Event: China Life released its 2023 annual report. Overall, China Life Insurance's annual report performance was in line with expectations. The profit performance for the single quarter slightly exceeded expectations. NBV grew steadily under a comparable caliber, and the number and quality of agents increased steadily.
1. Profit and net assets: Under the new accounting standards, net profit attributable to mother was 46.2 billion yuan, -30.7% YoY; Q4 was 10.6 billion yuan in a single quarter, -4.7% YoY. Net assets due to mother were 477.1 billion yuan, +30.3% compared to the beginning of the year.
2. Life insurance premiums and value growth: first-year premium payment +16.7% YoY, NBV +11.9% YoY (comparable caliber, after 22 years of data based on a 23-year assumption).
1) First-year premiums: First-year premiums were +16.7%; of these, premiums for 10 years or more were +18.4% year-on-year, accounting for +0.6pct year-on-year. Premium payments for the first year of individual insurance were +12.6% year-on-year, and premiums for 10 years or more were +18.4% year-on-year. The first-year premium payment for long-term banking insurance was +39.4%, of which the proportion of premiums paid for a period of 5 years or more was 47.6%.
2) Hypothetical adjustments and value growth: In 2023, the company's return on investment and risk discount rate assumptions were lowered from 5% and 10% to 4.5% and 8%, respectively. Based on the 23-year assumption, the company's NBV was 36.9 billion yuan, +11.9% year over year, personal insurance NBV margin (based on annualized premiums for the first year) was 31.3%, +0.3 pct year over year, and EV was 1.26 trillion yuan, +5.6% compared to the beginning of the year.
3. Manpower: The agent team is stable in size, and the per capita production capacity has increased significantly.
1) Total manpower: At the end of 2022, 2023H1, and the end of 2023, they were 729,000, 721,000, and 694,000, respectively, -4.8% compared to the beginning of the year and -3.7% compared to the middle of the year.
2) Individual insurance manpower: 668,000, 661,000, and 63 at the end of 2022, 2023H1, and the end of 2023, respectively.
40,000 people, -5.1% compared to the beginning of the year and -4.1% compared to the middle of the year. Among them, the marketing and exhibition teams were 410,000 and 224,000 respectively. Production capacity per capita increased significantly, with monthly first-year premiums per capita +28.6% year-on-year.
3) Diversified manpower: 23,000 banking insurance channel account managers, +9.5% year-on-year, average quarterly actual manpower +8.5% year-on-year ratio.
Group insurance sales personnel were 37,000, -7.5% year-on-year, and high-performing manpower accounted for +4.7pct year over year.
4. Investment: Asset size has grown steadily, and net and total return on investment have declined.
1) Investment assets reached 5.7 trillion yuan, +12% compared to the beginning of the year.
2) The share of fixed deposit and bond investment was -2.5 pct and +3.1 pct, respectively, and the share of stocks and funds was basically stable.
3) Net return on investment 3.77%, -0.23pct year on year; total return on investment 2.68%, -1.26pct year on year; comprehensive return on investment 3.23%, +1.31pct year on year.
4) Asset impairment losses of 53 billion yuan were calculated for the whole year, which are mainly estimated to be AFS stock assets. The surplus balance (other comprehensive income accounts) increased from $4.9 billion at the beginning of the year to $11.4 billion.
Investment advice: Overall, China Life Insurance's annual report performance was in line with expectations. The profit performance for the single quarter slightly exceeded expectations. NBV grew steadily under a comparable scale, and the number and quality of agents increased steadily. We forecast the company's EV growth of 9.1% in 24, maintaining the buy rating.
Risk warning: The equity market has declined sharply, long-term risk-free returns have declined sharply, the growth rate of new premiums has not been as high as expected, and the results of life insurance reform have fallen short of expectations.