08/23/2020 | 06:28am EDT
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中國太平洋保險(集團)股份有限公司
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
(A joint stock company incorporated in the People’s Republic of China with limited liability)
(Stock Code:02601)
ANNOUNCEMENT OF UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
Chairman’s statement
The year 2020 has shaped up to be one that is extraordinary and particularly challenging. With the unexpected outbreak of COVID-19, the whole of China mobilised manpower and resources to combat the pandemic. In the face of growing uncertainties in domestic and overseas economic environments, increasing risks and challenges, and normalisation of the pandemic prevention and control effort, we took matters into our own stride, maintained consistency in strategies, and continued to work hard and make progress.
We achieved a milestone in the history of our development. In the first half of 2020, we issued and listed global depositary receipts (GDRs) on the LSE, making us the first insurer simultaneously listed in Shanghai, Hong Kong and London. Our history over the past 30 years is
compelling evidence of the importance of corporate governance as the bedrock of the development of a business enterprise. It is because of the effectiveness of our governance mechanisms that CPIC has been able to persist in high-quality development, forestall systemic risks, and contribute to national initiatives, China’s real economy as well as the welfare of the Chinese people. And we will not stop there. The recent GDR issuance is another important step to enhance our corporate governance. It raised capital and, more importantly, it pooled talent. In particular, with the participation of high-quality investors such as Swiss Re, we further optimised our ownership structure, which laid a sound foundation for continuous enhancement of corporate governance. Recently, with the election of new directors, the new board of directors has become more diversified, international and professional, which, in turn, will add impetus to the implementation of Transformation 2.0 and long-term development of the Company.
We delivered steady growth of business results. The board closely tracked the status of KPIs and led a broad-basedeffort to promote business development. In the first half of the year, we achieved further growth of comprehensive strength, while maintaining an overall healthy momentum in the core business segments.
- The property and casualty insurance business reported rapid top-line growth, with continued enhancement of underwriting profitability.
- Our life insurance operation met challenges head-on, stepped up on-line management of the agency force, and continued to push for its restructuring and upgrading focusing on the 3 core segments. During the reporting period, we achieved steady growth of the life insurance residual margin, with improvement in new business value (NBV) margin of the individual customer business.
- As for asset management, we persisted in the optimisation of Strategic Asset Allocation (SAA) based on profiles of liabilities, while enhancing infrastructural management, improving mechanisms of outsourcing management and performance evaluation, and pushing forward the building of mid-end systems, with steady investment performance in the first half of 2020.
We pressed ahead with transformation.
- Breakthroughs in innovations of systems and mechanisms. We vigorously promoted the establishment of a market-based, long-termincentive system, with recent on-the-groundprogress in the core business segments of our life and property and casualty operations.
The new structure combines a performance-based pay system, which focuses on value contribution, and a dynamic mechanism to « enlarge the pie » of compensation package. At the same time, given the long-term nature of the insurance business, there are also mechanisms of « lock-ups », « deferred payment » and « claw-backs ». The new scheme covers the key positions of the headquarters of the life and property and casualty subsidiaries, and is more skewed towards the front-line of their branch offices, so as to strike a balance between providing incentives for growth and quality. We believe that the implementation of the new mechanisms will stimulate organisational vitality and improve talent retention, paving the way for sustainable development.
- Further progress of digital empowerment. The data centre in Luojing of Shanghai was proceeding according to plan, with the completion of « CPIC Cloud » and « 3 Data Centres in 2 Locations ». We continued to optimise the distributional framework of the core business systems, fostering seconds-level response capabilities. We also started comprehensive strategic co-operation with leading technology firms and renowned academies, put in place a mode of co-operation for the technology ecosystem, with steady progress in the capacity- building of data processing and AI mid-end output. We formulated a draft plan for the establishment of CPIC Fintech, in a bid to enhance our technology capabilities in an all- around way through marketisation of technology.
- Reaping more benefits from increased intra-Group synergy. We launched a new management system for cross-sellbusiness and intra-Groupcollaboration, integrated customer data, improved tools support and continued to promote the integrated customer- oriented operational model with our own characteristics. In the first half of 2020, business from intra-Groupcollaboration grew rapidly, underpinned by unified customer resources at Group level. Of this, cross-sellpremiums, such as health and automobile insurance cross- sold by life insurance agents amounted to RMB9.95 billion, a growth of 20.9%; the number of customers with 2 insurance policies or above reached 27.29 million, up 6.3%; affiliates under the Group jointly developed more than 400 strategic accounts, which covered 84% of governments at provincial or municipal level.
- Deepening of integrated risk management. We improved the standards, performance evaluation and personnel management systems of risk management, while launching pilot programmes of integrated risk management at grass-rootlevels. We pushed forward the integration of risk management and internal auditing which went downstream to sub-keybranches, so as to enhance the risk management effectiveness at grass-rootlevels. We
initiated the re-engineering of key processes at Group headquarters in a bid to streamline procedures, improve efficiency and strengthen service capabilities. We promoted the sharing of financial resources, deepened centralised management of fund payments and receipts, unified fund management so as to maximise benefits from centralisation.
We promoted the branding of « CPIC Service » in an all-around way. Since the outbreak of the pandemic, we stood side by side with our compatriots and fully participated in the combat against the pandemic. As an insurance company, we provided insurance cover to mitigate disruption to the economy and people’s welfare, while facilitating resumption of businesses and work. We provided comprehensive solutions in the form of funding and risk protection, which targeted the key supply chain and most vulnerable communities and enterprises, supporting firms in key sectors and SMEs in their effort to resume normal business. CPIC employees have been seen at the forefront of the fight against the pandemic, around the pavilions of the China International Import Expo, and at the scene of disaster relief in flood-strickenareas of Southern China, reinforcing a brand image of « Responsible, Smart and Caring » of « CPIC Service ».
We continued to deepen targeted poverty reduction mechanisms. As of the end of the first half of 2020, our poverty alleviation programmes covered 6.414 million registered impoverished people nationwide, and provided a total of RMB2.73 trillion in sum assured to poverty-strickenareas. The « Fang Pin Bao » programme was up and running in over 500 districts and counties of 25 provinces, providing cover against poverty with sum assured of RMB5.96 trillion, benefiting 90 million vulnerable people. We paired up with 2 rural townships and 3 rural villages and succeeded in lifting them out of poverty 9 months earlier than planned. The Rainbow On-lineCharity Platform, stepped up product promotion via live streaming, and delivered nearly 60% increase in turnover dedicated to poverty alleviation. The mode of « shopping and donating to those in need » helps to pool resources and get more people on board in the poverty relief effort.
Thirty years is the prime time of one’s life. As a business enterprise, we will soon celebrate our 30th anniversary, and that means more foresight and even better plan to prepare us for long-term growth opportunities. Recently, we completed a new 3-YearDevelopment Programme of the Group and the Development Programme of Health-relatedBusiness. The former outlines the vision and objectives of the Group between 2020 and 2022, and sets out the 3 development paths, namely, the improvement of product and service supply, the focus on long-term capacity-buildingand long-termincentive systems and the establishment of an integrated risk control system. The latter revisits and revamps the strategic plan for deployment along the health value chain, with a vision of becoming a leading domestic provider of
comprehensive health-related services via capacity-building in products, services, operation and risk management. In the retirement business, we are half way through the implementation of original plans. The « CPIC Home » retirement communities are up and running in various locations across China. Given China’s economic development and demographic shift, the health and retirement sector is becoming increasingly important. The COVID-19 pandemic further raised people’s awareness of public health. Going forward, we will seize opportunities and vigorously deploy along the health and retirement value chain, in a bid to promote the model of « insurance products + health management » and « insurance products + elderly care ».
The quest for great achievements always starts with the first step. The COVID-19pandemic is still spreading globally, triggering an economic slow-down.A new development pattern of « dual circulation » is beginning to take shape in China, with domestic circulation at the core supplemented by international circulation. As for China’s insurance industry, the life insurance market is still facing big challenges, while on the property and casualty insurance side, the comprehensive reform of automobile insurance is expected to be launched soon, with the severity and frequency of natural disasters in 2020 rarely seen before. All these lead to increasing uncertainties in our business operation. But a complex market environment is all the more reason for rationality and consistency in strategies.
In the second half of the year, we will persist in high quality development, while striking a balance between stability of business performance and the acceleration of transformation.
- On the liability side, we will accelerate the shift of growth drivers of property and casualty insurance, pro-actively adapt to the comprehensive reform of automobile insurance, and translate the achievements of previous transformation into our competitive edge. We will also step up the restructuring of the life insurance agency force, upgrade the customer- oriented operational model, and foster new growth engines via service and digital empowerment.
- On the asset management side, in a complex economic environment, it is essential to adhere to the principle of long-term, prudent and value investing, further enhance investment research capabilities, step up post-investment management, strengthen co- ordination of assets and liabilities and continue to improve capabilities in risk prevention and mitigation.
- It is equally important to foster long-term development capabilities in key areas. One is the deepening of long-term incentive systems so as to inject vitality into the organisation; another priority is marketisation of technological innovation. We will emulate leading
insurance companies and renowned Internet firms, and accelerate market-based reform of systems and institutions so that technology can be a more powerful enabler of business development; there is also the building of a platform for health management services by pooling premium resources, both in-house and third-party, and promoting the sharing of core capabilities.
Looking ahead, under the leadership of the board of directors, we will stiffen the sinews, meet challenges head-on, and work relentlessly toward the vision of « being the best in customer
experience, business quality and risk control capabilities, with industry leadership in healthy and steady development« .
Review and analysis of operating results
Business overview
I. Key businesses
We are a leading integrated insurance group in China, and the first insurer simultaneously listed in Shanghai, Hong Kong and London. We provide, through our subsidiaries and along the insurance value chain, a broad range of risk protection solutions, wealth management and asset management services.
In particular, we provide life/health insurance products & services through CPIC Life, property and casualty insurance products & services through CPIC P/C and Anxin Agricultural, and specialised health insurance products & health management services through CPIC Allianz Health. We manage insurance funds, including third-party assets, through our investment arm, CPIC AMC. We conduct pension fund management business and other related asset management business via Changjiang Pension. We also engage in mutual fund management business through CPIC Fund.
In the first half of 2020, China’s insurance market realised a premium income of RMB2,718.624 billion, up 6.5% from the same period of 2019. Of this, premium from life/health insurance companies amounted to RMB1,996.877 billion, a growth of 6.0%, and that from property and casualty insurance companies amounted to RMB721.747 billion, up 7.6%. Measured by direct business premiums, CPIC Life and CPIC P/C are both China’s 3rd largest insurers for life and property and casualty insurance, respectively.
II. Core competitiveness
We are a leading integrated insurance group in China, and the first insurer simultaneously listed in Shanghai, Hong Kong and London, ranking 193rd among Fortune Global 500 released in 2020. On the back of vigorous effort in transformation and competitive insurance expertise, we can capitalise on the growth potential of China’s insurance market.
Focus
We persist in the focus on insurance, and have obtained a full range of insurance-related licences covering life insurance, property and casualty insurance, pension, health insurance, agricultural insurance and asset management. With balanced development of business segments along the insurance value chain, we have fostered top-notch core competitiveness in the insurance business. Our life/health insurance business, with the agency channel as the key driver of both
volume and value growth, centres on protection, pursues product innovation and strives to drive sustainable value growth. The property and casualty insurance persists in business quality control, promotes the shift of growth drivers, with continuous improvement in underwriting profitability. As for investment, we put in place the system of asset liability management (ALM), adhere to prudent, value and long-term investing, and enhance mechanisms to curb cost of liabilities, with sustained improvement in industry-leadingliability-based SAA capabilities. In the first half of the year, in the face of the COVID-19 pandemic, we pro-actively enhanced professional capacity-building, stepped up the on-line operation of the agency force, innovated products and services to seize opportunities arising from the resumption of work and business, and achieved steady business development.
Prudence
We are committed to protection as the central insurance value proposition, and pursue a path of high-quality development with a business philosophy centring on prudence and sustainability. We boast a professional and competent board of directors, an experienced management team and a group-centralised platform of management, with sound corporate governance featuring a clear definition of responsibilities, checks and balances and well-coordinated mechanisms. Through the recent GDR issuance, we raised capital and attracted talent, further optimised shareholding structure, which paved the way for continued improvement in corporate governance and an even more diversified, international and professional board of directors. We established an industry leading system for risk management and internal control, which ensures healthy and sustainable development of the Company.
Dynamism
We persist in customer orientation and forge ahead with transformation in a bid to foster capabilities for sustainable development. In response to trends and dynamics of the industry, we pro-actively invest in emerging business segments such as health care and elderly care, with progress in the new « products + services » model. We use technology to empower the insurance business, seeking to enhance customer experience, operational efficiency and risk management, and facilitate transformation. We boost synergy across various business segments based on customer data mining, so as to boost value creation.
Responsibility
Committed to our responsibility to society, customers and shareholders, we vigorously participate in national initiatives, serve the needs of the real economy, promote the brand image
of « CPIC Service » as one that is « Responsible, Smart and Caring », contributing to a better life of the Chinese people. At the same time, we strive to generate sound returns and give back to our shareholders so that they can benefit from the growth of the Company.
Performance overview
We focused on the core business of insurance, deepened the customer-oriented Strategic Transformation, pursued high quality development and delivered solid business results and sustained increase in overall strength in the reporting period.
I. Performance highlights
During the reporting period, Group operating incomenote 1 amounted to RMB235.481 billion, of which, gross written premiums (GWPs) reached RMB216.597 billion, a growth of 4.2% compared with the same period of 2019. Group net profitnote 2 reached RMB14.239 billion, down by 12.0%, with net operating profitnotes 2, 3 (OPAT) of RMB17.428 billion, a growth of 28.1%. Group embedded value amounted to RMB430.420 billion, an increase of 8.7% from the end of 2019. Of this, value of in-force businessnote 4 reached RMB198.247 billion, up 5.7%. Life insurance business delivered RMB11.228 billion in NBV, down by 24.8% compared with the same period of 2019, with an NBV margin of 37.0%, down by 2.0pt. Property and casualty insurance businessnote 5 recorded a combined ratio of 98.4%, down by 0.2pt. Annualised growth rate of Group investments’ net asset value fell by 0.6pt to 5.3%. As of the end of the reporting period, Group total number of customers amounted to 140.65 million, an increase of 2.09 million from the end of 2019.
Life business NBV growth under pressure, with steady growth of residual margin.
- CPIC Life realised RMB11.228 billion in NBV, down by 24.8%, with an NBV margin of 37.0%, down by 2.0pt. Given the focus on business quality, the NBV margin of the individual customer business stood at 56.5%, up 6.8pt from the same period of 2019.
- The residual margin of life insurance amounted to RMB347.056 billion, a growth of 5.3% from the end of 2019.
- CPIC Life realised a 5.9% growth of renewal business, driving a GWP growth of 0.1%,
reaching RMB138.586 billion.
Improved combined ratio of property and casualty businessnote 5, with rapid top-line growth.
- The control of expenses was intensified in property and casualty insurance business, and
recorded a combined ratio of 98.4%, down by 0.2pt. Of this, loss ratio stood at 59.9%, up 0.6pt, and expense ratio fell to 38.5%, down by 0.8pt.
- GWPs amounted to RMB77.748 billion, an increase of 12.4%. Of this, non-auto business grew by 29.1% and accounted for 38.2% of total property and casualty insurance GWPs, up 4.9pt.
- Automobile insurance enhanced renewal business management and pushed for a shift of growth drivers. Emerging business lines including agricultural and liability insurance experienced rapid development. Of this, agricultural business realised RMB6.274 billion in
direct business premiumsnote 6, with a fast increase in market share.
Persisted in asset allocation stretching across economic cycles and based on profiles of liabilities, with largely stable investment results.
- The share of fixed income investments stood at 79.5%, down by 0.9pt from the end of 2019; that of equity investments 15.5%, down by 0.2pt, and of this, core equity investmentsnote 7 accounted for 8.3% of total investment assets, the same as that at the end of 2019.
- With continued effort to extend asset duration, enhance investment research capabilities and the Tactical Asset Allocation (TAA) process, Group annualised growth rate of investments’ net asset value reached 5.3%, down by 0.6pt from the same period of 2019. Annualised total investment yield was 4.8%, the same as that for the first half of 2019, with annualised net investment yield of 4.4%, down by 0.2pt.
- Group assets under management (AuM) amounted to RMB2,306.305 billion, an increase of 12.9% from the end of 2019. Of this, third-party AuM amounted to RMB753.439 billion, an increase of 20.8%.
Notes:
- Based on PRC GAAP.
- Attributable to shareholders of the parent.
- OPAT is based on net profit on the financial statements, while excluding certain P/L items with short-term volatility an material one-off items which management does not consider to be part of the Company’s day-to-day business operation.
- Based on the Group’s share of CPIC Life’s value of in-force business after solvency.
- Consolidated data of CPIC P/C, Anxin Agricultural and CPIC HK.
- Based on direct business premiums, excluding premium from reinsurance assumed, with consolidation of CPIC P/C and Anxin Agricultural.
- Stocks and equity funds included.
II. Key performance indicators
Unit: RMB million |
|||
As at 30 June 2020/for |
As at 31 December |
||
Indicators |
the period between |
2019/for the period |
Changes (%) |
January and June in |
between January and |
||
2020 |
June in 2019 |
||
Key value indicators |
|||
Group embedded value |
430,420 |
395,987 |
8.7 |
Value of in-force businessnote 1 |
198,247 |
187,585 |
5.7 |
Group net assetsnote 2 |
196,798 |
178,427 |
10.3 |
NBV of CPIC Life |
11,228 |
14,927 |
(24.8) |
NBV margin of CPIC Life (%) |
37.0 |
39.0 |
(2.0pt) |
Combined ratio of CPIC P/C (%) |
98.3 |
98.6 |
(0.3pt) |
Annualised growth rate of investments’ net asset value (%) |
5.3 |
5.9 |
(0.6pt) |
Key operating indicators |
|||
GWPs |
216,597 |
207,809 |
4.2 |
CPIC Life |
138,586 |
138,428 |
0.1 |
CPIC P/C |
76,672 |
68,247 |
12.3 |
Group number of customers (‘000)note 3 |
140,646 |
138,558 |
1.5 |
Average number of insurance policies per customer |
2.02 |
1.95 |
3.6 |
Monthly average agent number (‘000) |
766 |
796 |
(3.8) |
Monthly average first-year commission per agent (RMB) |
857 |
1,247 |
(31.3) |
Surrender rate of CPIC Life (%) |
0.5 |
0.5 |
– |
Annualised total investment yield (%) |
4.8 |
4.8 |
– |
Annualised net investment yield (%) |
4.4 |
4.6 |
(0.2pt) |
Third-party AuM |
753,439 |
623,815 |
20.8 |
CPIC AMC |
269,597 |
194,766 |
38.4 |
Changjiang Pension |
442,217 |
395,277 |
11.9 |
Key financial indicators |
|||
Net profit attributable to shareholders of the parent |
14,239 |
16,183 |
(12.0) |
CPIC Life |
10,147 |
12,259 |
(17.2) |
CPIC P/C |
3,176 |
3,350 |
(5.2) |
Basic earnings per share (RMB)note 2 |
1.57 |
1.79 |
(12.3) |
Net assets per share (RMB)note 2 |
20.55 |
19.69 |
4.4 |
Comprehensive solvency margin ratio (%) |
|||
CPIC Group |
289 |
295 |
(6pt) |
CPIC Life |
242 |
257 |
(15pt) |
CPIC P/C |
275 |
293 |
(18pt) |
Notes:
- Based on the Group’s share of CPIC Life’s value of in-force business after solvency.
- Attributable to shareholders of the parent.
- The Group number of customers refers to the number of applicants and insureds who hold at least one insurance policy within the insurance period issued by one or any of CPIC subsidiaries as at the end of the reporting period. In the event that the applicants and insureds are the same person, they shall be deemed as one customer.
Life/health insurance business
Due to the impact of COVID-19 pandemic, NBV growth was under pressure. CPIC Life stepped up on-line business operation, promoted the restructuring of the agency force, explored the new development mode of « products + services » in a bid to foster new growth drivers. CPIC Allianz Health boosted product and service innovations, deepened Group strategy of synergic development, and recorded rapid business growth.
I. CPIC Life
(I) Business analysis
In the first half of 2020, driven by renewal business growth, CPIC Life reported RMB138.586 billion in GWPs, a growth of 0.1% compared with the same period of 2019. Due to the decline of new business premiums, the NBV fell by 24.8% to RMB11.228 billion. As a result of decreased share of first year premiums (FYPs) from individual customer business, the NBV margin fell by 2.0pt to 37.0%. Given the focus on business quality, the NBV margin of the individual customer business stood at 56.5%, up 6.8pt.
1. Analysis by channels
Unit: RMB million |
||||
For 6 months ended 30 June 2020 |
2020 |
2019 |
Changes (%) |
|
Individual customers |
130,707 |
132,398 |
(1.3) |
|
Agency channel |
126,389 |
126,979 |
(0.5) |
New policies |
19,065 |
26,305 |
(27.5) |
Regular premium business |
14,741 |
22,800 |
(35.3) |
Renewed policies |
107,324 |
100,674 |
6.6 |
Other channelsnote |
4,318 |
5,419 |
(20.3) |
Group clients |
7,879 |
6,030 |
30.7 |
Total GWPs |
138,586 |
138,428 |
0.1 |
Note: Other channels include bancassurance and telemarketing & internet sales, etc.
(1) Business from individual customers
For the reporting period, CPIC Life realised RMB130.707 billion in GWPs from individual customers, down by 1.3%. Of this, new policies from the agency channel amounted to RMB19.065 billion, down by 27.5%, and renewal business RMB107.324 billion, an increase of 6.6%. GWPs from the agency channel accounted for 91.2% of total GWPs, a decrease of 0.5pt from the first half of 2019.
The COVID-19 pandemic was a major disruption to the traditional operational mode of the agency channel, such as off-line marketing, recruitment and basic management activity. To address these challenges, CPIC Life took a host of measures to promote the upgrading of the agency force, such as accelerating on-line operation, improving agent recruitment, enhancing agent training, and increasing technological applications. During the reporting period, monthly average number of agents reached 766,000. Of this, monthly average number of active and high- performing agents reached 207,000 and 121,000, accounting for 27.0% and 15.8% respectively of the total number of agents, with month-on-month recovery in the second quarter. At the same time, CPIC Life vigorously explored the new model of « products + health management » and « products + elderly care » via the health management service of « CPIC Blue Passports », the deposit of human immune cells under the « Life Bank » programme, and retirement communities of « CPIC Home » to help with the acquisition of high-end customers. As of the end of the reporting period, « CPIC Home » had extended over 10,000 certificates of admission into its retirement communities.
Going forward, CPIC Life will persist in customer orientation and high-quality development, « do the right thing » and pursue sustainable value growth. We will intensify efforts to upgrade the agency force, diversify service offerings and promote digital empowerment. To be specific, we will step up the restructuring of the sales force focusing on the core manpower, ultra-high performing agents and new generation agents; vigorously push forward the model of « products + services » as part of the effort to foster the brand name of « CPIC Service »; step up digital
empowerment and the on-line and off-line integration to strengthen capabilities in customer acquisition and up-sell.
For 6 months ended 30 June |
2020 |
2019 |
Changes (%) |
Monthly average agent number (‘000) |
766 |
796 |
(3.8) |
Monthly average FYP per agent (RMB) |
4,183 |
5,887 |
(28.9) |
Monthly average first-year commission per agent (RMB) |
857 |
1,247 |
(31.3) |
Average number of new long-term life insurance policies per agent per month |
1.83 |
1.54 |
18.8 |
(2) Business from group clients
In pursuit of high-quality development, CPIC Life focused on the core customer segments, effectively controlled expenses and risks through business and service innovations, and delivered improved profitability as evidenced by lower direct cost ratio and combined ratio. During the reporting period, the business segment realised RMB7.879 billion in GWPs, up 30.7%. CPIC Life vigorously contributed to China’s social health insurance system by engaging in government-sponsored business such as critical illness programmes, third-party administration of social insurance, long-term care and supplementary medical insurance, which, during the reporting period, covered over 115 million people, cumulatively responded to nearly 14 million service requests, and paid out a total of RMB16 billion in claims. There was cumulatively a total of 36 managed care programmes, covering 32 million people under the social security system in 31 municipalities/prefectures of 12 provinces.
2. Analysis by product types
CPIC Life focus on both traditional and participating products. For the reporting period, traditional business generated RMB55.370 billion in GWPs, up 14.0%. Of this, long-term health insurance contributed RMB28.491 billion, up 2.8%. Participating business delivered RMB70.234 billion in GWPs, down by 11.1%, due to switch of products.
Unit: RMB million |
|||
For 6 months ended 30 June |
2020 |
2019 |
Changes (%) |
GWPs |
138,586 |
138,428 |
0.1 |
Traditional |
55,370 |
48,573 |
14.0 |
Long-term health |
28,491 |
27,717 |
2.8 |
Participating |
70,234 |
79,015 |
(11.1) |
Universal |
49 |
52 |
(5.8) |
Tax-deferred pension |
38 |
38 |
– |
Short-term accident and health |
12,895 |
10,750 |
20.0 |
3. Policy persistency ratio
For 6 months ended 30 June |
2020 |
2019 |
Changes |
Individual life insurance customer 13-month persistency ratio (%)note 1 |
86.9 |
91.7 |
(4.8pt) |
Individual life insurance customer 25-month persistency ratio (%)note 2 |
86.7 |
90.5 |
(3.8pt) |
Notes:
- 13-monthpersistency ratio: premiums from in-force policies 13 months after their issuance as a percentage of premiums from policies which entered into force during the same period.
- 25-monthpersistency ratio: premiums from in-force policies 25 months after their issuance as a percentage of premiums from policies which entered into force during the same period.
The policy persistency of CPIC Life maintained an overall healthy level, with the 13-month and 25-month persistency ratios at 86.9% and 86.7% respectively.
4. Top 10 regions for GWPs
The GWPs of CPIC Life mainly came from economically developed regions or populous areas.
Unit: RMB million |
|||
For 6 months ended 30 June |
2020 |
2019 |
Changes (%) |
GWPs |
138,586 |
138,428 |
0.1 |
Henan |
16,193 |
16,354 |
(1.0) |
Jiangsu |
14,215 |
14,321 |
(0.7) |
Shandong |
11,776 |
11,631 |
1.2 |
Zhejiang |
10,038 |
10,293 |
(2.5) |
Hebei |
8,738 |
8,713 |
0.3 |
Guangdong |
7,486 |
7,646 |
(2.1) |
Heilongjiang |
6,009 |
5,969 |
0.7 |
Hubei |
6,001 |
5,845 |
2.7 |
Shanxi |
5,614 |
5,849 |
(4.0) |
Sichuan |
4,460 |
4,401 |
1.3 |
Subtotal |
90,530 |
91,022 |
(0.5) |
Others |
48,056 |
47,406 |
1.4 |
(II) Financial analysis
Unit: RMB million
For 6 months ended 30 June |
2020 |
2019 |
Changes (%) |
Net premiums earned |
130,489 |
132,811 |
(1.7) |
Investment incomenote |
33,137 |
28,760 |
15.2 |
Other operating income |
1,231 |
1,156 |
6.5 |
Total income |
164,857 |
162,727 |
1.3 |
Net policyholders’ benefits and claims |
(130,183) |
(123,752) |
5.2 |
Finance costs |
(1,141) |
(1,244) |
(8.3) |
Interest credited to investment contracts |
(1,902) |
(1,659) |
14.6 |
Other operating and administrative expenses |
(20,016) |
(25,524) |
(21.6) |
Total benefits, claims and expenses |
(153,242) |
(152,179) |
0.7 |
Profit before tax |
11,615 |
10,548 |
10.1 |
Income tax |
(1,468) |
1,711 |
(185.8) |
Net profit |
10,147 |
12,259 |
(17.2) |
Note: Investment income includes investment income and share of profit / (loss) in equity accounted investees on financial statements.
Investment income for the reporting period was RMB33.137 billion, up 15.2%, mainly because of increase in gains from securities trading and interest income on bond investments.
Net policyholders’ benefits and claims amounted to RMB130.183 billion, up 5.2%, largely due to growth of changes in long-term life insurance contract liabilities.
Unit: RMB million |
|||
For 6 months ended 30 June |
2020 |
2019 |
Changes (%) |
Net policyholders’ benefits and claims |
130,183 |
123,752 |
5.2 |
Life insurance death and other benefits paid |
31,096 |
31,822 |
(2.3) |
Claims incurred |
3,958 |
3,721 |
6.4 |
Changes in long-term life insurance contract liabilities |
88,807 |
82,382 |
7.8 |
Policyholder dividends |
6,322 |
5,827 |
8.5 |
Other operating and administrative expenses for the reporting period amounted to RMB20.016 billion, down by 21.6%.
Income tax for the reporting period was RMB1.468 billion, up by 185.8%, mainly due to adjustment of tax deductible policies on commission and brokerage expenses of insurance companies. The income tax expense booked for 2018 was adjusted in 2019, resulting in a low base in 2019, hence the sharp increase in the first half of 2020. Excluding the above-mentioned factor, income tax for the reporting period would have decreased by 14.7% from the same period
of 2019.
As a result, CPIC Life recorded a net profit of RMB10.147 billion, down by 17.2%.
II. CPIC Allianz Health
In the first half of 2020, CPIC Allianz Health vigorously adapted to the COVID-19 pandemic, leveraged its strengths as a specialised provider of health insurance and management services, and strived to provide high-quality service to Group customers via on-line and off-line channels, doing its share to promote the branding of « Responsible, Smart and Caring » of CPIC Service. In the meantime, despite the adverse impact of the pandemic, it continued to deepen the strategy of boosting development via increased intra-Group synergy, and reported rapid business growth. For the reporting period, it realised RMB4.022 billion in GWPs and health management fee income, a growth of 52.7%, and net profit of RMB23 million.
The company seized the window of opportunity of China’s health insurance market, continuously fostered core competitiveness of health insurance companies. In product development, it supported CPIC Life in its effort to improve the product line-up, drive business development and enhance customer experience, achieving a 57.6% growth of life insurance collaboration business in the first half of 2020; it focused on the transformation in personal lines business of property and casualty insurance, accelerated product upgrading, optimised service allocation, fuelling a 40.6% fast growth of the individual health insurance business of CPIC P/C in the reporting period. The health subsidiary continued to diversify its product offerings and explored product innovation of single illnesses. In respect of operational risk control, it continuously enhanced service quality in insurance application, claims handling, business renewals and customer service, in a bid to enhance customer experience. As for health management, the company stepped up deployment along the health-related value chain by means of partnerships and collaboration, boosted the integration of health management and health insurance so as to promote the development of health insurance business; it diversified the model of « products + services », put in place mechanisms of « insurance + health management » to support customer acquisition and up-sell and customer value generation.
Property and casualty insurance
In the first half of 2020, CPIC P/Cnote introduced effective steps to mitigate the impact of COVID- 19 pandemic, persisted in business quality control, achieved continued improvement in underwriting profitability and rapid premium growth. The capability of customer acquisition
and retention was enhanced in automobile insurance to promote the shift of growth drivers, with further improvement in the combined ratio; non-auto business maintained underwriting profitability, with rapid development of emerging business lines including agricultural and liability insurance.
Note: References to CPIC P/C in this report do not include Anxin Agricultural.
I. CPIC P/C
(I) Business analysis
During the reporting period, in the face of the pandemic, CPIC P/C focused on disease control and prevention on the one hand and the resumption of business on the other. It innovated products and services to help with the resumption of work and business to mitigate the impact of the pandemic. At the same time, CPIC P/C vigorously promoted the branding of CPIC Service, enhanced customer acquisition and retention and deepened risk management to pursue high quality development. It reported GWPs of RMB76.672 billion, up 12.3%, with a combined ratio of 98.3%, a decrease of 0.3pt from the same period of 2019. Of this, the loss ratio stood at 59.7%, up 0.5pt, and the expense ratio reached 38.6%, down by 0.8pt.
1. Analysis by lines of business
Unit: RMB million |
|||
For 6 months ended 30 June |
2020 |
2019 |
Changes (%) |
GWPs |
76,672 |
68,247 |
12.3 |
Automobile insurance |
47,962 |
46,133 |
4.0 |
Compulsory automobile insurance |
11,515 |
10,784 |
6.8 |
Commercial automobile insurance |
36,447 |
35,349 |
3.1 |
Non-automobile insurance |
28,710 |
22,114 |
29.8 |
Agricultural insurance |
5,721 |
3,796 |
50.7 |
Liability insurance |
4,840 |
3,609 |
34.1 |
Health insurance |
4,828 |
2,724 |
77.2 |
Commercial property insurance |
3,553 |
3,441 |
3.3 |
Others |
9,768 |
8,544 |
14.3 |
(1) Automobile insurance
In the first half of 2020, CPIC P/C proactively adapted to challenges such as the slow-down of new vehicle sales and the impact of COVID-19 pandemic, continued to enhance customer acquisition and retention, promoted on-line business operation in an all-around way, accelerated on-line and off-line integration, enhanced risk selection and achieved high-quality development of automobile insurance business.
For the reporting period, CPIC P/C reported GWPs of RMB47.962 billion from automobile business, a growth of 4.0%, with a combined ratio of 97.8%, down by 0.6pt from the first half of 2019. Of this, the loss ratio stood at 59.6%, down by 0.3pt and the expense ratio decreased by 0.3pt to 38.2%.
Going forward, the company will continue to ensure compliance in its business operation, pro- actively adapt to the comprehensive reform of automobile insurance, continuously enhance capabilities in customer acquisition and retention, step up on-line operation, deepen intraGroup synergy, enhance risk selection and pricing, intensify claims management and claims cost control in a bid to drive high-quality development of automobile business.
(2) Non-automobile insurance
For the reporting period, CPIC P/C made great efforts to mitigate the impact of COVID-19, supported China’s national strategies, the real economy and people’s welfare. It accelerated the
development of emerging business lines, continued to enhance business quality control, and recorded GWPs of RMB28.710 billion, up 29.8%, with a combined ratio of 99.7%, up 0.2pt, staying relatively stable. Of the major business lines, commercial property insurance and liability insurance reported further improvement in the combined ratio, with accident insurance recording great improvement in underwriting profitability. Emerging lines such as agricultural and liability insurance continued to grow rapidly.
Out of the above, agricultural insurance stepped up innovations in products, services and technology, and continuously improved services for farmers and rural areas. During the outbreak of COVID-19, it developed an innovative insurance solution insuring against the disruption to the supply of farm produce in large and medium-sized cities, which played an important role in ensuring food supply. In the first half of 2020, the business line delivered RMB5.721 billion in GWPs, up 50.7%.
Guarantee insurance focused on personal lines business and business of using guarantee insurance as a substitute for security deposit, continued to enhance the risk control systems and anti-fraud and credit risk management capabilities, with business risks under control.
Going forward, we will continue to accelerate the development of emerging lines, optimise business mix, step up product and service innovations, and push for an all-around upgrading of the customer-oriented operational capabilities. At the same time, we will strengthen business quality control, establish risk control systems for emerging business, increase digital empowerment, improve technology-driven risk management capabilities based on smart risk control and digital operational platforms, so as to drive healthy and rapid development of the business.
(3) Key financials of major business lines
Unit: RMB million
For 6 months ended 30 June
Name of insurance |
GWPs |
Amounts |
Claims |
Reserves |
Underwriting |
Combined |
|
insured |
profit |
ratio (%) |
|||||
Automobile insurance |
47,962 |
15,217,920 |
24,958 |
65,319 |
945 |
97.8 |
|
Agricultural insurance |
5,721 |
187,745 |
2,223 |
4,636 |
5 |
99.8 |
|
Liability insurance |
4,840 |
19,637,353 |
1,391 |
6,445 |
267 |
89.5 |
|
Health insurance |
4,828 |
157,493,231 |
1,825 |
4,657 |
(345) |
111.7 |
|
Commercial property insurance |
3,553 |
9,145,638 |
1,247 |
5,212 |
59 |
96.7 |
|
2. Top 10 regions for GWPs
CPIC P/C implemented differentiated regional development strategies as per requirements of the Group concerning the 3 Strategic Areas, while considering factors like market potential and local market competitive landscape.
Unit: RMB million |
||||
For 6 months ended 30 June |
2020 |
2019 |
Changes (%) |
|
GWPs |
76,672 |
68,247 |
12.3 |
|
Guangdong |
8,600 |
7,324 |
17.4 |
|
Jiangsu |
8,362 |
7,563 |
10.6 |
|
Zhejiang |
6,760 |
6,543 |
3.3 |
|
Shanghai |
5,220 |
4,960 |
5.2 |
|
Shandong |
4,368 |
3,883 |
12.5 |
|
Beijing |
3,575 |
3,446 |
3.7 |
|
Hebei |
2,992 |
2,518 |
18.8 |
|
Henan |
2,888 |
2,397 |
20.5 |
|
Hunan |
2,785 |
2,368 |
17.6 |
|
Sichuan |
2,684 |
2,453 |
9.4 |
|
Subtotal |
48,234 |
43,455 |
11.0 |
|
Others |
28,438 |
24,792 |
14.7 |
(II) Financial analysis
Unit: RMB million |
|||
For 6 months ended 30 June |
2020 |
2019 |
Changes (%) |
Net premiums earned |
59,304 |
50,563 |
17.3 |
Investment incomenote |
3,432 |
2,440 |
40.7 |
Other operating income |
173 |
118 |
46.6 |
Total income |
62,909 |
53,121 |
18.4 |
Claims incurred |
(35,276) |
(29,853) |
18.2 |
Finance costs |
(281) |
(416) |
(32.5) |
Other operating and administrative expenses |
(23,104) |
(20,186) |
14.5 |
Total benefits, claims and expenses |
(58,661) |
(50,455) |
16.3 |
Profit before tax |
4,248 |
2,666 |
59.3 |
Income tax |
(1,072) |
684 |
(256.7) |
Net profit |
3,176 |
3,350 |
(5.2) |
Note: Investment income includes investment income and share of profit / (loss) in equity accounted investees on financial statements.
Investment income for the reporting period amounted to RMB3.432 billion, up by 40.7%, mainly attributable to higher gains from securities trading.
Other operating and administrative expenses amounted to RMB23.104 billion, up by 14.5%.
This, coupled with the impact of adjustment of policies on deductibles for corporate income tax in the first half of 2019, resulted in a net profit of RMB3.176 billion, a decrease of 5.2% from the same period of 2019.
II. Anxin Agricultural
In the first half of 2020, committed to the high-quality development objectives, Anxin Agricultural continued to cement its branding as a top-notch provider of agricultural insurance, underpinned by innovation and transformation, deepening of integration, empowerment of technology and compliance in business operation. It delivered RMB902 million in GWPs, up 13.5%. Of this, agricultural insurance reported GWPs of RMB598 million, a growth of 10.9%, with a combined ratio of 107.7%, up 15.1pt, due to the impact of a higher loss ratio. It reported net profit of RMB26 million, down by 50.0%.
III. CPIC HK
We conduct overseas business via CPIC HK, a wholly-owned subsidiary. As at 30 June 2020, its total assets stood at RMB1.343 billion, with net assets of RMB552 million. GWPs for the reporting period amounted to RMB277 million, with a combined ratio of 92.4%, and a net profit of RMB12 million.
Asset management
We persist in long-term, value and prudent investing and support the core insurance business with outstanding ALM capabilities. Within the SAA framework, we continued to extend the duration of assets, while seizing market opportunities and dynamically adjusting the procedures of TAA. As a result, we delivered solid investment performance, with Group AuM on steady increase.
I. Group AuM
As of the end of the first half of 2020, Group AuM totalled RMB2,306.305 billion, rising 12.9% from the end of 2019. Of this, Group in-house investment assets amounted to RMB1,552.866 billion, a growth of 9.4%, and third-party AuM RMB753.439billion, an increase of 20.8%, with a fee income of RMB1.059 billion, up 51.3% from the same period of 2019.
Unit: RMB million |
|||
30 June 2020 31 December 2019 |
Changes (%) |
||
Group AuM |
2,306,305 |
2,043,078 |
12.9 |
Group in-house investment assets |
1,552,866 |
1,419,263 |
9.4 |
Third-party AuM |
753,439 |
623,815 |
20.8 |
CPIC AMC |
269,597 |
194,766 |
38.4 |
Changjiang Pension |
442,217 |
395,277 |
11.9 |
II. Group in-house investment assets
During the reporting period, in the face of the formidable challenges of COVID-19 and complex domestic and international environment, China demonstrated solidarity and pushed forward disease prevention and control and social and economic development in a coordinated manner. On the capital markets, interest rates fell sharply and then experienced a V-shaped rebound; the equity market rallied amid steady progress of pandemic control and resumption of business and work, with the ChiNext market rallying even more.
With the guidance of SAA, we conducted TAA with flexibility, seized market opportunities and achieved solid investment results. In fixed income investments, given expectations of lower interest rates, we seized tactical opportunities and increased allocation into T-bonds and local government bonds at a time of interest rate rebound to extend asset duration. We also increased investments in high-qualitynon-public financing instruments to the extent that the liquidity risk is under control. Given possible deterioration of defaults on the fixed income market, we maintained prudence in credit risk exposure.
(I) Consolidated investment portfolios
unit: RMB million |
||||
30 June 2020 |
Share (%) |
Share change from |
Changes (%) |
|
the end of 2019 (pt) |
||||
Group investment assets (total) |
1,552,866 |
100.0 |
– |
9.4 |
By investment category
Fixed income investments |
1,233,918 |
79.5 |
(0.9) |
8.1 |
– Debt securities |
613,802 |
39.5 |
(3.1) |
1.4 |
– Term deposits |
177,168 |
11.4 |
1.0 |
19.9 |
– Debt investment plans |
176,761 |
11.4 |
0.7 |
16.7 |
– Wealth management productsnote 1 |
167,452 |
10.8 |
0.9 |
18.5 |
– Preferred shares |
32,000 |
2.1 |
(0.2) |
– |
– Other fixed income investmentsnote 2 |
66,735 |
4.3 |
(0.2) |
4.1 |
Equity investments |
241,293 |
15.5 |
(0.2) |
8.6 |
– Equity funds |
30,210 |
1.9 |
– |
14.4 |
– Bond funds |
17,738 |
1.1 |
(0.2) |
(2.4) |
– Stocks |
98,545 |
6.4 |
– |
8.8 |
– Wealth management productsnote 1 |
1,475 |
0.1 |
– |
102.3 |
– Preferred shares |
13,763 |
0.9 |
(0.1) |
1.0 |
– Other equity investmentsnote 3 |
79,562 |
5.1 |
0.1 |
9.6 |
Investment properties |
8,121 |
0.5 |
(0.1) |
(2.0) |
Cash, cash equivalents and others |
69,534 |
4.5 |
1.2 |
47.7 |
By investment purpose |
||||
Financial assets at fair value through profit or loss |
10,490 |
0.7 |
0.4 |
112.7 |
Available-for-sale financial assets |
526,093 |
33.9 |
(2.2) |
2.8 |
Held-to-maturity financial assets |
303,424 |
19.5 |
(1.3) |
2.8 |
Interests in associates |
10,305 |
0.7 |
– |
(2.4) |
Investment in joint ventures |
9,883 |
0.6 |
(0.1) |
– |
Loans and other investmentsnote 4 |
692,671 |
44.6 |
3.2 |
18.0 |
Notes:
- Wealth management products include wealth management products issued by commercial banks, collective trust plans by trust firms, special asset management plans by securities firms and credit assets backed securities by banking institutions, etc.
- Other fixed income investments include restricted statutory deposits and policy loans, etc.
- Other equity investments include unlisted equities, etc.
- Loans and other investments include term deposits, cash and short-term time deposits, securities purchased under agreements to resell, policy loans, restricted statutory deposits, investments classified as loans and receivables, and investment properties, etc.
1. By investment category
As of the end of the reporting period, the share of debt securities was 39.5%, a drop of 3.1pt
from the end of 2019. Out of the above, treasury bonds, local government bonds and financial bonds issued by policy banks made up 16.4% of total investment assets, up 0.2pt from the end of 2019, with an average duration of 15.3 years, extended by 0.1 years versus the end of 2019. Moreover, 99.8% of enterprise bonds and financial bonds issued by non-policy banks had an issuer/debt rating of AA/A-1 or above. Out of these, the share of AAA reached 93.7%. We put in place and dynamically enhanced independent internal credit-rating teams and credit risk management systems covering the entire debt securities investment process, namely, before, during and after the investment. In the selection of new securities, we looked at the internal credit-rating of both the debt and debt issuer, identified the credit risk based on our internal credit-rating system and the input from in-house credit analysts, while considering other factors such as macroeconomic conditions, market environment and external credit-ratings in order to make a well-informed investment decision. At the same time, to assess the credit risk of the stock of bond holdings, we followed a uniform and standardised set of regulations and procedures, combining both regular and unscheduled follow-up tracking post the investment. Our corporate/enterprise bond holdings spread over a wide range of sectors with good diversification effect; the debt issuers all boasted sound financial strength, with the overall credit risk under control.
The share of equity investments stood at 15.5%, down by 0.2pt from the end of 2019. Of this, stocks and equity funds accounted for 8.3% of total investment assets, the same as that as of the end of 2019. On the back of market strategy research and in compliance of disciplined TAA processes, we pro-actively seized tactical opportunities on the equity market and realised solid investment performance with an average neutral allocation, supporting the core business of insurance.
As of the end of the reporting period, non-public financing instruments (NPFIs) totalled RMB349.478 billion, accounting for 22.5% of total investment assets, rising 1.6pt from the end of 2019. While ensuring full compliance with regulatory requirements and internal risk control policies, we persisted in prudent management as is inherently required of insurance companies, stayed highly selective about debt issuers and projects and strived to serve the needs of China’s real economy. The underlying projects spread across sectors like infrastructure, non-bank financial institutions, communications & transport and real estate, and were geographically concentrated in China’s prosperous areas such as Beijing, Shanghai, Guangdong and Jiangsu.
Overall, the credit risk of our NPFI holdings is in the comfort zone. All NPFIs had external credit- ratings, and of these, the share of AAA reached 94.7%, and that of AA+ and above 99.9%. 51.8%
of NPFIs were exempt from debt issuer external credit-ratings, with the rest secured with credit- enhancing measures such as guarantee or pledge of collateral.
Mix and distribution of yields of non-public financing instruments
Sectors |
Share of |
Nominal |
Average |
Average remaining |
investments (%) |
yield (%) |
duration (year) |
duration (year) |
|
Infrastructural |
35.6 |
5.4 |
7.2 |
5.4 |
Non-bank financial institutions |
17.2 |
5.0 |
5.4 |
3.9 |
Communications & transport |
16.3 |
5.4 |
6.6 |
4.3 |
Real estate |
15.5 |
4.8 |
7.6 |
6.4 |
Energy and manufacturing |
8.1 |
5.1 |
6.5 |
4.1 |
Others |
7.3 |
5.9 |
8.2 |
5.8 |
Total |
100.0 |
5.2 |
6.9 |
5.0 |
Note: Non-public financing instruments include wealth management products issued by commercial banks, debt investment schemes, collective trust plans by trust firms, special asset management plans by securities firms and credit assets backed securities by banking institutions, etc.
2. By investment purpose
By investment purpose, our in-house investment assets are mainly in three categories, namely, available-for-sale (AFS) financial assets, held-to-maturity (HTM) financial assets as well as loans and other investments. Of this, financial assets at fair value through profit or loss increased by 112.7% from the end of 2019, mainly because of increased allocation in unlisted equities. AFS financial assets increased by 2.8%, mainly as a result of increased investments in stocks and funds. HTM financial assets grew by 2.8% from the end of 2019, mainly due to increased investments in government bonds. Loan and other investments rose by 18.0%, largely attributable to increased allocation in debt investment plans and term deposits.
(II) Group consolidated investment income
For the reporting period, net investment income totalled RMB32.663 billion, up 10.0%. This stemmed mainly from increased interest income on fixed income investments. Annualised net investment yield reached 4.4%, down by 0.2pt compared with the same period of 2019.
Total investment income amounted to RMB38.429 billion, up 17.8%, mainly attributable to increase in realised gains and interest income on fixed income investments, with annualised total investment yield at 4.8%, the same as that for the first half of 2019.
Annualised growth rate of investments’ net asset value fell by 0.6pt to 5.3%, as a result of decrease in net of fair value changes of AFS assets.
Unit: RMB million |
|||
For 6 months ended 30 June |
2020 |
2019 |
Changes (%) |
Interest income from fixed income investments |
29,091 |
26,670 |
9.1 |
Dividend income from equity investments |
3,188 |
2,639 |
20.8 |
Rental income from investment properties |
384 |
382 |
0.5 |
Net investment income |
32,663 |
29,691 |
10.0 |
Realised gains |
8,106 |
2,522 |
221.4 |
Unrealised (losses) / gains |
(414) |
898 |
(146.1) |
Charge of impairment losses on investment assets |
(2,484) |
(1,077) |
130.6 |
Other incomenote 1 |
558 |
577 |
(3.3) |
Total investment income |
38,429 |
32,611 |
17.8 |
Net investment yield (annualised) (%)note 2 |
4.4 |
4.6 |
(0.2pt) |
Total investment yield (annualised) (%)note 2 |
4.8 |
4.8 |
– |
Growth rate of investments’ net asset value (annualised) (%)notes 2,3 |
5.3 |
5.9 |
(0.6pt) |
Notes:
- Other income includes interest income on cash and short-term time deposits, securities purchased under agreements to resell, share of profit / (loss) in equity accounted investees, and investment income through the step acquisition of a subsidiary, etc.
- The impact of securities sold under agreements to repurchase was considered in the calculation of net investment yield. Average investment assets as the denominator in the calculation of net / total investment yield and growth rate of investments’ net asset value are computed based on the Modified Dietz method.
- Growth rate of investments’ net asset value = total investment yield + net of fair value changes of AFS booked as other comprehensive income / (loss) / average investment assets.
- Total investment yield on a consolidated basis
Unit: % |
|||
For 6 months ended 30 June |
2020 |
2019 |
Changes |
Total investment yield (annualised) |
4.8 |
4.8 |
– |
Fixed income investmentsnote |
4.9 |
5.1 |
(0.2pt) |
Equity investmentsnote |
4.1 |
3.1 |
1.0pt |
Investment propertiesnote |
9.6 |
9.1 |
0.5pt |
Cash, cash equivalents and othersnote |
0.7 |
0.9 |
(0.2pt) |
Note: The impact of securities sold under agreements to repurchase was not considered.
-
Third-partyAuM
(I) CPIC AMC
In the first half of 2020, CPIC AMC adhered to prudent business development strategies, effectively adapted to the adverse impact of COVID-19, faithfully implemented regulatory requirements and supported economic development in an all-around way. As of the end of the reporting period, its third-party AuM amounted to RMB269.597 billion, an increase of 38.4% from the end of 2019.
During the reporting period, the company intensified its support for the fight against the pandemic. It contacted, at the earliest possible time, 7 owners of partnership projects, which had planned to invest a total of over RMB10 billion in Hubei Province, and given the extraordinary circumstances, opened a green channel to fast-track work process so that funds could be channelled to local firms at the forefront of the combat against the pandemic. At the same time, it seized opportunities arising from the national economy, looked closely for high- quality assets, and steadily promoted the development of alternative investment business through co-operation with target clients such as large State-owned Enterprises (SOEs) under the central and local governments or in major cities. For the first half of 2020, it registered a total of 10 alternative investment products involving an amount of RMB33.1 billion, maintaining its industry leadership.
Under the guidelines of « market-based,product-driven development », the company faithfully implemented new rules on asset management, and steadily promoted the business of asset management products. In the first half of 2020, based on a full review of its target client mix and insights into customer needs, it conducted effective communication with key institutional clients, particularly banks and insurance companies, and successfully marketed its strategies and products. As of the end of the reporting period, the subsidiary reported RMB208.6 billion in third-party asset management products and AuM combined, an increase of 62.8% from the end of 2019.
(II) Changjiang Pension
In the first half of 2020, Changjiang Pension coordinated pandemic control and prevention and business development, took a host of steps to support the resumption of business and work, continued to deepen its presence in the 3 pillars of old-age provision, pro-actively increased investments in human resources and technology, strived to provide « Responsible, Smart and Caring » service, and achieved high-quality development. As at 30 June 2020, its third-party assets under trustee management amounted to RMB182.049 billion, up 22.6% from the end of 2019; third-party assets under investment management reached RMB442.217 billion, an increase of 11.9%.
In the first pillar, it continued with steady management of the social security pension fund and was entrusted multiple times with additional funds, with the investment performance leading among comparable portfolios. As for the second pillar, the company initiated the trustee and investment management of 26 occupational annuity schemes, with industry-leading performance so far in the year; it continued to deepen its presence in enterprise annuity business, and was selected as manager of a number of large enterprise annuity plans in public tendering; it focused on the marketing of the « Shengshi Ruyi » collective group retirement product to serve the needs of hybrid ownership and pay structure reform of SOEs. In the third pillar, Changjiang Pension pro-actively adapted to the changing market environment, and continued to deliver solid investment performance for the tax-deferred pension schemes; in the light of regulatory requirements and new rules on asset management, it focused on the development of long-duration individual retirement plans based on net asset value, which cumulatively served nearly 20 million individual customers; it dynamically improved the product line-up for institutional clients; in the first half of 2020, the company registered RMB20.8 billion in debt investment plans, ranking the 3rd in the industry, with firm steps to promote innovation and transformation of the alternative business.
Analysis of specific items
I. Items concerning fair value accounting
Unit: RMB million |
||||
30 June 2020 |
31 December 2019 |
Changes |
Impact of fair value |
|
changes on profitsnote |
||||
Financial assets at fair value through profit or loss |
10,490 |
4,931 |
5,559 |
(414) |
Available-for-sale financial assets |
526,093 |
511,822 |
14,271 |
(2,220) |
Total |
536,583 |
516,753 |
19,830 |
(2,634) |
Note: Impact on profits of change of fair value for AFS financial assets refers to charges for impairment losses.
II. Solvency
We calculate and disclose our core capital, actual capital, minimum required capital and solvency margin ratio in accordance with requirements by CBIRC. The solvency margin ratio of domestic insurance companies in the PRC shall meet certain prescribed levels as stipulated by CBIRC.
Unit: RMB million |
|||
30 June |
31 December |
Reasons of change |
|
2020 |
2019 |
||
CPIC Group |
|||
Profit for the period, capital injection, profit |
|||
Core capital |
485,527 |
453,838 |
distribution to shareholders, and change of fair |
value of investment assets |
|||
Profit for the period, capital injection, profit |
|||
Actual capital |
495,527 |
463,838 |
distribution to shareholders, and change of fair |
value of investment assets |
|||
Minimum required capital |
171,167 |
157,481 |
Growth of insurance business and changes to |
asset allocation |
|||
Core solvency margin ratio (%) |
284 |
288 |
|
Comprehensive solvency margin ratio (%) |
289 |
295 |
|
CPIC Life |
|||
Profit for the period, profit distribution to the |
|||
Core capital |
366,003 |
357,883 |
shareholders, and change of fair value of |
investment assets |
|||
Profit for the period, profit distribution to the |
|||
Actual capital |
366,003 |
357,883 |
shareholders, and change of fair value of |
investment assets |
|||
Minimum required capital |
150,960 |
139,354 |
Growth of insurance business and changes to |
asset allocation |
|||
Core solvency margin ratio (%) |
242 |
257 |
|
Comprehensive solvency margin ratio (%) |
242 |
257 |
|
CPIC P/C |
|||
Profit for the period, profit distribution to the |
|||
Core capital |
40,872 |
38,900 |
shareholders, and change of fair value of |
investment assets |
|||
Profit for the period, profit distribution to the |
|||
Actual capital |
50,872 |
48,900 |
shareholders, and change of fair value of |
investment assets |
|||
Minimum required capital |
18,484 |
16,713 |
Growth of insurance business and changes to |
asset allocation |
|||
Core solvency margin ratio (%) |
221 |
233 |
|
Comprehensive solvency margin ratio (%) |
275 |
293 |
|
CPIC Allianz Health |
Core capital |
1,142 |
Actual capital |
1,142 |
Minimum required capital |
919 |
Core solvency margin ratio (%) |
124 |
Comprehensive solvency margin ratio (%) |
124 |
1,084 |
Profit for the period, change of fair value of |
investment assets |
|
1,084 |
Profit for the period, change of fair value of |
investment assets |
|
702 Growth of insurance business and changes to asset allocation
155
155
Anxin Agricultural
Profit for the period, profit distribution to the
Core capital1,7251,684 shareholders, and change of fair value of investment assets
Actual capital |
1,725 |
Minimum required capital |
629 |
Core solvency margin ratio (%) |
274 |
Comprehensive solvency margin ratio (%) |
274 |
Profit for the period, profit distribution to the
1,684 shareholders, and change of fair value of investment assets
557 Growth of insurance business and changes to asset allocation
303
303
Please refer to the summaries of solvency reports published on the websites of SSE (www.sse.com.cn), SEHK (www.hkexnews.hk), LSE (www.londonstockechange.com) and the Company (www.cpic.com.cn) for more information about the solvency of CPIC Group and its main insurance subsidiaries.
III. Sensitivity analysis of price risk
The following table shows the sensitivity analysis of price risk, i.e. the pre-tax impactnote 1 of fair value changes of all equity assetsnote 2 in the case of a 10% change in stock prices as at the end of the reporting period on our profit before tax and shareholders’ equity (assuming the fair value of equity assetsnote 2 moves in proportion to stock prices), other variables being equal.
Unit: RMB million |
||
From January to June 2020 / 30 June 2020 |
||
Market value |
||
Impact on profit before tax |
Impact on equity |
|
+10% |
22 |
7,791 |
-10% |
(22) |
(7,791) |
Notes:
- After policyholder participation.
- Equity assets do not include bond funds, money market funds, wealth management products, preferred shares and other equity investments, etc.
IV. Insurance contract liabilities
Insurance contract liabilities include unearned premium reserves, claim reserves, and long-term life insurance contract liabilities. All three are applicable in life insurance business, while only the first two are applicable in property and casualty insurance.
As at 30 June 2020, insurance contract liabilities of CPIC Life amounted to RMB1,071.691 billion, representing an increase of 10.2% from the end of 2019. Those of CPIC P/C amounted to RMB107.069 billion, an increase of 14.3%. The rise was mainly caused by business expansion and accumulation of insurance liabilities.
We also test the adequacy of reserves at the balance sheet date. If the testing shows that reserves set aside for each type of insurance contracts are sufficient, there is no need for additional provisions; if not, then additional reserves are required.
Unit: RMB million |
|||
30 June 2020 |
31 December 2019 |
Changes (%) |
|
CPIC Life |
|||
Unearned premium reserves |
8,063 |
4,500 |
79.2 |
Claim reserves |
5,117 |
4,472 |
14.4 |
Long-term life insurance contract liabilities |
1,058,511 |
963,540 |
9.9 |
CPIC P/C |
|||
Unearned premium reserves |
64,542 |
56,643 |
13.9 |
Claim reserves |
42,527 |
37,026 |
14.9 |
V. Investment contract liabilities
Investment contract liabilities mainly cover the non-insurance portion of insurance contracts, and those contracts which failed to pass the testing of significant insurance risk.
Unit: RMB million |
|||||||
31 December |
Increase for the period |
Decrease for the period |
30 June |
||||
2019 |
Deposits |
Interest |
Others |
Deposits |
Fees |
2020 |
|
received |
credited |
withdrawn |
deducted |
||||
Investment contract liabilities |
75,506 |
9,603 |
1,902 |
472 |
(3,651) |
(80) |
83,752 |
VI. Reinsurance business
In the first half of 2020, premiums ceded to reinsurers are shown below:
Unit: RMB million |
|||
For 6 months ended 30 June |
2020 |
2019 |
Changes (%) |
CPIC Life |
5,105 |
3,110 |
64.1 |
Traditional |
1,742 |
949 |
83.6 |
Long-term health |
1,373 |
630 |
117.9 |
Participating |
213 |
131 |
62.6 |
Universal |
27 |
39 |
(30.8) |
Tax-deferred pension |
– |
– |
/ |
Short-term accident and health |
3,123 |
1,991 |
56.9 |
CPIC P/C |
11,218 |
9,523 |
17.8 |
Automobile |
3,207 |
3,103 |
3.4 |
Non-automobile |
8,011 |
6,420 |
24.8 |
In the first half of 2020, premiums from reinsurance assumed are set out below:
Unit: RMB million |
|||
For 6 months ended 30 June |
2020 |
2019 |
Changes (%) |
CPIC Life |
|||
Traditional |
238 |
– |
/ |
Long-term health |
1 |
– |
/ |
Participating |
– |
– |
/ |
Universal |
– |
– |
/ |
Tax-deferred pension |
– |
– |
/ |
Short-term accident and health |
– |
– |
/ |
CPIC P/C |
607 |
430 |
41.2 |
Automobile |
– |
– |
/ |
Non-automobile |
607 |
430 |
41.2 |
As at the end of the first half of 2020, assets under reinsurance are set out below:
Unit: RMB million |
|||
30 June 2020 |
31 December 2019 |
Changes (%) |
|
CPIC Life |
|||
Reinsurers’ share of insurance contract liabilities |
|||
Unearned premiums |
1,639 |
1,067 |
53.6 |
Claim reserves |
257 |
246 |
4.5 |
Long-term life insurance contract liabilities |
12,867 |
12,340 |
4.3 |
CPIC P/C |
|||
Reinsurers’ share of insurance contract liabilities |
|||
Unearned premiums |
8,032 |
6,283 |
27.8 |
Claim reserves |
7,015 |
6,117 |
14.7 |
We determine retained insured amounts and reinsurance ratio according to insurance regulations and our business development needs. To lower the concentration risk of reinsurance, we also entered into reinsurance agreements with various leading international reinsurance companies. The criteria for the selection of reinsurance companies include their financial strength, service level, insurance clauses, claims settlement efficiency and price. In general, only domestic reinsurance companies with proven records or international reinsurance
companies of ratings of A- or above would qualify as our reinsurance partners. Besides China Reinsurance (Group) Corporation and its subsidiaries, i.e., China Life Reinsurance Company Ltd., and China Property & Casualty Reinsurance Company Ltd., our reinsurance partners also include international giants like Swiss Reinsurance Company (瑞 士 再 保 險 公 司) and Munich Reinsurance Company (慕尼黑再保險公司).
VII. Main subsidiaries & associates and equity participation
Unit: RMB million
Company |
Main business scope |
Registered |
Group |
Total |
Net |
Net |
capital |
shareholdingnote2 |
assets |
assets |
profit |
||
Property indemnity |
||||||
insurance; liability |
||||||
insurance; credit and |
||||||
guarantee insurance; |
||||||
China Pacific |
short-term health and |
|||||
accident insurance; |
||||||
Property |
||||||
reinsurance of the above |
19,470 |
98.5% |
191,724 |
41,557 |
3,176 |
|
Insurance Co., |
||||||
said insurance; insurance |
||||||
Ltd. |
||||||
funds investment as |
||||||
approved by relevant |
||||||
laws and regulations; |
||||||
other business as |
||||||
approved by CBIRC. |
||||||
Personal lines insurance |
||||||
including life insurance, |
||||||
health insurance, |
||||||
accident insurance, etc. |
||||||
denominated in RMB or |
||||||
foreign currencies; |
||||||
reinsurance of the above |
||||||
said insurance; statutory |
||||||
life/health insurance; |
||||||
agency and business |
||||||
relationships with |
||||||
China Pacific |
domestic and overseas |
|||||
insurers and |
||||||
Life Insurance |
8,420 |
98.3% |
1,397,179 |
80,262 |
10,147 |
|
organisations, loss |
||||||
Co., Ltd. |
||||||
adjustment, claims and |
||||||
other business entrusted |
||||||
from overseas insurance |
||||||
organisations; insurance |
||||||
funds investment as |
||||||
prescribed by Insurance |
||||||
Law of the PRC and |
||||||
relevant laws and |
||||||
regulations; international |
||||||
insurance activities as |
||||||
approved; other business |
||||||
as approved by CBIRC. |
||||||
Changjiang |
Group pension and |
3,000 |
61.1% |
4,999 |
3,476 |
258 |
Pension |
annuity business; |
|||||
Insurance Co., |
individual pension and |
Ltd. |
annuity business; short- |
|||||
term health insurance; |
||||||
accident insurance; |
||||||
reinsurance of the |
||||||
aforementioned |
||||||
business; outsourced |
||||||
money management |
||||||
business denominated in |
||||||
RMB or foreign |
||||||
currencies for the |
||||||
purpose of elderly |
||||||
provisions; pension |
||||||
insurance asset |
||||||
management business; |
||||||
advisory business |
||||||
pertaining to asset |
||||||
management; insurance |
||||||
fund management as |
||||||
allowed by the PRC laws |
||||||
and regulations; other |
||||||
business as approved by |
||||||
CBIRC. |
||||||
Asset management of |
||||||
capital and insurance |
||||||
funds; outsourcing of |
||||||
Pacific Asset |
fund management; |
|||||
advisory services relating |
||||||
Management |
2,100 |
99.7% |
4,078 |
3,371 |
241 |
|
to asset management; |
||||||
Co., Ltd. |
||||||
other asset management |
||||||
business as allowed by |
||||||
the PRC laws and |
||||||
regulations. |
||||||
Health and accident |
||||||
insurance denominated |
||||||
in RMB yuan or foreign |
||||||
currencies; health |
||||||
insurance sponsored by |
||||||
the government or |
||||||
CPIC Allianz |
supplementary to state |
|||||
Health |
medical insurance |
1,700 |
77.1% |
9,981 |
1,234 |
23 |
Insurance Co., |
policies; reinsurance of |
|||||
Ltd. |
the above said insurance; |
|||||
health insurance-related |
||||||
advisory and agency |
||||||
business; insurance funds |
||||||
investment as approved |
||||||
by relevant laws and |
||||||
regulations; other |
||||||
business as approved by |
CBIRC. |
|||||||
Agricultural insurance; |
|||||||
property indemnity |
|||||||
insurance; liability |
|||||||
insurance; statutory |
|||||||
liability insurance; credit |
|||||||
Anxin |
and guarantee insurance; |
||||||
Agricultural |
short-term health |
700 |
51.3% |
4,208 |
1,524 |
26 |
|
Insurance Co., |
insurance and accident |
||||||
Ltd. |
insurance; property |
||||||
insurance relating to rural |
|||||||
areas and farmers; |
|||||||
reinsurance of the above |
|||||||
said insurance; insurance |
|||||||
agency business. |
|||||||
Fund management |
|||||||
CPIC Fund |
business; the launch of |
||||||
mutual funds and other |
|||||||
Management |
150 |
50.8% |
643 |
536 |
37 |
||
business as approved by |
|||||||
Co., Ltd. |
|||||||
competent authorities of |
|||||||
the PRC. |
|||||||
Notes: |
- Figures for companies in the table are on an unconsolidated basis. For other information pertaining to the Company’s main subsidiaries, associates or invested entities, please refer to Review and analysis of operating results of this report, and Scope of Consolidation, Interests in Associates, Investment in Joint Ventures as Notes to the Interim Condensed Consolidated Financial Information.
- Figures for Group shareholding include direct and indirect shareholdings.
VIII. Seizure, attachment, and freeze of major assets or their pledge as collateral
The Company’s assets are mainly financial assets. The repurchase of bonds forms part of the Company’s day-to-day securities investment activities, and as of the end of the reporting period, no abnormality was detected.
IX. Gearing ratio
30 June 2020 |
31 December 2019 |
Changes |
|
Gearing ratio (%) |
88.3 |
88.3 |
– |
Note: Gearing ratio = ( total liabilities + non-controlling interests) / total assets.
Outlook
I. Market environment and business plan
China’s development is facing increasing risks and challenges. A new development pattern of « dual circulation » is taking shape in China, with domestic circulation at the core and supplemented by international circulation. From a long-term perspective, rising per capita income, population ageing, urbanisation, economic restructuring, shift of government roles and the cut of tax and administrative fees will continue to drive sustainable development of China’s insurance industry. The COVID-19 pandemic as a major public health crisis promises to further raise public awareness of and stimulate demand for insurance and health care service, and China remains one of the most dynamic and fastest-growing insurance markets of the world. Traditional domestic insurance companies are accelerating transformation; foreign players are increasing presence in China; Internet insurance firms and specialised insurance intermediaries are thriving. All of them will stimulate dynamic development of the insurance market.
Going forward, with a vision of « achieving leadership in healthy and stable development of the insurance industry », and the targets of « being the best in customer experience, business mix and risk control capabilities », the Company will deepen Transformation 2.0 in the 5 keys areas of talent, digitalisation, intra-Group synergy, governance and deployment, introduce long-term incentive systems, promote marketisation of technological innovation, establish a comprehensive platform of health-related business, enhance the professionalism of investment management, and achieve the modernisation of corporate governance, so as to foster core competitiveness for the future. Meanwhile, it will also promote the branding of « CPIC Service », vigorously serve national strategies, support the real economy, improve the welfare of the Chinese people, ensure the prevention of major risks, and achieve more success in high-quality development.
II. Major risks and mitigating measures
Firstly, in terms of macroeconomic environment, the global spread of COVID-19, escalation of trade frictions and rising anti-globalisation sentiment severely disrupted the world industry chain and business models, with increasing uncertainties in short-term economic growth. At the same time, normalisation of resumption of business and work will run in tandem with the control and prevention of the pandemic. As China’s economic growth slows down, rising credit defaults, the pressure on long-termrisk-free interest rates and deterioration of liquidity risk may materially impact insurance and asset management business.
Secondly, in terms of industry development, China’s insurance market is also slowing down, coupled with a shift of the development model, and accumulation of risks over the years which have begun to surface. The regulator will continue to intensify its efforts to mitigate risks, tackle irregularities and tighten the overall regulation. New actuarial rules on life/health insurance, amendments to regulations on health insurance, and the launch of comprehensive reform of automobile insurance will compel the industry to enhance capacity-building and professionalism. The COVID-19 pandemic will stimulate digital transformation of the industry, reshape its business model, posing challenges to traditional insurance companies, which rely more on off-line operation. Insurance player will face more intense competitions as a result of increased opening-up of the industry and technological development.
Thirdly, in respect of its business operation, the Company is facing a relatively high risk of large claims arising from severe natural catastrophes and accidents caused by human error, with emerging risks starting to have potential impact on the stability of its business performance. Its GDR issuance and the execution of internationalisation strategy will require full compliance in domestic and overseas jurisdictions and even more professionalism in corporate governance and investment capabilities.
To cope with these risks, we will persist in compliance in business operation, stay focused on the core business of insurance and press ahead with Transformation 2.0. In particular, in light of the Transformation objectives, we will step up research into and analysis of macroeconomic trends, accelerate digital empowerment to improve on-line capabilities, dynamically enhance capabilities in risk assessment and product pricing; improve ALM and counter-party credit risk management in an all-around way, strengthen investment research capabilities and the matching of assets and liabilities; continuously optimise mechanisms for risk identification, assessment, early warning and mitigation, as well as programmes of cumulative risk exposure control and reinsurance so as to forestall major risks and ensure stable business operation and healthy solvency levels.
Change in accounting estimates
When measuring the insurance contract reserves, the Group determines actuarial assumptions such as discount rate, mortality and morbidity, surrender rates, expense assumptions and policy dividend assumptions based on information currently available as at the balance sheet date.
As at 30 June 2020, the Group used information currently available to determine the above assumptions. Mainly due to change of the benchmark yield curve of discount rate for life and long-term health insurance reserves, life and long-term health insurance reserves after reinsurance increased by approximately RMB4,236 million as at 30 June 2020 and profit before tax decreased by approximately RMB4,236 million for the 6 months ended 30 June 2020.
Embedded value
Summary of Embedded Value and Value of Half Year’s Sales
The table below shows the Group Embedded Value of CPIC Group as at 30 June 2020, and the value of half year’s sales of CPIC Life in the 6 months to 30 June 2020 at a risk discount rate of 11%.
Unit: RMB million |
|||
Valuation Date |
30 June 2020 |
31 December 2019 |
|
Group Adjusted Net Worth |
232,174 |
208,402 |
|
Adjusted Net Worth of CPIC Life |
115,450 |
114,677 |
|
Value of In Force Business of CPIC Life Before Cost of Required Capital Held |
213,804 |
203,392 |
|
Cost of Required Capital Held for CPIC Life |
(12,113) |
(12,548) |
|
Value of In Force Business of CPIC Life After Cost of Required Capital Held |
201,691 |
190,844 |
|
CPIC Group’s Equity Interest in CPIC Life |
98.29% |
98.29% |
|
Value of In Force Business of CPIC Life After Cost of Required Capital Held |
198,247 |
187,585 |
|
attributable to the shareholders of CPIC Group |
|||
Group Embedded Value |
430,420 |
395,987 |
|
CPIC Life Embedded Value |
317,141 |
305,521 |
|
Valuation Date |
30 June 2020 |
30 June 2019 |
|
Value of Half Year’s Sales of CPIC Life Before Cost of Required Capital Held |
12,674 |
18,011 |
|
Cost of Required Capital Held |
(1,447) |
(3,084) |
|
Value of Half Year’s Sales of CPIC Life After Cost of Required Capital Held |
11,228 |
14,927 |
Notes:
- Figures may not be additive due to rounding.
- Results in column « 30 June 2019 » are those reported in the 2019 interim report.
3. Results in column « 31 December 2019 » are those reported in the 2019 annual report.
The Group Adjusted Net Worth represents the shareholder net equity of the Company based on the China Accounting Standards, inclusive of adjustments of the value of certain assets to market value and adjusted for the relevant differences, such as difference between China Accounting Standards reserves and policy liabilities valued under « Appraisal of Embedded Value » standard published by the CAA. It should be noted that the Group Adjusted Net Worth incorporates the shareholder net equity of the Company as a whole (including CPIC Life and other operations of the Company), and the value of in force business and the value of half year’s sales are of CPIC Life only. The Group Embedded Value also does not include the value of in force business that is attributable to minority shareholders of CPIC Life.
New Business Volumes and Value of Half Year’s Sales
The table below shows the volume of new business sold in terms of first year annual premium and value of half year’s sales of CPIC Life after cost of required capital held at a risk discount rate of 11% for year 2020.
Unit: RMB million |
||||
First Year Annual Premium (FYAP) in the |
Value of Half Year’s Sales After Cost of |
|||
First Half of Year |
Required Capital Held |
|||
2020 |
2019 |
2020 |
2019 |
|
Total |
30,316 |
38,238 |
11,228 |
14,927 |
Of which: Traditional |
12,035 |
16,987 |
9,596 |
12,405 |
Participating |
4,566 |
7,821 |
1,106 |
1,913 |
Implementation of profit distribution during the reporting period
The Company distributed a cash dividend of RMB1.20 per share (tax included) in accordance with the « Resolution on Profit Distribution Plan for the Year of 2019 » approved at the 2019 Annual General Meeting. The implementation of this distribution plan has been completed in June 2020.
Profit distribution
The Company did not propose to distribute any profit, nor did it transfer any capital reserves to share capital for the first half of 2020.
Compliance of the Corporate Governance Code
During the reporting period, save as disclosed below, the Company has complied with all the code provisions and substantially all of the recommended best practices of the Corporate Governance Code, as well as the latest revisions of the Corporate Governance Code including but not limited to improving the transparency and accountability of the board and board member election, and advocating the diversity of board members.
Code Provision A.2.1 of the Corporate Governance Code provides that the roles of the chairman and chief executive shall be separate and should not be performed by the same individual. A resolution in relation to the appointment of Mr. FU Fan as the president of the Company has been considered and approved at the 22nd session of the 8th Board, and his appointment qualification has been approved by CBIRC in March 2020. The Board has designated Mr. KONG Qingwei, Chairman of the Board, as the temporary person-in-charge to act on behalf of the president prior to the tenure of office of Mr. FU Fan. After considering the principles under Code Provision A.2.1 of the Corporate Governance Code and examining the Company’s management structure, the Board is of the view that such temporary arrangement is able to provide the Company with effective management and, at the same time, protect the shareholders’ rights to the greatest extent. Currently, Mr. KONG Qingwei serves as Chairman of the Board, and Mr. FU Fan serves as President of the Company.
Completion of the issuance and listing of GDRs
Upon the approval of CBIRC, domestic and foreign securities regulators and stock exchanges, the GDRs issued by the Company were listed on the LSE on 22 June 2020 (London time) (Stock Name: China Pacific Insurance (Group) Co., Ltd.; Trading Symbol: CPIC). Newly issued PRC domestic A shares of the Company are used as the underlying securities of the GDRs, with each GDR representing 5 A shares of the Company. After the listing of the A shares issued upon the exercise of over-allotment option on the SSE on 9 July 2020 (Beijing time), 111,268,291 GDRs were issued by the Company in total, and the total share capital of the Company changed to 9,620,341,455 shares. The issue price was USD17.60 per GDR, and the gross proceeds raised from the issuance of GDRs were USD1,965.4 million.
44
Purchase, redemption or sale of the Company’s listed securities
During the reporting period, neither the Company nor its subsidiaries purchased, sold or redeemed any listed securities of the Company.
Review of accounts
The audit committee of the Company has reviewed the principal accounting policies of the Company and the unaudited financial statements for the six months ended 30 June 2020 in the presence of internal and external auditors.
Publication of results on the websites of SEHK and the Company
The interim report of the Company for the 6 months ended 30 June 2020 will be dispatched to shareholders of the Company and will be published on the websites of SEHK (www.hkexnews.hk) and the Company (www.cpic.com.cn) in due course.
DEFINITIONS
« The Company », « the Group », |
China Pacific Insurance (Group) Co., Ltd. |
« CPIC » or « CPIC Group » |
|
« CPIC Life » |
China Pacific Life Insurance Co., Ltd., a subsidiary of China Pacific Insurance (Group) Co., Ltd. |
« CPIC P/C » |
China Pacific Property Insurance Co., Ltd., a subsidiary of China Pacific Insurance (Group) |
Co., Ltd. |
|
« CPIC AMC » |
Pacific Asset Management Co., Ltd., a subsidiary of China Pacific Insurance (Group) Co., Ltd. |
« CPIC HK » |
China Pacific Insurance Co., (H.K.) Limited, a wholly-owned subsidiary of China Pacific |
Insurance (Group) Co., Ltd. |
|
« Changjiang Pension » |
Changjiang Pension Insurance Co., Ltd., a subsidiary of China Pacific Insurance (Group) Co., |
Ltd. |
|
« Anxin Agricultural » |
Anxin Agricultural Insurance Co., Ltd., a subsidiary of China Pacific Insurance (Group) Co., |
Ltd. |
|
« CPIC Fund » |
CPIC Fund Management Co., Ltd., a subsidiary of China Pacific Insurance (Group) Co., Ltd. |
45 |
« CPIC Allianz Health » |
CPIC Allianz Health Insurance Co., Ltd., a subsidiary of China Pacific Insurance (Group) Co., |
Ltd. |
|
« CBIRC » |
China Banking and Insurance Regulatory Commission |
« SSE » |
Shanghai Stock Exchange |
« SEHK » |
The Stock Exchange of Hong Kong Limited |
« LSE » |
London Stock Exchange |
« PRC GAAP » |
China Accounting Standards for Business Enterprises issued by Ministry of Finance of the |
People’s Republic of China, and the application guide, interpretation and other related |
|
regulations issued afterwards |
|
« Corporate Governance Code » |
Corporate Governance Code as set out in Appendix 14 to the Rules Governing the Listing of |
Securities on The Stock Exchange of Hong Kong Limited |
|
« RMB » |
Renminbi |
« pt » |
Percentage point |
By Order of the Board
China Pacific Insurance (Group) Co., Ltd.
KONG Qingwei
Chairman
Hong Kong, 23 August 2020
As at the date of this announcement, the Executive Directors of the Company are Mr. KONG Qingwei and Mr. FU Fan; the Non-executive Directors of the Company are Ms. LIANG Hong, Ms. LU Qiaoling, Mr. John Robert DACEY, Mr. HUANG Dinan, Mr. WANG Tayu, Mr. WU Junhao, Mr. ZHOU Donghui and Mr. CHEN Ran; and the Independent Non-executive Directors of the Company are Ms. LAM Tyng Yhi, Elizabeth, Ms. LIU Xiaodan, Mr. WOO Ka Biu, Jackson, Mr. CHEN Jizhong and Mr. JIANG Xuping.
- Note: The appointment qualifications of Ms. LIANG Hong, Ms. LU Qiaoling, Mr. John Robert DACEY, Mr. ZHOU Donghui, Mr. CHEN Ran, Ms. LIU Xiaodan and Mr. WOO Ka Biu, Jackson are subject to the approval of China Banking and Insurance Regulatory Commission.
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
FOR THE PERIOD ENDED 30 JUNE 2020
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
FOR THE PERIOD ENDED 30 JUNE 2020
CONTENTS |
Pages |
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION |
1 |
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION |
|
Interim condensed consolidated income statement |
2 |
Interim condensed consolidated statement of comprehensive income |
3 |
Interim condensed consolidated balance sheet |
4 -5 |
Interim condensed consolidated statement of changes in equity |
6 – 7 |
Interim condensed consolidated cash flow statement |
8 |
Notes to the Interim condensed consolidated financial information |
9 – 56 |
REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION TO THE BOARD OF DIRECTORS OF CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
(Incorporated in the People’s Republic of China with limited liability)
Introduction
We have reviewed the interim financial information set out on pages 2 to 56, which comprises the interim condensed consolidated balance sheet of China Pacific Insurance (Group) Co., Ltd. (the « Company ») and its subsidiaries (together, the « Group ») as at 30 June 2020 and the interim condensed consolidated income statement, the interim condensed consolidated statement of comprehensive income, the interim condensed consolidated statement of changes in equity and the interim condensed consolidated cash flow statement for the six-month period then ended, and a summary of significant accounting policies and other explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 « Interim Financial Reporting » issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with Hong Kong Accounting Standard 34 « Interim Financial Reporting ». Our responsibility is to express a conclusion on this interim financial information based on our review and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.
Scope of Review
We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, « Review of Interim Financial Information Performed by the Independent Auditor of the Entity » issued by the Hong Kong Institute of Certified Public Accountants. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the interim financial information of the Group is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 « Interim Financial Reporting ».
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 21 August 2020
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
Group |
Six months ended 30 June |
|
Notes |
2020 |
2019 |
Gross written premiums |
6(a) |
Less: Premiums ceded to reinsurers |
6(b) |
Net written premiums |
6(c) |
Net change in unearned premium reserves |
|
Net premiums earned |
|
Investment income |
7 |
Other operating income |
|
Other income |
|
Total income |
|
Net policyholders’ benefits and claims: |
|
Life insurance death and other benefits paid |
8 |
Claims incurred |
8 |
Changes in long-term life insurance contract |
|
liabilities |
8 |
Policyholder dividends |
8 |
Finance costs |
|
Interest credited to investment contracts |
|
Other operating and administrative expenses |
|
Total benefits, claims and expenses |
|
Share of profit in equity accounted investees |
|
Profit before tax |
9 |
Income tax |
10 |
Net profit for the period |
|
Attributable to: |
|
Shareholders of the parent |
|
Non-controlling interests |
|
Basic earnings per share |
11 |
Diluted earnings per share |
11 |
(unaudited) |
(unaudited) |
|
216,597 |
207,809 |
|
(13,822) |
(11,211) |
|
202,775 |
196,598 |
|
(10,005) |
(11,113) |
|
192,770 |
185,485 |
|
37,766 |
31,952 |
|
2,176 |
1,695 |
|
39,942 |
33,647 |
|
232,712 |
219,132 |
|
(31,096) |
(31,824) |
|
(40,366) |
(34,321) |
|
(88,911) |
(82,509) |
|
(6,322) |
(5,827) |
|
(1,531) |
(1,780) |
|
(1,902) |
(1,659) |
|
(45,233) |
(47,004) |
|
(215,361) |
(204,924) |
|
279 |
277 |
|
17,630 |
14,485 |
|
(3,039) |
2,041 |
|
14,591 |
16,526 |
|
14,239 |
16,183 |
|
352 |
343 |
|
14,591 |
16,526 |
|
RMB 1.57 |
RMB 1.79 |
|
RMB 1.57 |
RMB 1.79 |
The accompanying notes form an integral part of these consolidated financial statements.
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the six months ended 30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
Group |
Six months ended 30 June |
||||
Notes |
2020 |
2019 |
|||
(unaudited) |
(unaudited) |
||||
Net profit for the period |
14,591 |
16,526 |
|||
Other comprehensive income/(loss) |
|||||
Exchange differences on translation of foreign |
|||||
operations |
11 |
3 |
|||
Available-for-sale financial assets |
3,417 |
7,899 |
|||
Income tax relating to these items |
(894) |
(1,954) |
|||
Other comprehensive income to be reclassified to |
2,534 |
5,948 |
|||
profit or loss in subsequent period |
|||||
Other comprehensive income for the period |
12 |
2,534 |
5,948 |
||
Total comprehensive income for the period |
17,125 |
22,474 |
|||
Attributable to: |
|||||
Shareholders of the parent |
16,706 |
22,012 |
|||
Non-controlling interests |
419 |
462 |
|||
17,125 |
22,474 |
||||
The accompanying notes form an integral part of these consolidated financial statements.
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEET 30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
Group |
Notes |
30 June 2020 |
31 December 2019 |
|||||
(unaudited) |
(audited) |
|||||||
ASSETS |
||||||||
Goodwill |
1,357 |
1,357 |
||||||
Property and equipment |
18,745 |
19,365 |
||||||
Right-of-use assets |
4,831 |
4,810 |
||||||
Investment properties |
8,121 |
8,283 |
||||||
Other intangible assets |
2,784 |
2,972 |
||||||
Interests in associates |
13 |
10,305 |
10,563 |
|||||
Investment in joint ventures |
14 |
9,883 |
9,879 |
|||||
Held-to-maturity financial assets |
15 |
303,424 |
295,247 |
|||||
Investments classified as loans and receivables |
16 |
375,957 |
324,013 |
|||||
Restricted statutory deposits |
6,658 |
6,658 |
||||||
Term deposits |
17 |
177,168 |
147,756 |
|||||
Available-for-sale financial assets |
18 |
526,093 |
511,822 |
|||||
Financial assets at fair value through profit or loss |
19 |
10,490 |
4,931 |
|||||
Securities purchased under agreements to resell |
28,608 |
28,045 |
||||||
Policy loans |
59,307 |
57,194 |
||||||
Interest receivables |
17,308 |
19,493 |
||||||
Reinsurance assets |
20 |
28,823 |
25,560 |
|||||
Deferred income tax assets |
21 |
1,127 |
860 |
|||||
Insurance receivables |
41,484 |
23,256 |
||||||
Other assets |
22 |
16,140 |
11,397 |
|||||
Cash and short-term time deposits |
23 |
36,852 |
14,872 |
|||||
Total assets |
1,685,465 |
1,528,333 |
The accompanying notes form an integral part of these consolidated financial statements.
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEET (continued) 30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
Group |
Notes |
30 June 2020 |
31 December 2019 |
||||
(unaudited) |
(audited) |
||||||
EQUITY AND LIABILITIES |
|||||||
Equity |
|||||||
Issued capital |
24 |
9,576 |
9,062 |
||||
Reserves |
25 |
113,291 |
98,763 |
||||
Retained profits |
25 |
73,931 |
70,602 |
||||
Equity attributable to shareholders of the parent |
196,798 |
178,427 |
|||||
Non-controlling interests |
4,892 |
4,893 |
|||||
Total equity |
201,690 |
183,320 |
|||||
Liabilities |
|||||||
Insurance contract liabilities |
26 |
1,181,122 |
1,068,021 |
||||
Investment contract liabilities |
27 |
83,752 |
75,506 |
||||
Policyholders’ deposits |
70 |
70 |
|||||
Bonds payable |
28 |
9,990 |
9,988 |
||||
Securities sold under agreements to repurchase |
100,224 |
78,366 |
|||||
Lease liabilities |
3,478 |
3,668 |
|||||
Deferred income tax liabilities |
21 |
3,169 |
2,911 |
||||
Income tax payable |
2,527 |
549 |
|||||
Premium received in advance |
7,414 |
21,000 |
|||||
Policyholder dividend payable |
24,112 |
25,447 |
|||||
Payables to reinsurers |
8,896 |
4,543 |
|||||
Other liabilities |
59,021 |
54,944 |
|||||
Total liabilities |
1,483,775 |
1,345,013 |
|||||
Total equity and liabilities |
1,685,465 |
1,528,333 |
KONG Qingwei |
FU Fan |
|
Director |
Director |
The accompanying notes form an integral part of these consolidated financial statements.
5
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
Group |
For the six months ended 30 June 2020 (unaudited) |
|||||||||||||||||||||||
Attributable to shareholders of the parent |
||||||||||||||||||||||||
Reserves |
||||||||||||||||||||||||
Available- |
||||||||||||||||||||||||
for-sale |
||||||||||||||||||||||||
investment |
||||||||||||||||||||||||
Issued |
Capital |
Surplus |
General |
revaluation |
Foreign currency |
Retained |
Non-controlling |
Total |
||||||||||||||||
capital |
reserves |
reserves |
reserves |
reserves |
translation reserves |
profits |
Subtotal |
interests |
equity |
|||||||||||||||
At 1 January 2020 |
9,062 |
66,650 |
4,835 |
14,329 |
12,952 |
(3) |
70,602 |
178,427 |
4,893 |
183,320 |
||||||||||||||
Total comprehensive income |
– |
– |
– |
– |
2,456 |
11 |
14,239 |
16,706 |
419 |
17,125 |
||||||||||||||
Dividend declared 1 |
– |
– |
– |
– |
– |
– |
(10,874) |
(10,874) |
– |
(10,874) |
||||||||||||||
Capital contribution by shareholders |
||||||||||||||||||||||||
(Note 1) |
514 |
12,040 |
– |
– |
– |
– |
– |
12,554 |
– |
12,554 |
||||||||||||||
De-registration of subsidiaries |
– |
(15) |
– |
– |
– |
– |
– |
(15) |
– |
(15) |
||||||||||||||
Appropriations to general reserves |
– |
– |
– |
36 |
– |
– |
(36) |
– |
– |
– |
||||||||||||||
Dividends paid to non-controlling |
– |
– |
– |
– |
– |
– |
– |
– |
(420) |
(420) |
||||||||||||||
shareholders |
||||||||||||||||||||||||
At 30 June 2020 |
9,576 |
78,675 |
4,835 |
14,365 |
15,408 |
8 |
73,931 |
196,798 |
4,892 |
201,690 |
1 Dividend declared represents the final dividend on ordinary shares declared for the year ended 31 December 2019, amounting to RMB 10,874 million (RMB 1.20 per share).
The accompanying notes form an integral part of these consolidated financial statements.
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) For the six months ended 30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
Group
At 1 January 2019
Total comprehensive income Dividend declared 1 Appropriations to general reserves Dividends paid to non-controlling
shareholders
At 30 June 2019
For the six months ended 30 June 2019 (unaudited)
Attributable to shareholders of the parent
Reserves |
||||||||||||||||||||
Available- |
||||||||||||||||||||
for-sale |
||||||||||||||||||||
investment |
||||||||||||||||||||
Issued |
Capital |
Surplus |
General |
revaluation |
Foreign currency |
Retained |
Non-controlling |
Total |
||||||||||||
capital |
reserves |
reserves |
reserves |
reserves |
translation reserves |
profits |
Subtotal |
interests |
equity |
|||||||||||
9,062 |
66,635 |
4,835 |
11,642 |
2,808 |
(16) |
54,610 |
149,576 |
4,472 |
154,048 |
|||||||||||
– |
– |
– |
– |
5,826 |
3 |
16,183 |
22,012 |
462 |
22,474 |
|||||||||||
– |
– |
– |
– |
– |
– |
(9,062) |
(9,062) |
– |
(9,062) |
|||||||||||
– |
– |
– |
27 |
– |
– |
(27) |
– |
– |
– |
|||||||||||
– |
– |
– |
– |
– |
– |
– |
– |
(381) |
(381) |
|||||||||||
9,062 |
66,635 |
4,835 |
11,669 |
8,634 |
(13) |
61,704 |
162,526 |
4,553 |
167,079 |
1 Dividend declared represents the final dividend on ordinary shares declared for the year ended 31 December 2018, amounting to RMB 9,062 million (RMB 1.00 per share).
The accompanying notes form an integral part of these consolidated financial statements.
7
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
INTERIM CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
Group |
Six months ended 30 June |
||||
Notes |
2020 |
2019 |
|||
(unaudited) |
(unaudited) |
||||
OPERATING ACTIVITIES |
|||||
Cash generated from operating activities |
29 |
69,249 |
68,864 |
||
Income tax paid |
(1,964) |
(4,059) |
|||
Net cash inflows from operating activities |
67,285 |
64,805 |
|||
INVESTING ACTIVITIES |
|||||
Purchases of property and equipment, intangible assets and |
|||||
other assets |
(1,045) |
(1,127) |
|||
Proceeds from disposal of property and equipment, |
|||||
intangible assets and other assets |
6 |
36 |
|||
Purchases of investments, net |
(102,207) |
(104,405) |
|||
Acquisition of subsidiaries and other business entities, net |
(9) |
(2,442) |
|||
Proceeds from disposal of subsidiaries and other business |
|||||
entities, net |
318 |
3 |
|||
Interest received |
32,000 |
29,098 |
|||
Dividends received from investments |
2,667 |
2,391 |
|||
Other cash paid related to investing activities |
(9) |
– |
|||
Net cash outflows from investing activities |
(68,279) |
(76,446) |
|||
FINANCING ACTIVITIES |
|||||
Securities sold under agreements to repurchase, net |
22,020 |
14,345 |
|||
Proceeds from the issue of asset-backed securities |
3,600 |
4,540 |
|||
Proceeds from the issue of share capital |
12,831 |
– |
|||
Repayment of borrowings |
(2,290) |
(4,000) |
|||
Interest paid |
(1,200) |
(1,453) |
|||
Dividends paid |
(11,285) |
(313) |
|||
Principal elements of lease payments |
(695) |
(672) |
|||
Cash received/(paid) related to NCI of consolidated |
|||||
structured entities |
479 |
(204) |
|||
Other cash (paid)/received related to financing activities |
(4) |
329 |
|||
Net cash inflows from financing activities |
23,456 |
12,572 |
|||
Effects of exchange rate changes on cash and cash |
12 |
10 |
|||
equivalents |
|||||
Net increase in cash and cash equivalents |
22,474 |
941 |
|||
Cash and cash equivalents at the beginning of period |
42,546 |
38,121 |
|||
Cash and cash equivalents at the end of period |
65,020 |
39,062 |
|||
Analysis of balances of cash and cash equivalents |
|||||
Cash at banks and on hand |
32,426 |
18,713 |
|||
Time deposits with original maturity of no more than three |
|||||
months |
3,073 |
2,224 |
|||
Other monetary assets |
913 |
1,219 |
|||
Investments with original maturity of no more than three |
28,608 |
16,906 |
|||
months |
|||||
Cash and cash equivalents at the end of period |
65,020 |
39,062 |
The accompanying notes form an integral part of these consolidated financial statements.
8
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION 30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
-
CORPORATE INFORMATION
China Pacific Insurance (Group) Co., Ltd.(the « Company ») was established in Shanghai, the
People’s Republic of China (the « PRC ») in May 1991, under the original name of China Pacific Insurance Co., Ltd. Pursuant to the approval of the State Council of the PRC and Circular [2001] No. 239 issued by the former China Insurance Regulatory Commission (the « CIRC »), the Company was restructured as a joint stock limited company in October 2001 with an issued capital of RMB 2,006.39 million. The Company increased its issued capital to RMB 6,700 million through issuing new shares to its then existing shareholders and new shareholders in 2002 and 2007.
In December 2007, the Company conducted a public offering of 1,000 million A shares in the PRC. Upon the completion of the A share offering, the issued capital was increased to RMB 7,700 million. The Company’s A shares are listed on the Shanghai Stock Exchange and trading of its A shares commenced on 25 December 2007.
In December 2009, the Company conducted a global offering of overseas listed foreign shares (« H shares »). Upon the completion of the H share offering, the issued capital was increased to RMB
8,600 million. The Company’s H shares are listed on the Hong Kong Stock Exchange and trading of its H shares commenced on 23 December 2009.
In November 2012, the Company conducted a non-public offering of 462 million H shares. Upon completion of the H share offering, the issued capital was increased to RMB 9,062 million, which was approved by the CIRC in December 2012.
In June 2020, the Company issued 102,873,300 Global Depositary Receipts (« GDRs ») on the London Stock Exchange (the « LSE ») and listed on the LSE, with each GDR representing five A shares of the Company. Upon the completion of the GDR listing, the Company’s issued capital was increased to approximately RMB 9,576 million (before the over-allotment option was exercised). The over-allotment option described in the Prospectus of GDR was partially exercised in July 2020, as detailed in Note 36.
The authorised business scope of the Company includes investing in insurance enterprises, supervising and managing domestic and overseas reinsurance businesses of subsidiaries and utilizing funds, participating in global insurance activities upon approval. The principal activities of the Company and its subsidiaries (the « Group » or « CPIC Group ») are property and casualty businesses, life insurance businesses, pension and annuity businesses, as well as asset management, etc. - BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES
2.1 Basis of preparation
This interim condensed consolidated financial information for the six months ended 30 June 2020 has been prepared in accordance with Hong Kong Accounting Standard 34 « Interim Financial Reporting » issued by the Hong Kong Institute of Certified Public Accountants (the « HKICPA »), as part of the Hong Kong Financial Reporting Standards (« HKFRSs »).
This interim condensed consolidated financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the
Group’s annual financial statements for the year ended 31 December 2019.
9
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
2. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
-
Changes in accounting policy and disclosures
The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended 31 December 2019, except for the adoption of amended or improved standards and interpretations as of 1 January 2020 as described below. The adoption of these revised HKFRSs currently has had no significant impact on these consolidated financial statements.
Amendments to HKAS 1 |
|
and HKAS 8 |
Definition of Material |
Amendments to HKFRS 3 |
Definition of a Business |
Amendments to HKFRS 9, |
|
HKAS 39 and HKFRS 7 |
Interest Rate Benchmark Reform |
The Group has not early adopted any other standard, interpretation or amendment that was issued but is not yet effective.
-
New and revised standards not yet adopted
All HKFRSs that remain in effect which are relevant to the Group have been applied except HKFRS 9, as the Group qualifies for a temporary exemption from HKFRS 9 which was illuminated in HKFRS 4 Amendments.
The Group has not applied the following key new and revised HKFRSs that have been issued but are not yet effective, in these consolidated financial statements:
HKFRS 17 |
Insurance Contracts2 |
Amendments to HKFRS 16 |
Covid-19-related Rent Concessions1 |
Amendments to HKAS 1 |
Classification of Liabilities as Current or Non-current3 |
Amendments to HKFRS 3 |
Reference to the Conceptual Framework3 |
Amendments to HKAS 37 |
Onerous Contracts – Cost of Fulfilling a Contract3 |
Annual improvements to HKFRS standards 2018-2020 |
|
Amendments to HKFRSs |
Cycle3 |
- Effective for annual periods beginning on or after 1 June 2020
- Effective for annual periods beginning on or after 1 January 2021
- Effective for annual periods beginning on or after 1 January 2022
None of these HKFRSs is expected to have a significant effect on the consolidated financial statements of the Group, except for the following as set out below:
10
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
2. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
-
New and revised standards not yet adopted (continued)
HKFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of HKFRS 9 was issued in July 2014. It replaces the guidance in HKAS 39 that relates to the classification and measurement of financial instruments. HKFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income (« OCI ») and fair value through profit or loss. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI which are not recycled to profit or loss. There is now a new expected credit losses model that replaces the incurred loss impairment model used in HKAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under HKAS 39. The standard is effective for accounting periods beginning on 1 January 2018. The Group is eligible to and has elected to apply the temporary option to defer the effective date of HKFRS 9 under the amendments to HKFRS 4 ‘Insurance contracts’. The impact of the adoption of HKFRS 9 on the Group’s consolidated financial statements will, to a large extent, have to take into account the interaction with the issued insurance contracts standard. The Group will not adopt the HKFRS 9 until 1 January 2021 (please note below that the International Accounting Standards Board (« IASB ») issued the amendments to IFRS 4 and
IFRS 17 to defer the effective date of IFRS 17 to 1 January 2023 and the temporary exemption from IFRS 9 will be extended as well) and the Group makes additional disclosures as below:
The Group is defined as an insurer with its activities predominantly connected with insurance, with the percentage of the total carrying amounts of its liabilities connected with insurance relative to the total carrying amounts of all its liabilities greater than 90%.
Financial assets meet SPPI are relevant financial assets of which the contractual cash flows generated on a specific date are solely payments of principal and interest on the principal amount.
11
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
2. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
-
New and revised standards not yet adopted (continued)
Additional disclosures of financial assets listed in financial assets at fair value through profit or loss, available-for-sale financial assets, held-to-maturity financial assets, investments classified as loans and receivables are as follows:
Six months ended |
||||
As at 30 June 2020 |
30 June 2020 |
|||
Fair value |
Change in the fair value |
|||
Financial assets held for trading (A) |
3,886 |
(136) |
||
Financial assets managed and whose |
||||
performance evaluated on a fair value |
||||
basis (B) |
6,603 |
(278) |
||
Financial assets other than A or B |
||||
–Financial assets meet SPPI (C) |
979,244 |
5,880 |
||
–Financial assets not meet SPPI |
250,995 |
3,066 |
||
Total |
1,240,728 |
8,532 |
||
Credit risk rating grades of financial assets meet SPPI (C) |
As at 30 June 2020 |
|||
Carrying amount |
||||
Domestic |
||||
Exempt from ratingNote |
254,881 |
|||
AAA |
659,499 |
|||
A-1 |
70 |
|||
AA+ |
36,566 |
|||
AA |
1,000 |
|||
Not rated |
1,815 |
|||
Overseas |
||||
A-(inclusive) or above |
229 |
|||
BBB+ |
343 |
|||
BBB |
36 |
|||
BBB- |
15 |
|||
BB+(inclusive) or below |
122 |
|||
Total |
954,576 |
Note: « Exempt from rating », a domestic rating grade, is to describe a rating grade above « AAA ». It mainly includes government bonds and policy financial bonds.
12
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
2. BASIS OF PREPARATION AND PRINCIPAL ACCOUNTING POLICIES (continued)
2.1 Basis of preparation (continued)
- New and revised standards not yet adopted (continued)
As at 30 June 2020 |
|||||
Financial assets not have low credit risk |
Carrying amount |
Fair value |
|||
Domestic |
2,815 |
2,815 |
|||
Overseas |
122 |
123 |
|||
Total |
2,937 |
2,938 |
Except for the above assets, other financial assets other than cash held by the Group, including securities purchased under agreements to resell, policy loans, term deposits, restricted statutory deposits, etc., are financial assets which meet the SPPI conditions. The carrying amounts are close to their fair value.
HKFRS 17 was issued in May 2017 and will replace the current HKFRS 4 Insurance Contracts. It applies to the measurement of insurance contracts issued, all reinsurance contracts and investment contracts with discretionary participating features. It requires a current measurement model where estimates are re-measured each reporting period. Contracts are measured using the building blocks of:
- discounted probability-weighted cash flows
- an explicit risk adjustment, and
- a contractual service margin (« CSM ») representing the unearned profit of the contract which is recognised as revenue over the coverage period.
The standard is currently mandatorily effective for annual periods beginning on or after 1 January 2021 and earlier application is permitted. On 25 June 2020, the IASB issued the amendments to IFRS 4 and IFRS 17, the effective date of IFRS 17 will be deferred to annual reporting periods beginning on or after 1 January 2023, and the temporary exemption from IFRS 9 will be extended to enable the implementation of both IFRS 9 and IFRS 17 at the same time. The deferral for HKFRS 17 to 1 January 2023 is yet to be endorsed by the Financial Reporting Standards Committee of the HKICPA. The impact is expected to be significant, and the Group is in the process of assessing the impact of adoption of HKFRS 17.
There are no other HKFRSs or HK (IFRIC) interpretations that are not yet effective that would be expected to have a material impact on the Group.
13
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
3. CHANGE IN ACCOUNTING ESTIMATES
When measuring the insurance contract reserves, the Group determines actuarial assumptions such as discount rate, mortality and morbidity, surrender rates, expense assumptions and policy dividend assumptions based on information currently available as at the balance sheet date.
As at 30 June 2020, the Group used information currently available to determine the above assumptions. Mainly due to change of the benchmark yield curve of discount rate for life and long- term health insurance reserves, life and long-term health insurance reserves after reinsurance increased by approximately RMB 4,236 million as at 30 June 2020 and profit before tax decreased by approximately RMB 4,236 million for the six months ended 30 June 2020.
4. SEGMENT INFORMATION
The Group presents segment information based on its major operating segments.
For management purpose, the Group is organised into business units based on their products and services. Different operating segments provide products and services with different risks and rewards.
The Group’s operating segments are listed as follows:
- The life and health insurance segment (including China Pacific Life Insurance Co.,Ltd. (« CPIC Life ») and CPIC Allianz Health Insurance Co.,Ltd. (« CPIC Allianz Health »)) offers a wide range of RMB life and health insurance;
- The property and casualty insurance segment (including Mainland China segment and Hong Kong segment) provides a wide range of RMB and foreign-currency property and casualty insurance;
- Other businesses segment mainly provides corporation management and assets management services, etc.
Intersegment sales and transfers are measured based on the actual transaction price.
More than 99% of the Group’s revenue is derived from its operations in Mainland China. More than 99% of the Group’s assets are located in Mainland China.
For the six months ended 30 June 2020, gross written premiums from transactions with the top five external customers amounted to 0.7% (for the six months ended 30 June 2019: 0.6%) of the Group’s total gross written premiums.
14
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
4. SEGMENT INFORMATION (continued)
Segment income statement for the six months ended 30 June 2020:
Life and |
||||||||||||||||
health |
Property and |
Corporate |
Elimina- |
|||||||||||||
insurance |
casualty insurance |
and others |
tions |
Total |
||||||||||||
Mainland |
Hong Elimina- Sub-total |
|||||||||||||||
China |
Kong |
tions |
||||||||||||||
Gross written premiums |
139,515 |
77,547 |
277 |
(76) |
77,748 |
– |
(666) |
216,597 |
||||||||
Less: Premiums ceded to reinsurers |
(3,146) |
(11,331) |
(103) |
92 |
(11,342) |
– |
666 |
(13,822) |
||||||||
Net written premiums |
136,369 |
66,216 |
174 |
16 |
66,406 |
– |
– |
202,775 |
||||||||
Net change in unearned premium |
(3,670) |
(6,389) |
(39) |
1 |
(6,427) |
– |
92 |
(10,005) |
||||||||
reserves |
||||||||||||||||
Net premiums earned |
132,699 |
59,827 |
135 |
17 |
59,979 |
– |
92 |
192,770 |
||||||||
Investment income |
32,986 |
3,464 |
17 |
– |
3,481 |
20,622 |
(19,323) |
37,766 |
||||||||
Other operating income |
1,267 |
176 |
1 |
– |
177 |
2,755 |
(2,023) |
2,176 |
||||||||
Other income |
34,253 |
3,640 |
18 |
– |
3,658 |
23,377 |
(21,346) |
39,942 |
||||||||
Segment income |
166,952 |
63,467 |
153 |
17 |
63,637 |
23,377 |
(21,254) |
232,712 |
||||||||
Net policyholders’ benefits and |
||||||||||||||||
claims: |
||||||||||||||||
Life insurance death and other |
||||||||||||||||
benefits paid |
(31,096) |
– |
– |
– |
– |
– |
– |
(31,096) |
||||||||
Claims incurred |
(4,596) |
(35,697) |
(69) |
– |
(35,766) |
– |
(4) |
(40,366) |
||||||||
Changes in long-term life |
||||||||||||||||
insurance contract liabilities |
(88,807) |
– |
– |
– |
– |
– |
(104) |
(88,911) |
||||||||
Policyholder dividends |
(6,322) |
– |
– |
– |
– |
– |
– |
(6,322) |
||||||||
Finance costs |
(1,143) |
(284) |
– |
– |
(284) |
(48) |
(56) |
(1,531) |
||||||||
Interest credited to investment |
||||||||||||||||
contracts |
(1,902) |
– |
– |
– |
– |
– |
– |
(1,902) |
||||||||
Other operating and administrative |
(21,177) |
(23,254) |
(63) |
– |
(23,317) |
(2,742) |
2,003 |
(45,233) |
||||||||
expenses |
||||||||||||||||
Segment benefits, claims and |
(155,043) |
(59,235) |
(132) |
– |
(59,367) |
(2,790) |
1,839 |
(215,361) |
||||||||
expenses |
||||||||||||||||
Segment results |
11,909 |
4,232 |
21 |
17 |
4,270 |
20,587 |
(19,415) |
17,351 |
||||||||
Share of profit/(loss) in equity |
286 |
8 |
– |
– |
8 |
(17) |
2 |
279 |
||||||||
accounted investees |
||||||||||||||||
Profit before tax |
12,195 |
4,240 |
21 |
17 |
4,278 |
20,570 |
(19,413) |
17,630 |
||||||||
Income tax |
(1,477) |
(1,059) |
(9) |
– |
(1,068) |
(256) |
(238) |
(3,039) |
||||||||
Net profit for the period |
10,718 |
3,181 |
12 |
17 |
3,210 |
20,314 |
(19,651) |
14,591 |
15
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
4. SEGMENT INFORMATION (continued)
Segment income statement for the six months ended 30 June 2019:
Life and |
||||||||||||||||
health |
Property and |
Corporate |
Elimina- |
|||||||||||||
insurance |
casualty insurance |
and others |
tions |
Total |
||||||||||||
Mainland |
Hong Elimina- Sub-total |
|||||||||||||||
China |
Kong |
tions |
||||||||||||||
Gross written premiums |
139,096 |
69,037 |
198 |
(77) |
69,158 |
– |
(445) |
207,809 |
||||||||
Less: Premiums ceded to reinsurers |
(1,999) |
(9,645) |
(92) |
80 |
(9,657) |
– |
445 |
(11,211) |
||||||||
Net written premiums |
137,097 |
59,392 |
106 |
3 |
59,501 |
– |
– |
196,598 |
||||||||
Net change in unearned premium |
(3,038) |
(8,312) |
23 |
– |
(8,289) |
– |
214 |
(11,113) |
||||||||
reserves |
||||||||||||||||
Net premiums earned |
134,059 |
51,080 |
129 |
3 |
51,212 |
– |
214 |
185,485 |
||||||||
Investment income |
28,439 |
2,441 |
17 |
– |
2,458 |
16,733 |
(15,678) |
31,952 |
||||||||
Other operating income |
1,176 |
120 |
1 |
– |
121 |
2,248 |
(1,850) |
1,695 |
||||||||
Other income |
29,615 |
2,561 |
18 |
– |
2,579 |
18,981 |
(17,528) |
33,647 |
||||||||
Segment income |
163,674 |
53,641 |
147 |
3 |
53,791 |
18,981 |
(17,314) |
219,132 |
||||||||
Net policyholders’ benefits and |
||||||||||||||||
claims: |
||||||||||||||||
Life insurance death and other |
||||||||||||||||
benefits paid |
(31,824) |
– |
– |
– |
– |
– |
– |
(31,824) |
||||||||
Claims incurred |
(4,096) |
(30,203) |
(79) |
– |
(30,282) |
– |
57 |
(34,321) |
||||||||
Changes in long-term life |
||||||||||||||||
insurance contract liabilities |
(82,384) |
– |
– |
– |
– |
– |
(125) |
(82,509) |
||||||||
Policyholder dividends |
(5,827) |
– |
– |
– |
– |
– |
– |
(5,827) |
||||||||
Finance costs |
(1,244) |
(417) |
– |
– |
(417) |
(55) |
(64) |
(1,780) |
||||||||
Interest credited to investment |
||||||||||||||||
contracts |
(1,659) |
– |
– |
– |
– |
– |
– |
(1,659) |
||||||||
Other operating and administrative |
(26,116) |
(20,328) |
(44) |
– |
(20,372) |
(2,370) |
1,854 |
(47,004) |
||||||||
expenses |
||||||||||||||||
Segment benefits, claims and |
(153,150) |
(50,948) |
(123) |
– |
(51,071) |
(2,425) |
1,722 |
(204,924) |
||||||||
expenses |
||||||||||||||||
Segment results |
10,524 |
2,693 |
24 |
3 |
2,720 |
16,556 |
(15,592) |
14,208 |
||||||||
Share of profit/(loss) in equity |
380 |
(4) |
– |
– |
(4) |
(7) |
(92) |
277 |
||||||||
accounted investees |
||||||||||||||||
Profit before tax |
10,904 |
2,689 |
24 |
3 |
2,716 |
16,549 |
(15,684) |
14,485 |
||||||||
Income tax |
1,711 |
684 |
(3) |
– |
681 |
(176) |
(175) |
2,041 |
||||||||
Net profit for the period |
12,615 |
3,373 |
21 |
3 |
3,397 |
16,373 |
(15,859) |
16,526 |
||||||||
The segment assets as at 30 June 2020 and 31 December 2019 are as following:
Life |
Property and |
Elimina- |
|||||||||||||
insurance |
casualty insurance |
Others |
tions |
Total |
|||||||||||
Mainland |
Hong |
Elimina- |
|||||||||||||
China |
Kong |
tions |
Sub-total |
||||||||||||
30 June 2020 (Unaudited) |
1,369,990 |
195,263 |
1,343 |
(152) |
196,454 |
141,231 |
(22,210) |
1,685,465 |
|||||||
31 December 2019 (Audited) |
1,272,861 |
168,757 |
1,225 |
(161) |
169,821 |
102,806 |
(17,155) |
1,528,333 |
|||||||
16
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued) 30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
5. SCOPE OF CONSOLIDATION
- Particulars of the Company’s incorporated subsidiaries as at 30 June 2020 are as follows:
Percentage of |
||||||||||||||||||
Registered capital |
Issued capital |
Percentage of |
voting rights |
|||||||||||||||
Place of |
(RMB thousand, |
(RMB thousand, |
equity attributable |
attributable |
||||||||||||||
Business scope and |
incorporation/ |
Place of |
unless otherwise |
unless otherwise |
to the |
to the |
||||||||||||
Name |
Type of legal entity |
principal activities |
registration |
operations |
specified) |
specified) |
Company(%) |
Company(%) Note |
||||||||||
Direct |
Indirect |
|||||||||||||||||
China Pacific Property Insurance Co., Ltd. |
Limited company |
Property and casualty |
Shanghai |
The PRC |
19,470,000 |
19,470,000 |
98.50 |
– |
98.50 |
|||||||||
(« CPIC Property ») |
insurance |
|||||||||||||||||
CPIC Life |
Limited company |
Life and health |
Shanghai |
The PRC |
8,420,000 |
8,420,000 |
98.29 |
– |
98.29 |
|||||||||
insurance |
||||||||||||||||||
Pacific Asset Management Co., Ltd. (« CPIC |
Limited company Investment management |
Shanghai |
Shanghai |
2,100,000 |
2,100,000 |
80.00 |
19.67 |
100.00 |
||||||||||
Asset Management ») |
||||||||||||||||||
China Pacific Insurance Co., (H.K.) Ltd. |
Limited company |
Property and casualty |
Hong Kong |
Hong Kong |
HK$250,000 |
HK$250,000 |
100.00 |
– |
100.00 |
|||||||||
insurance |
thousand |
thousand |
||||||||||||||||
Shanghai Pacific Insurance Real Estate Co., |
Limited company |
Real estate |
Shanghai |
Shanghai |
115,000 |
115,000 |
100.00 |
– |
100.00 |
|||||||||
Ltd. |
||||||||||||||||||
Changjiang Pension Insurance Co., Ltd. |
Limited company |
Pension business and |
Shanghai |
Shanghai |
3,000,000 |
3,000,000 |
– |
61.10 |
62.16 |
|||||||||
(« Changjiang Pension ») |
investment management |
|||||||||||||||||
CPIC Investment Management (H.K.) |
Limited company Investment management |
Hong Kong |
Hong Kong |
HK$50,000 |
HK$50,000 |
49.00 |
50.83 |
100.00 |
||||||||||
Company Limited |
thousand |
thousand |
||||||||||||||||
(« CPIC Investment (H.K.) ») |
||||||||||||||||||
City Island Developments Limited (« City |
Limited company |
Investment holding |
The British |
The British |
US$50,000 |
US$1,000 |
– |
98.29 |
100.00 |
|||||||||
Island ») |
Virgin Islands |
Virgin Islands |
||||||||||||||||
Great Winwick Limited * |
Limited company |
Investment holding |
The British |
The British |
US$50,000 |
US$100 |
– |
98.29 |
100.00 |
|||||||||
Virgin Islands |
Virgin Islands |
|||||||||||||||||
Great Winwick (Hong Kong) Limited * |
Limited company |
Investment holding |
Hong Kong |
Hong Kong |
HK$10,000 |
HK$1 |
– |
98.29 |
100.00 |
|||||||||
Newscott Investments Limited * |
Limited company |
Investment holding |
The British |
The British |
US$50,000 |
US$100 |
– |
98.29 |
100.00 |
|||||||||
Virgin Islands |
Virgin Islands |
17
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued) 30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
5. SCOPE OF CONSOLIDATION (continued)
- Particulars of the Company’s incorporated subsidiaries as at 30 June 2020 are as follows (continued):
Percentage of |
Percentage of |
|||||||||||||||||
Registered capital |
Issued capital |
equity |
voting rights |
|||||||||||||||
Place of |
(RMB thousand, |
(RMB thousand, |
attributable |
attributable |
||||||||||||||
Business scope and |
incorporation/ |
Place of |
unless otherwise |
unless otherwise |
to the |
to the |
||||||||||||
Name |
Type of legal entity |
principal activities |
registration |
operations |
specified) |
specified) |
Company(%) |
Company(%) Note |
||||||||||
Direct |
Indirect |
|||||||||||||||||
Newscott (Hong Kong) Investments |
Limited company |
Investment holding |
Hong Kong |
Hong Kong |
HK$10,000 |
HK$1 |
– |
98.29 |
100.00 |
|||||||||
Limited * |
||||||||||||||||||
Shanghai Xinhui Real Estate |
Limited company |
Real estate |
Shanghai |
Shanghai |
US$15,600 |
US$15,600 |
– |
98.29 |
100.00 |
|||||||||
Development Co., Ltd. * |
thousand |
thousand |
||||||||||||||||
Shanghai Hehui Real Estate |
Limited company |
Real estate |
Shanghai |
Shanghai |
US$46,330 |
US$46,330 |
– |
98.29 |
100.00 |
|||||||||
Development Co., Ltd. * |
thousand |
thousand |
||||||||||||||||
Pacific Insurance Online Services |
Limited company |
Consulting services, etc. |
Shandong |
The PRC |
200,000 |
200,000 |
100.00 |
– |
100.00 |
|||||||||
Technology Co., Ltd. |
||||||||||||||||||
(« CPIC Online Services ») |
||||||||||||||||||
Tianjin Trophy Real Estate Co., Ltd. |
Limited company |
Real estate |
Tianjin |
Tianjin |
353,690 |
353,690 |
– |
98.29 |
100.00 |
|||||||||
(« Tianjin Trophy ») |
||||||||||||||||||
Pacific Insurance Senior Living |
Limited company |
Senior living properties |
Shanghai |
Shanghai |
3,000,000 |
3,000,000 |
– |
98.29 |
100.00 |
|||||||||
Investment Management Co., Ltd. |
investment and |
|||||||||||||||||
(« CPIC Senior Living Investment ») |
management, etc. |
|||||||||||||||||
CPIC Allianz Health |
Limited company |
Health insurance |
Shanghai |
Shanghai |
1,700,000 |
1,700,000 |
77.05 |
– |
77.05 |
|||||||||
Anxin Agricultural Insurance Co., Ltd. |
Limited company |
Property and casualty |
Shanghai |
Shanghai |
700,000 |
700,000 |
– |
51.35 |
52.13 |
|||||||||
(« Anxin ») |
insurance |
|||||||||||||||||
Pacific Medical & Healthcare |
Limited company |
Medical consulting |
Shanghai |
Shanghai |
500,000 |
500,000 |
– |
98.29 |
100.00 |
|||||||||
Management Co., Ltd. (« Pacific |
services, etc. |
|||||||||||||||||
Medical & Healthcare ») |
||||||||||||||||||
Pacific Insurance Agency Co., Ltd. |
Limited company |
Insurance agency |
Shanghai |
Shanghai |
50,000 |
50,000 |
– |
100.00 |
100.00 |
|||||||||
(« Pacific Insurance Agency ») |
||||||||||||||||||
CPIC Fund Management Co., Ltd. |
Limited company |
Fund management |
Shanghai |
Shanghai |
150,000 |
150,000 |
– |
50.83 |
51.00 |
|||||||||
(« CPIC Funds ») |
18
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued) 30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
5. SCOPE OF CONSOLIDATION (continued)
- Particulars of the Company’s incorporated subsidiaries as at 30 June 2020 are as follows (continued):
Percentage of |
Percentage of |
|||||||||||||||||
Registered capital |
Issued capital |
equity |
voting rights |
|||||||||||||||
Place of |
(RMB thousand, |
(RMB thousand, |
attributable |
attributable |
||||||||||||||
Business scope and |
incorporation/ |
Place of |
unless otherwise |
unless otherwise |
to the |
to the |
||||||||||||
Name |
Type of legal entity |
principal activities |
registration |
operations |
specified) |
specified) |
Company(%) |
Company(%) |
Note |
|||||||||
Direct |
Indirect |
|||||||||||||||||
CPIC Senior Living Development |
Limited company |
Senior living properties |
Chengdu |
Chengdu |
1,000,000 |
510,000 |
– |
98.29 |
100.00 |
|||||||||
(Chengdu) Co., Ltd. (« Chengdu Project |
investment and |
|||||||||||||||||
Company ») |
management, etc. |
|||||||||||||||||
CPIC Senior Living Development |
Limited company |
Senior living properties |
Hangzhou |
Hangzhou |
1,200,000 |
530,000 |
– |
98.29 |
100.00 |
(1) |
||||||||
(Hangzhou) Co., Ltd. (« Hangzhou |
investment and |
|||||||||||||||||
Project Company ») |
management, etc. |
|||||||||||||||||
CPIC Senior Living Development |
Limited company |
Senior living properties |
Xiamen |
Xiamen |
900,000 |
290,000 |
– |
98.29 |
100.00 |
(2) |
||||||||
(Xiamen) Co., Ltd. (« Xiamen Project |
investment and |
|||||||||||||||||
Company ») |
management, etc. |
|||||||||||||||||
Pacific Care Home (Chengdu) Senior |
Limited company |
Seniors and disabled |
Chengdu |
Chengdu |
60,000 |
– |
– |
98.29 |
100.00 |
(3) |
||||||||
Living Service Co., Ltd. (« Pacific Care |
care, etc. |
|||||||||||||||||
Home at Chengdu ») |
* Subsidiaries of City Island.
19
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
5. SCOPE OF CONSOLIDATION (continued)
- Particulars of the Company’s incorporated subsidiaries as at 30 June 2020 are as follows (continued):
-
Hangzhou Project Company
Hangzhou Project Company, a wholly-owned subsidiary set up by CPIC Life, has obtained the business license of legal entity with the unified social credit code of 91330185MA2GMQ5J3E on 31 May 2019. The registered capital is RMB 1,200 million. CPIC Life made the capital contribution of RMB 350 million and RMB 180 million in 2019 and 2020, respectively. CPIC Life has made the capital contribution of RMB 530 million as at 30 June 2020. -
Xiamen Project Company
Xiamen Project Company, a wholly-owned subsidiary set up by CPIC Life, has obtained the business license of legal entity with the unified social credit code of 91350200MA33L83Y9L on 6 March 2020. The registered capital is RMB 900 million. CPIC Life has made the capital contribution of RMB 290 million as at 30 June 2020. -
Pacific Care Home at Chengdu
Pacific Care Home at Chengdu, a wholly-owned subsidiary set up by CPIC Senior Living Investment, has obtained the business license of legal entity with the unified social credit code of 91510115MA64FB601H on 18 May 2020. The registered capital is RMB 60 million. CPIC Senior Living Investment has not yet made the capital contribution as at 30 June 2020.
- As at 30 June 2020, entities no longer included in the Group’s scope of consolidation:
- Ningbo Fenghua Xikou Garden Hotel Co., Ltd. (the « Xikou Garden Hotel »), a subsidiary of CPIC Life, was registered in Ningbo with a paid-in capital of RMB 27.28 million. Xikou Garden Hotel completed the liquidation and de-registration procedures in 2020.
- Taiji (Shanghai) Information Technology Co., Ltd. (the « Taiji Information Technology »), the CPIC Online Services’s subsidiary, was registered in Shanghai with a paid-in capital of RMB 15 million. Taiji Information Technology completed the liquidation and de-registration procedures in 2020.
20
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued) 30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
5. SCOPE OF CONSOLIDATION (continued)
- As at 30 June 2020, consolidated structured entities material to the Group are as follows:
Collective |
Product Scale |
|||||
Holding by the |
(Units in RMB |
|||||
Name |
Group (%) |
thousand) |
Nature of business |
|||
Pacific-China Venture Capital Fund Equity |
100.00 |
6,120,000 |
Investing in China Venture Capital Co., Ltd. through equity investment plan. |
|||
Investment Plan |
||||||
CPIC Zengfu Annually Open Pure Type |
100.00 |
5,009,999 |
Investing in financial instruments with high liquidity including national bonds, government bond, |
|||
Launching Securities Investment Fund |
local treasury bonds, financial bonds, enterprise bonds, |
|||||
corporate bonds, Central Bank bills, medium term notes, short-term commercial paper, super |
||||||
short-term commercial paper, SME private debt, asset-backed security, subordinated debt, the |
||||||
debt part of the convertible bonds, bonds repo, bank deposits (including agreement deposits, |
||||||
notice deposits and term deposits), NCDs, money market instrument, treasury bond futures and |
||||||
other financial instruments that laws and regulations or the China Securities Regulatory |
||||||
Commission (the « CSRC’) allow funds to invest (yet subject to related regulations of the CSRC). |
||||||
CPIC Zengyu Annually Open Pure Type |
100.00 |
5,009,999 |
Investing in financial instruments with high liquidity including national bonds, government bond, |
|||
Launching Securities Investment Fund |
local treasury bonds, financial bonds, enterprise bonds, |
|||||
corporate bonds, Central Bank bills, medium term notes, short-term commercial paper, super |
||||||
short-term commercial paper, SME private debt, asset-backed security, subordinated debt, the |
||||||
debt part of the convertible bonds, bonds repo, bank deposits (including agreement deposits, |
||||||
notice deposits and term deposits), NCDs, money market instrument, treasury bond futures and |
||||||
other financial instruments that laws and regulations or the CSRC allow funds to invest (yet |
||||||
subject to related regulations of the CSRC). |
||||||
Pacific-Jiangsu Communications Holding Co., |
100.00 |
4,000,000 |
Investing in Taizhou Yangtze River Highway Bridge Project operated by Jiangsu |
|||
Ltd. Debt Investment Plan (Phase I) |
Communications Holding Co., Ltd. through debt investment plan. |
|||||
Pacific-China Nonferrous Metal Mining (Group) |
53.91 |
2,430,000 |
Investing in projects operated by CNMC’s subsidiaries through debt investment plan. |
|||
Co.,Ltd. (« CNMC ») Debt Investment Plan |
||||||
(Phase I) |
Note: CPIC Asset Management, CPIC Funds and Changjiang Pension are the asset managers of the consolidated structured entities.
21
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
6. NET WRITTEN PREMIUMS
(a) |
Gross written premiums |
|||
Six months ended 30 June |
||||
2020 |
2019 |
|||
Long-term life insurance premiums |
125,692 |
127,678 |
||
Short-term life insurance premiums |
13,157 |
10,973 |
||
Property and casualty insurance premiums |
77,748 |
69,158 |
||
216,597 |
207,809 |
|||
(b) |
Premiums ceded to reinsurers |
|||
Six months ended 30 June |
||||
2020 |
2019 |
|||
Long-term life insurance premiums ceded to reinsurers |
(1,982) |
(1,119) |
||
Short-term life insurance premiums ceded to reinsurers |
(1,164) |
(879) |
||
Property and casualty insurance premiums ceded to reinsurers |
(10,676) |
(9,213) |
||
(13,822) |
(11,211) |
|||
- Net written premiums
Six months ended 30 June |
|||
2020 |
2019 |
||
Net written premiums |
202,775 |
196,598 |
7. |
INVESTMENT INCOME |
|||
Six months ended 30 June |
||||
2020 |
2019 |
|||
Interest and dividend income (a) |
32,542 |
29,609 |
||
Realised gains (b) |
8,122 |
2,522 |
||
Unrealised (losses) /gains (c) |
(414) |
898 |
||
Charge of impairment losses on financial assets |
(2,484) |
(1,077) |
||
37,766 |
31,952 |
|||
22
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
7. INVESTMENT INCOME (continued)
(a) |
Interest and dividend income |
|||
Six months ended 30 June |
||||
2020 |
2019 |
|||
Financial assets at fair value through profit or loss |
||||
– Fixed maturity investments |
34 |
48 |
||
– Funds |
3 |
6 |
||
– Stocks |
6 |
12 |
||
– Other equity investments |
2 |
25 |
||
45 |
91 |
|||
Held-to-maturity financial assets |
||||
– Fixed maturity investments |
7,023 |
6,608 |
||
Loans and receivables |
||||
– Fixed maturity investments |
15,782 |
13,809 |
||
Available-for-sale financial assets |
||||
– Fixed maturity investments |
6,486 |
6,455 |
||
– Funds |
610 |
494 |
||
– Stocks |
1,504 |
1,328 |
||
– Other equity investments |
1,092 |
824 |
||
9,692 |
9,101 |
|||
32,542 |
29,609 |
(b) |
Realised gains |
||||
Six months ended 30 June |
|||||
2020 |
2019 |
||||
Financial assets at fair value through profit or loss |
|||||
– Fixed maturity investments |
97 |
55 |
|||
– Funds |
(9) |
(6) |
|||
– Stocks |
(5) |
(170) |
|||
– Other equity investments |
4 |
(126) |
|||
– Derivative instruments |
– |
(2) |
|||
87 |
(249) |
||||
Available-for-sale financial assets |
|||||
– Fixed maturity investments |
307 |
30 |
|||
– Funds |
728 |
240 |
|||
– Stocks |
6,602 |
2,483 |
|||
– Other equity investments |
382 |
18 |
|||
8,019 |
2,771 |
||||
Others |
16 |
– |
|||
8,122 |
2,522 |
23
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
7. INVESTMENT INCOME (continued)
(c) |
Unrealised (losses)/gains |
||||
Six months ended 30 June |
|||||
2020 |
2019 |
||||
Financial assets at fair value through profit or loss |
|||||
– Fixed maturity investments |
(126) |
45 |
|||
– Funds |
12 |
373 |
|||
– Derivative instruments |
– |
(1) |
|||
– Stocks |
(22) |
510 |
|||
– Wealth management products and other equity |
(278) |
(29) |
|||
investments |
|||||
(414) |
898 |
8. NET POLICYHOLDERS’ BENEFITS AND CLAIMS
Six months ended 30 June 2020 |
||||||
Gross |
Ceded |
Net |
||||
Life insurance death and other benefits paid |
32,076 |
(980) |
31,096 |
|||
Claims incurred |
||||||
– Short-term life insurance |
4,642 |
(452) |
4,190 |
|||
– Property and casualty insurance |
40,849 |
(4,673) |
36,176 |
|||
Changes in long-term life insurance contract liabilities |
89,440 |
(529) |
88,911 |
|||
Policyholder dividends |
6,322 |
– |
6,322 |
|||
173,329 |
(6,634) |
166,695 |
Six months ended 30 June 2019 |
||||||
Gross |
Ceded |
Net |
||||
Life insurance death and other benefits paid |
32,590 |
(766) |
31,824 |
|||
Claims incurred |
||||||
– Short-term life insurance |
4,218 |
(364) |
3,854 |
|||
– Property and casualty insurance |
34,873 |
(4,406) |
30,467 |
|||
Changes in long-term life insurance contract liabilities |
82,609 |
(100) |
82,509 |
|||
Policyholder dividends |
5,827 |
– |
5,827 |
|||
160,117 |
(5,636) |
154,481 |
24
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
9. PROFIT BEFORE TAX
The Group’s profit before tax is arrived at after charging/(crediting):
Six months ended 30 June |
|||
2020 |
2019 |
||
Employee benefit expense (including directors’ and |
|||
supervisors’ emoluments) |
11,127 |
11,248 |
|
Auditors’ remuneration |
16 |
15 |
|
Short-term and low-value leases payments |
76 |
171 |
|
Depreciation of property and equipment |
898 |
820 |
|
Depreciation of investment properties |
164 |
158 |
|
Depreciation of right-of-use assets |
757 |
596 |
|
Amortisation of other intangible assets |
376 |
267 |
|
Amortisation of other assets |
10 |
5 |
|
Gains on disposal of items of property and equipment, |
|||
intangible assets and other long-term assets |
(1) |
(1) |
|
Charge of impairment loss on insurance receivables and |
|||
other assets |
354 |
431 |
|
Charge of impairment loss on financial assets (Note 7) |
2,484 |
1,077 |
|
Foreign exchange (income)/loss, net |
(25) |
75 |
10. INCOME TAX
- Income tax
Current income tax
Deferred income tax (Note 21)
Six months ended 30 June
20202019
3,942 |
(2,087) |
|
(903) |
46 |
|
3,039 |
(2,041) |
- Tax recorded in other comprehensive income
Six months ended 30 June
20202019
Deferred income tax (Note 21) |
894 |
1,954 |
25
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
10. INCOME TAX (continued)
-
Reconciliation of tax expense
Current income tax has been provided at the rate of 25% on the assessable profits arising in Mainland China. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries/jurisdictions in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.
A reconciliation of the tax expense applicable to profit before tax using the statutory income tax rate of 25% to the tax expense at the Group’s effective tax rate is as follows:
Six months ended 30 June |
|||
2020 |
2019 |
||
Profit before tax |
17,630 |
14,485 |
|
Tax computed at the statutory tax rate |
4,408 |
3,621 |
|
Adjustments to income tax in respect of previous periods |
(124) |
(4,887) |
|
Income not subject to tax |
(1,594) |
(1,099) |
|
Expenses not deductible for tax |
167 |
135 |
|
Others |
182 |
189 |
|
Tax expense at the Group’s effective rate |
3,039 |
(2,041) |
Pursuant to the Announcement on the Pre-tax Deduction Policy for the Commission and Brokerage Expenses of Insurance Enterprises issued by the Ministry of Finance and the State Administration of Taxation in May 2019 (Notice of the Ministry of Finance and the State Administration of Taxation No.72, 2019), the deductible commissions rate is increased to 18%, with allowing any excess amount to be carried forward to future years. The commission rate is calculated as insurance business related commission and brokerage expenses over the current year total premium income less surrenders. This announcement is effective for the 2018 annual income tax filing for insurance companies.
26
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
11. EARNINGS PER SHARE
- Basic earnings per share
Basic earnings per share was calculated by dividing the net profit of the current period attributable to shareholders of the parent by the weighted average number of ordinary shares in issue during the six-month period ended 30 June 2020.
Consolidated net profit for the period attributable to shareholders of the parent
Weighted average number of ordinary shares in issue (million)
Basic earnings per share
Six months ended 30 June
20202019
14,23916,183
9,0859,062
The weighted average number of ordinary shares in issue has been adjusted to reflect the impact of the issuance of 102,873,300 GDRs in June 2020, representing 514,366,500 A shares of the Company (Note 1).
-
Diluted earnings per share
Diluted earnings per share was calculated by dividing the net profit of the current period attributable to the shareholders of the parent by the adjusted weighted average number of ordinary shares based on assuming full exercise of the over-allotment option as below. According to the over-allotment option arrangement under the issuance of GDRs, the stabilising manager may require the Company to additionally issue no more than 10,287,300 GDRs, representing 51,436,500 A shares, by exercising the over-allotment option.
Consolidated net profit for the period attributable to shareholders of the parent
Weighted average number of ordinary shares in issue (million)
Adjustment for:
Assumed vesting of the over-allotment option
Weighted average number of ordinary shares for diluted earnings per share
Diluted earnings per share
Six months ended 30 June
20202019
14,239 |
16,183 |
|
9,085 |
9,062 |
|
– |
– |
|
9,085 |
9,062 |
|
RMB 1.57 |
RMB 1.79 |
|
The Company had no dilutive potential ordinary shares as at 31 December 2019.
27
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
12. |
OTHER COMPREHENSIVE INCOME/(LOSS) |
|||
Six months ended 30 June |
||||
2020 |
2019 |
|||
Exchange differences on translation of foreign operations |
11 |
3 |
||
Available-for-sale financial assets |
||||
Gains arising during the period |
11,987 |
14,084 |
||
Reclassification adjustments for losses included in profit or |
||||
loss |
(8,019) |
(2,771) |
||
Fair value change on available-for-sale financial assets |
||||
attributable to policyholders |
(2,771) |
(4,491) |
||
Impairment charges reclassified to the income statement |
2,220 |
1,077 |
||
3,417 |
7,899 |
|||
Income tax relating to these items |
(894) |
(1,954) |
||
2,523 |
5,945 |
|||
Other comprehensive income |
2,534 |
5,948 |
13. INTERESTS IN ASSOCIATES
30 June 2020 |
|||||||
At 1 |
At 30 |
||||||
Historical |
January |
Increase |
Share of |
Dividend |
June |
||
cost |
2020 |
/(Decrease) |
profit |
declared |
2020 |
||
Shanghai Juche Information |
|||||||
Technology Co., Ltd. |
|||||||
(« Juche ») |
3 |
9 |
– |
1 |
– |
10 |
|
Zhongdao Automobile Rescue |
|||||||
Industry Co., Ltd. |
|||||||
(« Zhongdao ») |
17 |
34 |
– |
2 |
– |
36 |
|
Shanghai Proton and Heavy Ion |
|||||||
Hospital (« Zhizhong |
|||||||
Hospital ») |
100 |
66 |
– |
(4) |
– |
62 |
|
Shanghai Dedao Co., Ltd. |
|||||||
(« Dedao ») |
5 |
1 |
– |
– |
– |
1 |
|
Shanghai Xingongying |
|||||||
Information Technology Co., |
|||||||
Ltd. (« Xingongying ») |
81 |
58 |
– |
(2) |
– |
56 |
|
Shanghai Heji Business |
|||||||
Management LLP. (« Heji ») |
200 |
477 |
(300) |
4 |
(5) |
176 |
|
Changjiang Pension – China |
|||||||
National Chemical |
|||||||
Corporation Infrastructure |
|||||||
Debt Investment Plan |
|||||||
(« CHEMCHINA Debt |
|||||||
Investment Plan ») |
2,160 |
2,164 |
– |
58 |
(58) |
2,164 |
28
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
13. INTERESTS IN ASSOCIATES (continued)
30 June 2020 |
||||||||||||||||||
At 1 |
At 30 |
|||||||||||||||||
Historical |
January |
Increase |
Share of |
Dividend |
June |
|||||||||||||
cost |
2020 |
/(Decrease) |
profit |
declared |
2020 |
|||||||||||||
Changjiang Pension – Sichuan |
||||||||||||||||||
Railway Xugu Highway |
||||||||||||||||||
Investment Infrastructure |
||||||||||||||||||
Debt Investment Plan |
||||||||||||||||||
(« Sichuan Railway |
||||||||||||||||||
Investment Plan ») |
250 |
250 |
– |
7 |
(7) |
250 |
||||||||||||
Ningbo Zhilin Investment |
||||||||||||||||||
Management LLP. (« Ningbo |
||||||||||||||||||
Zhilin ») |
2,416 |
2,514 |
– |
125 |
(61) |
2,578 |
||||||||||||
Changjiang Pension – Yunnan |
||||||||||||||||||
Energy Investment |
||||||||||||||||||
Infrastructure Debt |
||||||||||||||||||
Investment Plan (« Yunnan |
||||||||||||||||||
Energy Investment Plan ») |
3,610 |
3,617 |
– |
110 |
(111) |
3,616 |
||||||||||||
Beijing More Health Technology |
||||||||||||||||||
Group CO.,Ltd. (« Beijing |
||||||||||||||||||
Miaoyijia ») |
413 |
387 |
– |
(19) |
– |
368 |
||||||||||||
Jiaxing Yishang Equity |
||||||||||||||||||
Investment LLP. (« Jiaxing |
||||||||||||||||||
Yishang ») |
474 |
486 |
– |
8 |
– |
494 |
||||||||||||
Lianren Digital Health |
||||||||||||||||||
Technology Co., Ltd. |
||||||||||||||||||
(« Lianren Digital Health ») |
500 |
500 |
– |
(15) |
– |
485 |
||||||||||||
Zhejiang Xin’an Shuzhi |
||||||||||||||||||
Technology Co., Ltd. |
||||||||||||||||||
(« Xin’an Technology ») |
9 |
– |
9 |
– |
– |
9 |
||||||||||||
10,238 |
10,563 |
(291) |
275 |
(242) |
10,305 |
|||||||||||||
On 8 May 2020, the shareholders of Xingongying changed and its total registered capital increased from RMB 3.106 million to RMB 3.112 million. After this change, CPIC Property’s shareholding in Xingongying became 6.27%, and CPIC Online Services’s shareholding in Xingongying became 0.67% respectively.
On 14 April 2020, additional capital contributions from another shareholder of Jiaxing Yishang increased the paid-in capital of Jiaxing Yishang from RMB 500 million to RMB 500.501 million. After this capital injection, CPIC Life’s shareholding in Jiaxing Yishang is diluted to 94.72%.
Pursuant to the Notice of Shanghai Heji Business Management Limited Liability Partnership’s payment to limited partners for the distribution of proceeds during the second phase of the project, Heji returned the paid-in capital of CPIC Property of RMB 300 million in March 2020, the total paid-in capital of Heji became RMB 202 million. CPIC Property’s shareholding in Heji decreased from 99.60% to 99.01%.
29
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
13. INTERESTS IN ASSOCIATES (continued)
On 7 May 2020, Pacific Medical & Healthcare, a subsidiary of CPIC Life, entered into an investment cooperation agreement of Xin’an Technology with Quzhou Financial Holdings Group Co., Ltd. and some other investment companies. Pacific Medical & Healthcare purchased 9% shares of Xin’an Technology with a consideration of RMB 6.7086 million and then subscribed additional shares of Xin’an Technology proportionally with a consideration of RMB 2.25 million. On 23 June 2020, Xin’an Technology completed the relevant industrial and commercial modification registration and the total registered capital increased to RMB 13.354 million.
Nature of investment in associates as at 30 June 2020:
Percentage of |
Registered |
Paid-up |
|||||||||
Place of |
ownership interest |
Percentage |
capital |
capital |
|||||||
of voting |
(RMB |
(RMB |
|||||||||
Name |
incorporation |
Direct |
Indirect |
power |
thousand) |
thousand) |
Principal activity |
||||
Juche |
Shanghai |
– |
37.42% |
37.80% |
5,882 |
5,882 |
Internet |
||||
Zhongdao |
Shanghai |
– |
26.37% |
26.67% |
63,000 |
58,000 |
Road rescue |
||||
Oncology, medical |
|||||||||||
laboratory, clinical fluid, |
|||||||||||
Zhizhong Hospital |
Shanghai |
– |
15.41% |
20.00% |
500,000 |
500,000 |
etc. |
||||
Computer information |
|||||||||||
technology, technical |
|||||||||||
development in the field |
|||||||||||
of automotive software |
|||||||||||
Dedao |
Shanghai |
– |
25.00% |
25.00% |
20,000 |
20,000 |
technology, etc. |
||||
Technical development in |
|||||||||||
the field of computer |
|||||||||||
information technology, |
|||||||||||
Xingongying(1) |
Shanghai |
– |
6.85% |
6.94% |
3,112 |
3,112 |
technical consulting, etc. |
||||
Information |
|||||||||||
Transmission, Software, |
|||||||||||
and information |
|||||||||||
Beijing Miaoyijia |
Beijing |
– |
19.66% |
20.00% |
75,009 |
69,190 |
technology services |
||||
Lianren Digital |
Information technology |
||||||||||
Health |
Shanghai |
– |
24.57% |
25.00% |
2,000,000 |
2,000,000 |
services |
||||
Xin’an |
Network technology |
||||||||||
Technology(2) |
Quzhou |
– |
8.85% |
9.00% |
13,354 |
13,354 |
development services |
||||
Business management, |
|||||||||||
industrial investment, |
|||||||||||
investment management, |
|||||||||||
assets management, |
|||||||||||
Heji(3) |
Shanghai |
– |
97.53% |
N/A |
202,000 |
consulting, etc. |
|||||
CHEMCHINA |
|||||||||||
Debt |
|||||||||||
Investment |
|||||||||||
Plan (4) |
N/A |
– |
70.55% |
N/A |
3,000,000 |
Debt investment plan |
|||||
Sichuan Railway |
|||||||||||
Investment |
|||||||||||
Plan(5) |
N/A |
– |
38.17% |
N/A |
600,000 |
Debt investment plan |
|||||
Investment management, |
|||||||||||
Ningbo Zhilin(6) |
Ningbo |
– |
88.46% |
N/A |
2,684,798 |
assets management |
|||||
Yunnan Energy |
|||||||||||
Investment |
|||||||||||
Plan (7) |
N/A |
– |
92.94% |
N/A |
3,800,000 |
Debt investment plan |
|||||
Jiaxing Yishang(8) |
Jiaxing |
– |
93.10% |
N/A |
500,501 |
Equity Investment |
30
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
13. INTERESTS IN ASSOCIATES (continued)
Nature of investment in associates as at 30 June 2020 (continued): Note:
- According to the articles of association of Xingongying, CPIC Property has significant influence over Xingongying by accrediting a director to the company. Therefore, Xingongying is accounted under equity method.
- According to the articles of association of Xin’an Technology, Pacific Medical & Healthcare has significant influence over Xin’an Technology by accrediting a director to the company. Therefore, Xin’an Technology is accounted under equity method.
- CPIC Property holds over 50% shares of Heji. Since CPIC Group cannot direct the relevant activities of Heji according to the partnership agreement of Heji, Heji is accounted under equity method.
- CPIC Life and Changjiang Pension hold over 50% shares of CHEMCHINA Debt Investment Plan. Since CPIC Group cannot direct the relevant activities of CHEMCHINA Debt Investment Plan according to the Agreement of Investment Plan, CHEMCHINA Debt Investment Plan is accounted under equity method.
- CPIC Life and Changjiang Pension hold shares of Sichuan Railway Investment Plan. Changjiang Pension is the issuer and manager of Sichuan Railway Investment Plan. Since CPIC Group has significant influence over Sichuan Railway Investment Plan, Sichuan Railway Investment Plan is accounted under equity method.
- CPIC Life holds over 50% shares of Ningbo Zhilin. Since CPIC Group cannot direct the relevant activities of Ningbo Zhilin according to the partnership agreement of Ningbo Zhilin, Ningbo Zhilin is accounted under equity method.
- CPIC Life and Changjiang Pension hold over 50% shares of Yunnan Energy Investment Plan. Since CPIC Group cannot direct the relevant activities of Yunnan Energy Investment Plan according to the Agreement of Investment Plan, Yunnan Energy Investment Plan is accounted under equity method.
- CPIC Life holds over 50% shares of Jiaxing Yishang. Since CPIC Group cannot direct the relevant activities of Jiaxing Yishang according to the partnership agreement of Jiaxing Yishang, Jiaxing Yishang is accounted under equity method.
Summarised financial information for principal associates:
30 June 2020/Six months ended 30 June 2020 |
||||||||
Total assets |
Total liabilities |
Total revenue |
Net profit |
|||||
Ningbo Zhilin |
2,921 |
26 |
60 |
53 |
||||
CHEMCHINA Debt |
||||||||
Investment Plan |
3,007 |
2 |
88 |
81 |
||||
Yunnan Energy |
3,809 |
2 |
119 |
116 |
||||
Investment Plan |
||||||||
31 |
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
13. INTERESTS IN ASSOCIATES (continued) Summarised financial information for other associates:
Six months ended 30 |
Six months ended 30 |
|||||||||
June 2020 |
June 2019 |
|||||||||
Net loss for the period |
(158) |
(92) |
||||||||
Other comprehensive income for the period |
– |
– |
||||||||
Total comprehensive loss for the period |
(158) |
(92) |
||||||||
Total comprehensive (loss) /income attributable to the |
(18) |
4 |
||||||||
Group |
||||||||||
Carrying amount of the Group’s interest |
1,947 |
1,787 |
||||||||
14. |
INVESTMENT IN JOINT VENTURES |
|||||||||
30 June 2020 |
31 December 2019 |
|||||||||
Share of net assets |
||||||||||
Shanghai Ruiyongjing Real Estate Development |
||||||||||
Co., Ltd. (« Ruiyongjing Real Estate ») |
9,834 |
9,834 |
||||||||
Others |
49 |
45 |
||||||||
9,883 |
9,879 |
Particulars of the joint venture as at 30 June 2020 are as follow:
Percentage of |
Percentage |
Registered |
Paid-up |
|||||||
Place of |
ownership interest |
of voting |
capital |
capital |
Principal |
|||||
Name |
incorporation |
Direct |
Indirect |
power |
(RMB thousand) |
(RMB thousand) |
activity |
|||
Shanghai |
||||||||||
Binjiang- |
||||||||||
Xiangrui |
||||||||||
Investment and |
||||||||||
Construction |
||||||||||
Co., Ltd. |
||||||||||
(« Binjiang- |
||||||||||
Xiangrui ») |
Shanghai |
– |
35.16% |
35.70% |
150,000 |
30,000 |
Real estate |
|||
Taiyi (Shanghai) |
||||||||||
Information |
Used car |
|||||||||
Technology |
information |
|||||||||
Co., Ltd. |
Shanghai |
– |
48.00% |
48.00% |
10,000 |
10,000 |
service platform |
|||
Technical |
||||||||||
Hangzhou Dayu |
development, |
|||||||||
Internet |
technical service |
|||||||||
Technology |
and technical |
|||||||||
Co., Ltd. |
Hangzhou |
– |
20.25% |
20.25% |
13,333 |
13,333 |
consulting |
|||
Network |
||||||||||
Aizhu (Shanghai) |
technology, |
|||||||||
Information |
technical |
|||||||||
Technology |
consulting and |
|||||||||
Co., Ltd. |
Shanghai |
– |
35.00% |
35.00% |
10,000 |
6,950 |
technical service |
32
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
14. INVESTMENT IN JOINT VENTURES (continued)
Particulars of the joint venture as at 30 June 2020 are as follow (continued):
Percentage of |
Percentage |
Registered |
Paid-up |
||||||||
Place of |
ownership interest |
of voting |
capital |
capital |
Principal |
||||||
Name |
incorporation |
Direct |
Indirect |
power |
(RMB thousand) |
(RMB thousand) |
activity |
||||
Pacific Euler |
|||||||||||
Hermes |
|||||||||||
Insurance Sales |
|||||||||||
Co., Ltd. |
Shanghai |
– |
50.24% |
50.00% |
50,000 |
50,000 |
Insurance sales |
||||
Shanghai |
Third party |
||||||||||
Dabaoguisheng |
operation |
||||||||||
Information |
services of |
||||||||||
Technology |
insurance |
||||||||||
Co., Ltd. |
Shanghai |
– |
33.42% |
34.00% |
100,000 |
22,200 |
industry |
||||
Ruiyongjing Real |
|||||||||||
Estate (1) |
Shanghai |
– |
68.80% |
57.14% |
14,050,000 |
14,050,000 |
Real estate |
||||
Pacific Orpea |
|||||||||||
(Shanghai) |
|||||||||||
Senior Care |
Operation and |
||||||||||
Management |
management of |
||||||||||
Co., Ltd. |
pension industry, |
||||||||||
(« Pacific |
technical |
||||||||||
Orpea ») (2) |
Shanghai |
– |
55.04% |
60.00% |
10,000 |
10,000 |
consulting |
Note:
- CPIC Life holds over 50% of the ownership interest of Ruiyongjing Real Estate. Since CPIC Group cannot direct the relevant activities of Ruiyongjing Real Estate according to the Articles of Association of Ruiyongjing Real Estate, Ruiyongjing Real Estate is accounted under equity method.
- CPIC Senior Living Investment holds over 50% of the ownership interest of Pacific Orpea. Since CPIC Group cannot direct the relevant activities of Pacific Orpea according to the Articles of Association of Pacific Orpea, Pacific Orpea is accounted under equity method.
The main financial information of the Group’s joint ventures:
Six months ended 30 June |
|||
2020 |
2019 |
||
(RMB thousand) |
(RMB thousand) |
||
The joint ventures’ net profit/(loss) |
7,445 |
(6,109) |
As at 30 June 2020, the Group’s investment in joint ventures had no impairment.
Commitments related to investment in joint ventures are mentioned in Note 31.
33
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
15. HELD-TO-MATURITY FINANCIAL ASSETS
Held-to-maturity financial assets are stated at amortised cost and comprise the following:
30 June 2020 |
31 December 2019 |
||||
Listed |
|||||
Debt investments |
|||||
– Government bonds |
1,310 |
749 |
|||
– Finance bonds |
5,697 |
5,725 |
|||
– Corporate bonds |
8,671 |
9,308 |
|||
Sub-total |
15,678 |
15,782 |
|||
Unlisted |
|||||
Debt investments |
|||||
– Government bonds |
129,366 |
108,981 |
|||
– Finance bonds |
91,399 |
94,551 |
|||
– Corporate bonds |
67,119 |
75,980 |
|||
Sub-total |
287,884 |
279,512 |
|||
Less: Impairment provisions |
(138) |
(47) |
|||
Net Value |
303,424 |
295,247 |
16. INVESTMENTS CLASSIFIED AS LOANS AND RECEIVABLES
30 June 2020 |
31 December 2019 |
||||
Debt investments |
|||||
– Finance bonds |
2,000 |
2,000 |
|||
– Debt investment plans |
176,758 |
151,446 |
|||
– Wealth management products |
164,752 |
138,528 |
|||
– Preferred shares |
32,000 |
32,000 |
|||
– Loans |
770 |
236 |
|||
Sub-total |
376,280 |
324,210 |
|||
Less: Impairment provisions |
(323) |
(197) |
|||
Net Value |
375,957 |
324,013 |
|||
34
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
16. INVESTMENTS CLASSIFIED AS LOANS AND RECEIVABLES (continued)
As at 30 June 2020, CPIC Asset Management, a subsidiary of the Company, had 86 existing debt investment plans issued by it with a total value of RMB 124.283 billion. Of these, the existing amounts of investments classified as loans and receivables with a book value of approximately RMB 61.529 billion were recognised on the Group’s consolidated financial statement (As at 31 December 2019, CPIC Asset Management, a subsidiary of the Company, had 81 existing debt investment plans issued by it with a total value of RMB 117.469 billion. Of these, the existing amounts of investments classified as loans and receivables with a book value of approximately RMB 54.941 billion were recognised on the Group’s consolidated financial statement). As at 30 June 2020, Changjiang Pension, a subsidiary of the Company, had 60 existing debt investment plans issued by it with a total value of RMB 102.872 billion. Of these, the existing amounts of investments classified as loans and receivables with a book value of approximately RMB 35.281 billion were recognised on the Group’s consolidated financial statement (As at 31 December 2019, Changjiang Pension, a subsidiary of the Company, had 57 existing debt investment plans issued by it with a total value of RMB 101.912 billion. Of these, the existing amounts of investments classified as loans and receivables with a book value of approximately RMB 34.816 billion were recognised on the Group’s consolidated financial statement). Meanwhile, as at 30 June 2020, the Group also had investments in debt investment plans classified as loans and receivables launched by other insurance asset management companies with a book value of approximately RMB 79.948 billion (As at 31 December 2019: approximately RMB 61.689 billion). The amount of debt investment plans guaranteed by a third party or by pledge that invested by the Group is about RMB 128.812 billion. For debt investment plans launched by CPIC Asset Management and Changjiang Pension and invested by the Group, the Group did not provide any guarantees or financial support. The Group’s maximum exposure to loss in the debt investment plans is limited to their carrying amounts.
17. |
TERM DEPOSITS |
|||||
Maturity Period |
30 June 2020 31 December 2019 |
|||||
Within 3 months (including 3 months) |
583 |
21,997 |
||||
3 months to 1 year (including 1 year) |
7,795 |
2,939 |
||||
1 to 2 years (including 2 years) |
11,290 |
15,800 |
||||
2 to 3 years (including 3 years) |
78,030 |
16,470 |
||||
3 to 4 years (including 4 years) |
55,470 |
41,080 |
||||
4 to 5 years (including 5 years) |
24,000 |
48,770 |
||||
Over 5 years |
– |
700 |
||||
Total |
177,168 |
147,756 |
35
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in RMB million unless otherwise specified)
18. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Available-for-sale financial assets are stated at fair value and comprise the following:
30 June 2020 |
31 December 2019 |
||||
Listed |
|||||
Equity investments |
|||||
– Stocks |
98,389 |
90,373 |
|||
– Funds |
6,209 |
8,056 |
|||
Debt investments |
|||||
– Government bonds |
7,901 |
7,476 |
|||
– Finance bonds |
5,327 |
5,389 |
|||
– Corporate bonds |
63,822 |
64,302 |
|||
Sub-total |
181,648 |
175,596 |
|||
Unlisted |
|||||
Equity investments |
|||||
– Funds |
45,363 |
40,369 |
|||
– Wealth management products |
1,327 |
452 |
|||
– Other equity investments |
52,936 |
51,554 |
|||
– Preferred shares |
13,763 |
13,621 |
|||
Debt investments |
|||||
– Government bonds |
78,023 |
72,170 |
|||
– Finance bonds |
32,602 |
36,294 |
|||
– Corporate bonds |
117,422 |
118,781 |
|||
– Wealth management products |
3,009 |
2,985 |
|||
Sub-total |
344,445 |
336,226 |
|||
Total |
526,093 |
511,822 |
19. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June 2020 |
31 December 2019 |
||||
Listed |
|||||
Equity investments |
|||||
– Stocks |
156 |
237 |
|||
– Funds |
94 |
88 |
|||
Debt investments |
|||||
– Government bonds |
40 |
11 |
|||
– Finance bonds |
461 |
253 |
|||
– Corporate bonds |
2,244 |
2,558 |
|||
Sub-total |
2,995 |
3,147 |
|||
Unlisted |
|||||
Equity investments |
|||||
– Funds |
356 |
232 |
|||
– Wealth management products |
148 |
277 |
|||
– Other equity investments |
6,438 |
595 |
|||
Debt investments |
|||||
– Corporate bonds |
536 |
666 |
|||
– Wealth management products |
14 |
11 |
|||
– Debt Investment plans |
3 |
3 |
|||
Sub-total |
7,495 |
1,784 |
|||
Total |
10,490 |
4,931 |
36
CHINA PACIFIC INSURANCE (GROUP) CO., LTD.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
30 June 2020
(All amounts expressed in