shareholders shall prevail.

Article 41.

The Company shall have a complete register of shareholders, which shall include the following parts:

(1)	the register of shareholders which is maintained at the Company’s residence (other than those share registers<br>which are described in sub- paragraphs (2) and (3) of this Article);
(2)	the register of shareholders in respect of the holders of Overseas-Listed Foreign-Invested Shares of the Company which<br>is maintained at the overseas stock exchange(s) on which the shares are listed; and
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(3)	the registers of shareholders which are maintained in such other places as the Board of Directors may consider<br>necessary for the purpose of listing the Company’s shares.

Article 42.

Different parts of the register of shareholders shall not overlap. No transfer of any shares registered in any part of the register shall, during the continuance of that registration, be registered in any other part of the register.

Amendment or rectification of the register of shareholders shall be made in accordance with the laws of the place where the register of shareholders is maintained.

Article 43.

All Overseas-Listed Foreign-Invested Shares shall be transferred by a written instrument in a usual or common form or any other form that the Board of Directors may approve. The instrument of transfer of any share may be executed by hand without seal. Where the shareholder is a clearing house or a nominee of the clearing house recognized by the Hong Kong Law (the “Recognized Clearing House”), the share transfer instrument may be executed in mechanically-printed form.

All Overseas-Listed Foreign-Invested Shares listed in Hong Kong which have been fully paid up, may be freely transferred in accordance with the Company’s Articles of Association; provided, however, unless such transfer complies with the following requirements, the Board of Directors may refuse to recognize any instrument of transfer and will not need to provide any reason therefore:

(1)	a fee of HK$2.50 per instrument of transfer, or such higher amount as the Board of the Directors may from time to time<br>require but not exceeding the amount permitted from time to time by the Listing Rules of Stock Exchange, shall have been paid up to the Company for registration for the instrument of transfer and other documents relating to or which will affect the<br>right of ownership of the shares;
(2)	the instrument of transfer shall only relate to Overseas-Listed Foreign- Invested Shares listed in Hong<br>Kong;
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(3)	the stamp duty which is chargeable on the instrument of transfer shall have been paid;
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(4)	the relevant share certificate(s) and any other certificates that the Board of Directors may require to evidence that<br>the transferor has the right to transfer the shares shall have been provided;
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(5)	if it is intended that the shares be transferred to joint owners, the maximum number of joint owners shall not be more<br>than four (4); and
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(6)	the Company shall not have any lien over the relevant shares.

If the Company refuses to register any transfer of shares, the Company shall within two (2) months of the formal application for the transfer, provide the transferor and the transferee with a notice of refusal to register such transfer.

Article 44.

No change may be made in the register of shareholders of H shares for the purpose of share transfer within thirty (30) days prior to the date of a shareholders’ general meeting, or within five (5) days prior to the record date for the Company’s distribution of dividends. Any changes in the register of shareholders of A Shares shall be subject to applicable provisions of PRC laws and regulations.

Article 45.

When the Company needs to determine the rights attached to the shares of the Company for the purposes of convening a shareholders’ meeting, dividend distribution, liquidation, or for any other purpose, the Board of Directors shall decide on a date for the determination of rights attached to the shares of the Company. The shareholders of the Company shall be such persons who appear in the register of shareholders at the close of such date.

Article 46.

Any person aggrieved or claiming to be entitled to have his name (title) to be entered in or removed from the register of shareholders may apply to a court of competent jurisdiction for rectification of the register.

Article 47.

Any person who is a registered shareholder or claims to be entitled to have his name (title) to be entered in the register of the shareholders in respect of shares of the Company may, if his share certificate (the “Original Share Certificate”) relating to the shares is lost, apply to the Company for a replacement share certificate in respect of such shares (the “Relevant Shares”).

An application by a holder of Domestic-Invested Shares, who has lost his share certificate, for a replacement share certificate shall be dealt with in accordance with Article 143 of the Company Law.

An application by a holder of Overseas-Listed Foreign-Invested Shares, who has lost his share certificate, for a replacement share certificate may be dealt with in accordance with the law of the place where the original register of shareholders of holders of Overseas-Listed Foreign-Invested Shares is maintained, the rules of the stock exchange or other relevant regulations.

The issue of a replacement share certificate to a holder of H Shares, who has lost his share certificate, shall comply with the following requirements:

(1)	The applicant shall submit an application to the Company in a prescribed form accompanied by a notarial certificate or a statutory declaration<br>stating the ground upon which the application is made and the circumstances and evidence of the loss, and declaring that no other person is entitled to have his name entered in the register of shareholders in respect of the Relevant<br>Shares;
(2)	The Company must not have received any declaration made by any person other than the applicant declaring that his name shall be entered into<br>the register of shareholders in respect of such shares before it may issue a replacement share certificate to the applicant;
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(3)	The Company shall, if it intends to issue a replacement share certificate, publish a notice of its intention to do so at least once every<br>thirty (30) days within a period of ninety (90) days in such newspaper as prescribed by the Board of Directors;
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(4)	The Company shall, prior to publication of its intention to issue a replacement share certificate, deliver to the stock exchange on which its<br>shares are listed, a copy of the notice to be published, and may publish the notice upon receipt of confirmation from such stock exchange that the notice has been exhibited in the premises of the stock exchange. Such notice shall be exhibited in the<br>premises of the stock exchange for a period of ninety (90) days.
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In the case of an application which is made without the consent of the registered holder of the Relevant Shares, the Company shall deliver by mail to such registered shareholder a copy of the notice to be published;

(5)	If, by the expiration of the 90-day period referred to the paragraphs (3) and (4) of this Article, the Company has not received any challenge<br>from any person in respect of the issuance of the replacement share certificate, it may issue a replacement share certificate to the applicant pursuant to his application;
(6)	Where the Company issues a replacement share certificate pursuant to this Article, it shall forthwith cancel the Original Share Certificate and<br>record the cancellation of the Original Share Certificate and the issuance of a replacement share certificate in the register of shareholders accordingly; and
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(7)	All expenses relating to the cancellation of an Original Share Certificate and the issuance of a replacement share certificate shall be borne<br>by the applicant, and the Company shall be entitled to refuse to take any action until reasonable security is provided by the applicant therefore.
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Article 48.

Where the Company issues a replacement share certificate pursuant to the Company’s Articles of Association and a bona fide purchaser acquires or becomes the registered owner of such shares, his name (title) shall not be removed from the register of shareholders.

Article 49.

The Company shall not be liable for any damages sustained by any person by reason of the cancellation of the original share certificate or the issuance of the replacement share certificate unless the claimant can prove that the Company has acted in a deceitful manner.

Chapter 7 Party Organization (Party Committee)

Article 50.

The Company shall establish the committee of the Communist Party of China Life Insurance Company Limited (the “Party Committee”). The Party Committee shall consist of one secretary, one deputy secretary and several other members. The Chairman of the Board of Directors shall serve as the secretary to the Party Committee. If, however, the Chairman of the Board of Directors mainly works at the shareholder entity, the president may also serve as the secretary to the Party Committee. One (1) deputy secretary shall be designated to assist the secretary in carrying out the Party building work. Eligible members of the Party Committee may take seats in the Board of Directors, the Board of Supervisors and the senior management through legal procedures, while eligible members of the Board of Directors, the Board of Supervisors and the senior management may take seats in the Party Committee in accordance with the relevant rules and procedures. A discipline inspection committee shall also be established in accordance with the relevant requirements.

Article 51.

The Party Committee shall perform the following duties in accordance with the internal rules and regulations of the Party such as the Constitution of the Communist Party of China:

(1)	To ensure and supervise the Company’s implementation of guidelines and policies of the Party and the State, and implement major strategic<br>decisions of the Central Committee of the Party and the State Council, as well as important work arrangements of the Party organizations of higher levels;
(2)	To strengthen its leadership and gate keeping role in the process of selection and appointment of personnel, focus on standards, procedures,<br>inspection, recommendation and supervision, and adhere to the principle of the Party supervising the performance of officials while ensuring the lawful selection by the Board of Directors of the senior management and the lawful exercise of the power<br>of the senior management in the employment of personnel;
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(3)	To research and discuss the reform, development and stability of the Company, major operational and management issues and major issues<br>concerning employees’ interests, and provide comments and suggestions; to support the shareholders’ general meeting, the Board of Directors, the Board of Supervisors and the senior management in performing their duties in accordance with<br>law, and support the employee representative meeting in carrying out its work;
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(4)	To undertake the main responsibility of comprehensive and strict Party management; to lead the Company’s ideological and political work,<br>united front work, spiritual civilization construction, corporate culture cultivation, as well as the work of groups such as the labor union and the Communist Youth League; to lead the construction of the Party’s working style and its clean<br>and honest administration, and support the discipline inspection committee in earnestly performing its supervisory responsibilities;
(5)	To strengthen the Company’s grassroots Party organizations and their team building, give full play to the role of the Party branches as<br>strongholds and to the role of the Party members as pioneers and fine examples, and unite and lead officials and employees to devote themselves into the reform and development of the Company; and
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(6)	To handle other important matters within the scope of duties of the Party Committee.
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Chapter 8 Shareholders’ Rights and Obligations

Article 52.

A shareholder of the Company is a person who lawfully holds shares in the Company and whose name (title) is entered in the register of shareholders.

A shareholder shall enjoy rights and assume obligations according to the class and amount of shares held by him. Shareholders who hold shares of the same class shall enjoy the same rights and assume the same obligations.

Article 53.

The ordinary shareholders of the Company shall enjoy the following rights:

(1)	the right to receive dividends and other distributions in proportion to the number of shares held;
(2)	the right to request, convene, preside over, attend or appoint a proxy to attend shareholders’ general meetings according to law and to<br>vote thereat;
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(3)	the right that enables the shareholders individually or jointly holding 3% or more of the Company’s shares to nominate directors or<br>supervisors;
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(4)	the right of supervisory management over the Company’s business operations and the right to present proposals or to raise queries<br>according to law;
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(5)	the right to transfer, donate or pledge shares in accordance with laws, administrative regulations, and provisions of the Company’s<br>Articles of Association;
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(6)	the right to obtain relevant information in accordance with provisions of the Company’s Articles of Association,<br>including:
(I)	the right to obtain a copy of the Company’s Articles of Association, subject to payment of costs; and
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(II)	the right to inspect and copy, subject to payment of a reasonable fee:
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(i)	all parts of the register of shareholders;
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(ii)	personal particulars of directors, supervisors, president, vice presidents and other senior officers of the Company,<br>including:
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a.	present and former name and alias;
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b.	principal address (place of residence);
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c.	nationality;
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d.	primary and all other part-time occupations and duties;
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e.	identification documents and numbers thereof.
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(iii)	financial reports;
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(iv)	report on the state of the Company’s share capital;
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(v)	reports showing the aggregate par value, number of shares, highest and lowest price paid in respect of each class of shares repurchased by the<br>Company since the end of the last accounting year and the aggregate amount paid by the Company for this purpose;
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(vi)	minutes of shareholders’ general meetings;
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(vii)	counterfoils of company debt securities, resolutions of the Board of Directors’ meetings, resolutions of the Board of Supervisors’<br>meetings.
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(7)	in the event of the termination or liquidation of the Company, the right to participate in the distribution of surplus assets of the Company in<br>accordance with the number of shares held;
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(8)	the right to request the Company to purchase shares held by the shareholders if such shareholders object to the resolution on the merger or<br>division of the Company at the shareholders’ general meeting;
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(9)	the right to request the record and change of the register of members;
(10)	the right to file a suit to the court against acts which are detrimental to the Company’s interest or have infringed the lawful rights<br>and interest of shareholders and to claim the relevant rights pursuant to the Company Law or other applicable laws and administrative regulations; and
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(11)	other rights conferred by laws, administrative regulations and the Company’s Articles of Association.
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Shareholders who submit a request to access or inspect any information mentioned in the preceding paragraph shall provide to the Company such relevant written documents to prove the class and number of shares they hold in the Company. The Company shall provide such information as requested by the shareholders after verifying their identity.

Article 54.

If any resolution of the shareholders’ general meeting or Board of Directors of the Company violates the laws or administrative regulations, the shareholders shall have the right to submit to a court to nullify such resolution.

The controlling shareholder or actual controller of the Company shall not restrict or hinder medium and small investors from exercising their rights to vote, or harm the legitimate interest of the Company or the medium and small investors.

If the convening procedures or voting methods for the general meeting or the board meeting violate the laws, administrative regulations, the Company’s Articles of Association, or any content of the resolution thereof violates the Company’s Articles of Association, the shareholders shall have the right to submit to a court within sixty (60) days after such a resolution is made to revoke it.

Article 55.

If the directors, president, vice president and other senior officers of the Company have, while performing their duties of the Company, violated any laws, administrative regulations or provisions of the Company’s Articles of Association, and the Company has suffered losses as a result, any shareholders individually or jointly holding in aggregate more than 1% of the shares in the Company for a consecutive period of one hundred and eighty (180) days shall have the right to request the Supervisory Board in writing to initiate legal proceedings at a court. If the Supervisory Board has, while performing its duties, violated any laws, administrative regulations or provisions of the Company’s Articles of Association, and the Company has suffered losses as a result, the shareholders may request the Board of Directors in writing to initiate legal proceedings at a court.

Where the Supervisory Board or the Board of Directors rejects to do so, or does not initiate legal proceedings within thirty (30) days after the receipt of the written request from the shareholders, or where it is an emergency and not initiating legal proceedings forthwith will cause irreparable damage to the Company’s interest, the shareholders in the preceding paragraph shall have the right to directly initiate in their own names legal proceedings at a court.

If anyone infringes upon the Company's interest, and the Company has suffered any losses as a result, the shareholders in the first paragraph above shall have the right to initiate legal proceedings at a court according to the preceding two paragraphs.

Article 56.

If the directors, president, vice president and other senior officers of the Company have violated any laws, administrative regulations or provisions of these Articles of Association and impaired the interest of the shareholders, the shareholders may initiate legal proceedings at a people’s court.

In the event that any director, supervisor or senior officers violates laws and regulations, regulatory requirements or these Articles of Association to the detriment to the interests of the Company or shareholders, shareholders are entitled to report the issue directly to the CBIRC.

Article 57.

The ordinary shareholders of the Company shall assume the following obligations:

(1)	to comply with laws and regulations, regulatory requirements and the Company’s Articles of Association;
(2)	to pay subscription monies according to the number of shares subscribed and the method of subscription;
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(3)	the capital contribution and holding of shares shall comply with the regulatory requirements and shares shall not be held on behalf of others<br>and in excess of the required ratio;
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(4)	not to return any shares unless otherwise provided by laws or regulations;
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(5)	to be liable for the Company’s liabilities up to the amount of its capital contribution;
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(6)	not to abuse the shareholders’ rights to impair the interest of the Company or other shareholders, not to abuse the legal person status<br>of the Company or the shareholders’ limited liability to impair the interest of creditors of the Company.
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Shareholders of the Company shall be liable for making compensation for any loss suffered by the Company or other shareholders arising from their abuse of shareholders’ rights in accordance with law.

Shareholders of the Company who abuse the legal person status of the Company and the shareholders’ limited liability to evade debts and seriously impair the interest of creditors of the Company shall be jointly and severally liable for the debts of the Company;

(7)	shareholders shall support the Company to improve its solvency when the solvency of the Company fails to satisfy the regulatory<br>requirements;
(8)	shareholders who hold more than 5% of shares of the Company shall inform the Company of the identity of its controlling shareholder and actual<br>controller, and shall also inform the Company in writing of any changes of its controlling shareholder or actual controller, as well as its related parties and connected relationship after such changes, within five (5) working days upon occurrence<br>of the changes, and shall perform the procedures in accordance with regulatory requirements; when the Company’s shares held by a shareholder and its concerted parties reach or exceed 5% of the issued shares of the Company, they shall perform<br>the procedures in accordance with the relevant laws and regulations such as the Securities Law;
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(9)	in the event that shareholders who hold more than 5% of shares of the Company are involved in significant matters such as merger, division,<br>dissolution, bankruptcy, closure, being taken over, or the occurrence of changes in their legal representative, company name, place of operation, business scope and other significant matters, they shall inform the Company in writing within fifteen<br>(15) working days after the occurrence of the foregoing;
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(10)	to obey and implement the resolutions passed at the shareholders’ general meetings;
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(11)	to cooperate with regulatory authorities to carry out investigations and risk disposition in the event of the occurrence of a risk event or a<br>material non-compliance of the Company;
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(12)	shareholders who pledge their shares in the Company shall not prejudice the interests of other shareholders and the Company, and shall not<br>appoint pledgees or its related parties to exercise their voting rights;
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(13)	other obligations imposed by laws, administrative regulations and the Company’s Articles of Association.
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Shareholders are not liable to make any further contribution to the share capital other than according to the terms that were agreed by the subscriber of the relevant shares at the time of subscription.

Article 58.

If any shareholder who holds 5% or more of the voting shares of the Company pledges or releases the pledge of its shares, such shareholder shall report such pledge or release to the Board of Directors of the Company in writing on the date on which the pledge or release is made.

If there is any connected relationship created among shareholders holding 5% or more of shares in the Company, such shareholders shall report it to the Board of Directors of the Company in writing on the date on which the relationship is created.

If any shareholder holds 5% or more of shares in the Company and such shares are involved in any litigation or arbitration, such shareholder shall report it to the Board of Directors of the Company on its own initiative on the date of its awareness of such event, and shall cooperate with the Company to perform the information disclosure obligation.

Article 59.

In the event that shareholders’ capital contribution and other actions are in violation of laws and regulations, and the relevant regulatory requirements, shareholders shall not exercise their shareholders’ rights such as voting rights, dividend rights and nomination rights, and shall undertake to accept the regulatory measures taken by the CBIRC against them, such as the restriction on shareholders’ rights and the order to transfer shares.

Article 60.

In addition to the obligations imposed by law and administrative regulation or the listing rules of the stock exchange on which the Company’s shares are listed, a controlling shareholder (as defined in the following Article) shall not exercise his voting rights in respect of the following matters in a manner prejudicial to the interests of all or part of the shareholders of the Company:

(1)	to relieve a director or supervisor of his duty to act honestly in the best interests of the Company;
(2)	to approve the expropriation by a director or supervisor (for his own benefit or for the benefit of another person) of the Company’s<br>assets by any method, including (without limitation) opportunities which are beneficial to the Company; or
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(3)	to approve the expropriation by a director or supervisor (for his own benefit or for the benefit of another person) of the individual rights of<br>other shareholders, including (without limitation) the rights to distributions and voting rights (save pursuant to a restructuring which has been submitted for approval by the shareholders in a general meeting in accordance with the Company’s<br>Articles of Association).
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Article 61.

For the purpose of the foregoing Article, a “controlling shareholder” means a person who satisfies any one of the following conditions:

(1)	a person who, acting alone or in concert with others, has the power to elect more than half of the Board of Directors;
(2)	a person who, acting alone or in concert with others, has the power to control the exercise of 30% or more of the voting rights in the<br>Company;
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(3)	a person who, acting alone or in concert with others, holds 30% or more of the issued and outstanding shares of the Company;<br>or
(4)	a person who, acting alone or in concert with others, has de facto control of the Company in any other way.
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For the purpose of this Article, “acting in concert” means that two (2) or more persons, by way of agreement (either verbal or written), agree to obtain or consolidate the control of the Company through the obtaining of the voting right over the Company by any of such persons.

Article 62.

The controlling shareholder and actual controller of the Company shall not impair the interest of the Company through their connected relationship. In the event of any violation of the above, they shall be liable for any losses suffered by the Company arising therefrom.

The controlling shareholder and actual controller of the Company shall have fiduciary duty to the Company and its public shareholders. The controlling shareholder shall exercise its right strictly under the law as a capital contributor. The controlling shareholder shall not impair the legal rights of the Company and its public shareholders through connected transactions, profit distribution, asset restructuring, external investment, fund appropriation, loan and guarantee, and use of insurance funds, nor impair the interests of the Company and its public shareholders through its controlling position.

The controlling shareholder shall effectively manage the personnel concurrently working in the controlling shareholder and the Company to prevent any conflict of interest. Employees of the controlling shareholder shall not concurrently serve as the executive directors and senior officers of the Company, except for the chairman of the board of directors of the controlling shareholder.

Article 63.

If the solvency of the Company fails to satisfy the regulatory requirements, shareholders shall be under an obligation to improve the solvency of the Company. In the event of any of the following circumstances, shareholders who are unable to or do not intend to increase their capital contributions shall agree that other shareholders or investors may adopt reasonable measures and increase their capital contributions so as to improve the solvency:

(1)	the CBIRC orders the Company to increase its capital;
(2)	the Company must increase its capital as its solvency fails to meet the regulatory requirements even if it adopts other<br>measures.
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Chapter 9 Shareholders’ General Meetings

Article 64.

The shareholders’ general meeting is the organ of authority of the Company, and shall exercise its functions and powers in accordance with law.

Article 65.

The shareholders’ general meeting shall have the following functions and powers:

(1)	to decide on the Company’s operational policies and investment plans;
(2)	to elect and replace directors who are not employee representatives and to decide on the matters relating to the remuneration of the<br>directors;
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(3)	to elect and replace supervisors who are not employee representatives and to decide on the matters relating the remuneration of the<br>supervisors;
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(4)	to examine and approve the Board of Directors’ reports;
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(5)	to examine and approve the Board of Supervisors’ reports;
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(6)	to examine and approve the Company’s proposed annual preliminary and financial budgets;
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(7)	to examine and approve the Company’s profit distribution plans and loss recovery plans;
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(8)	to decide on the increase or reduction of the Company’s registered capital;
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(9)	to decide on the merger, division, dissolution, liquidation or change of the form of the Company;
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(10)	to decide on the issuance of debentures or other negotiable securities by the Company and the listing of the Company;
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(11)	to decide on the appointment, dismissal or non-reappointment of accounting firms of the Company who conduct regular and statutory audit on the<br>Company’s financial reports;
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(12)	to amend the Company’s Articles of Association, and to consider the Procedural Rules for the Shareholders’ General Meetings and the<br>Procedural Rules for the Board of Directors’ Meetings and the Board of Supervisors’ Meetings;
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(13)	to consider motions raised by shareholders who represent 3% or more of the voting shares of the Company;
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(14)	to consider and approve matters in relation to guarantees as provided under Article 66;
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(15)	to decide on the acquisition of shares of the Company;
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(16)	to consider matters in relation to the Company’s establishment of legal entity, material external investment, acquisition of material<br>assets, disposal and write-off of material assets, and pledge of material assets;
(17)	to consider the Company’s purchase or sale of material assets within one year, which exceeds 30% of the latest audited total assets of<br>the Company;
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(18)	to consider and approve matters in relation to the change of use of the capital raised;
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(19)	to consider the equity-based incentive plan; and
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(20)	to decide on other matters which, according to laws, administrative regulations or the Company’s Articles of Association, need to be<br>approved by shareholders in general meetings.
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The above-mentioned functions and powers of the shareholders’ general meeting shall not be exercised by the Board of Directors, other organizations or individuals through authorization.

The legal entity described in sub-paragraph (16) of this Article refers to the domestic or foreign company which is established with the direct investment by the Company and over which the Company exercise control; the “material” investments specified in this Article and these Articles of Association shall: (1) include any investment where any of the applicable assets, consideration, profits, revenue or equity ratio as prescribed by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited from time to time is over 25%; (2) include any investment where any of the applicable transaction amount ratio and net profit ratio as prescribed by the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange from time to time is over 50% (including but not limited to external investment, acquisition or sale of assets, pledge of assets, write-off of assets, entrusted wealth management, external guarantee, connected transaction, etc.); and (3) exclude the investments otherwise provided by the internal governance documents of the Company.

Article 66.

Any of the external guarantees provided by the Company shall be in compliance with regulatory provisions and reviewed and approved by the shareholders’ general meeting.

Article 67.

The Company shall not, without the prior approval of shareholders in a general meeting, enter into any contract with any person (other than the directors, supervisors, president, vice presidents, or other senior officers) pursuant to which such person shall be responsible for the management and administration of the whole or any substantial part of the Company’s business.

Article 68.

Shareholders’ general meetings shall be divided into annual general meetings and extraordinary general meetings. Shareholders’ general meetings shall be convened by the Board of Directors. Shareholders’ annual general meetings shall be held once every year and within six (6) months from the end of the preceding fiscal year.

The Board of Directors shall convene an extraordinary general meeting within two (2) months of the occurrence of any one of the following events:

(1)	where the number of the directors is less than the number stipulated in the Company Law or two-thirds of the number specified by the<br>Company’s Articles of Association;
(2)	where the unrecovered losses of the Company amount to one-third of the total amount of its paid-in share capital;
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(3)	where shareholder(s), individually or in aggregate, holding 10% or more of the Company’s issued and outstanding voting shares request(s)<br>in writing for the convening of an extraordinary general meeting;
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(4)	wherever the Board of Directors deems necessary, or more than half of directors (including at least two (2) independent directors) or the<br>Supervisory Board so requests; or
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(5)	such other case as maybe required by applicable laws, administrative regulations, rules or these Articles of<br>Association.
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Article 69.

A venue shall be fixed for a shareholders’ general meeting. The shareholders’ general meeting shall take the form of a physical meeting. The Company shall hold the shareholders’ general meeting at the address of the Company or such venue as specified in the notice of the shareholders’ general meeting.

Where the shareholders’ general meeting is ensured to be legal and valid, the voting may be conducted through the internet and other methods may be adopted at the shareholders’ general meeting, for the purpose of convenience. Any shareholder participating in the shareholders’ general meeting through the above-mentioned methods shall be deemed to be present at such meeting.

The Procedural Rules for the Shareholders’ General Meetings will specify the method to confirm the identity of the shareholders who participate in the shareholders’ general meeting through the above-mentioned methods including the voting conducted through the internet.

The voting conducted through the internet shall not apply to the holders of Overseas-Listed Foreign-Invested Shares in the Company.

No meeting shall be convened by way of communication voting in respect of any proposals which shall be passed by special resolutions on the shareholders’ general meeting.

Article 70.

More than half of and no less than two (2) independent directors shall have the right to propose to the Board of Directors to convene an extraordinary general meeting. With respect to the proposal for convening an extraordinary general meeting by independent directors, the Board of Directors shall, in accordance with laws, administrative regulations and these Articles of Association, give a written reply on whether to convene the extraordinary general meeting or not within ten (10) days upon receipt of the proposal.

If the Board of Directors agrees to convene an extraordinary general meeting, it shall send out a notice of the extraordinary general meeting within five (5) days after the resolution of the Board of Directors is made. If the Board of Directors does not agree to convene an extraordinary general meeting, independent directors shall report it to the CBIRC and the Board of Directors shall explain the reasons and make an announcement.

Article 71.

When the Company convenes a shareholders’ general meeting, written notice of the meeting shall be given not less than forty-five (45) days before the date of the meeting to notify all of the shareholders whose names appear in the share register of the matter to be considered and date and place of the meeting. A shareholder who intends to attend the meeting shall deliver to the Company his written reply concerning his attendance at such meeting not less than twenty (20) days before the date of the meeting.

Article 72.

The contents of the motion shall fall within the terms of reference of the general meeting and have specified subjects and specific resolutions, in further compliance with the laws, administrative regulations and provisions of the Company’s Articles of Association.

Article 73.

When the Company convenes the shareholders’ general meeting, the Board of Director, the Board of Supervisors or shareholders, individually or in aggregate, holding 3% or more of the total voting shares of the Company shall have the right to propose motions in writing.

Shareholder(s) individually or jointly holding 3% or more of the Company’s shares may propose provisional motions in writing to the convenor sixteen (16) days prior to the convocation of a shareholders’ general meeting. Upon receipt of the provisional motions, the convenor shall issue a supplemental notice of the shareholders’ general meeting announcing such provisional motions fourteen (14) days prior to the convocation of the shareholders’ general meeting. The provisional motions shall fall into the scope of the functions and powers of the shareholders’ general meeting and specify explicit topics and specific matters to be resolved.

Except for the circumstance set forth in the preceding paragraph, the convenor shall not amend any motions set out in the notice of the shareholders’ general meeting or add any new motions after issuing such notice.

The convenor mentioned in the Company’s Articles of Association means the Board of Directors, the Board of Supervisors or shareholder(s) individually or jointly holding 10% or more of the total voting shares of the Company at the proposed meeting that are entitled to convene a shareholders’ general meeting pursuant to the Company’s Articles of Association.

No resolution shall be passed at the shareholders’ general meeting in respect of any motions not specified in the notice of the shareholders’ general meeting or not in compliance with Article 72 of these Articles of Association.

Article 74.

The Company shall, based on the written replies which it receives from shareholders at least twenty (20) days before the date of the shareholders’ general meeting, calculate the number of voting shares represented by the shareholders who intend to attend the meeting. If the number of voting shares represented by the shareholders who intend to attend the meeting amounts to more than one-half of the Company’s total voting shares, the Company may hold the meeting; if not, the Company shall, within five (5) days, notify the shareholders by way of public announcement of the matters to be considered, and the date and place of the meeting, The Company may then hold the meeting after publication of such announcement.

No shareholders’ general meeting shall decide on the matters not stated in the notice for the meeting.

Article 75.

A notice of a meeting of the shareholders of the Company must satisfy the following requirements:

(1)	be in writing;
(2)	specify the place, date and time of the meeting;
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(3)	state the matters to be discussed at the meeting;
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(4)	provide such information and explanations as are necessary for shareholders to make an informed decision on the proposals submitted; without<br>limiting the generality of the foregoing, when a proposal is made to amalgamate the Company with another, to repurchase the shares of the Company, to reorganize its share capital or to restructure the Company in any other way, the terms of the<br>proposed transaction must be provided in detail together with the copies of the proposed agreement, if any, and the cause and effect of such proposal must be properly explained;
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(5)	contain disclosure of the nature and extent, if any, of the material interests of any director, supervisor, president, vice president, or other<br>senior officer in the proposed transaction and the effect which the proposed transaction will have on them in their capacity as shareholders in so far as it is different from the effect on the interests of shareholders of the same<br>class;
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(6)	contain the full text of any special resolution to be proposed at the meeting;
(7)	contain a conspicuous statement that a shareholder entitled to attend and vote at such meeting is entitled to appoint one (1) or more proxies<br>to attend and vote at such meeting on his behalf, and that a proxy need not to be a shareholder;
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(8)	specify the time and place for lodging proxy forms for the relevant meeting; and
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(9)	set out the procedures for the voting by way of poll and the rights of shareholders to demand for a poll pursuant to applicable<br>rules.
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Article 76.

Unless otherwise provided by paragraph 2 of Article 259 of the Company’s Articles of Association, the notice of shareholders’ general meetings shall be served on each shareholder (whether or not such shareholder is entitled to vote at the meeting), by personal delivery or prepaid mail to the address of the shareholder as shown in the register of shareholders. For the holders of Domestic-Invested Shares, notice of the meeting may also be issued by way of public announcement.

The public announcement referred to in the preceding paragraph shall be published in one (1) or more national newspapers designated by the securities authority of the State Council within a period of forty-five (45) days to fifty (50) days before the date of the meeting; after the publication of such announcement, all the holders of Domestic-Invested Shares shall be deemed to have received the notice of relevant shareholders’ general meeting.

The Company shall submit the meeting notice in writing and by email to the CBIRC ten (10) days before the date of the regular shareholders’ general meeting.

Article 77.

After the notice of the shareholders’ general meeting is sent, the shareholders’ general meeting shall not be postponed or cancelled without a justifiable excuse, and any proposal listed in such notice shall not be withdrawn. If the shareholders’ general meeting needs to be postponed or cancelled or a proposal needs to be withdrawn, the convenor shall announce such postponement and cancellation and explain the reason at least two

(2) working days prior to the original scheduled date for the meeting.

Article 78.

The accidental omission to give notice of a meeting, or the failure to receive the notice of a meeting by any person entitled to receive such notice, shall not invalidate the meeting or the resolutions adopted thereat.

The Board of Directors and other convenors shall take all necessary measures to ensure that the shareholders’ general meeting is conducted in an orderly manner and shall take steps to prevent any activities interfering the shareholders’ general meeting or infringing the legal interests of shareholders and report such activities to the relevant authority.

Article 80.

The Company shall be responsible for compiling the attendee register which shall include, among others, the name of attendee (or name of relevant unit), ID number, domicile, the number of shares with voting rights that he holds or represents, and name of the person (or name of relevant unit) who attends the meeting by proxy.

Article 81.

The convenor and lawyers engaged by the Company shall verify the legitimate qualification of shareholders in accordance with the register of members provided by the securities registration and settlement company and shall register the names of shareholders and the number of voting shares each of them holds. The registration shall end before the chairperson of the meeting announces the number of shareholders and proxies attending the meeting and the total number of voting shares they hold.

Article 82.

All the directors, supervisors and the secretary of the Board of Directors of the Company shall have the right to attend the shareholders’ general meeting. The senior officers shall have the right to be present at the shareholders’ general meeting as non- voting delegates.

Article 83.

Any shareholder who is entitled to attend and vote at a general meeting of the Company shall be entitled to appoint one (1) or more persons (whether such person is a shareholder or not) as his proxy to attend and vote on his behalf, and a proxy so appointed shall be entitled to exercise the following rights pursuant to the authorizations from that shareholder:

(1)	the shareholder’s right to speak at the meeting;
(2)	the right to demand or join in demand for a poll; and
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(3)	the right to vote by hand or on a poll, but a proxy of a shareholder who has appointed more than one (1) proxy may only<br>vote on a poll.
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Article 84.

If shareholder shall appoint his proxy in writing, such instrument appointing the proxy shall be signed by the appointing shareholder or a person who is authorised in writing, or if the appointing shareholder is a legal entity, either affixed with legal person seal or signed by a director, an executive officer or a duly authorized person.

The instrument appointing a proxy shall state the number of shares represented by the proxy and, if more than one (1) proxy has been appointed, the number of shares represented by each proxy.

Article 85.

The instrument appointing a voting proxy and, if such instrument is signed by a person under a power of attorney or other authority on behalf of the appointor, a certified copy of that power of attorney or other authority shall be deposited at the residence of the Company or at such other place as is specified for that purpose in the notice convening the meeting, not less than twenty-four (24) hours before the time for holding the meeting at which the proxy propose to vote or the time appointed for the passing of the resolution. Such instrument shall indicate the date of authorization.

If the appointor is a legal person, its legal representative or such person as is authorized by resolution of its Board of Directors or other governing body may attend meetings of the shareholders of the Company as a representative of the appointor.

If a shareholder is a recognized clearing house (or its nominee), it may, as it sees fit, appoint one (1) or more persons as its proxies to attend and vote at any shareholders’ general meeting or class meeting. However, if more than one (1) person is appointed, the instrument of proxy shall specify the number and class of the shares relating to each such proxy. Such proxy may exercise the rights of such shareholder (or its nominee) on its behalf in the same manner as the individual shareholder of the Company.

Article 86.

Any form issued to a shareholder by the Board of Directors for use by such shareholder for the appointment of a proxy to attend and vote at the meetings of the Company shall be such as to enable the shareholder to freely instruct the proxy to vote for or against the motions or abstain from voting, such instructions being given in respect of each individual matter to be voted at the meeting. Such a form shall contain a statement that in the absence of specific instructions from the shareholder, the proxy may vote at his discretion.

The Company has the right to request a proxy who attends a shareholders’ general meeting to provide evidence of his or its identity.

If a shareholder who is a legal person appoints its legal representative to attend a meeting on its behalf, the Company has the right to request such legal representative to provide evidence of his identity (excluding Recognized Clearing House) and a certified copy of the resolution of such shareholder’s Board of Directors in respect of the appointment of the proxy or the power of attorney executed by such other organization which has the capacity to appoint the proxy.

Article 87.

A vote given in accordance with the terms of a proxy shall be valid, notwithstanding the death or loss of capacity of the appointor or revocation of the proxy or the authority under which the proxy was executed, or the transfer of the shares in respect of which the proxy is given, provided that the Company did not receive any written notice in respect of any such matters prior to the commencement of the relevant meeting.

Article 88.

When any shareholders’ general meeting considers matters related to connected transactions, the connected shareholder shall not vote and the number of voting shares that it represents shall not be counted as part of the total number of valid votes. The announcement of the resolution of the general meeting shall fully disclose the votes of the non-connected shareholders.

Article 89.

Except where the Company is in a crisis or any extraordinary circumstance, the Company may not enter into any contract with anyone other than a director or the president, the vice president or any other senior officer to have all or significant part of the Company’s business in the care of such person, unless otherwise approved by the shareholders in a general meeting by way of special resolution.

Article 90.

The list of candidates for directors or supervisors shall be proposed to the shareholders’ general meeting for votes.

The Board of Directors shall announce the resumes and basic information of these candidates for directors or supervisors.

Article 91.

At the annual shareholders’ general meeting, the Board of Directors and the Supervisory Board shall report their work performance in the preceding year to the shareholders. Each independent director shall also report his work performance.

The Board of Directors of the Company shall give explanation in connection with the non-standard audit opinion issued by the registered accountant on the financial report of the Company at the shareholders’ general meeting.

Except for trade secrets relevant to the Company which shall not be disclosed at the shareholders’ general meeting, directors, supervisors and senior officers shall give explanation in connection with queries made and opinions given by shareholders at the shareholders’ general meeting.

Article 92.

Resolutions of shareholders’ general meeting shall be divided into ordinary resolutions and special resolutions.

An ordinary resolution must be passed by votes representing more than half of the voting rights represented by the shareholders (including proxies) present at the meeting.

A special resolution must be passed by votes representing more than two-thirds of the voting rights represented by the shareholders (including proxies) present at the meeting.

Article 93.

A shareholder (including a proxy), when voting at a shareholders’ general meeting, may exercise such voting rights as are attached to the number of voting shares which he represents. Except otherwise required by laws or regulations, each share shall have one (1) vote.

When the shareholders’ general meeting considers matters that could materially affect the interest of medium and small investors, the votes by medium and small investors shall be counted separately, and the results of such separate vote counting shall be disclosed promptly.

Where a shareholder is, under the applicable listing rules as amended from time to time, required to abstain from voting on any particular resolution or to vote only for or restricted to only vote against any particular resolution, any votes cast by or on behalf of such shareholder or his proxy in contravention of such requirement or restriction shall not be counted.

The same voting right shall only be exercised by one means, either through onsite voting or via internet or other voting means. If the same voting right is exercised in more than one means, the result of the first vote cast shall prevail.

The Board of Directors, independent directors, and shareholders who meet relevant requirements may solicit the voting rights from the shareholders of the Company.

Article 94.

Any vote of shareholders at a shareholders’ general meeting must be taken by poll except where the Chairman of the meeting, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands.

Article 95.

A poll demanded on the election of the chairman of the meeting, or on a question of the adjournment of the meeting, shall be taken forthwith. A poll demanded on any other question shall be taken as the chairman of the meeting directs, and any business other than that upon which a poll has been demanded may be proceeded with pending the taking of the poll. The result of the poll shall be deemed to be a resolution of the meeting at which the poll was demanded.

Article 96.

On a poll taken at a meeting, a shareholder (including a proxy) entitled to two (2) or more votes is not required to cast all his votes for or against any motion or to abstain on all his votes.

Article 97.

The following matters shall be resolved by an ordinary resolution at a shareholders’ general meeting:

(1)	the operational policies and investment plans of the Company;
(2)	the election and replacement of the directors and supervisors who are not employee representatives, and the determination<br>of the remuneration of the directors and supervisors and its payment method;
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(3)	the work reports of the Board of Directors and the Board of Supervisors;
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(4)	the profit distribution plans and loss recovery plans formulated by the Board of Directors;
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(5)	the appointment or dismissal of accounting firms who conduct regular and statutory audit on the Company’s financial<br>reports;
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(6)	the annual budgets, final accounts, balance sheets, profit and loss accounts, and other financial statements of the<br>Company; and
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(7)	any matters other than those which are required by laws, administrative regulations, regulatory requirements or the<br>Company’s Articles of Association to be adopted by special resolution.
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Article 98.

The following matters shall be resolved by a special resolution at a shareholders’ general meeting:

(1)	the increase or reduction of share capital, the issue of shares of any class, warrants and other similar securities, and<br>the listing of the Company;
(2)	the issue of debentures of the Company;
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(3)	the division, merger, dissolution and liquidation or change of the form of the Company;
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(4)	the amendment to the Company’s Articles of Association;
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(5)	the acquisition of shares of the Company;
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(6)	the matters in relation to the Company’s establishment of legal entity, material external investment, disposal and<br>write-off of material assets, and pledge of material assets;
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(7)	the removal of independent directors;
(8)	the Company’s purchase or sale of material assets within one year, which exceeds 30% of the latest audited total<br>assets of the Company;
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(9)	any equity-based incentive plan; and
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(10)	any other matter stipulated by laws, administrative regulations, regulatory requirements or the Company’s Articles<br>of Association and decided by shareholders at shareholders’ general meetings by way of an ordinary resolution, which, in their opinions, might have a material impact on the Company and shall be adopted by a special resolution.
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Article 99.

Shareholders who request the convening of an extraordinary general meeting or a class meeting shall comply with the following procedures:

(1)

Two (2) or more shareholders individually or in aggregate holding 10% or more of the shares carrying the right to vote at the meeting sought to be held shall sign one (1) or more counterpart requisitions stating the object of the meeting and requiring the Board of Directors to convene a shareholders’ extraordinary general meeting or a class meeting thereof. The Board of Directors shall proceed as soon as possible to convene the extraordinary shareholders’ general meeting or a class meeting thereof after receipt of such requisitions. The number of shareholders referred to above shall be calculated as of the date of the requisitions.

(2)

If the Board of Directors fails to issue a notice of such a meeting within thirty (30) days from the date of the receipt of the requisitions, the requisitionists may themselves convene such a meeting in a manner as similar as possible to the manner in which shareholders’ meetings are convened by the Board of Directors within four (4) months from the date of the receipt of the requisitions by the Board of Directors.

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The requisitionists shall be compensated by the Company for any reasonable expenses incurred by the requisitionists by reason of failure by the Board of Directors to duly convene a meeting, and any sum so compensated shall be set-off against sums owed by the Company to the defaulting directors.

Article 100.

The Supervisory Board shall have the right to propose to the Board of Directors to convene an extraordinary general meeting, and shall put forward the proposal to the Board of Directors in written form. The Board of Directors shall, in accordance with the laws, administrative regulations and the Company’s Articles of Association, give a written reply on whether to convene an extraordinary general meeting or not within ten days upon receipt of the proposal.

If the Board of Directors agrees to convene an extraordinary general meeting, it shall send out a notice of the extraordinary general meeting within five (5) days after the resolution of the Board of Directors is made; if it makes any change to the original proposal in the notice, it shall obtain the consent of the Supervisory Board.

If the Board of Directors does not agree to convene an extraordinary general meeting or fails to give a reply within ten (10) days upon receipt of the proposal, it shall be regarded that the Board of Directors is unable or fails to perform the duty of convening the shareholders’ general meetings, and the Supervisory Board may convene and preside over the meeting by itself.

Article 101.

If the Supervisory Board or shareholders decide to convene the shareholders’ general meeting on their own initiative, they shall notify the Board of Directors in writing and file the notice of meeting with the branch of the securities regulatory authority of the State Council and the stock exchanges at the place where the Company locates for records. The shareholder(s) entitled to convening the shareholders’ general meeting must hold no less than 10% of shares in the Company immediately before the resolution of such meeting is announced.

The shareholders convening the shareholders’ general meeting shall at the time when a notice of the shareholders’ general meeting is sent and the resolution of the shareholders’ general meeting is announced, submit relevant supporting documents to the branch of the securities regulatory authority of the State Council at the place where the Company locates and the relevant stock exchanges.

Article 102.

With regard to the shareholders’ general meeting convened by the Supervisory Board or shareholders on their own initiative, the Board of Directors and the secretary of the Board of Directors shall provide assistance. The Board of Directors shall provide the register of members as at of the record date for the general meeting.

Article 103.

The Company shall bear costs and expenses necessary for the shareholders’ general meetings, which are convened by the Supervisory Board or shareholders on their own initiative.

Article 104.

The Board of Directors shall convene and the Chairman of the Board of Directors shall chair the shareholders’ general meetings. If the Chairman is unable to attend the meeting for any reason, the vice-chairman of the Board of Directors (if appointed by the Company) shall chair the meeting. If the vice-chairman of the board of directors is not appointed by the Company or is unable or fails to perform his duties, the shareholders’ general meeting shall be presided over by a director nominated by more than half of the directors.

The shareholders’ general meeting convened by the Supervisory Board on its own initiative shall be presided over and chaired by the chairman of the Supervisory Board. If the chairman of the Supervisory Board is unable or fails to perform his duties, the shareholders’ general meeting shall be presided over by a supervisor nominated by more than half of the supervisors.

The shareholders’ general meeting convened by shareholders on their own initiative shall be presided over by the representative nominated by the convenor.

If the chairperson of the shareholders’ general meeting breaches the procedural rules, which makes it unable to proceed the shareholders’ general meeting, subject to consents of more than half of shareholders with voting rights attending the shareholders’ general meeting, the shareholders’ general meeting may nominate a person to act as the chairperson of the meeting and such meeting may continue.

Article 105.

Before the vote casting, the chairperson of the shareholders’ general meeting shall announce the number of shareholders present in person or represented by proxy at the meeting and the total number of voting shares they hold or represent. The number of shareholders present in person or represented by proxy at the meeting and the total number of voting shares they hold or represent shall be determined by the meeting registration.

Article 106.

Shareholders attending the shareholders’ general meeting shall vote for or against or abstain from voting any motion submitted for voting (for shareholders holding H Shares, abstention may not apply), except for the declaration made by a securities registration and clearing institution as the nominal holder of stocks under the stock connect mechanism between the mainland China and Hong Kong stock markets according to the actual holders’ intentions.

In respect of any vote forms that are not filled, misfilled, illegible or not submitted, the voter shall be deemed to abstain. The voting result in respect of shares held by such voter shall be deemed to be “abstention”.

Article 107.

Before the shareholders’ general meeting casts votes on the proposals, two (2) representatives of the shareholders shall be nominated to participate in the vote counting and scrutinizing. If any shareholder has interest in the matters to be considered, the relevant shareholder and its proxy shall not participate in the vote counting and scrutinizing.

When votes are being cast on proposals at the shareholders’ general meeting, lawyers, representatives of the shareholders and the representative of supervisors shall be jointly responsible for scrutinizing and counting votes and shall announce the voting results at the meeting. The voting results in connection with the resolutions shall be recorded in the meeting minutes.

Shareholders of the Company or their proxies who cast votes via internet or other means shall be entitled to review their own voting result through the relevant voting system.

Article 108.

The onsite voting shall not end earlier than the internet voting or any other method of voting at the shareholders’ general meeting. The chairperson of the meeting shall announce details of voting in connection with each proposal, the voting result and whether the resolution is passed in accordance with the voting result.

The Company, vote counting officers, scrutineers, major shareholders, internet service providers and other relevant parties shall be obliged to keep confidential details of voting.

Article 109.

The resolutions of the shareholders’ general meeting shall be announced promptly. Such announcement shall specify the number of shareholders present in person or by proxy at the meeting, the total number of voting shares held or represented by them, the percentage of such voting shares in relation to all the voting shares of the Company, the voting methods, the voting result of each motion, and details of each resolution that are passed at the meeting.

The Company shall report to the CBIRC regarding the voting results within thirty (30) days after the passing of resolutions at the shareholders’ general meeting.

Article 110.

If the motion on election of new directors and supervisors for a new session is adopted at the shareholders’ general meeting, directors and supervisors for the new session shall take the position after the resolution of such shareholders’ general meeting is made.

If the employee representatives of the Board of Directors (the “Employee Directors”) or the employee representatives of the Board of Supervisors (the “Employee Supervisors”) for a new session are elected democratically at a date earlier than the date of establishment of the Board of Directors or the Board of Supervisors for the new session respectively, such Employee Directors or Employee Supervisors shall take the office at the date of establishment of the Board of Directors or the Board of Supervisors for the new session; in the event that such democratic election is made later than the date of establishment of the Board of Directors or the Board of Supervisors for the new session, such Employee Directors or Employee Supervisors shall take the office at the date of democratic election.

The qualification of the Company’s directors and supervisors shall be approved by the CBIRC.

Article 111.

If any proposal for a cash dividend, share allocation, or conversion from capital reserves to share capital is adopted at the shareholders’ general meeting, the Company shall implement detailed plans within two (2) months after the end of the shareholders’ general meeting.

Article 112.

The chairman of the meeting shall be responsible for determining whether a resolution has been passed. The decision shall be final and conclusive and shall be announced at the meeting and recorded in the minute books.

Article 113.

If any proposal is not adopted, or the current shareholders’ general meeting amends the resolution of the last shareholders’ general meeting, special indication thereof shall be given in the announcement of the resolutions of the shareholders’ general meeting.

Article 114.

If the chairman of the meeting has any doubt as to the result of a resolution which has been presented for at a shareholders’ meeting, he may have the votes counted. If the chairman of the meeting has not counted the votes, any shareholder who is present in person or by proxy and who objects to the result announced by the chairman of the meeting may, immediately after the declaration of the result, demand that the votes be counted and the chairman of the meeting shall have the votes counted immediately.

Article 115.

If votes are counted at a shareholder’s general meeting, the result of the count shall be recorded in the minute books.

Article 116.

Minutes shall be taken for matters deliberated at the shareholders’ general meeting.

The minutes shall be taken by the secretary to the meeting and signed by the chairman of the meeting and directors present at the meeting.

The minutes, shareholders’ attendance lists and proxy forms shall be kept at the Company’s place of residence.

Article 117.

Copies of the minutes of proceedings of any shareholders’ meeting shall, during business hours of the Company, be open for inspection by any shareholder without charge. If a shareholder requests a copy of such minutes from the Company, the Company shall send a copy of such minutes to him within seven (7) days after receipt of reasonable fees therefor.

Article 118.

The Company shall formulate the procedural rules of the shareholders’ general meeting which shall set out in detail the procedures of convention and voting in respect of the shareholders’ general meeting (including notices, registration, consideration and approval for proposals, voting, vote counting, announcement on voting results, the resolution making process, meeting minutes and signing, announcements and other matters) and the principles of authorization granted to the Board of Directors at the shareholders’ general meeting. The scope of authorization shall be specified in details. The procedural rules of the shareholders’ general meeting shall be prepared by the Board of Directors, approved at the shareholders’ general meeting and attached to the Company’s Articles of Association as an appendix.

Article 119.

At the time of the shareholders’ general meeting, the Company shall engage a lawyer to issue and make public a legal opinion on the following matters:

(1)	Whether the convention and holding of the shareholders’ general meeting comply with laws, administrative<br>regulations and the Company’s Articles of Association;
(2)	Whether the qualifications of the attendees and the convenor are lawful and valid;
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(3)	Whether the voting procedures and results at the shareholders’ meeting are lawful and valid; and
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(4)	Other relevant matters at the request of the Company.
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Chapter 10 Special Procedures forVoting by A Class of Shareholders

Article 120.

Those shareholders who hold different classes of shares are class shareholders. Class shareholders shall enjoy rights and assume obligations in accordance with law, administrative regulation and the Company’s Articles of Association.

Article 121.

Rights conferred on any class of shareholders may not be varied or abrogated unless with the approval of shareholders by way of special resolution in a general meeting, and by holders of shares of that class at a separate general meeting conducted in accordance with Articles 123 to 127.

Article 122.

The following circumstances shall be deemed to be variation or abrogation of the rights attaching to a particular class of shares:

(1)	to increase or decrease the number of shares of that class, or to increase or decrease the number of shares of a class<br>having voting or equity rights or privileges equal or superior to those of shares of that class;
(2)	to exchange all or part of the shares of that class for shares of another class or to exchange or to create a right to<br>exchange all or part of the shares of another class for shares of that class;
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(3)	to remove or reduce rights to accrued dividends or rights to cumulative dividends attached to shares of that class;
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(4)	to reduce or remove preferential rights attached to shares of that class to receive dividends or to the distribution of<br>assets in the event that the Company is liquidated;
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(5)	to add, remove or reduce conversion privileges, options, voting rights, transfer or pre-emptive rights, or rights to<br>acquire securities of the Company attached to shares of that class;
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(6)	to remove or reduce rights to receive payment payable by the Company in particular currencies attached to shares of that<br>class;
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(7)	to create a new class of shares having voting or equity rights or privileges equal or superior to those of the shares of<br>that class;
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(8)	to restrict the transfer or ownership of shares of that class or to increase the types of restrictions attaching<br>thereto;
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(9)	to allot and issue rights to subscribe for, or to convert the existing shares into, shares in the Company of that class or<br>another class;
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(10)	to increase the rights or privileges of shares of another class;
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(11)	to restructure the Company in such a way so as to result in the disproportionate distribution of obligations between the<br>various classes of shareholders; or
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(12)	to vary or abrogate the provisions of this Chapter.
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Article 123.

Shareholders of the affected class, whether or not otherwise having the right to vote at shareholders’ general meetings, shall have the right to vote at class meetings in respect of matters concerning sub-paragraphs (2) to (8), (11) and (12) of Article 122, but interested shareholder(s) shall not be entitled to vote at such class meetings.

“(An) interested shareholder(s)”, as such term is used in the preceding paragraph, means:

(1)	in the case of a repurchase of shares by way of a general offer to all shareholders of the Company or<br>by way of public dealing on a stock exchange pursuant to Article 27 of the Company’s Articles of Association, a controlling shareholder within the meaning of Article 61 of the Company’s Articles of Association;
(2)	in the case of a repurchase of shares by an off-market agreement pursuant to Article 27 of the<br>Company’s Articles of Association, a holder of the shares to which the proposed agreement relates;
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(3)	in the case of a restructuring of the Company, a shareholder who assumes a relatively lower<br>proportion of obligation than the obligations imposed on shareholders of that class under the proposed restructuring or who has an interest in the proposed restructuring different from the general interests of the shareholders of that class.
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Article 124.

Resolutions of a class of shareholders shall be passed by affirmative votes representing more than two-thirds of the voting rights of shareholders of that class presented at the relevant meeting who, according to Article 123, are entitled to vote thereat.

Article 125.

Written notice of a class meeting shall be given to all shareholders who are registered as holders of that class in the register of shareholders forty-five (45) days before the date of the class meeting. Such notice shall give such shareholders notice of the matters to be considered at such meeting and the date and place of the class meeting. A shareholder who intends to attend the class meeting shall deliver his written reply in respect thereof to the Company twenty (20) days before the date of the class meeting.

If the shareholders who intend to attend such class meeting represent more than half of the total number of shares of that class which have the right to vote at such meeting, the Company may hold the class meeting; otherwise, the Company shall within five (5) days give the shareholders further notice of the matters to be considered and the date and place of the class meeting by way of public announcement. The Company may then hold the class meeting after such public announcement has been made.

Article 126.

Notice of class meetings need only be served on shareholders entitled to vote threat,

Class meetings shall be conducted in a manner which is as similar as possible to that of shareholders’ general meetings. The provisions of the Company’s Articles of Association relating to the manner for the conduct of shareholders’ general meetings are also applicable to class meetings.

Article 127.

Apart from the holders of other classes of shares, the holders of the Domestic- Invested Shares and holders of Overseas-Listed Foreign-Invested Shares shall be deemed to be holders of different classes of shares.

The special procedures for approval by a class of shareholders shall not apply in the following circumstances:

(1)	where the Company issues, upon the approval by special resolution of its shareholders in a general<br>meeting, either separately or concurrently once every twelve (12) months, not more than 20% of each of its existing issued Domestic-Invested Shares and Overseas-Listed Foreign-Invested Shares; or
(2)	where the Company’s plan to issue Domestic-Invested Shares and Overseas-Listed Foreign-Invested Shares at the time<br>of its establishment is carried out within fifteen (15) months from the date of approval of the securities authority of the State Council.
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Chapter 11 Board of Directors

Article 128.

The Board of Directors shall consist of twelve (12) directors, including four (4) executive directors, four (4) non-executive directors and four (4) independent directors. It shall have one (1) Chairman, and may have one (1) Vice Chairman.

Article 129.

Directors who are not employee representatives shall be elected at the shareholders’ general meeting, and employee directors shall be elected at the employee representative conference by the Company’s employees or by other democratic means. A director’s term shall be three (3) years and is renewable by re-election upon expiry of the term.

A written notice of the intention to nominate a person for election as a director and a written notice by that person of his willingness to be nominated shall be delivered to the Company seven (7) days before the date of the shareholders’ general meeting.

A director’s term of office shall commence from the date when the resolution of shareholders’ general meeting is adopted and the qualification of such director is approved by the CBIRC and end upon expiry of the term of current session of the Board of Directors. After expiry of a director’s term of office but before a new director is elected and takes office, the retiring director shall continue to perform his duty as a director pursuant to laws, administrative regulations, departmental rules and these Articles of Association.

The president, vice president and other senior officers may concurrently serve as directors, provided that the total number of directors who concurrently serve as the president, vice president, other senior officers and the total number of directors who are served by employee representatives shall not exceed half of the total number of directors of the Company.

The Chairman and the Vice Chairman shall be elected and changed by more than one-half of all of the members of the Board of Directors. The term of office of each of the Chairman and the Vice Chairman is three (3) years, which term is renewable upon re-election.

Subject to compliance with all relevant laws and administrative regulations, the shareholders’ general meeting may by ordinary resolution change any director who is not employee representative before the expiration of his term of office (however, the director’s right to make claims pursuant to any contract shall not be affected thereby).

The directors shall not be required to hold shares of the Company.

Directors of the Company who are natural persons shall have good conduct and reputation, possess the expertise and working experience commensurate with their duties and responsibilities, and satisfy the requirements specified by laws and regulations and the CBIRC. Any election or appointment of a director in violation of this Article shall be deemed as null and void. If the directors fail to meet the qualifications or conditions as specified by laws, regulations and regulatory requirements during their term of office, the Company shall dismiss them from their positions.

Article 130.

A director may resign before expiry of his term of office, subject to submission of a written resignation report to the Board of Directors. The Board of Directors will disclose relevant information within two (2) days.

If the number of the Company’s directors is less than the quorum as required by law due to a director’s resignation, such resigning director shall continue to perform his duty as a director pursuant to laws, administrative regulations, departmental rules and these Articles of Association until a new director is elected and takes office.

Except for the case mentioned in the preceding paragraph, resignation of directors shall take effect immediately upon the Board of Directors’ receipt of the written resignation report.

Upon resignation or expiry of the tenure of a director, such director shall duly complete all formalities in relation to handover, and the faithful duties owed by such director to the Company and shareholders shall not be released and shall remain effective within five (5) years from the expiry of his/her tenure.

Article 131.

No director shall act on behalf of the Company or the Board of Directors without legal authorization provided hereunder or by the Board of Directors. When a director acts in his own name and a third party reasonably considers such director acts on behalf of the Company or the Board of Directors, such director shall declare in advance his position and capacity.

Article 132.

If a director violates laws, administrative regulations, department rules or the Company’s Articles of Association when performing his duties in the Company, such director shall indemnify the Company against losses incurred due to such violation.

Article 133.

An independent director means a director who does not have any function in the Company other than being a director and has no relationship with the Company and its controlling shareholder or actual controller which may prejudice such director’s independent judgment on the Company’s affairs.

Article 134.

An independent director shall have high professional competence and reputation, and shall also meet the qualification requirements for serving as an independent director of a listed insurance company as specified by laws, administrative regulations and regulatory requirements.

Article 135.

Any of the following persons shall not serve as an independent director of the Company:

(1)	a person who has worked in an entity holding more than 5% of shares of the Company or in any of the top ten (10)<br>shareholders of the Company in the past three (3) years, and such person’s close relatives;
(2)	a person who has worked in the Company or any enterprises actually controlled by the Company in the past three (3) years,<br>and such person’s close relatives;
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(3)	a person who has provided the Company with legal, audit, actuarial or management consulting services in the past two (2)<br>years;
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(4)	a person serving as a partner, controlling shareholder or senior officer of any banking, legal, consulting, or audit<br>institutions which have business relationship with the Company in the past two (2) years; or
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(5)	other person whose independent judgment, in the opinion of regulatory authorities, may be compromised.
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Article 136.

The Board of Directors, the nomination and remuneration committee of the Board of Directors, the Board of Supervisors or any shareholder(s) individually or jointly holding more than 3% of the issued shares of the Company may nominate candidates for independent directors who shall be appointed upon being elected at the shareholders’ general meeting.

At least one-third of members of the Board of Directors of the Company shall be independent directors, including at least one (1) accounting professional.

Article 137.

The term of office of independent directors is the same as that of other directors of the Company, and may be renewed upon re-election when it expires, provided that an independent director shall not serve for more than six (6) consecutive years.

An independent director shall not be removed before the expiry of his term of office without a justifiable cause. If any independent director is removed prior to the expiration date, the Company shall disclose such removal as a special disclosure matter.

The removal of an independent director shall be decided by a shareholders’ general meeting. The Company shall notify such independent director in writing of the reasons of the removal and his corresponding rights at least fifteen (15) days prior to the convening of the shareholders’ general meeting. A resolution on the removal of an independent director at the shareholders’ general meeting shall be passed by votes representing over two-thirds of the voting rights held by the shareholders present at the meeting. The independent director shall have the right to provide an explanation and make a representation before voting.

Article 138.

In addition to the powers and functions granted to directors by the Company Law and other applicable laws, regulations, regulatory requirements and these Articles of Association, an independent director shall also have the following powers and functions:

(1)	to review the fairness of material connected transactions of the Company (defined according to the standards issued by regulatory authority of<br>the place where the Company is listed from time to time), implementation of internal audit procedures and impacts on the interests of the insured. Opinions shall be provided by independent directors in writing on any problems found in the connected<br>transactions reviewed. In addition to the circumstances where an independent financial advisor must be engaged to issue a report pursuant to the listing rules of the place where the Company is listed, if more than two independent directors deem<br>necessary, they may engage an intermediary to provide independent financial advisor report as the basis of their opinions;
(2)	to propose to the Board to convene an extraordinary general meeting by more than half of but no less than two (2) independent<br>directors;
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(3)	to propose to convene a meeting of the Board of Directors by more than two (2) independent directors;
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(4)	to independently engage external auditing firms and consultancy firms; and
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(5)	other powers and functions as specified by laws, regulations, regulatory requirements and these Articles of<br>Association.
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Independent directors shall provide independent opinions on the matters discussed at shareholders’ general meetings and meetings of the Board of Directors in an objective and fair manner. In particular, they shall give their opinions to the Board of Directors or the shareholders’ general meeting on the following matters:

(1)	material connected transactions;
(2)	nomination, appointment and dismissal of directors and appointment and dismissal of senior officers of the Company;
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(3)	remunerations of directors and senior officers of the Company;
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(4)	profit distribution plan;
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(5)	any material transaction such as investment, lease, purchase and sale of assets and guarantee not provided in business<br>plan;
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(6)	other matters that may have material effects on the interests of the Company, the insured and minority shareholders;<br>and
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(7)	other matters as specified by laws, regulations, regulatory requirements or these Articles of Association.
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Article 139.

An independent director shall give any of the following opinions regarding the above matters: consent; reservation and the reason; objection and the reason; unable to give opinion and the reason.

Where independent directors abstain or vote against the above matters, or consider that there are obstacles in expressing their opinions, they shall give written opinions to the Company and report to the CBIRC.

Where relevant matters are required to be disclosed, the Company shall announce the opinions of the independent directors. If the independent directors fail to agree on a particular matter, the Board of Directors shall disclose the opinion of each independent director.

Article 140.

An independent director shall attend meetings of the Board of Directors on schedule, possess knowledge of the operation of the Company and actively investigate and obtain information and documents necessary for any decision-making.

Independent directors shall at the Company’s annual shareholders’ general meeting submit the annual report on performance of duties by all the independent directors.

Article 141.

An independent director shall faithfully perform his duties, protect the Company’s interests and, in particular, procure that no harm be made to the legitimate interests of the public shareholders.

An independent director shall perform his duties independently and shall not be influenced by the major shareholders or the actual controller of the Company, or any enterprise or individual having interested relationship with the Company, its major shareholders or its actual controller.

Article 142.

If an independent director fails to attend three (3) consecutive meetings of the Board of Directors in person, the Board of Directors may propose the replacement of such independent director at a shareholders’ general meeting.

Where an independent director fails to attend two (2) meetings of the Board of Directors in person within one year, the Company shall issue to him a written reminder.

Where an independent director is given two (2) reminders within a term of office, he shall not be re-elected.

Article 143.

The Company shall establish the working system of independent directors, ensure that independent directors have the same rights of accessing to relevant information as other directors, provide independent directors with relevant documents and information, report information about the Company’s operation on a regular basis, and organize independent directors to make on-site visits if necessary.

Article 144.

Any independent director may resign prior to the expiry of his term of office, subject to submission of a written resignation report to the Board of Directors explaining any information related to his resignation or any information he considers it is necessary for the shareholders and creditors of the Company to be attentive to.

If the number of independent directors or members of the Board of Directors is less than the quorum provided by the law or the Company’s Articles of Association due to an independent director’s resignation, such resigning independent director shall continue to perform his duty as an independent director pursuant to laws, administrative regulations and the Company’s Articles of Association until a new independent director is elected and takes office. The Board of Directors shall hold a shareholders’ general meeting within two (2) months to elect a new independent director. If the Board of Directors fails to hold such shareholders’ general meeting within the said two (2) months, the resigning independent director may cease to perform his duty.

Article 145.

The Board of Directors shall be accountable to the shareholders in general meeting, and shall exercise the following functions and powers:

(1)	to be responsible for the convening of the shareholders’ general meeting and to report on its work to the shareholders in general<br>meetings;
(2)	to implement the resolutions passed by the shareholders in general meetings;
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(3)	to determine the Company’s business plans and investment proposals;
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(4)	to formulate the Company’s preliminary and final annual financial budgets;
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(5)	to formulate the Company’s profit distribution proposal and loss recovery proposal;
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(6)	to formulate proposals for the increase or reduction of the Company’s registered capital and for the issuance of the Company’s<br>debentures or other negotiable securities and listing;
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(7)	to formulate plans for major acquisition, acquisition of shares of the Company, or merger, division, dissolution and change of the form of the<br>Company;
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(8)	to consider and approve, to the extent authorized by the shareholders’ general meeting (except those that are not required for<br>authorization), such matters as the management of assets and liabilities, external investments, acquisition of assets, disposal and write-off of assets, pledge of assets, entrusted wealth management and connected transactions of the<br>Company;
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(9)	to decide on the establishment of the Company’s internal management organizations;
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(10)	to appoint or remove the Company’s president or secretary to the Board of Directors, and to appoint or remove the vice president(s) and<br>other senior officers (excluding the secretary to the Board of Directors) based on the nomination of the president, and to decide on their remuneration, reward and punishment;
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(11)	to formulate the Company’s basic management system, to formulate the Procedural Rules for the Shareholders’ General Meetings and<br>the Procedural Rules for the Board of Directors’ Meetings, and to review the work rules of the professional committees of the Board of Directors;
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(12)	to formulate proposals for any amendment to the Company’s Articles of Association;
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(13)	to manage the information disclosure of the Company;
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(14)	to propose to the shareholders’ general meeting for retaining or replacing the accounting firm that conduct audits for the<br>Company;
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(15)	to hear the work report of the Company’s president and to inspect the work of the president; and
---	---

(16)	to exercise any other powers and functions conferred by laws, administrative regulations, departmental rules, these Articles of Association or<br>shareholders’ general meetings.

Other than the Board of Directors’ resolutions in respect of the matters specified in sub-paragraphs (6), (7), (8) and (12) of this Article which shall be passed by the affirmative vote of more than two-thirds of all directors, the Board of Directors’ resolutions in respect of all other matters may be passed by the affirmative vote of a simple majority of all directors, unless otherwise provided by applicable laws, administrative regulations, departmental rules, or these Articles of Association.

The said functions and powers of the Board of Directors shall be exercised by the Board of Directors collectively. The statutory functions and powers of the Board of Directors shall not, in principle, be delegated to the Chairman of the Board of Directors, directors or other individuals or entities. If it is necessary to delegate decision-making right on certain matters, such delegation shall be made legally by means approved by resolutions of the Board of Directors. Delegation shall be made on a case by case basis, and no function of the Board of Directors shall be delegated generally or permanently to other entities or individuals.

The Board of Directors shall give an explanation to the shareholders’ general meeting in respect of the qualified audit opinions issued by a certified public accountant on the financial reports of the Company.

Statutory functions and powers of the Board of Directors shall not be modified or deprived of by any provisions of these Articles of Association, any resolutions of the shareholders’ general meeting, or in any other manner.

Article 146.

The opinions of the Party Committee of the Company shall be heard before the Board of Directors decides on material issues of the Company.

Article 147.

The Board of Directors shall not, without the prior approval of shareholders in a general meeting, dispose or agree to dispose of any fixed assets of the Company where the aggregate of the amount or value of the consideration for the proposed disposition, and the amount or value of the consideration for any such disposition of any fixed assets of the Company that has been completed in the period of four (4) months immediately preceding the proposed disposition, exceeds 33% of the value of the Company's fixed assets as shown in the latest balance sheet which was approved at a shareholders’ general meeting.

For the purposes of this Article, “disposition” includes an act involving the transfer of an interest in assets but does not include the usage of fixed assets for the provision of security.

The validity of a disposition by the Company shall not be affected by any breach of the first paragraph of this Article.

Article 148.

Unless otherwise provided by applicable laws, regulations or listing rules, the Board of Directors shall have the right to decide on investment (including venture capital investment) or acquisition projects within the authorization of the shareholders’ general meeting, and to organize experts and professionals concerned to assess significant investment or acquisitions project that fall out of the authorization of the shareholders’ general meeting, and report the same to the general meeting for approval.

Article 149.

The Chairman of the Board of Directors shall exercise the following powers:

(1)	to preside over shareholders’ general meetings and to convene and preside over meetings of the Board of<br>Directors;
(2)	to check on the implementation of resolutions passed by the Board of Directors;
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(3)	to sign the securities certificates issued by the Company; and
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(4)	to exercise other powers conferred by the Board of Directors.
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When the Chairman is unable to perform or does not perform his duties, the duties shall be performed by the Vice Chairman. When the Vice Chairman is unable to perform or does not perform his duties, a director jointly elected by more than half of the directors shall perform his duties.

In the event that the Chairman is unable to perform or does not perform his duties, which affects the normal operation of the Company, the Board of Directors of the Company shall re-elect the Chairman pursuant to the requirements of these Articles of Association.

Article 150.

Meetings of the Board of Directors can be divided into regular meetings and special meetings. Regular meetings shall be held at least four (4) times each year at appropriate quarterly intervals. Regular meetings shall be convened by the Chairman by serving a notice to all directors at least fourteen (14) days before the proposed date of the meeting. Regular meetings do not include the practice of obtaining board consent through the circulation of written resolutions. In case of emergency, a special meeting may be convened upon request by shareholders representing more than 10% voting rights, more than one-third of all directors, the Supervisory Board, more than two (2) independent directors, the Chairman, or president of the Company.

Article 151.

Notice of regular and special meetings of the Board of Directors may be delivered by hand, facsimile, express delivery service, registered mail or email. Deadlines for serving the notices: at least fourteen (14) days in advance of regular meetings; special meetings may be less than fourteen (14) days but shall not be less than three (3) days.

Article 152.

Notice of a meeting shall be deemed to have been given to any director who attends the meeting without objecting to, before or at its commencement, any lack of notice.

Article 153.

Any regular or special meeting of the Board of Directors may be held physically and through telecommunications (by way of telephone conference or similar communication equipment). So long as it can ensure the real-time communications and discussions among all directors participating in the meeting, all such directors shall be deemed to be present in person at the meeting.

Matters that shall not be voted at the meetings of the Board of Directors convened by telecommunications shall include but not limited to the profit distribution plan, remuneration plan, material investments and asset disposal, appointment and dismissal of senior officers, and other proposals involving the risk management of the Company.

Article 154.

Meetings of the Board of Directors shall be held only if more than half of the directors (including any director who has appointed another director to attend the meeting on his behalf pursuant to Article 156 of the Company’s Articles of Association) are present.

Each director shall have one (1) vote. Unless otherwise provided for in the Company’s Articles of Association, a resolution of the Board of Directors must be passed by the majority of the directors of the Company. No resolution of the Board of Directors concerning any connected transaction will become effective without the signatures of the independent (non-executive) directors.

Where there is an equality of votes cast both for and against a resolution, the Chairman of the Board of Directors shall have no more casting vote.

Article 155.

Subject to the exceptions as specifically provided, a director shall not vote on any resolution of the Board of Directors approving any contract or arrangement or any other proposal in which he or any of his close associates has a material interest, nor shall he exercise voting rights on behalf of other directors. He shall not be counted in the quorum present at such meeting.

Such meetings of the Board of Directors shall be convened with more than half of the directors present who are not connected, and the decisions made at the meetings of the Board of Directors shall be approved by more than two-thirds of the directors who are not connected. If the number of directors attending the meetings of the Board of Directors who are not connected is less than three (3), such matters shall be submitted to the shareholders’ general meeting for approval.

In considering the matters concerning connected transactions by the Board of Directors, connected directors can neither exercise their voting rights, nor act on behalf of other directors to exercise voting rights.

The Board of Directors shall report annually to the shareholders’ general meeting on the status of connected transactions and the execution of the connected transaction management system.

Article 156.

Directors shall attend the meetings of the Board of Directors in person. Where a director is unable to attend a meeting for any reason, he may appoint another director by a written power of attorney to attend the meeting on his behalf. The power of attorney shall set out the scope of the authorization.

A director appointed as a representative of another director to attend the meeting shall exercise the rights of a director within the scope of authority conferred by the appointing director. Where a director is unable to attend a meeting of the Board of Directors, and has not appointed a representative to attend the meeting on his behalf, he shall be deemed to have waived his right to vote at the meeting.

In case a director (other than independent director) has failed to be present in person at any two (2) consecutive board meetings, nor authorized another director to be present at the board meeting on his behalf, he shall be considered unable to fulfill his responsibilities as a director, and the Board of Directors shall accordingly suggest the shareholders’ general meeting making a replacement.

Article 157.

In respect of any matter to be determined by the Board of Directors at a special meeting of the Board of Directors, where the Board of Directors has already sent out in writing the draft resolution to be decided at such meeting and the number of directors who have signed to approve such proposals satisfies the requirements set out in Article 154 of this Chapter, a valid resolution shall be deemed to be passed, and no Board of Directors’ meeting is required to be held.

Article 158.

The Board of Directors shall keep minutes of resolutions passed at meetings of the Board of Directors. The minutes shall be signed by both the directors present at the meeting and the person who recorded the minutes. The directors shall be liable for the resolutions of the Board of Directors. If a resolution of the Board of Directors violates the law, administrative regulation or the Company’s Articles of Association, and the Company suffers serious losses as a result thereof, the directors who participated in the passing of such resolution shall compensate the Company therefor. However, if it can be proven that a director expressly objected to the resolution when the resolution was voted on, and that such objection was recorded in the minutes of the meeting, such director shall be released from such liability. The directors shall have the right to inspect documents and relevant information of the Board of Directors, such as resolutions and minutes of the Board of Directors. Upon receiving a reasonable request from a director, the Company shall make available the relevant meeting minutes for the inspection by such director at any reasonable time.

Article 159.

The Board of Directors shall formulate the procedural rules to be followed at meetings of the Board of Directors, specifying rules regarding convocation, proposal and notice, convening and presiding, voting and resolution, keeping of files, report of resolutions, so as to ensure that it makes efficient and reasonable decisions.

The procedural rules to be followed at meetings of the Board of Directors shall be formulated by the Board of Directors of the Company, considered and approved at the shareholders’ general meeting and attached to the Company’s Articles of Association as an appendix.

Chapter 12 Secretary of the Board of Directors

Article 160.

The Company shall have one (1) secretary of the Board of Directors. The secretary shall be a senior officer of the Company.

Article 161.

The secretary of the Company’s Board of Directors shall be a natural person who has the requisite professional knowledge and experience, and shall be appointed by the Board of Directors. His primary responsibilities are to ensure that:

(1)	organize and prepare meetings of the Board of Directors and shareholders’ general meetings pursuant to statutory procedures and<br>requirements;
(2)	produce and keep records of shareholders’ general meetings and meetings of the Board of Directors as well as other meeting materials and<br>documents;
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(3)	communicate and liaise between the Company and related parties and the regulatory authorities of the jurisdiction where the Company is<br>listed;
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(4)	ensure that the Company prepare and deliver, in accordance with law, the reports and documents required by competent<br>authorities;
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(5)	administer the Company’s affairs including information disclosure and investor relations;
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(6)	carry out the Company’s equity administration matters, maintain materials setting forth the holding of the Company’s shares by the<br>Company’s directors, supervisors, senior management officers, controlling shareholders and such shareholders’ directors, supervisors and senior management officers, and disclose any change in shareholding by the Company’s<br>directors, supervisors and senior management officers;
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(7)	assist shareholders, directors and supervisors in exercising rights and performing duties; and
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(8)	perform other duties as required by laws, administrative regulations, bylaws and applicable provisions.

Article 162.

A director or other senior officer of the Company may also act as the secretary of the Board of Directors. An accountant of the accounting firm retained by the Company shall not act as the secretary of the Board of Directors.

Where the office of secretary is held concurrently by a director, and an act is required to be conducted by a director and a secretary separately, the person who holds the offices of director and secretary may not perform such act in a dual capacity.

Chapter 13 Committees under the Board of Directors

Article 163.

The Company’s Board of Directors shall have four (4) special committees, namely, the audit committee, the risk management committee, the nomination and remuneration committee, and the strategy and assets and liabilities management committee.

Functions of special committees of the Board of Directors shall be defined by resolutions of the Board of Directors in accordance with applicable laws, administrative regulations and regulatory rules.

Article 164.

The audit committee shall be composed of three (3) to five (5) directors, the risk management committee shall be composed of three (3) to seven (7) directors, the nomination and remuneration committee shall be composed of three (3) to seven (7) directors, and the strategy and assets and liabilities management committee shall be composed of three (3) to seven (7) directors.

Chapter 14 President

Article 165.

The Company shall have one (1) president, five (5) to six (6) vice presidents, and two (2) to three (3) assistants to president. The president shall be nominated by the Chairman of the Board of Directors, and shall be appointed or dismissed by the Board of Directors. Vice presidents and other senior officers (except the secretary of the Board of Directors) shall be nominated by the president, and shall be appointed or dismissed by the Board of Directors.

The term of office of the president shall be three (3) years, renewable upon re-appointment.

Members of the Board of Directors may concurrently serve as the president, vice president or other senior officers of the Company. Any person working in the controlling shareholder or actual controller of the Company other than as a director shall not serve as senior officers of the Company.

Article 166.

The president shall be accountable to the Board of Directors, and shall exercise the following functions and powers:

(1)	to be in charge of the Company’s production, operation and management, and to organize the implementation of the resolutions of the Board<br>of Directors;
(2)	to organize the implementation of the Company’s annual business plan and investment proposals;
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(3)	to draft plans for the establishment of the Company’s internal management organizations;
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(4)	to draft the Company’s basic management system;
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(5)	to propose the appointment or dismissal by the Board of Directors of the Company’s vice president(s) and other senior officers (except<br>for the secretary to the Board of Directors);
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(6)	to appoint or dismiss management personnel other than those required to be appointed or dismissed by the Board of Directors;<br>and
---	---
(7)	other functions and powers conferred by the Company’s Articles of Association and the Board of Directors.
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When the president is unable to perform or does not perform his duties, the provisional person-in-charge designated by the Board of Directors shall perform his duties on his behalf. In the event that the president is unable to perform or does not perform his duties, which affects the normal operation of the Company, the Company shall re-elect the president pursuant to the requirements of these Articles of Association.

Article 167.

The president and other senior officers of the Company shall ensure that information disclosed by the Company is true, accurate and complete and shall sign written confirmation regarding regular reports of the Company.

Article 168.

The president shall attend meetings of the Board of Directors. A president who is not a director shall not have any voting rights at board meetings.

Article 169.

The president, vice presidents and other senior officers of the Company, in performing their functions and powers, shall act honestly and diligently and in accordance with law, administrative regulation and the Company’s Articles of Association.

Article 170.

The Company shall formulate working rules of the president, specifying conditions, procedure and participants of the president meeting, responsibilities and work allocation of the president and other senior officers of the Company, use of funds and assets of the Company, scope of authorization to enter into contracts and reporting policies regarding the Board of Directors and the Supervisory Board.

The president working rules drafted by the president shall be implemented after being approved by the Board of Directors.

Article 171.

The president and other senior officers of the Company may resign prior to expiry of their term of office. Relevant resignation procedures and measures shall be provided in the service contract between such persons and the Company.

Chapter 15 Supervisory Board

Article 172.

The Company shall have a Supervisory Board.

Article 173.

The Board of Supervisors shall be composed of five (5) supervisors. One of the members of the Board of Supervisors shall act as the Chairman. Each supervisor shall serve for a term of three (3) years, which term is renewable upon re-election.

The election or removal of the Chairman of the Board of Supervisors shall be determined by two-thirds or more of the members of the Board of Supervisors.

The Chairman of the Board of Supervisors shall serve for a term of three (3) years, which term is renewable upon re-election.

Supervisors of the Company shall have good character and reputation, possess the expertise and working experience commensurate with their duties, and satisfy the conditions specified by laws and regulations and the CBIRC.

Article 174.

Supervisory Board shall comprise supervisors who represent the shareholders but not employees and supervisors who represent the employees. The number of supervisors who are employee representatives shall constitute no less than one-third of the members of the Supervisory Board. Supervisors who represent the shareholders but not employees shall be elected or changed by the shareholders in general meetings, and the supervisor who represents employees shall be elected or changed by the employees democratically.

Article 175.

If no new supervisor is elected after the term of a supervisor expires, or the number of members of the Supervisory Board is less than the quorum due to any supervisor’s resignation during his term of office, the relevant supervisor shall continue to perform his duties as a supervisor in accordance with laws, administrative regulations and the Company’s Articles of Association until a new supervisor is elected.

Article 176.

The directors, president, vice presidents and other senior officers of the Company shall not act concurrently as supervisors.

Article 177.

Meetings of the Supervisory Board shall be held at least once every six (6) months, and shall be convened by the chairman of the Supervisory Board. Supervisors may propose to convene the extraordinary meetings of the Supervisory Board.

Article 178.

The Board of Supervisors shall be accountable to the shareholders in a general meeting, and shall exercise the following functions and powers in accordance with law:

(1)	to review the Company’s financial position;
(2)	to nominate independent directors;
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(3)	to supervise the directors, president, vice presidents and other senior officers of the Company to ensure that they do not act in contravention<br>of any laws, administrative regulations or the Company’s Articles of Association when they perform their duties;
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(4)	to demand any director, president, vice president or other senior officer of the Company to make rectifications when his acts impair the<br>interest of the Company;
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(5)	to check the financial information, such as the financial report, business report and profit distribution plan, to be submitted by the Board of<br>Directors to the shareholders’ general meetings, and to engage, in the Company’s name, public certified accountants and practicing auditors to assist with the re-examination of such information in case of any<br>doubt;
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(6)	to propose to convene an extraordinary general meeting, and to convene and preside over shareholders’ general meetings when the Board of<br>Directors fails to perform its duty to do so as required by the Company Law;
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(7)	to submit motions to shareholders’ general meetings;
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(8)	to initiate legal proceedings against any director or senior officer according to the relevant requirements of the Company<br>Law;
(9)	to investigate any unusual operation of the Company, and if necessary, to engage an accounting firm, a law firm or any professional<br>organization to assist its work at the expenses of the Company; and
---	---
(10)	such other functions and powers as provided by laws, regulations and the Company’s Articles of Association.
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Supervisors shall attend meetings of the Board of Directors and may raise queries or proposals regarding matters discussed at such meetings.

Article 179.

Meetings of the Supervisory Board shall be held only if more than two-thirds of the supervisors are present.

Resolutions of the Supervisory Board shall be passed by the affirmative vote of more than two-thirds of all of its members.

Article 180.

All reasonable fees incurred in the employment of professionals (such as lawyers, certified public accountants or practicing auditors) which are required by the Supervisory Board in the exercise of its functions and powers shall be borne by the Company.

Article 181.

A supervisor shall carry out his duties honestly and faithfully in accordance with law, administrative regulation and the Company’s Articles of Association.

A supervisor shall ensure that information disclosed by the Company is true, accurate and complete.

A supervisor shall not take advantage of his connection with the Company to harm interests of the Company and shall indemnify the Company against losses caused thereby.

Article 182.

The Supervisory Board shall produce minutes of the meetings, and the supervisors attending the meetings shall sign the minutes.

Each supervisor shall have the right to request for an explanation of his comments made at the meetings to be noted in the minutes. Such minutes shall be kept as records of the Company.

Article 183.

The Procedural Rules for the Board of Supervisors’ Meetings shall be formulated by the Board of Supervisors of the Company, considered and approved at the shareholders’ general meeting and attached to these Articles of Association as an appendix to ensure that the Board of Supervisors works efficiently and make decisions in a scientific manner.

Chapter 16 The Qualifications and Duties of the Directors, Supervisors, President, Vice Presidents and Other Senior Officers of the Company

Article 184.

Directors, supervisors and senior officers of the Company shall satisfy the requirements for the qualification of their respective positions under applicable laws, administrative regulations, rules and regulatory requirements, and their qualifications shall be approved by the CBIRC before they assume office.

Article 185.

No one shall be a Director, Supervisor, President, Vice President or any other senior management officer of the Company if subject to any of the following circumstances:

(1)	being without civil capacity or having limited civil capacity;
(2)	having been penalized or sentenced due to an offence of corruption, bribery, encroachment on property, misappropriation of property or<br>disruption of the socialist market economy, or having been deprived of political rights due to the committing of any crime, and in each case, five (5) years not having elapsed since the completion of the relevant penalty, sentence or<br>deprivation;
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(3)	having been a former director, factory director or manager of a company or enterprise which had been bankrupt and liquidated whereby such<br>person was personally liable for the bankruptcy of such company or enterprise, and three (3) years not having elapsed since the date of completion of the liquidation of the company or enterprise;
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(4)	having been the legal representative of a company or enterprise which business licence was revoked and which business was compulsorily closed<br>down due to violation of laws whereby such person was personally liable, and three (3) years not having elapsed since the date of revocation of the business licence of the company or enterprise;
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(5)	being a debtor personally liable for a relatively large debt which has not been paid as it fell due;
---	---
(6)	having been subject to an investigation by judicial authorities for criminal offences, and such investigation not having come to an<br>end;
---	---

(7)	being banned from being senior management of enterprises by laws and regulations;
(8)	being a non-natural person;
---	---
(9)	having been adjudged by the relevant competent authorities of violations of relevant securities laws which involves fraud or dishonesty, and<br>five (5) years not having elapsed since the date of the judgment;
---	---
(10)	having been banned from entering the market by financial regulators, and five (5) years not having elapsed since the last date of the ban;<br>and
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(11)	being prohibited from holding such posts due to other circumstances, including stipulations by laws, administrative regulations, departmental<br>rules and regulatory requirements.
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Article 186.

The validity of an act carried out by a director, president, vice president or other senior officer of the Company on its behalf, as against a bona fide third party, shall not be affected by any irregularity in his office, election or any defect in his qualification.

Article 187.

In addition to the obligations imposed by laws, administrative regulations or the listing rules of the stock exchanges on which shares of the Company are listed, each of the Company’s directors, supervisors, president, vice presidents and other senior officers owes a duty to each shareholder, in the exercise of the functions and powers of the Company entrusted to him:

(1)	not to cause the Company to exceed the scope of business stipulated in its business license;
(2)	to act honestly and in the best interests of the Company;
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(3)	not to expropriate the Company’s property in any way, including (without limitation) usurpation of opportunities which benefit the<br>Company; and
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(4)	not to expropriate the individual rights of shareholders, including (without limitation) rights to distributions and voting rights, save and<br>except pursuant to a restructuring of the Company which has been submitted to the shareholders for approval in accordance with the Company’s Articles of Association.
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Article 188.

Each of the Company’s directors, supervisors, president, vice presidents and other senior officers owes a duty, in the exercise of his powers and in the discharge of his duties, to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Article 189.

Each of the Company’s directors, supervisors, president, vice presidents and other senior officers shall exercise his power or perform his duties in accordance with fiduciary principles; and shall not put himself in a position where his duty and his interest may conflict. These principles include (without limitation):

(1)	to act honestly in the best interest of the Company;
(2)	to act within the scope of its powers and not to exceed such powers;
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(3)	to exercise his proportional decision power in person without being subject to the manipulations of other persons, and not to transfer such<br>power to other persons unless permitted by law or administrative regulation or approved by the shareholders with full knowledge at the general meeting;
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(4)	to treat shareholders of the same class with equality, and different classes with fairness;
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(5)	not to enter into contracts or conduct transactions or make arrangements with the Company unless otherwise provided by the Company’s<br>Articles of Association or approved by the shareholders with full knowledge at the general meeting;
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(6)	not to employ the Company’s assets in any way so as to pursue interests for himself unless approved by the shareholders with full<br>knowledge at the general meeting;
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(7)	not to accept any bribery or other illegal income by using his powers and position, and seize the assets of the Company in any manner,<br>including (but not limited to) opportunities beneficial to the Company;
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(8)	not to accept commissions relating to the transactions of the Company, without the approval of the shareholders with full knowledge at the<br>general meeting;
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(9)	to obey the Company’s Articles of Association, perform his duties honestly and faithfully, protect the Company’s interests, and not<br>to pursue his personal gain by taking advantage of his powers and positions at the Company;
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(10)	not to compete with the Company in any way unless approved by the shareholders with full knowledge at the general<br>meeting;
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(11)	not to misappropriate the funds of the Company or lend the funds of the Company to other persons, open accounts in his own or another<br>individual's name for deposit of the Company’s assets, or use Company’s assets as security for the debts of the shareholders of the Company or other individuals; and
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(12)	not to divulge the confidential information relating to the Company received during his term of office, unless approved by the shareholders<br>with full knowledge at the general meeting; and not to use such information unless for the purpose of the Company’s interests; however, to be allowed to disclose such information to a court of law or other governing authorities under the<br>following circumstances:
(I).	as prescribed by law;
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(II).	as required for the purpose of public interest;
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(III).	as required for the purpose of such director’s, supervisor’s, president’s, vice president’s or other senior<br>officers’ own interests.
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Article 190.

Directors, supervisors, president, vice presidents and other senior officers of the Company shall not direct the following persons or organizations (“Associates”) to engage in activities prohibited for directors, supervisors, president, vice presidents and other senior officers of the Company:

(1)	spouses or underage children of directors, supervisors, president, vice presidents or other senior officers of the<br>Company;
(2)	trustors of directors, supervisors, president, vice presidents or other senior officers of the Company or of such persons as described in<br>sub-paragraph of this Article;
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(3)	partners of directors, supervisors, president, vice presidents or other senior officers of the Company or of such persons as described in<br>sub-paragraph or sub-paragraph (2) of this Article;
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(4)	company (companies) which a director, supervisor, president, vice president or any other senior officer of the Company has de facto single<br>control over or joint control over with such persons as described in sub- paragraph (1), sub-paragraph (2) or sub-paragraph (3) of this Article or other directors, supervisors, president, vice presidents or other senior officers of the Company;<br>and
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(5)	directors, supervisors, president, vice presidents and other senior officers of the Company (companies) referred to by sub-paragraph (4) of<br>this Article.
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Article 191.

The fiduciary duty of a director, supervisor, president, vice president and any other senior officer of the Company may not necessarily cease upon the conclusion of his term, their obligations to keep confidential the business secrets of the Company shall survive the conclusion of his term. The duration of the other obligations and duties shall be determined in accordance with the principle of fairness, taking into account of the lapse between the time when he leaves the office and the occurrence of the relevant event, and the situation and the circumstances and terms under which his relation with the Company was ended.

Article 192.

The shareholders with full knowledge of the relevant circumstances may at the general meeting relieve a director, supervisor, president, vice president and any other senior officer of the Company of his liability as a result of his violation of any specific duty, save for the circumstances specified in Article 60 of the Company’s Articles of Association.

Article 193.

A director, supervisor, president, vice president and any other senior officer of the Company who directly or indirectly has material interests in contracts, transactions, or arrangements that are being planned or have already been concluded by the Company (save the contracts of employment between the directors, supervisors, president, vice presidents or other senior officers and the Company), shall, as soon as possible, disclose to the Board of Directors the nature and extent of his interests, regardless of whether or not the matters at hand require the approval of the Board of Directors.

Unless the interested directors, supervisors, president, vice presidents or other senior officers of the Company have made such disclosure to the Board of Directors as required by the preceding paragraph of this Article, and the relevant matter has been approved by the Board of Directors at the board’s meeting where such directors, supervisors, president, vice presidents or other senior officers have not been counted as part of the quorum and voted thereat, the Company shall be entitled to cancel such contracts, transactions, or arrangements, except as to any other party which is a bona fide party without knowledge of the violation of duties on the part of such directors, supervisors, president, vice presidents and other senior officers.

Where the Associates of the directors, supervisors, president, vice presidents and other senior officers of the Company have interests in such contracts, transactions or arrangements, such directors, supervisors, president, vice presidents and other senior officers shall also be deemed to be interested.

Article 194.

If, prior to the Company’s initial consideration of such contracts, transactions, or arrangements referred to by the preceding Article, a director, supervisor, president, vice president or any other senior officer of the Company has delivered a written notice to the Board of Directors, which contains the statement that he has interests in the contracts, transactions, or arrangements to be concluded by the Company in the future, such director, supervisor, president, vice president or other senior officer shall be deemed to have made the disclosure stipulated by the preceding Article in respect of the statement contained in the notice.

Article 195.

The Company shall not, in any manner, perform tax duties for its directors, supervisors, president, vice presidents and other senior officers.

Article 196.

The Company shall not directly or indirectly make a loan to or provide a guarantee in connection with the making of a loan to a director, supervisor, president, vice president, and other senior officer of the Company or of the Company’s holding company or any of their respective associates.

The foregoing shall not apply to the following circumstances:

(1)	the provision by the Company of a loan to its subsidiaries;
(2)	the provision by the Company of a loan or any other funds available to any of its director, supervisor, president, vice president and other<br>senior officer to meet expenditures incurred or to be incurred by him for the purpose of the Company or for the purpose of enabling him to perform his duties properly in accordance with a service contract approved by the shareholders in a general<br>meeting; and
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(3)	if the ordinary course of the business of the Company includes the lending of money, the Company may make a loan to the relevant directors,<br>supervisors, president, vice presidents and other senior officers or their respective associates, provided that they are on normal commercial terms.
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Article 197.

Any person who receives funds from a loan which has been made by the Company acting in breach of the preceding Article shall, irrespective of the terms of the loan, forthwith repay such funds.

Article 198.

A guarantee for the repayment of a loan which has been provided by the Company in breach of paragraph (1) of Article 196 shall not be enforceable against the Company, save for the following circumstances:

(1)	the guarantee was provided in connection with a loan made to an Associate of any of the directors, supervisors, president, vice presidents and<br>other senior officers of the Company or its holding company and the lender of such funds did not know of the relevant circumstances at the time of the loan; or
(2)	the collateral provided by the Company has already been lawfully disposed of by the lender to a bona fide purchaser.
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Article 199.

For the purpose of the foregoing provisions of this Chapter, a “guarantee” includes an undertaking or property provided to secure the obligator’s performance of his obligations.

Article 200.

In addition to the rights and remedies provided by law and administrative regulations when a director, supervisor, president, vice president or other senior officer of the Company breaches the duties which he owes to the Company, the Company shall be entitled:

(1)	to demand such director, supervisor, president, vice president or other senior officer compensate for the losses sustained by it as a result of<br>such breach;
(2)	to rescind any contract or transaction which has been entered into between the Company and such director, supervisor, president, vice president<br>or other senior officer or between the Company and a third party, where such party knew or should have known that such director, supervisor, president, vice president or other senior officer representing the Company was in breach of his duty owed to<br>the Company.
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(3)	to demand such director, supervisor, president, vice president or other senior officer account for the profits made as result of the breach of<br>his duty;
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(4)	to recover any money which shall have been received by the Company but were received by such director, supervisor, president, vice president or<br>other senior officer instead, including (without limitation) any commissions; and
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(5)	to demand repayment of interest earned or which may have been earned by such director, supervisor, president, vice president or other senior<br>officer on moneys which shall have been received by the Company.
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Article 201.

The Company shall, with the prior approval of the shareholders’ general meeting, enter into a contract in writing with a director or supervisor wherein his emoluments are stipulated. The aforesaid emoluments may include:

(1)	emoluments in respect of his service as director, supervisor or senior officer of the Company;
(2)	emoluments in respect of his service as director, supervisor or senior officer of any subsidiary of the Company;
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(3)	emoluments in respect of the provision of other services in connection with the management of the affairs of the Company and any of its<br>subsidiaries; and
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(4)	payment by way of compensation for loss of office or as consideration for or in connection with his retirement from<br>office.

No proceedings may be brought by a director or supervisor against the Company for anything due to him in respect of the matters mentioned in this Article except pursuant to any contract described above.

Article 202.

Contracts between the Company and its directors or supervisors with respect to emolument shall provide that in the event that the Company is to be acquired by others, the Company’s directors and supervisors shall, subject to the prior approval of shareholders in a general meeting, have the right to receive compensation or other payment in respect of his loss of office or retirement. For the purposes of the preceding sentence, the acquisition of the Company includes any of the following:

(1)	a tender offer made by any person to all the shareholders; or
(2)	a tender offer made by any person with the aim of making the offeror become a controlling shareholder. The definition of controlling<br>shareholder shall be the same as that defined in Article 61 of the Company’s Articles of Association.
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If the relevant director or supervisor does not comply with this Article, any sum so received by him shall belong to those persons who have sold their shares as a result of such offer. The expenses incurred in distributing such sum on a pro rata basis amongst such persons shall be borne by the relevant director or supervisor and shall not be paid out of such sum.

Article 203.

The Company shall have a chief financial officer. The chief financial officer shall report to the Board of Directors and the president.

The chief financial officer shall perform the following duties:

(1)	responsible for financial accounting and preparing financial report, establishing and maintaining an internal control system in connection with<br>financial report, and responsible for the authenticity of financial and accounting information;
(2)	responsible for financial management, including budget management, cost control, fund management, distribution of proceeds, business<br>performance evaluation, etc.;
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(3)	responsible for solvency management and participating in risk management;
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(4)	participating in material operation and management activities such as strategic planning;
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(5)	reviewing and signing related data and reports for public disclosure pursuant to laws, administrative regulations and relevant regulatory<br>requirements; and
(6)	performing other duties as required by the CBIRC or according to law.
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For at least once every half year, the Board of Directors shall hear the report from the chief financial officer on certain matters including the insurance company’s financial condition, operating results and issues necessary to be attentive to.

Prior to signing documents such as financial reports and solvency reports, the chief financial officer shall seek opinion in writing from senior officers in charge of related business such as actuarial science, investment and risk management.

If the conducts of the Company fall into the following conditions, the chief financial officer shall, in accordance with his duties, promptly raise rectification proposal to the Board of Directors, president or related senior officers. If the Board of Directors or president fails to take measures for rectification, the chief financial officer shall report to the CBIRC and shall have the right to refuse to sign on related documents:

(1)	operating activities or financial and accounting reports seriously violate laws, administrative regulations or regulatory provisions on<br>insurance;
(2)	conducts seriously violate the legitimate rights of policyholders and the insured; or
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(3)	conducts of other senior officers of the insurance company violate the legitimate rights of the insurance company, which may cause material<br>damage to the operation of the insurance company.
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The chief financial officer shall have the right to obtain related information such as data, documents and materials necessary to perform his duties. Relevant departments and personnel of the Company shall not illegitimately interfere, conceal information or provide false information. The chief financial officer shall have the right to be present at the meetings of the Board of Directors in connection with his duties.

Chapter 17 Financial and Accounting Systems, Profit Distribution and Audit

Article 204.

The Company shall establish its financial and accounting systems in accordance with law, administrative regulation and PRC accounting principles formulated by the finance regulatory department of the State Council.

Article 205.

The financial year of the Company shall be a calendar year commencing from January 1 to December 31 every year.

Article 206.

At the end of each fiscal year, the Company shall prepare a financial report which shall be examined and verified in the manner prescribed by law.

Financial and accounting reports shall be prepared in accordance with laws, administrative regulations and provisions of financial department of the State Council.

Financial reports of the Company shall include:

(1)	balance sheet;
(2)	income statement;
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(3)	cash flow statement;
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(4)	statement of changes in equity; and
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(5)	notes to financial statements.
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Article 207.

The Company shall publish its annual financial and accounting reports within four (4) months after the end of each fiscal year; the interim financial and accounting report shall be published within two (2) months after the end of the first six (6) months of each fiscal year; the quarterly financial and accounting report shall be published within one (1) month after the end of the first three (3) months and the first nine (9) months of each fiscal year, respectively.

Article 208.

Unless otherwise provided by applicable laws, regulations, listing rules of the place where the Company is listed and the Company’s Articles of Association, the Board of Directors of the Company shall present to the shareholders, at every annual general meeting, such financial reports which the relevant laws administrative regulation and directives promulgated by competent regional and central governmental authorities require the Company to prepare.

Article 209.

The Company’s financial reports shall be made available for shareholders’ inspection at the Company twenty (20) days before the date of an annual general meeting. Each shareholder of the Company shall be entitled to obtain a copy of the financial reports referred to in this Chapter.

Unless otherwise provided by paragraph 2 of Article 259 of the Company’s Articles of Association, the Company shall deliver to each shareholder of Overseas-Listed Foreign-Invested Shares by prepaid mail at the address registered in the register of shareholders such reports, together with copies of the Board of Directors’ report, not later than twenty-one (21) days before the date of an annual general meeting.

Article 210.

The financial statements of the Company shall, in addition to being prepared in accordance with PRC accounting principles and regulations, be prepared in accordance with either international accounting principles, or those of the place outside the PRC where the Company’s shares are listed. If there is any material difference between the financial statements prepared in accordance with the two accounting principles, such difference shall be stated in the financial statements. In distributing its after-tax profits, the lower of the two amounts shown in the financial statements shall be adopted.

Article 211.

Any interim results or financial information published or disclosed by the Company must also be prepared and presented in accordance with PRC accounting principles and regulations, and also in accordance with either international accounting principles or those of the place overseas where the Company’s shares are listed.

Article 212.

The Company shall not keep financial accounts other than those required by law.

Article 213.

The Company’s after-tax profit shall be allocated in accordance with the following order:

(1)	compensation of losses;
(2)	allocation of 10% of it's the after-tax profits to the statutory common reserve fund;
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(3)	allocation to the discretionary common reserve fund as approved by resolution of the shareholders’ general meeting;<br>and
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(4)	payment of dividends in respect of ordinary shares. The Company shall not allocate dividends or carry out other allocations in the form of<br>bonuses, before the Company has compensated for its losses and made allocations to the statutory common reserve fund.
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The profit distribution shall not be applied to shares held by the Company.

Article 214.

The Company will set up a Company Incentive Fund to be drawn once each year. The Company Incentive Fund shall be used as incentives for the Company's directors, supervisors, president, vice president, other senior officers and the Company’s employees, or as a source of the risk fund for duties performed by its directors, supervisors, president, vice president and other senior officers. Details of the fund shall be formulated separately.

The Company will establish a liability insurance system for its directors, supervisors, president, vice president and other senior officers.

Article 215.

The capital common reserve fund includes the following items:

(1)	any premium above the proceeds from share issuances at face value; and
(2)	any other income designated for the capital common reserve fund by regulation of the finance regulatory department of the State<br>Council.
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Article 216.

The common reserve fund of the Company shall be applied for the following purposes only:

(1)	to make up for losses, however, the capital surplus fund may not be used for making up for losses;
(2)	to expand the Company’s operation; and
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(3)	to convert the common reserve fund into capital in order to increase its capital. The Company may convert its common reserve fund into capital<br>with the approval of shareholders in a general meeting. When such conversion takes place, the Company shall either distribute new shares in proportion to the existing shareholders’ of shares, or increase the par value of each share, provided,<br>however, that when the statutory common reserve fund is converted to capital, the balance of the statutory common reserve fund may not fall below 25% of the registered capital.
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Article 217.

The basic principles of the Company’s profit distribution shall be as follows:

(1)	the Company shall take the investment return for investors into full account and allocate the required percentage of the Company’s<br>realized distributable profits to shareholders as dividends each year;
(2)	the Company shall maintain a sustainable and steady profit distribution policy and at the same time take into consideration the Company’s<br>long- term interest, general interest of all the shareholders and the sustainable development of the Company; and
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(3)	the Company shall give priority to cash dividends as its profit distribution manner.
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The “distributable profits” means the Company’s after-tax profits less the provisions for losses and the allocations to statutory funds that the Company is required to make.

Article 218.

The Company’s profit distribution policy shall be as follows:

(1)	profit distribution modes: The Company may distribute dividends in the form of cash or shares or a combination of cash and shares. If<br>practicable, the Company may distribute interim dividends. The Company’s dividends shall not bear interest, save in the case the Company fails to distribute the dividends to the shareholders on the day when dividends were due to have been<br>distributed.
(2)	conditions for and percentage of distribution of cash dividends: If the Company makes profits in a given year and the cumulative undistributed<br>profit is positive, the Company shall distribute dividends in the form of cash and the cumulative profits distributed in cash over the past three years by the Company shall be no less than thirty percent (30%) of the Company’s average annual<br>distributable profits. If the Company’s solvency ratio is less than one hundred percent (100%) of the regulatory requirement, the Company shall not distribute profits to its shareholders. If the Company’s solvency ratio is less than one<br>hundred and fifty percent (150%) of the regulatory requirement, the lower of the following two factors shall be the basis for profit distribution:
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(I)	the distributable profit as ascertained under the Accounting Standards for Business Enterprises; and
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(II)	the residual overall income ascertained pursuant to the preparation rules of the Company’s solvency<br>report.
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(3)	conditions for distribution of share dividends: If the Company’s operation is sound and the Board of Directors is of the opinion that<br>share dividends distribution is in the interest of all of the Company’s shareholders because the Company’s stock price does not match the Company’s share capital, the Company may propose a share dividends distribution plan if the<br>conditions for cash dividends listed above are satisfied.
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Article 219.

Procedures for reviewing the Company’s profit distribution proposal shall be as follows:

The Company’s profit distribution proposal shall be reviewed by the Board of Directors. The Board of Directors shall have a sufficient discussion of the reasonableness of the profit distribution proposal. After the Company’s independent directors give their independent opinions on a specific resolution regarding this proposal which has been reached by the Board of Directors, the proposal shall be submitted to the Company’s general meeting for approval. In reviewing the profit distribution proposal, the Company shall provide Internet-based voting mechanism to the shareholders. When deliberating on specific cash dividend proposal by the Company’s general meeting, the Company shall make active communication with shareholders, especially small and medium-sized shareholders, through various channels. The Company shall also fully solicit opinions and appeals from shareholders, and give timely reply to concerns of small and medium- sized shareholders.

Article 220.

Amendments to the Company’s profit distribution policy shall be made pursuant to the following paragraph:

If occurrence of any force majeure events, including war or natural disaster; or changes to external operation environment have caused material impact on the Company’s operation; or there is a relatively material change to the Company’s own operation, the Company may make amendments to its profit distribution policy. The Board of Directors shall have sufficient discussion of the proposed amendments to the Company’s profit distribution policy. After the Company’s independent directors give their independent opinions on a specific resolution regarding this proposal which has been reached by the Board of Directors, the proposal shall be submitted to the Company’s general meeting for approval by way of special resolution. In reviewing the proposal concerning amendments to the Company’s profit distribution policy, the Company shall provide Internet-based voting mechanism to shareholders.

Article 221.

The Company shall withdraw, pay and use security funds, insurance security funds and all insurance liability reserves in accordance with applicable laws, administrative regulations and rules and policies.

Article 222.

The Company shall calculate, declare and pay dividends and other amounts which are payable to holders of Domestic-Invested Shares in Renminbi. The Company shall calculate and declare dividends and other payments which are payable to holders of Overseas-Listed Foreign-Invested Shares in Renminbi, and shall pay such amounts in the local currency of the place in which such Overseas-Listed Foreign-Invested Shares are listed (if such shares are listed in more than one place, then the currency of the principal place in which such shares are listed as determined by the Board of Directors).

Article 223.

The Company shall pay dividends and other amounts to holders of Foreign- Invested Shares in accordance with the relevant foreign exchange control regulations of the PRC. If there is no applicable regulation, the applicable exchange rate shall be the average closing rate for the relevant foreign currency announced by the Peoples’ Bank of China during the week prior to the announcement of payment of dividend and other amounts.

Article 224.

The Company shall appoint receiving agents for the holders of the Overseas-Listed Foreign-Invested Shares. Such receiving agents shall receive dividends in respect of the Overseas-Listed Foreign-Invested Shares declared by the Company on behalf of such holders and all other amounts payable to such holders.

The receiving agents appointed by the Company shall meet the relevant requirements of the laws of the jurisdiction where the Company’s shares are listed or the relevant rules of the stock exchanges. The receiving agents appointed for holders of the Overseas-Listed Foreign-Invested Shares listed in Hong Kong shall each be a company registered as a trust company under the Trustee Ordinance of Hong Kong.

Subject to the requirements under relevant laws, regulations and rules of the PRC and applicable rules of the securities regulatory authority of the jurisdiction where the Company’s shares are listed, the Company may exercise the power to forfeit unclaimed dividends, provided that such power shall not be exercised until after the expiration of the applicable limitations period.

Any amount paid up in advance of calls on any shares by a shareholder may carry interest, but shall not entitle the shareholder to participate in any dividend distribution declared prior to the due date of such amount.

Article 225.

The Company shall implement an internal audit system and appoint full time auditors to carry out internal auditing and supervision of the Company’s income and expenses and economic activities.

Article 226.

The Company’s internal auditing system and the responsibilities of the auditing personnel should be carried out after obtaining approval by the Board of Directors. The auditor-in-chief shall be accountable and report to the Board of Directors.

Chapter 18 Engagement of Auditors

Article 227.

The Company shall engage an independent accountancy firm which is qualified under the relevant State regulations to audit the Company’s annual report and review the Company’s other financial reports. The first auditor may be engaged before the first annual general meeting by the inaugural meeting of the Company. The auditor so appointed shall hold the office until the conclusion of the first annual general meeting. If the inaugural meeting does not exercise the powers under the preceding paragraph, those powers shall be exercised by the Board of Directors.

Article 228.

The term of office of an accounting firm appointed by the Company shall be one (1) year, commencing from the conclusion of the annual general meeting and expiring at the conclusion of the next annual general meeting. Upon the expiry of such term, the relevant accounting firm may be re-appointed.

Article 229.

The auditors engaged by the Company shall enjoy the following rights:

(1)	a right to inspect the books, records and vouchers of the Company at any time, the right to require the directors,<br>president, vice presidents and other senior officers of the Company to supply relevant information and explanations;
(2)	a right to require the Company to take all reasonable steps to obtain from its subsidiaries such information and<br>explanations as are necessary for the discharge of its duties; and
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(3)	a right to attend shareholders’ general meetings and to receive all notices of, and other communications relating<br>to, any shareholders’ general meeting which any shareholder is entitled to receive, and to speak at any shareholders’ general meeting in relation to matters concerning its role as the Company’s accountancy<br>firm.
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Article 230.

If there is a vacancy in the position of auditor of the Company, the Board of Directors may engage an accountancy firm to fill such vacancy before the convening of the shareholders’ general meeting. Any other accountancy firm which has been engaged by the Company may continue to act during the period during which a vacancy exists.

Article 231.

The shareholders in a general meeting may by ordinary resolution remove the Company’s auditor before the expiration of its term of office, irrespective of the provisions in the contract between the Company and the auditor. However, the accountancy firm’s right to claim for damages which arises from its removal shall not be affected thereby.

Article 232.

The remuneration of an accountancy firm or the manner in which such firm is to be remunerated shall be determined by the shareholders in a general meeting. The remuneration of an accountancy firm engaged by the Board of Directors shall be determined by the Board of Directors.

Article 233.

The Company’s engagement, removal or discontinuance of engagement of an accountancy firm shall be resolved by the shareholders in a general meeting. Such resolution shall be filed with the securities authority of the State Council.

Where a resolution at a shareholders’ general meeting is passed to appoint as auditor a person other than an incumbent auditor, to fill a casual vacancy in the office of auditor, to reappoint as auditor a retiring auditor who was appointed by the Board of Directors to fill a casual vacancy or to remove an auditor before the expiration of its term of office, the following provisions shall apply:

(1)	A copy of the appointment or removal proposal shall be sent (before notice of meeting is given to the shareholders) to the<br>firm proposed to be appointed or proposing to leave its post or the firm which has left its post in the relevant fiscal year.

For the purpose of this Article, “leaving” includes leaving by removal, resignation and retirement.

(2)	If the auditor leaving its post makes representations in writing and requests the Company to give the shareholders notice<br>of such representation, the Company shall (unless the representations have been received too late) take the following measures:
(I).	In any notice of the resolution given to shareholders, state the fact of the representations having been made;<br>and
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(II).	Attach a copy of the representations to the notice and deliver it to the shareholders in the manner stipulated in the<br>Company’s Articles of Association.
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(3)	If the Company fails to send out the auditor’s representations in the manner set out in sub-paragraph (2) above,<br>such auditor may (in addition to his right to be heard) require that the representations be read out at the shareholders’ general meeting.
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(4)	An auditor which is leaving its post shall be entitled to attend the following shareholders’ general<br>meetings:
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(I).	The general meeting at which its term of office would otherwise have expired;
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(II).	The general meeting at which it is proposed to fill the vacancy caused by its removal; and
---	---
(III).	The general meeting which convened as a result of its resignation,
---	---

and to receive all notices of, and other communications relating to, any such meeting, and to speak at any such meeting which it attends on any part of the business of the meeting which concerns it as former auditor of the Company.

Article 234.

Prior notice shall be given to the accounting firm if the Company decides to remove such accounting firm or not to renew the appointment thereof. Such accounting firm shall be entitled to make representations at the shareholders’ general meeting. Where the accounting firm resigns from its position, it shall make clear to the shareholders in a general meeting whether there has been any impropriety on the part of the Company.

An accounting firm may resign from its position by depositing at the Company’s legal address a resignation notice which shall become effective on the date of such deposit or on such later date as may be stipulated in such notice. Such notice shall contain the following statements:

(1)	a statement to the effect that there are no circumstances connected with its resignation which it believes should be<br>brought to the notice of the shareholders or creditors of the Company; or
(2)	a statement of any such circumstances.
---	---

Where a notice is deposited under the preceding sub-paragraph, the Company shall within fourteen (14) days send a copy of the notice to the relevant governing authority. If the notice contains a statement under the preceding two sub-paragraphs, a copy of such statement shall be placed at the Company for shareholders’ inspection. Unless otherwise provided under paragraph 2 of Article 259 of the Company’s Articles of Association, the Company shall also send a copy of such statement by prepaid mail to every shareholder of Overseas-Listed Foreign-Invested Shares at the address registered in the register of shareholders.

Where the accounting firm’s notice of resignation contains a statement of circumstances, the accounting firm may require the Board of Directors to convene an extraordinary general meeting for the purpose of receiving an explanation of the circumstances connected with its resignation.

Chapter 19 Insurance

Article 235.

Any insurance to be purchased by the Company shall be conducted in accordance with the relevant insurance laws of China.

Chapter 20 The Company’s Basic Management System

Article 236.

The Company may at its discretion employ and dismiss employees based on the business development needs of the Company and in accordance with the requirements of the laws and administrative regulations of the State.

The Company may formulate its labor and payroll systems and payment methods in accordance with the relevant laws and regulations of the State, the Company’s Articles of Association and the economical benefits of the Company.

The Company shall endeavor to improve its employee benefits and to continually improve the working environment and living standards of its employees.

The Company shall provide medical, retirement and unemployment insurance for its employees and put in place a labor insurance system, in accordance with the relevant laws and regulations of the State.

Article 237.

The Company shall formulate internal governance policies on connected transactions for the purpose of regulating connected transactions between the Company and its connected parties in accordance with applicable laws, regulations and regulatory provisions and shall report to competent regulatory authorities or disclose connected transactions promptly pursuant to applicable provisions.

Article 238.

The Company shall institute internal control mechanism for disclosure and appoint dedicated personnel responsible for disclosure matters in accordance with applicable laws, regulations and regulatory provisions.

The Company shall disclose finance, risk and governance structure information in accordance with applicable laws, regulations and regulatory provisions, and ensure the authenticity, accuracy and completeness of the information disclosed.

Article 239.

The Company shall establish an internal control system commensurate with its business nature and asset scale and conduct regular inspections and evaluations of the completeness and effectiveness of its internal control.

The Company shall institute a compliance management mechanism and conduct regular inspections and evaluations of its compliance with laws, regulations, regulatory provisions and internal control system.

Article 240.

The Company shall establish and improve an internal control system to curb money laundering and perform its anti-money laundering obligation pursuant to the applicable provisions including the Anti-Money Laundering Law of the People’s Republic of China.

Article 241.

The Company shall establish a sound system for the protection of the rights and interests of insurance consumers pursuant to the Law of the People’s Republic of China on Protection of Consumer Rights and Interests.

Chapter 21 Trade Unions

Article 242.

The Company’s employees may form trade unions and carry on trade union activities to protect their legal rights. The Company shall provide the necessary conditions for such activities.

Chapter 22 Merger and Division of the Company

Article 243.

In the event of the merger or division of the Company, a plan shall be presented by the Company’s Board of Directors and shall be approved in accordance with the procedures stipulated in the Company’s Articles of Association. The Company shall then go through the relevant approval process. A shareholder who objects to the plan of merger or division shall have the right to demand the Company or the shareholders who consent to the plan of merger or division to acquire such dissenting shareholders’ shares at a fair price. The contents of the resolution of merger or division of the Company shall constitute special documents which shall be available for inspection by the shareholders of the Company.

Unless otherwise provided by paragraph 2 of Article 259 of the Company’s Articles of Association, the aforesaid documents shall be sent by mail to holders of Overseas-Listed Foreign-Invested Shares to the address registered in the register of shareholders.

Article 244.

The merger of the Company may take the form of either merger by absorption or merger by the establishment of a new company. In the event of a merger, the merging parties shall execute a merger agreement and prepare a balance sheet and an inventory of assets. The Company shall notify its creditors within ten (10) days of the date of the Company’s merger resolution and shall publish a public notice in a newspaper within thirty (30) days of the date of the Company’s merger resolution.

After merger, any rights in relation to debtors and any indebtedness of each of the merged parties shall be assumed by the Company which survives the merger or the newly established company.

Article 245.

Where there is a division of the Company, its assets shall be divided up accordingly. In the event of division of the Company, the parties to such division shall execute a division agreement and prepare a balance sheet and an inventory of assets. The Company shall notify its creditors within then (10) days of the date of the Company’s division resolution and shall publish a public notice in a newspaper within thirty (30) days of the date of the Company’s division resolution.

The debts of the Company prior to the division shall be assumed jointly and severally by the companies arising from the division, except for those which written agreement has been reached with the creditor in respect of repayment of the debts prior to the division.

Article 246.

The Company shall, in accordance with law, apply for change in its registration with the company registration authority where a change in any item in its registration arises as a result of any merger or division. Where the Company is dissolved, the Company shall apply for cancellation of its registration in accordance with law.

Where a new company is established, the Company shall apply for registration thereof in accordance with law. Where the Company increases or decreases its registered capital, the procedures for alteration of registration shall be handled at the company registration authority in accordance with law.

Any merger, division, capital increase and decrease of the Company shall be submitted to the CBIRC for approval.

Chapter 23 Dissolution and Liquidation

Article 247.

If dissolution is necessary due to a merger or division of the Company, the Company shall be liquidated.

In the event that the Company is liquidated under the situation as set out in the paragraph above, such liquidation shall be carried out in accordance with relevant laws and administrative regulations.

In the event that the Company is declared insolvent pursuant to law, insolvent liquidation shall be carried out in accordance with laws regarding enterprise insolvency.

Article 248.

If the Company is unable to pay off due debts, with the consent from the competent insurance regulator, the People’s Court will declare the Company insolvent according to law. If the Company is declared insolvent, the People’s Court will arrange insurance regulators, relevant authorities and personnel to form a liquidation committee to carry out liquidation.

Where the Company is dissolved or is declared insolvent in accordance with law, the life insurance contracts and reserves held by it shall be transferred to other insurance companies with life insurance business operation. If the Company fails to enter into transfer agreements with other insurance companies, the competent insurance regulator will designate insurance companies with life insurance business operation to receive the life insurance contracts and reserves. In case of any transfer or receipt of the life insurance contracts and reserves mentioned in the preceding paragraph resulting from designation of the competent insurance regulator, the legitimate rights and interests of the insured and beneficiary shall be maintained.

Article 249.

Where the Board of Directors decides to liquidate the Company for any reason other than the Company’s declaration of its own insolvency, the Board shall include in its notice convening a shareholders’ general meeting for such purpose a statement that after making full inquiry into the affairs of the Company, the Board of Directors is of the opinion that the Company will be able to pay its debts in full within twelve (12) months from the commencement of the liquidation.

Upon the passing of the resolution by the shareholders in a general meeting for the liquidation of the Company, all functions and powers of the Board of Directors shall cease.

The liquidation committee shall act in accordance with the instructions of the shareholders’ general meeting to make a report at least once every year to the shareholders’ general meeting on the committee’s income and expenses, the business of the Company and the progress of the liquidation; and to present a final report to the shareholders’ general meeting on completion of the liquidation.

The liquidation of the Company shall be supervised and guided by the CBIRC.

Article 250.

The liquidation committee shall, within ten (10) days of its establishment, send notices to creditors and shall, within sixty (60) days of its establishment, publish a public announcement at a newspaper.

A creditor shall, within thirty (30) days of receipt of the notice, or for creditors, who have not personally received such notice, within forty-five (45) days of the date of the public announcement, claim its rights to the liquidation committee. In claiming its rights, the creditor shall provide evidential material in respect thereof. The liquidation committee shall register the creditor’s rights. In the course of claiming of creditors’ rights, the liquidation committee shall not make any repayment to creditors.

Article 251.

During the liquidation period, the liquidation committee shall exercise the following functions and powers:

(1)	to sort out the Company’s assets and prepare a balance sheet and an inventory of assets<br>respectively;
(2)	to notify the creditors or to publish public announcements;
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(3)	to dispose of and liquidate any unfinished businesses of the Company;
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(4)	to pay all outstanding taxes and taxes arising from the liquidation;
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(5)	to settle claims and debts;
---	---
(6)	to deal with the surplus assets remaining after the Company’s debts have been repaid; and
---	---

(7)	to represent the Company in any civil proceedings.

Article 252.

After it has sorted out the Company’s assets and after it has prepared the balance sheet and an inventory of assets, the liquidation committee shall formulate a liquidation plan and present it to a shareholders’ general meeting or to the people’s court for confirmation.

The Company’s assets shall be distributed in accordance with law or regulation. If there is no applicable law, such distribution shall be carried out in accordance with a fair and reasonable procedure determined by the liquidation committee.

Any surplus assets of the Company remaining after its debts have been repaid in accordance with the provisions of the preceding paragraph shall be distributed to its shareholders according to the class of shares and the proportion of shares held.

During the liquidation period, the Company remains in existence; however, it shall not commence any business activities irrelevant with liquidation. The Company’s assets shall not be distributed to its shareholders prior to repaying debts in accordance with the foregoing provision.

Article 253.

After sorting out the Company’s assets and preparing a balance sheet and an inventory of assets,, the liquidation committee discovers that the Company’s assets are insufficient to repay the Company’s debts in full, the liquidation committee shall immediately apply to the People’s Court for a declaration of insolvency.

After a Company is declared insolvent by a ruling of the People’s Court, the liquidation committee shall transfer all matters arising from the liquidation to the People’s Court.

Article 254.

Following the completion of the liquidation, the liquidation committee shall prepare a liquidation report, a statement of income and expenses received and made during the liquidation period and a financial report, which shall be verified by a Chinese registered accountant and submitted to the shareholders’ general meeting or the insurance regulatory authority for confirmation.

The liquidation committee shall, within thirty (30) days after such confirmation, submit the documents referred to in the preceding paragraph to the Company registration authority and apply for cancellation of registration of the Company, and publish a public announcement relating to the termination of the Company.

Chapter 24 Procedures for Amendment of the Company’s Articles of Association

Article 255.

The Company may amend these Articles of Association in accordance with the requirements of law, administrative regulations and the Company’s Articles of Association.

Upon occurrence of the following events, the Company shall hold a shareholders’ general meeting within three (3) months to amend these Articles of Association:

(1)	these Articles of Association is contradictory to the amended version of the Company Law, the Insurance Law or other<br>applicable laws, administrative regulations or regulatory provisions;
(2)	there is any change to fundamental matters recorded in these Articles of Association or relevant rights, obligations,<br>duties, procedural rules under these Articles of Association; or
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(3)	other matters requiring amendments to these Articles of Association.
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Article 256.

The Company’s Articles of Association shall be amended in the following manner:

(1)	shareholders or entities with right to raise proposal submit the proposal to amend these Articles of Association to the<br>shareholders’ general meeting;
(2)	the shareholders’ general meeting votes on the proposal of amendment to these Articles of Association and pass a<br>resolution by more than two-thirds of shareholders with voting right present at the meeting;
---	---
(3)	the Company submits the application for amendment to these Articles of Association to the CIRC;
---	---
(4)	the Company amends these Articles of Association in accordance with the comments of the CIRC. If the amended Articles of<br>Association comply with relevant regulations, the CIRC will approve the amended Articles of Association. The approved version shall be the prevailing version of these Articles of Association; and
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(5)	registration with company registration authority regarding the amendments.
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Article 257.

The amendment of the Company’s Articles of Association in respect of the following matters shall be submitted to the insurance regulatory authority for approval, and once approved, to the company registration authority for change in registration, followed by public announcement:

(1)	a change in the Company’s name;

(2)	a change in the Company’s scope of business;
(3)	an increase or reduction of the Company’s registered capital;
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(4)	a change of the Company’s share class in whole or in part;
---	---
(5)	an addition of new share class;
---	---
(6)	an addition or cancellation of convertible debentures; or
---	---
(7)	other matters.
---	---

Amendments of the Company’s Articles of Association which involve the contents of the Mandatory Provisions shall become effective upon receipt of the approvals from the securities authority of the State Council and the companies approving department authorized by the State Council. If there is any change relating to the registered particulars of the Company, application shall be made for change in registration in accordance with law.

If amendments to these Articles of Association need to be disclosed pursuant to laws and administrative regulations, they shall be disclosed accordingly.

Chapter 25 Dispute Resolution

Article 258.

The Company shall abide by the following principles for dispute resolution:

(1)

Any disputes or claims arising between holders of the Overseas-Listed Foreign-Invested Shares and the Company; holders of the Overseas-Listed Foreign-Invested and the Company’s directors, supervisors, president, vice presidents, or other senior officers; or holders of the Overseas-Listed Foreign-Invested Shares and holders of Domestic-Invested Shares, in respect of any rights or obligations arising from the Articles of Association, the Company Law or any rights or obligations conferred or imposed by the Company Law and special regulations (including other relevant laws) or any other relevant laws and administrative regulations concerning the affairs of the Company shall be submitted for arbitration.

When a dispute or claim of rights referred to in the preceding paragraph is submitted for arbitration, the entire claim or dispute must be referred to arbitration, and all persons who have a cause of action based on the same facts giving rise to the dispute or claim or whose participation is necessary for the resolution of such dispute or claim, shall, where such person is the Company, the Company’s shareholders, directors, supervisors, president, vice presidents, or other senior officers of the Company, comply with the arbitration.

Disputes in respect of the definition of shareholders and disputes in relation to the register of shareholders need not be resolved by arbitration.

(2)

A claimant may elect for arbitration to be carried out at either the China International Economic and Trade Arbitration Commission in accordance with its Rules or the Hong Kong International Arbitration Center in accordance with its Securities Arbitration Rules. Once a claimant submits a dispute or claim to arbitration, the other party must submit to the arbitral body elected by the claimant.

If a claimant elects for arbitration to be carried out at Hong Kong International Arbitration Center, any party to the dispute or claim may apply for a hearing to take place in Shenzhen in accordance with the Securities Arbitration Rules of the Hong Kong International Arbitration Center.

(3)	If any disputes or claims of rights are settled by way of arbitration in accordance with sub-paragraph (1) of this<br>Article, the laws of the PRC govern, save as otherwise provided in law and administrative regulations.
(4)	The award of an arbitral body shall be final and conclusive and binding on all parties.
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Chapter 26 Notices and Public Announcements

Article 259.

Notices, communications or other written documents of the Company (including but not limited to annual reports, interim reports, quarterly reports, notice of meetings, listing documents, circulars to shareholders, proxy forms and extraordinary announcements) shall be sent by the following means:

(1)	by hand;
(2)	by email;
---	---
(3)	by fax or email;
---	---
(4)	subject to laws, administrative regulations and relevant provisions of securities regulatory authority of the place where<br>the Company is listed, by publishing on the website of designated by the Company and the stock exchanges;
---	---
(5)	by announcement on newspapers and other designated media; or
---	---
(6)	by other means acceptable to securities regulatory authority of the place where the Company is<br>listed.
---	---

Even otherwise provided in these Articles of Association regarding the release or notification manner of any notices, communications or other written materials, in compliance with the listing rules of the place where the Company is listed, the Company may choose to resort to the means set forth in sub-paragraph (4) in the first paragraph of this Article for releasing notices, communications or other written materials instead of delivery by hand or by postage prepaid mail of written documents to each shareholder of overseas listed foreign shares.

Article 260.

If the securities regulatory authority of the place where the Company is listed requires the Company’s documents to be sent, mailed, distributed, delivered, published or otherwise provided in both English and Chinese versions, and if the Company has made proper arrangement confirming with its shareholders whether they would like to receive English or Chinese version, the Company may, upon request expressed by shareholders, send only English or Chinese version (as the case may be) to relevant shareholders, subject to and pursuant to applicable laws and regulations.

Article 261.

All notices which are to be sent by mail shall be clearly addressed, postage pre-paid, and shall be put in envelopes before being posted by mail. Such letters of notice shall be deemed to have been received by shareholders five (5) days after the date of dispatch.

Article 262.

Any notices, document, information or written statements from the shareholders or directors to the Company shall be delivered personally or sent by registered mail to the legal address of the Company.

Article 263.

Shareholders or directors of the Company who want to prove that certain notices, documents, information or written statements have been sent to the Company shall provide evidential materials showing that such notices, documents, information or written statements have been sent to the Company by normal methods within designated times, and that the mailing address is correct and the postage is fully paid.

Chapter 27 Special Matters of Corporate Governance

Article 264.

If the Company has one of the following possible failures in its corporate governance mechanism, it may carry out the internal corrective procedures and apply to the CBIRC for guidance:

(1)	the Board of Directors is not established for over one (1) year;
(2)	conflicts exist among the directors of the Company for a long period of time and cannot be resolved through<br>shareholders’ general meetings;
---	---
(3)	the Company fails to convene a shareholders’ general meeting for over one (1) year;
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(4)	the proportion of shareholders’ votes fails to reach the proportion specified by law or these Articles of<br>Association, resulting in a failure of passing an effective resolution at the shareholders’ general meeting for over one (1) year;
(5)	proposals for capital increase due to insolvency cannot be passed; or
---	---
(6)	the existing governance mechanism of the Company fails to operate normally, resulting in significant difficulties in the<br>operation and management of the Company, and other circumstances as identified by the CBIRC.
---	---

In the event that any failure of the corporate governance mechanism described above occurs and such failure cannot be resolved by the internal corrective procedures adopted by the Company, the Company, shareholders individually or jointly holding over one-third of shares of the Company, and more than half of the directors shall have the right to apply to the CBIRC for its supervision and guidance.

Article 265.

The CBIRC conducts supervision and provides guidance on the failure of the corporate governance mechanism on a case by case basis. If a substantial risk of governance is identified, which has significantly prejudiced or may significantly prejudice the legitimate rights and interests of insurance consumers or the security of insurance funds, shareholders and the Company undertake to accept regulatory measures taken by the CBIRC, such as requesting the Company to increase capital, restricting relevant shareholders’ rights, and transferring the equity interest held in the Company. For circumstances being considered serious, shareholders and the Company undertake to accept the rectification and takeover measures adopted by the CBIRC against the Company.

Chapter 28 Supplementary

Article 266.

In the Articles of Association, references to “accountancy firm” shall have the same meaning as “auditors”.

Article 267.

The phrases “more than”, “within” and “below” herein for the numbers include the numbers indicated themselves, while the phrases “exceed”, “beyond”, “lower than” and “over” exclude the numbers indicated themselves.

Article 268.

The Company’s Articles of Association are written in both Chinese and English. Both texts shall be equally valid. If there is any discrepancy between the two versions, the Chinese version of the Articles of Association shall prevail.

Article 269.

The Company shall designate the media recognized by regulatory authorities for the publication of its public announcements and any other information required for disclosure.

Article 270.

The Company shall formulate related transaction management policies, information disclosure management policies, internal control and compliance management policies and internal audit policies in accordance with applicable laws, regulations, rules and regulatory documents.

Article 271.

Appendices to these Articles of Association include the Procedural Rules for Shareholders’ General Meetings, the Procedural Rules for Board of Directors Meetings, and the Procedural Rules for Meetings of the Supervisory Board.

Article 272.

These Articles of Association shall take effect from the date when they are passed by shareholders’ general meeting and approved by the CBIRC.

Article 273.

In the event of any inconsistency between the relevant laws, regulations, rules, regulatory documents and the requirements of regulatory authorities of the place where the shares of the Company are listed, and these Articles of Association, the relevant laws, regulations, rules, regulatory documents and the requirements of regulatory authorities of the place where the shares of the Company are listed shall prevail.

Article 274.

The Company’s Board of Directors shall have the power to interpret the Company’s Articles of Association.

EX-2.5

Exhibit 2.5

Description of rights of each class of securities

registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”)

American Depositary Shares (“ADSs”), each representing five H Shares of par value RMB 1.00 per share (the “H Shares”) of China Life Insurance Company Limited (“we,” “our company,” “our,” “us,” or the “Company”) are listed and traded on the New York Stock Exchange and, in connection with this listing (but not for trading), the H Shares are registered under Section 12(b) of the Exchange Act. This exhibit contains a description of the rights of (i) the holders of H Shares and (ii) ADS holders. Shares underlying the ADSs are held by Deutsche Bank Trust Company Americas, as depositary (the “Depositary”), and holders of ADSs will not be treated as holders of the shares.

Description of HShares

The following are summaries of material provisions of our amended and restated articles of association and the applicable laws and regulations of the People’s Republic of China (the “PRC”), insofar as they relate to the material terms of our H Shares. Notwithstanding this, because it is a summary, it may not contain all the information that you may otherwise deem important. For more complete information, you should read the entire articles of association, which has been filed with the SEC as an exhibit to our annual report on Form 20-F for the financial year ended December 31, 2019 (the “Form 20-F”).

Type and Class of Securities (Item 9.A.5 of Form 20-F)

The Company’s H Shares have a par value of RMB 1.00 per share. The number of H Shares that have been issued and outstanding as of the last day of the financial year ended December 31, 2019 is set forth on the cover of the Form 20-F. The Company’s H Shares may be held in either certificated or uncertificated form. Subject to the applicable securities laws, regulations and listing rules where the securities of the Company are listed, you may refer to “Item 10.B. Additional Information — Articles of Association — Restrictions on Transferability and the Share Register” for restrictions on share transfers.

Preemptive Rights (Item 9.A.3 of Form 20-F)

See “Item 10. Additional Information — Articles of Association — Increases in Share Capital” of the Form 20-F.

Limitations or Qualifications (Item 9.A.6 of Form 20-F)

See “Item 8. Financial Information — A. Consolidated Statements and other Financial Information — Policy on Dividend Distributions,” “Item 10. Additional Information — B. Articles of Association” and “Item 12. Description of Securities Other than Equity Securities — D. American Depositary Shares” of the Form 20-F.

Other Rights (Item 9.A.7 of Form 20-F)

Not applicable.

Rights of the Shares (Item 10.B.3 of Form 20-F)

See “Item 8. Financial Information — A. Consolidated Statements and Other Financial Information — Policy on Dividend Distributions” and “Item 10. Additional Information — B. Articles of Association” of the Form 20-F.

Requirements for Amendments (Item 10.B.4 of Form 20-F)

See “Item 10. Additional Information — B. Articles of Association — Voting Rights and Shareholders’ Meetings” of the Form 20-F.

Limitations on the Rights to Own Shares (Item 10.B.6 of Form 20-F)

See “Item 10. Additional Information — D. Exchange Controls” and “Item 12. Description of Securities Other than Equity Securities — D. American Depositary Shares” of the Form 20-F, as well as the disclosure below on American Depositary Shares as required by Items 12.D.1 and 12.D.2 of Form 20-F.

Provisions Affecting Any Change of Control (Item 10.B.7 ofForm 20-F)

See “Item 10. Additional Information — B. Articles of Association” of the Form 20-F.

Ownership Threshold (Item 10.B.8 of Form 20-F)

There is no such provision in the Company’s Articles of Association governing the ownership threshold above which shareholder ownership must be disclosed. Shareholders will, however, be required to disclose shareholder ownership in according with the applicable securities laws, regulations and listing rules where the securities of the Company are listed. Please also see “Item 10. Additional Information — B. Articles of Association — Restrictions on Ownership” of the Form 20-F, as well as the disclosure below on American Depositary Shares as required by Items 12.D.1 and 12.D.2 of Form 20-F.

Differences Between the Law of Different Jurisdictions (Item 10.B.9 ofForm 20-F)

See “Item 10. Additional Information — B. Articles of Association — Certain Differences Between PRC Company Law and Delaware Corporate Law” and “Item 16G — Corporate Governance” of the Form 20-F.

Changes in Capital (Item 10.B.10 of Form 20-F)

See “Item 10. Additional Information — B. Articles of Association” of the Form 20-F.

Debt Securities (Item 12.A of Form 20-F)

Not applicable.

Warrants and Rights (Item 12.B of Form20-F)

Not applicable.

Other Securities (Item 12.C ofForm 20-F)

Not applicable.

Description of American Depositary Shares (Items 12.D.1 and 12.D.2 ofForm 20-F)

The Depositary issues the ADSs. Each ADS represents an ownership interest of five H Shares, deposited with the custodian, as agent of the Depositary, under the deposit agreement dated January 4, 2010 (as subsequently amended, the “Deposit Agreement”), among our company, the Depositary, and the holders of the American Depositary Receipts (“ADRs”) thereunder. Each ADS also represents any securities, cash or other property deposited with the Depositary, but which it has not distributed directly to you. In our description, references to ADRs include the statements you will receive which reflect your ownership of ADSs.

The Depositary’s corporate trust office is located at 60 Wall Street, New York, NY 10005, USA. The principal executive office of the Depositary is located at 60 Wall Street, New York, NY 10005, USA.

You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, by having an ADS registered in your name on the books of the Depositary, you are an ADS holder. This description assumes you hold your ADSs directly. If you hold the ADSs through your broker or financial institution nominee, you must rely on the procedures of the broker or financial institution to assert the rights of an ADS holder described in this section. You should consult with your broker or financial institution to find out what those procedures are.

Because the Depositary’s nominee will be the registered owner of the shares, you must rely on it to exercise the rights as a shareholder on your behalf. Your rights as an ADS holder as well as the rights and obligations of the Depositary and its agents are set out in the Deposit Agreement. By holding an ADR, you become party to the Deposit Agreement. The Deposit Agreement and the ADSs are governed by New York law. However, our obligations to the holders of our H Shares will continue to be governed by the laws of the PRC, which may be different from laws in the United States.

The following is a summary of the material terms of the Deposit Agreement. For more complete information, you should read the entire Deposit Agreement and the form of ADR which contains the terms of your ADSs. The Deposit Agreement (including the form of ADR) has been filed with the U.S. Securities and Exchange Commission (the “SEC”) as an exhibit to a Registration Statement on Form F-6 (File No. 333-164005) for our company.

Share Dividends and Other Distributions

How will you receive dividends and other distributions on the H Shares underlying your ADSs?

We may make various types of distributions with respect to our securities. The Depositary has agreed to the extent reasonably practicable and subject to certain other considerations, to pay to you the cash dividends or other distributions it or the custodian receives on H Shares or other deposited securities, after deducting its expenses and any applicable taxes. You will receive these distributions in proportion to the number of underlying H Shares that your ADSs represent.

Except as stated below, to the extent the Depositary is legally permitted, it will deliver distributions to ADS holders in proportion to their interests in the following manner:

Cash. The Depositary will distribute any U.S. dollars available to it resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof (to the extent applicable), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) the distribution being impermissible or impracticable with respect to certain registered holders, and (iii) deduction of the Depositary’s expenses in (1) converting any foreign currency to U.S. dollars to the extent that it determines that the conversion may be made on a reasonable basis, (2) to the extent that it determines that the transfer may be made on a reasonable basis, transferring foreign currency or U.S. dollars to the United States by such means as the Depositary may determine, (3) obtaining any approval or license of any governmental authority required for the conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time, and (4) making any sale by public or private means in any commercially reasonable manner.

H Shares. In the case of a distribution in H Shares, the Depositary will issue additional ADRs to evidence the number of ADSs representing these H Shares. Only whole ADSs will be issued. Any H Shares which would result in fractional ADSs will be sold, and the net proceeds will be distributed to the ADS holders entitled thereto.

Rights to receive additional H Shares. In the case of a distribution of rights to subscribe for additional H Shares or other rights, subject to the timely provision by us of evidence satisfactory to the Depositary that the Depositary may lawfully distribute such rights, the Depositary may arrange for ADS holders to instruct the Depositary as to the exercise of these rights. In the event we do not furnish such evidence, provided that the sale of such rights is practicable, the Depositary may sell these rights if practicable and distribute to you the net proceeds of such sale. However, in the event we do not furnish such evidence and the sale of such rights cannot practicably be accomplished by reason of non-transferability of such rights, limited markets therefor, their short duration or otherwise, the Depositary may allow such rights to lapse, in which case ADS holders will not receive anything.

We have no obligation to file a registration statement under the Securities Act of 1933 in order to make any rights available to ADS holders.

Other distributions. In the case of a distribution of securities or property other than those described above, the Depositary may either:

●	distribute the securities or property in any manner it deems equitable and practicable;
●	to the extent the Depositary deems distribution of the securities or property not to be equitable and practicable, sell the securities or property, as applicable, and distribute any net<br>proceeds in the same way it distributes cash; or
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●	hold the distributed property in which case the ADSs will also represent the distributed property.
---	---

Any U.S. dollars will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents will be withheld without liability and dealt with by the Depositary in accordance with its then current practices.

The Depositary may choose any practical method of distribution for any specific ADS holder, including the distribution of foreign currency, securities or property, or it may retain these items, without paying interest on or investing them, on behalf of the ADS holder as deposited securities.

The Depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders.

Deposit, Withdrawal and Cancellation

How does the Depositary issue ADSs?

The Depositary will issue ADSs if you or your broker deposits H Shares or evidence of rights to receive H shares with the custodian.

H Shares deposited with the custodian must be accompanied by specified documents, including instruments showing that the H Shares have been properly transferred or endorsed to the person on whose behalf the deposit is being made.

The custodian will hold all deposited H Shares for the account of the Depositary. ADS holders thus have no direct ownership interest in the H Shares and only have such rights as are contained in the Deposit Agreement. The custodian will also hold any additional securities, property and cash received on or in substitution for the deposited H Shares. We refer to the deposited H Shares and any such additional items as “deposited securities.”

Upon each deposit of H Shares, receipt of related delivery documentation and compliance with other applicable provisions of the Deposit Agreement, including the payment of the fees and charges of the Depositary and any taxes or other fees or charges owing, the Depositary will issue an ADR or ADRs to or upon the order of the person entitled to the ADR evidencing the aggregate number of ADSs to which such person is entitled.

All of the ADSs issued will, unless specifically requested to the contrary, be part of The Depositary Trust Company’s direct registration system utilized by the Depositary, pursuant to which the Depositary may record ownership of ADRs without the issuance of a certificate, and such ownership will be evidenced by periodic statements issued by the Depositary to the relevant holders, showing the number of ADSs registered in the holder’s name. An ADS holder can request that the ADSs not be held through the direct registration system and that certificated ADRs be issued.

How do ADS holders cancel an ADS and obtain deposited securities?

When you surrender your ADS pursuant to the terms and conditions of the Deposit Agreement, the Depositary will, upon payment of certain applicable fees, charges and taxes and upon receipt of proper instructions, deliver the underlying H Shares to an account designated by you maintained by us or an accredited intermediary, such as a bank, acting as a registrar for the deposited securities. At your risk, expense and request, the Depositary may deliver deposited securities at such other place as you may request.

Subject to any amendment of the General Instructions I.A.(1) of Form F-6, the Depositary may only restrict the withdrawal of deposited securities in connection with:

●	temporary delays caused by closing our transfer books or those of the Depositary, or the deposit of H Shares in connection with voting at a shareholders’ meeting, or the payment of<br>dividends;
●	the payment of fees, taxes and similar charges; or
---	---
●	compliance with any U.S. or foreign laws or governmental regulations relating to the ADRs or to the withdrawal of deposited securities.
---	---

Voting Rights

How do you vote?

After receipt from us a notice of a meeting or solicitation of consents or proxies of holders of H Shares or other deposited securities, the Depositary will distribute to the holders of ADSs a notice containing information in our notice and any solicitation materials and informing such holders that each holder of the record date set by the Depositary, subject to the provisions of applicable Hong Kong or PRC law, may instruct the Depositary as to the exercise of the voting pertaining to deposited securities represented by the relevant holder’s ADSs and the manner in which such instructions may be given, including the giving of a discretionary proxy to a person designated by us. For instructions to be valid, the Depositary must receive them on or before the date specified. The Depositary will try, as far as is practical, subject to the provisions of the underlying H Shares or other deposited securities, to vote or to have its agents vote the H Shares or other deposited securities as you instruct. The Depositary will only vote or attempt to vote as you instruct. The Depositary itself will not exercise any voting discretion. Furthermore, neither the Depositary nor its agents are responsible for any failure to carry out any voting instructions, for the manner in which any vote is cast or for the effect of any vote.

RecordDates

The Depositary may, after consultation with us, fix record dates for the determination of the ADS holders who will be entitled:

●	to receive a dividend, distribution or rights; or
●	to give instructions for the exercise of voting rights at a meeting of holders of H Shares or other deposited securities,
---	---

all subject to the provisions of the Deposit Agreement.

Reports and Other Communications

Will you be able to view our reports?

The Depositary will make available for inspection by holders of the ADSs at the Depositary’s office any written communications received from us, which are both (1) received by the custodian or its nominee as a holder of the deposited securities and (2) made generally available to the holders of the deposited securities. We will furnish these communications in English when so required by any rules or regulations of the SEC.

Additionally, if we make any written communications generally available to holders of our shares, including the Depositary or the custodian, and we request the Depositary to provide them to ADS holders, the Depositary will mail copies of them, or, at its option, summaries of them, to ADS holders.

Feesand Expenses

What fees and expenses will you be responsible for paying?

ADS holders will be charged a fee for each issuance of ADSs, including issuances resulting from distributions of shares, rights and other property, and for each surrender of ADSs in exchange for deposited securities. The fee in each case is US$5.00 for each 100 ADSs, or any portion thereof, issued or surrendered.

The following additional charges will be incurred by the ADS holders, by any party depositing or withdrawing shares or by any party surrendering ADRs or to whom ADRs are issued (including, without limitation, issuance pursuant to a share dividend or share split declared by us or an exchange of shares regarding the ADRs or the deposited securities or a distribution of ADRs), whichever is

applicable:

●	to the extent not prohibited by the rules of any stock exchange or interdealer quotation system upon which the ADSs are traded, a fee of $1.50 per ADR or ADRs for transfers of certificated<br>ADRs made;
●	to the extent not prohibited by the rules of any stock exchange or interdealer quotation shares system upon which the ADSs are traded, a fee of $0.02 or less per ADS (or portion thereof)<br>for any cash distribution;
---	---
●	a fee for the distribution of securities, such fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of<br>those securities (treating all such securities as if they were shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the Depositary to those entitled thereto;
---	---
●	stock transfer or other taxes and other governmental charges;
---	---
●	cable, telex and facsimile transmission and delivery charges;
---	---
●	transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited<br>securities;
---	---

●	expenses of the Depositary in connection with the conversion of foreign currency into U.S. dollars; and
●	such fees and expenses as are incurred by the Depositary, including without limitation expenses incurred in connection with compliance with foreign exchange control regulations or any law<br>or regulation relating to foreign investment, in delivery of deposited securities or otherwise in connection with the Depositary’s or its custodian’s compliance with applicable law, rule or regulation.
---	---

We will pay all other charges and expenses of the Depositary and any agent of the Depositary, except the custodian, under agreements from time to time between us and the Depositary. The fees described above may be amended from time to time.

Payment of Taxes

ADS holders must pay any tax or other governmental charge payable by the custodian or the Depositary on any ADS, deposited security or distribution. If an ADS holder owes any tax or other governmental charge, the Depositary may (1) deduct the amount of the tax or charge from any cash distributions, or (2) sell deposited securities and deduct the amount owing from the net proceeds of the sale. In either case the ADS holder remains liable for any shortfall. Additionally, if any tax or governmental charge is unpaid, the Depositary may also refuse to effect any registration, registration of transfer, split-up or combination of deposited securities or withdrawal of deposited securities, except under limited circumstances mandated by securities regulations. If any tax or governmental charge is required to be withheld on any non-cash distribution, the Depositary may sell the distributed property or securities to pay those taxes and distribute any remaining net proceeds to the ADS holders who are entitled to them.

Reclassifications, Recapitalizations and Mergers

If we take specified actions that affect the deposited securities, including (1) any change in par value, split-up, consolidation, cancellation or other reclassification of deposited securities, or (2) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or

sale of all or substantially all of our assets, then the Depositary may choose to:

●	amend the form of ADR;

●	distribute additional or amended ADRs;
●	distribute cash, securities or other property it has received in connection with these actions;
---	---
●	sell any securities or property received and distribute the proceeds as cash; or
---	---
●	none of the above.
---	---

If the Depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part of the deposited securities, and each ADS will then represent a proportionate interest in that property.

Amendment and Termination

How may the Deposit Agreement be amended?

We may agree with the Depositary to amend the Deposit Agreement and the terms of the ADSs without your consent for any reason. You will be given a notice at least 30 days in advance of any amendment that imposes or increases any fees or charges (other than share transfer or other taxes and other governmental charges, transfer or registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or that will otherwise prejudice any substantial existing right of ADS holders. At the time an amendment becomes effective, you are considered, by continuing to hold your ADSs, to consent and agree to the amendment and to be bound by the Deposit Agreement and the terms of the ADSs as amended. Any amendments or supplements which (i) are reasonably necessary (as agreed by us and the Depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act of 1933 or (b) the ADSs or H Shares to be traded solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by holders, shall be deemed not to prejudice any substantial rights of holders. Notwithstanding the foregoing, an amendment can become effective before notice is given if this is necessary to ensure compliance with a new law, rule or regulation adopted by a governmental body.

No amendment will impair your right to surrender your ADSs and receive the deposited securities, except in order to comply with mandatory provisions of applicable law.

How maythe Deposit Agreement be terminated?

Upon the resignation or removal of the Depositary pursuant to the Deposit Agreement, the Depositary shall, at our written direction, terminate the Deposit Agreement by giving the ADSs holders at least 30 days’ prior notice. After termination, the Depositary’s only responsibility will be (1) to deliver deposited securities to ADS holders who surrender their ADRs, and (2) to hold or sell distributions received on deposited securities. As soon as practicable after the expiration of six months from the termination date, the Depositary will sell the deposited securities which remain and hold the net proceeds of such sales as long as it may lawfully do so, without liability for interest, in trust for the pro rata benefit of ADS holders who have not surrendered their ADRs. After making the sale, the Depositary will have no obligations except to account for the proceeds and other cash. The Depositary will not be required to invest the proceeds or pay interest on them.

Limitations on Obligations and Liability to ADS Holders

Limits on our obligations and the obligations of the Depositary; limits on liability to ADR holdersand holders of ADSs

Prior to the issue, registration, registration of transfer, split-up, combination, or cancellation of any ADRs or the delivery of any distribution in respect of the ADRs, the Depositary and its custodian may require you to pay, provide or deliver:

●

payment of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of shares or other deposited securities upon any applicable register and (iii) any applicable fees and expenses described in the ADR;

●

the production of proof satisfactory to it of (i) the identity and genuineness of any signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial ownership of any securities, payment of applicable taxes or governmental charges, or legal or beneficial ownership and the nature of such interest, information relating to the registration of the shares on the books maintained by or on our behalf for the transfer and registration of shares, and compliance with applicable law, regulations, provisions of or governing deposited securities and terms of the Deposit Agreement and the ADR, as it may deem necessary or proper; and

---

●	compliance with such regulations as the Depositary may establish consistent with the Deposit Agreement.

The Deposit Agreement expressly limits the obligations and liabilities of the Depositary, ourselves and our respective agents. Neither we nor the Depositary nor any such agent will be liable if:

●	any present or future law, regulation of the United States, Hong Kong, the PRC or any other country, or of any governmental or regulatory authority or stock exchange, the provisions of or<br>governing any deposited securities, act of God, war or other circumstance beyond its control shall prevent, delay or subject to any civil or criminal penalty any act which the Deposit Agreement or any ADR provides shall be done or performed by<br>it;
●	it exercises or fails to exercise discretion authorized under the Deposit Agreement;
---	---
●	it performs its obligations without gross negligence or bad faith;
---	---
●	it takes any action or fails to take any action in reliance upon the advice of or information from legal counsel, accountants, any person presenting shares for deposit, any registered<br>holder of ADSs or any other person believed by it to be competent to give such advice or information; or
---	---
●	it relies upon on any documents it believes in good faith to be genuine and to have been properly executed.
---	---

Neither the Depositary nor its agents have any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities or the ADRs. We and our agents shall only be obligated to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities or the ADRs, which in our opinion may involve us in expense or liability, if indemnity satisfactory to us against all expense, including fees and disbursements of counsel, and liability is furnished as often as we require. The Depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in connection with the Deposit Agreement, any registered holder or holders of ADSs, any ADSs or otherwise to the extent such information is requested or required by or pursuant to any lawful authority, including without limitation laws, rules, regulations, administrative or judicial process of, banking, securities or other regulators.

The Depositary will not be responsible for failing to carry out instructions to vote the deposited securities or for the manner in which the deposited securities are voted or the effect of the vote. In no event shall the Depositary or any of its agents be liable for any indirect, special, punitive or consequential damages.

The Depositary may own and deal in deposited securities and in ADSs.

Disclosure of interests in ADSs

We may from time to time request you and other holders and beneficial owners of ADSs to provide information as to:

●	the capacity in which you and other holders and beneficial owners own or owned ADSs;
●	the identity of any other persons then or previously interested in those ADSs; and
---	---
●	the nature of that interest and various other matters.
---	---

You and other holders and beneficial owners will be subject to the provisions of the Hong Kong Securities and Futures Ordinance (the “Ordinance”) and any other legislation or regulations of Hong Kong from time to time in effect regarding the disclosure of interests in shares. For this purpose, “interest” has the meaning provided in the Ordinance. Under the Ordinance, you may have a duty to notify us and the Hong Kong Stock Exchange if you become aware that your interest in H Shares, including your interest in H Shares represented by ADSs, equals or exceeds 5% of long positions in our issued H share capital or 5% of long positions and 1% of short positions in our issued H share capital. You are also further required to notify us and the Hong Kong Stock Exchange of certain changes in your interest in the shares, or if you cease to have such interest or acquired more of our issued share capital. Under the Ordinance, we have certain rights and duties to make inquiries of persons whom we know or have reasonable cause to believe to be interested in our H Shares, including those represented by ADSs, concerning such persons’ interests in our H Shares. In the event that any person to whom we have made such inquiries fails to respond, or provides false information in response, such person may be subject to sanctions and criminal penalties.

The Depositary has agreed that it will use reasonable efforts to comply with our written instructions requesting that it forward any such requests for information relating to your interests to you. By holding an ADS or an interest in an ADS, you will be agreeing to comply with these requests.

Requirements for Depositary Actions

We, the Depositary or the custodian may refuse to:

●	issue, register or transfer an ADR or ADRs;
●	effect a split-up or combination of ADRs;
---	---
●	deliver distributions on any such ADRs; or
---	---
●	permit the withdrawal of deposited securities, unless the Deposit Agreement provides otherwise,
---	---

until the following conditions have been met:

●	the holder has paid all taxes, governmental charges and fees and expenses as required in the Deposit Agreement;
●	the holder has provided the Depositary with any information it may deem necessary or proper, including, without limitation, proof of identity and the genuineness of any signature;<br>and
---	---

●	the holder has complied with such regulations as the Depositary may establish under the Deposit Agreement.

The Depositary may also suspend the issuance of ADSs, the deposit of H Shares, the registration, transfer, split-up or combination of ADRs, or the withdrawal of deposited securities (unless the Deposit Agreement provides otherwise), if the register for ADRs or any deposited securities is closed or if we or the Depositary decides it is advisable to do so.

Books of Depositary

The Depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADSs. You may inspect these records at our office during regular business hours, but solely for the purpose of communicating with other holders in the interest of business matters relating to the Deposit Agreement.

The Depositary will maintain facilities for the delivery and receipt of ADSs.

EX-8.1

Exhibit 8.1

List of Significant Subsidiaries of the Registrant

Name of Subsidiary	Jurisdiction of<br>Incorporation	Proportion of Ownership Interest<br>Owned by China Life
中国人寿资产管理有限公司<br> China Life Asset Management Company Limited	The People’s Republic of China	60%<br> (directly)
中国人寿富兰克林资产管理有限公司<br> China Life Franklin Asset Management Company Limited ^(1)^	Hong Kong	50%^(2)^<br> (indirectly through<br>affiliate)
中国人寿养老保险股份有限公司<br><br><br><br> <br>China Life Pension Company Limited	The People’s Republic of China	74.27%^(3)^<br> (directly and indirectly through<br>affiliate)
国寿安保基金管理有限公司<br><br><br><br> <br>China Life AMP Asset Management Co., Ltd.	The People’s Republic of China	85.03%^(4)^<br> (indirectly through<br>affiliate)
国寿财富管理有限公司<br> <br><br><br><br>China Life Wealth Management Company Limited	The People’s Republic of China	100%^(5)^<br> (indirectly through<br>affiliate)
(1) Formerly<br>known as China Life Asset Management (Hong Kong) Company Limited.<br> <br>(2) AMC, which is 60% owned by us, owns<br>50%.<br> <br>(3) We own 70.74% and AMC, which is 60% owned by us, owns 3.53%.<br><br><br>(4) AMC, which is 60% owned by us, owns 85.03%.<br><br><br>(5) AMC, which is 60% owned by us, owns 48%, and China Life AMP, which is 85.03% owned by AMC, owns 52%.

EX-12.1

Exhibit 12.1

CERTIFICATION

I, Su Hengxuan, certify that:

I have reviewed this annual report on Form 20-F of China Life Insurance Company Limited;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is<br>made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the<br>preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
c)	Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this<br>report based on such evaluation; and
---	---
d)	Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the<br>company’s internal control over financial reporting; and
---	---

The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report<br>financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
---	---
Date: April 29, 2020	By:	/s/ Su Hengxuan
---	---	---
	Name: Su Hengxuan
	Title: President and Executive Director

EX-12.2

Exhibit 12.2

CERTIFICATION

I, Huang Xiumei, certify that:

I have reviewed this annual report on Form 20-F of China Life Insurance Company Limited;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is<br>made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the<br>preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
c)	Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this<br>report based on such evaluation; and
---	---
d)	Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the<br>company’s internal control over financial reporting; and
---	---

The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report<br>financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
---	---
Date: April 29, 2020	By:	/s/ Huang Xiumei
---	---	---
	Name: Huang Xiumei
	Title: Principal Financial Officer

EX-13.1

Exhibit 13.1

CERTIFICATION

Pursuant to 18 United States Code §1350

As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned hereby certify that the Annual Report on Form 20-F for the fiscal year ended December 31, 2019 of China Life Insurance Company Limited (the “Company”) filed with the Securities and Exchange Commission on the date hereof fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 29, 2020	By:	/s/ Su Hengxuan
	Name: Su Hengxuan
	Title: President and Executive Director
Date: April 29, 2020	By:	/s/ Huang Xiumei
	Name: Huang Xiumei
	Title: Principal Financial Officer

China Life Insurance Co Ltd 20-F for FY2019

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