2025-09-10 14:35Summary of the Conference Call for China Life Insurance Company Overview - The conference call pertains to China Life Insurance and discusses its financial performance and strategic outlook for 2025. Key Points and Arguments Financial Performance - The VFA model has shown some accounting losses due to short-term interest rate fluctuations, which do not reflect long-term performance. It is essential to focus on the full-cycle investment performance and operational capabilities when evaluating results [2][3] - In the first half of 2025, underwriting financial losses increased by 7% year-on-year, primarily due to the growth in reserve size [2][3] - The discount rate curve used by the company ranges from 1 year to 40 years, with a terminal level of 4.5% applied from 20 years onward. This results in better CSM indicators for longer-duration businesses under the new standards [2][3][4] - The company's income tax expenses significantly decreased in the first half of 2025, mainly due to increased investment income from tax-exempt investment types (government bonds) and the potential release of deferred tax assets in the future [2][8] Business Strategy and Market Position - The company maintains a strategy of simultaneous growth in scale and value for its bancassurance channel, achieving significant improvements in total premiums, new premiums, and first-year premiums in the first half of 2025 [3][8] - The average guaranteed interest rate for existing liabilities is approximately 2.9%, while the new business average is about 2.2%, showing a downward trend compared to the end of 2024 [3][10] New Business Margins - The new business contract service margin (CSM) was significantly impacted by market interest rate changes, with a notable decrease in the new business liability duration [6][11] - The CSM for new contracts declined by approximately 90 basis points, which is a more significant drop than the decrease in guaranteed interest rates, leading to a reduction in CSM [11] Investment Strategy - The company is optimistic about the equity market, expecting stable growth in the Chinese economy. The strategy includes long-term investment, value investment principles, and flexible allocation in fixed income [12][13] - The overall bond allocation ratio remained stable compared to the end of the previous year, indicating a divergence in market participants' strategies based on their circumstances [14] Regulatory Compliance - The company is committed to the regulatory requirement of investing 30% of new premiums into the A-share market. In the first half of 2025, the public market equity scale increased by 150 billion yuan [17] Risk Management and Future Outlook - The company plans to maintain a certain level of long-term bond allocation to match liabilities, with an effective duration of approximately 10 years for liabilities and 8.5 years for assets [15] - The difference between the adjusted net asset value and the net asset value in financial statements is attributed to the use of a longer-term discount rate for the adjusted value and the exclusion of non-tradable intangible assets [16] Additional Important Insights - The company is enhancing its agent channel's value rate through product transformation and improved expense management, which has led to significant improvements in profitability [9] - The company is prepared to adapt its strategies in response to market conditions, particularly if the stock market continues to rise [17]