# 01336_11042024_1629_Annual Report 2023 > Source: `01336_11042024_1629_Annual Report 2023.pdf` > Pages: 303 > Converted: 2026-05-06T13:04:32 --- # 新華人壽保險股份有限公司 ## NEW CHINA LIFE INSURANCE CO., LTD. (A joint stock company incorporated in the People’s Republic of China with limited liability) Stock Code : 01336 # 2023 ## Annual Report --- # IMPORTANT INFORMATION 1. The board of directors, the board of supervisors and directors, supervisors and members of senior management of the Company guarantee the correctness, accuracy and completeness of the contents of this report, and that there is no false representation, misleading statement or material omission in this report, and are legally liable for this report jointly and severally. 2. The Annual Report 2023 of the Company was considered and approved at the 18th meeting of the eighth session of the Board on 27 March 2024, which 11 directors were required to attend and 11 of them attended in person. 3. The 2023 Consolidated Financial Statements of the Company are prepared in accordance with International Financial Reporting Standards 17 – Insurance Contracts and International Financial Reporting Standards 9 – Financial Instruments, etc issued by International Accounting Standards Board. Deloitte Touche Tohmatsu conducted the auditing and issued the standard unqualified audit report. 4. The Company plans to distribute an annual cash dividend of RMB0.85 (tax included) per share to all shareholders for 2023, approximately RMB2,652 million in total, representing approximately 30.4% of net profit attributable to shareholders of the Company as contained in the 2023 financial statements of the Company. The above dividend distribution plan is subject to the approval of shareholders’ general meeting. 5. Mr. YANG Yucheng, the chairman of the Company, Mr. ZHANG Hong, the president and acting person in charge of accounting of the Company, Mr. GONG Xingfeng, the chief actuary and Mr. ZHANG Tao, the officer in charge of accounting department of the Company, guarantee the correctness, accuracy and completeness of the consolidated financial statements in the Annual Report 2023. 6. In addition to the facts stated herein, this report includes some forward-looking statements and analysis, which may differ from the actual results of the Company in the future. The Company does not make any warranty or undertaking upon its future performance. The investors and relevant persons should have adequate awareness of risks and understand the differences between plans, forecasts and undertakings. 7. There is no non-operating usage of funds by the controlling shareholder or its related parties for the Company. 8. There is no external guarantee provided by the Company which violates the decision-making procedures of the Company. 9. There is no more than half of directors of the Company who cannot guarantee the correctness, accuracy and completeness of this report. 10. The major risks of the Company include market risk, credit risk, insurance risk, operational risk, reputation risk, strategic risk, liquidity risk, etc. The Company has taken various measures to effectively manage and control all sorts of risks. Please refer to “Risk Management” of this report for details. --- ## DEFINITIONS **In this report, unless the context otherwise requires, the following terms shall have the meanings set out below:** | Term | Definition | | :--- | :--- | | the Company, New China Life, NCI | The general term of New China Life Insurance Company Ltd., its subsidiaries and its consolidated structured entities | | Asset Management Company | New China Asset Management Co., Ltd., a subsidiary of the Company | | Asset Management Company (Hong Kong) | New China Asset Management (Hong Kong) Limited, a subsidiary of Asset Management Company | | New China Pension | New China Pension Co., Ltd., a subsidiary of the Company | | Xinhua Seniors Service | Xinhua Village Seniors Service (Beijing) Co., Ltd., a subsidiary of the Company | | New China Health | New China Life Excellent Health Investment Management Co., Ltd. | | Electronic Commerce | New China Electronic Commerce Co., Ltd., a subsidiary of the Company | | Hefei Supporting Operation | New China Life Hefei Supporting Construction Operation Management Co., Ltd., a subsidiary of the Company | | Foundation | New China Life Foundation | | CIC | China Investment Corporation | | Huijin | Central Huijin Investment Ltd. | | China Baowu | China Baowu Steel Group Corporation Limited | | Hwabao Investment | Hwabao Investment Co., Ltd. | | CBIRC | Former China Banking and Insurance Regulatory Commission | | NFRA | National Financial Regulatory Administration | | CSRC | China Securities Regulatory Commission | | SSE | Shanghai Stock Exchange | | SZSE | Shenzhen Stock Exchange | | Hong Kong Stock Exchange, HKSE | The Stock Exchange of Hong Kong Limited | | RMB | Renminbi | --- | Term | Definition | | :--- | :--- | | pt | Percentage point(s) | | P.R.C., China | People’s Republic of China, for the purpose of this report only, excluding Hong Kong, Macau and Taiwan | | Company Law | Company Law of the People’s Republic of China | | Insurance Law | Insurance Law of the People’s Republic of China | | Securities Law | Securities Law of the People’s Republic of China | | P.R.C. GAAP | China Accounting Standards for Business Enterprises issued by the Ministry of Finance of the P.R.C., and its application guide, interpretation and other related regulations issued thereafter | | IFRS | International Financial Reporting Standards as promulgated by the International Accounting Standards Board | | IFRS 4, old accounting standards for insurance contracts | International Financial Reporting Standards 4 – Insurance Contracts | | IAS 39, old accounting standards for financial instruments | International Accounting Standards 39 – Financial Instruments: Recognition and Measurement | | IFRS 17, new accounting standards for insurance contracts | International Financial Reporting Standards 17 – Insurance Contracts | | IFRS 9, new accounting standards for financial instruments | International Financial Reporting Standards 9 – Financial Instruments | | Articles of Association | Articles of Association of New China Life Insurance Company Ltd. | | Hong Kong Listing Rules | The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited | | Model Code | Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Hong Kong Listing Rules | | Corporate Governance Code | Corporate Governance Code as set out in Appendix C1 to the Hong Kong Listing Rules | | SFO | The Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) | | Board, Board of Directors | The board of directors of the Company | | Board of Supervisors | The board of supervisors of the Company | --- # CONTENTS | Section | Page | | :--- | :--- | | **01 PRELUDE OF NEW CHINA LIFE** | | | Section 1 Corporate Information | 5 | | Section 2 Business Overview | 7 | | **02 CHAIRMAN’S STATEMENT** | | | Section 3 Statement | 14 | | **03 MANAGEMENT DISCUSSION & ANALYSIS** | | | Section 4 Management Discussion and Analysis | 17 | | **04 EMBEDDED VALUE** | | | Section 5 Embedded Value | 42 | | **05 CORPORATE GOVERNANCE** | | | Section 6 Directors, Supervisors, Senior Management and Employees | 52 | | Section 7 Corporate Governance | 67 | | Section 8 Risk Management | 95 | | Section 9 Environmental and Social Responsibility | 101 | | Section 10 The Board of Directors Report and Significant Events | 106 | | Section 11 Changes in Share Capital and Shareholders’ Profile | 116 | | **06 FINANCIAL REPORT** | | | Section 12 Financial Statements | 122 | --- ## SECTION 1 # CORPORATE INFORMATION ### BASIC INFORMATION | | | | :--- | :--- | | **Legal Name in Chinese** | 新華人壽保險股份有限公司（簡稱「新華保險」） | | **Legal Name in English** | NEW CHINA LIFE INSURANCE COMPANY LTD. (“NCI”) | | **Legal Representative** | YANG Yucheng | | **Registered Office** | No.16, East Hunan Road, Yanqing District, Beijing, P.R.C. (Zhongguancun Yanqing Park) | | **Historic Change of Registered Office** | The Company changed its registered office from No.1, East Hunan Road, Yanqing District, Beijing, P.R.C. to current address in November 2019. | | **Postal Code** | 102100 | | **Place of Business** | NCI Tower, A12 Jianguomenwai Avenue, Chaoyang District, Beijing, P.R.C. | | **Postal Code** | 100022 | | **Place of Business in Hong Kong** | 31/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong | | **Website** | http://www.newchinalife.com | | **Email** | ir@newchinalife.com | | **Customer Service and Complaint Hotline** | 95567 | ### CONTACT INFORMATION | | | | :--- | :--- | | **Board Secretary/Joint Company Secretary** | GONG Xingfeng | | **Securities Representative** | XU Xiu | | **Telephone** | 86-10-85213233 | | **Fax** | 86-10-85213219 | | **Email** | ir@newchinalife.com | | **Address** | NCI Tower, A12 Jianguomenwai Avenue, Chaoyang District, Beijing, P.R.C. | | **Joint Company Secretary** | NG Sau Mei | | **Telephone** | 852-35898647 | | **Fax** | 852-35898359 | | **Email** | Jojo.Ng@tmf-group.com | | **Address** | 31/F, Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong | --- ### INFORMATION DISCLOSURE AND PLACE FOR OBTAINING THE REPORT | | | | :--- | :--- | | **Newspapers and Websites for Publishing Annual Report (A Share)** | China Securities Journal, http://epaper.cs.com.cn
Shanghai Securities News, https://www.cnstock.com | | **Websites of Stock Exchange for Publishing Annual Report** | http://www.sse.com.cn (A Share)
http://www.hkexnews.hk (H Share) | | **Place Where Copies of Annual Report are Kept** | Board of Directors Office of the Company | ### STOCK INFORMATION | Stock Type | Stock Exchange | Stock Name | Stock Code | | :--- | :--- | :--- | :--- | | **A Share** | The Shanghai Stock Exchange | 新華保險 | 601336 | | **H Share** | The Stock Exchange of Hong Kong Limited | NCI | 01336 | ### OTHER RELEVANT INFORMATION | | | | :--- | :--- | | **A Share Registrar** | China Securities Depository and Clearing Corporation Limited, Shanghai Branch | | **Address** | No.188 South Yanggao Road, Pudong New Area, Shanghai, China | | **H Share Registrar** | Computershare Hong Kong Investor Services Limited | | **Address** | Room 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong | | **Domestic Auditor** | Deloitte Touche Tohmatsu Certified Public Accountants LLP | | **Address** | 30/F, 222 East Yan’an Road, Huangpu District, Shanghai, China | | **Signing Certified Public Accountants** | MA Qianlu and YANG Li | | **International Auditor** | Deloitte Touche Tohmatsu | | **Address** | 35/F, One Pacific Place, 88 Queensway, Hong Kong SAR, China | | **Domestic Legal Advisor** | Commerce & Finance Law Offices | | **Address** | China World Office 2, No. 1 Jianguomenwai Avenue, Beijing, China | | **Hong Kong Legal Advisor** | Clifford Chance LLP | | **Address** | 27/F, Jardine House, 1 Connaught Place, Central, Hong Kong | --- ### SECTION 02 # BUSINESS OVERVIEW Founded in September 1996, New China Life is a large and nationwide life insurance company with its headquarters in Beijing, a member of both Fortune 500 and Forbes 500. New China Life has always been committed to forging China’s best financial service group with comprehensive life insurance business as its core, and provided customers with protection and wealth planning products and services that cover their whole life. The Company has promoted the development of old-age care and healthcare industries and strived to make assets management business bigger and stronger to greatly support the development of life insurance business. New China Life has established nationwide marketing and service networks and offered life insurance products and services to 31.986 million individual customers and 83 thousand institutional customers, manages and deploys insurance funds through its subsidiaries, including Asset Management Company and Asset Management Company (Hong Kong). New China Life was simultaneously listed on the SSE and the HKSE in 2011. --- # Vision **To be China’s best financial service group with comprehensive life insurance business as its core** | Wealth management | Life insurance | Old-age care & Healthcare | | :--- | :--- | :--- | | Investment \| Asset management | Comprehensive protection and wealth management plan | Old-age care \| Healthcare | **Technology empowerment** * *Investment supports life insurance* * *Old-age care and healthcare support life insurance* Unit: RMB in millions | Indicator | Value | | :--- | :--- | | Total assets | 1,403,257 | | Equity attributable to shareholders of the Company | 105,067 | | Dividend per share | 0.85 RMB per share (1) | | Total revenues | 72,254 | | Net profit attributable to shareholders of the Company | 8,712 | | Embedded value | 250,510 | | Value of one year’s new business (2) | 3,024 | | Comprehensive solvency margin ratio (%) | 278.43% | ## MAJOR OPERATING INDICATORS Unit: RMB in millions | Key Operating Indicators | 2023/As of 31 December 2023 | 2022/As of 31 December 2022 | | :--- | :---: | :---: | | Gross written premiums | 165,903 | 163,099 | | Number of total individual agents (in thousands) | 155 | 197 | | Investment assets(3) | 1,336,092 | 1,157,622 | | Total investment yield (%)(3) | 1.8 | 4.3 | | Net investment yield (%)(3) | 3.4 | 4.6 | | Value of one year’s new business(2) | 3,024 | 2,423 | | Embedded value | 250,510 | 255,582 | | Core solvency margin ratio (%) | 157.01 | 140.53 | | Comprehensive solvency margin ratio (%) | 278.43 | 238.20 | **Notes:** 1. Subject to approval of shareholders’ general meeting. 2. The value of one year’s new business of 2023 was RMB3,024 million after the Company prudently lowered the non-unit-linked insurance funds investment return assumption to 4.5% and the risk discount rate to 9.0% for the evaluation of embedded value of 2023. The value of one year’s new business of 2023 would be RMB3,999 million, increasing by 65.1% on a like-for-like basis, if using the non-unit-linked insurance funds investment return assumption of 5.0% and the risk discount rate of 11.0%. 3. The Company has implemented IFRS 17 and IFRS 9 since 1 January 2023. According to IFRS 17, policyholder loan is included in insurance contract liabilities rather than a part of investment assets and the interest income generated is no longer part of investment income. Investment assets as at 31 December 2022 and investment income for the year ended 31 December 2022 are restated in accordance with the IFRS 17, not restated in accordance with IFRS 9. Investment assets as at 31 December 2022, total investment yield of 2022 and net investment yield of 2022 are not comparable to those as at 31 December 2023 or of 2023. --- In 2023, being committed to pursuing high-quality development, the Company proactively adapted to new external changes and challenges, practiced the customer-centered philosophy and initiated professional and market-oriented reform and innovation. The first is to serve the overall development. The Company conscientiously implemented the policies of the CPC Central Committee, accurately grasped the new requirements for insurance industry during the new era and new journey, accelerated layout optimization and structural adjustment, integrated resources to promote the development of “five target areas”, namely technology finance, green finance, inclusive finance, pension finance and digital finance, and promoted high-quality development while serving the national strategy. The second is to return to the essence of insurance. The Company strived to build a multi-level and three-dimensional “insurance + healthcare & old-age care + wealth management” ecosystem. The Company effectively grasped market changes, enhanced product and service supply to fully contribute to people’s wellbeing. The third is to deepen reform and innovation. The Company improved systems and mechanisms conducive to high-quality development, emphasized on core elements such as talent, culture and technology, highlighted professional, intensive and distinctive operation, and actively explored new models and fields to stimulate development momentum and vitality. The fourth is to adhere to lawful and compliance operation, ensure no major risk arise. The Company improved a full process, full coverage and penetrative risk management system, enhanced risk prevention and resolution to build a solid safety barrier. ## LIFE INSURANCE In 2023, the Company achieved gross written premiums (“**GWP**”) of RMB165,903 million, an increase of 1.7% year-on-year. The Company made steady progress in overall operation. The first year regular premiums from long-term insurance business increased by 31.8% year on year. The business structure optimized and effectively boosted the value of new business. The value of one year’s new business rose by 65.1% on a like-for-like basis.(1) The new business value margin increased from 5.5% in 2022 to 8.9% in 2023 based on first year premiums. ## WEALTH MANAGEMENT In 2023, the Company followed the strategic deployment of the 20th CPC National Congress, implemented the requirements of the Central Financial Work Conference and the Central Economic Work Conference and worked hard to serve national strategies and support the real economy in asset management business. The Company achieved high-quality development in asset management business. While continuing to expand the scale of investment assets, the Company seized market opportunities, enriched investment strategies, controlled investment risks and optimized investment systems to achieve long-term and stable return. As of 31 December 2023, the Company’s investment assets reached RMB1,336,092 million. ## OLD-AGE CARE & HEALTHCARE INDUSTRIES After years of efforts, the Company has developed a comprehensive healthcare and old-age care service system of “old-age care and healthcare community + nursing and medical care community + leisure and tourism community + health management center” as a way to provide customers with healthcare and old-age care, medical care, leisure and tourism, and health management services that cover their whole life. In 2023, Yanqing Yixiang community (延慶頤享社區) officially opened for operation, marking the full implementation of the three old-age care projects. Yanqing Yixiang community not only can provide customers with long-term residence and supporting services, but also offer short-stay experience and vacation services. The number of visitors received by Hainan Lexiang community (海南樂享社區), the sojourn project of the Company, increased by 6 times year-on-year and the occupancy rate of Lianhuachi Zunxiang community (蓮花池尊享公寓) reached 77%. After obtaining the qualification of designated institution for medical insurance, the Rehabilitation Hospital (康復醫院) achieved rapid business development. The number of outpatient visits and new inpatient visits increased by 2.2 times and 3.5 times year-on-year, respectively. Note: 1. The value of one year’s new business of 2023 was RMB3,024 million after the Company prudently lowered the non-unit-linked insurance funds investment return assumption to 4.5% and the risk discount rate to 9.0% for the evaluation of embedded value of 2023. The value of one year’s new business of 2023 would be RMB3,999 million, increasing by 65.1% year on a like-for-like basis, if using the non-unit-linked insurance funds investment return assumption of 5.0% and the risk discount rate of 11.0%. --- ### TECHNOLOGY EMPOWERMENT The Company put in place the concept of “digital finance” and strengthened the application of big data and artificial intelligence in key areas such as marketing support, team development, customer service, risk prevention and control and data governance to update and iterate digital scenes. The online customer service platform, “Zhangshang NCI” (掌上新華) and NCI’s official WeChat, have comprehensively improved services, enabling customers to enjoy over 100 self-services at home. To improve service efficiency, “Zhangshang NCI” introduced functions such as inquiry and return visit and smart consulting to provide customers with online services such as information updating, fast claim settlement, renewal premium payment, etc. NCI’s official WeChat also iterated and improved its basic architecture and service interface, and the classification at the front help offer rich online scenarios and functions. To improve life quality, “Zhangshang NCI” launched real-time live interaction, precise personalized recommendations and other content to provide customers with health management, scientific health guidance and online reading materials. To enhance empowerment, NCI’s official WeChat enhanced online data empowerment and provided customers with timely and accurate product consulting services. In 2023, “Zhangshang NCI” had 4.4 million users and the official WeChat platform had 7 million users. The platforms recorded a total of 53 million visits. “New Era” (新時代), the online business platform for agent, adhered to the user-centered service concept, and put in place multiple new application scenarios such as video recommendation and remote video and audio recording in 2023. The platform supported multiple main insurance products and riders as well as combined insurance and shopping cart marketing, provided digital business expansion and service assistance to agents with a more complete one-stop platform. The annual visit volume reached 176 million in 2023. ### CLAIM SETTLEMENT The Company stays committed to the “people-oriented” finance, focuses on its main responsibility and business and proactively fulfills its insurance responsibilities. In 2023, a total of 4.4 million claim cases were settled with compensation amount of RMB15.9 billion. The number of daily claims reached 12,100 with compensation amount of RMB43.78 million. The average time from application to settlement for each claim was 0.67 day. The Company continued to optimize the model of “insurance + service”, helped customers solve medical expenses burden, and built a claim service system covering pre-medical treatment, during and after medical treatment to meet different health management needs, and carried out critical illness condolence and advance compensation, advance medical payment and direct payment for special medicine purchase. Meanwhile, the Company optimized the claim settlement process and 96.99% of individual claim applications are submitted online, and over 80% of claims have been settled and given the real-time payment on the same day, making the Company’s brand connotation of “fast claims and excellent services” concrete and reach customers. --- ## PRODUCTS The Company adheres to customer-centered philosophy, makes efforts in product research and development, implements diversified product strategy and enhances product competitiveness. In 2023, the Company grasped market opportunities, promoted product adjustment, optimization and upgrading. For example, the Company accelerated customer classification and built a differentiated product system, enriched the products for medium to high end customers, and further improved products in specific disease, medical treatment and term life insurance. The Company actively served the national strategy, strengthened product supply in key areas such as critical illness, long-term care, individual pension, micro, small and medium-sized enterprise insurance, and special groups for the elderly and children, continued to increase product innovation and help ensure and improve people’s wellbeing. As of the end of 2023, a total of 169 products were selling, including 107 health insurance products, 8 annuity insurance products, 20 life insurance products and 34 accident insurance products. ## CUSTOMER SERVICE The Company has continued to build and improve the smart customer service cluster represented by “Zhiduoxin” (智多新), “Suixintong” (隨信通) and “Smart Teller Machine” (智慧櫃員機) as a way to provide customers with an omni-channel, diversified and three-dimensional intelligent service system. The smart customer service cluster has connected over 10 online and offline customer service platforms, which can meet a wide range of customer needs such as product consulting, inquiry and download, business handling, and customer return visits through multimedia methods including voice and video, text and links. In 2023, the smart customer service cluster served a total of 22.52 million visitors. Meanwhile, the Company took root in more than 1,500 grassroots counter service windows, and addressed the urgency and difficulties of the elderly, the disabled, and new citizens by innovatively launching the exclusive service of “ensure people’s wellbeing and promote development”. The Company set up more than 630 “old-age service stations” offering home visits, counter office, door-to-door help, warm heart help and other new services. In 2023, such services benefited more than 100,000 customers. At the end of 2023, the Company launched a new high-end customer private membership service “Xinhua Zun” (新華尊) to meet needs of high net-worth individuals. The Company introduced well-known service providers, integrated its internal healthcare and old-age care resources and provided high-end customers with services such as health management, home services for legal and tax affairs and business travel. --- # ANALYSIS OF CORE COMPETITIVENESS ## PROMINENT BRAND VALUE Staying committed to high-quality development, the Company has deepened the practice of “insurance for the people”, served the national strategy, the real economy, and the people’s wellbeing and fulfilled its social responsibilities. The Company has always played the role of economic “shock absorber” and social “stabilizer”. As of the end of 2023, the Company supported the real economy with investment over RMB920 billion, representing a year-on-year growth rate of 7.5%. The Company also served national strategy with investment over RMB240 billion, increasing by 19.7% year on year. In 2023, the Company was a member of Fortune 500 for three consecutive years, a member of world’s top 500 public companies by Forbes for ten consecutive years, and a member of world’s top 50 most valuable insurance brands for nine consecutive years. ## SOLID MAIN BUSINESS Adhering to the essence of life insurance and long-termism, the Company has made efforts to cultivate market demands, optimize marketing channels and build a professional and high-quality sales team. The Company provides customers with products and services that cover their whole life through distribution and service networks nationwide as a way to lay a solid and extensive customer base. In 2023, the Company achieved GWP of RMB165,903 million, and the total assets amounted to RMB1,403,257 million. The Company made steady progress in overall operation. ## SUPPORTIVE INDUSTRIAL COLLABORATION The Company always persists in the construction of industrial ecosystem. With Asset Management Company as the main body, the Company has an integrated wealth management platform with total assets under management over RMB1 trillion. The investment remains prudent and forms excellent synergy with liabilities. Boasting three old-age care projects of “Zunxiang (尊享), Lexiang (樂享) and Yixiang (頤享)”, the Company has continuously explored experimental marketing and optimized health management services so as to improve “product and service” model. ## CONVENIENT AND HIGH-QUALITY SERVICE The Company has built a “Smart +” (智慧+), “U Customer +” (優客+) and “People +” (人和+) trinity operation service ecosystem, and has accelerated the application of science and technology to optimize service supply and improve service processes. The operation service system has been continuously improved, the quality and efficiency of support have been enhanced, the scope of diversified services has been further expanded, and the service capacity has been comprehensively strengthened. ## PROFESSIONAL AND EFFICIENT MANAGEMENT The Company has a management team with rich experience and keen market insight as well as a group of talents with high-quality and professional underwriting, actuarial, risk management skills. Management efficiency constantly improves. --- ### HONORS AND AWARDS | Assessment Institution | Honors & Awards | | :--- | :--- | | Fortune | Ranking 478 in Fortune 500 | | Forbes | Ranking 497 in World’s Top 2000 Public Companies | | Fortune Plus App | Ranking 137 in Fortune China 500
Ranking 65 in China’s Top 500 Public Companies | | Moody’s Ratings | Insurer Financial Strength (IFS) Rating at “A2”
Basic Credit Assessment (BCA) Rating at “A3” | | Fitch Ratings | Insurer Financial Strength (IFS) Rating at “A” (Strong) | | World Brand Lab | Ranking 234 in Asian Top 500 Brands in 2023
Ranking 84 in China’s 500 Most Valuable Brands in 2023 | | Brand Finance | Ranking 33 in the World’s 100 Most Valuable Insurance Brands in 2023 | | China Enterprise Confederation | Ranking 130 in China’s Top 500 Enterprises in 2023 | | Kantar & China Banking and Insurance News | Top 10 Most Influential Chinese Insurance Brands of BrandZ in 2023 | | National Business Daily | Golden Tripod Award · Excellent Life Insurance Company in 2023 | | China Business Journal | Outstanding Performance Award for Listed Companies in Financial Industry in 2023 | | Shanghai Securities News | Golden Wealth Management · Insurance Protection Brand Award in 2023 | | China Investment Network | Golden Jubilee Award · Best Claim Service Life Insurance Company in 2023 | | JRJ.com | Golden Intelligence Award ·Outstanding Insurance Service Award in 2023 | | Financial News | Best Claim Service Life Insurance Company in 2023 | | China Association of Listed Companies and China News Agency | Top 10 ESG Listed Companies in China’s Financial Industry in 2023 | | Dingge Award for Digital Transformation Pioneer jointly initiated by Harvard Business Review, Tsinghua University Global Industry Research Institute and SAP AG | The New Insurance Contract Standards Application Software and its Implementation was awarded Annual Management Compliance Enterprise Award | --- ### SECTION 03 # STATEMENT Dear Shareholders, In 2023, New China Life upheld innovation while inheriting tradition, and pursued development through reform. With the concerted efforts of over 20,000 employees and 100,000 agents, the Company overcame difficulties and challenges and delivered hard-earned achievements to our esteemed shareholders and customers. The Company achieved GWP of RMB165.9 billion, a year-on-year increase of 1.7%. Total assets amounted to RMB1.4 trillion. The comprehensive solvency margin ratio stood at 278.43% and the core solvency margin ratio at 157.01%, all of which are at excellent levels within the industry. Currently, life insurance industry is still in a critical period of deep transformation. It requires to deeply understand high-quality development, continuously enhance insurance protection, service supply and risk prevention. Moving forward with the times, the Company initiated professional and market-oriented reform, and explored models and paths for high-quality development on the path of financial development with Chinese characteristics. --- ## We build upon our main business to serve the overall development. As a state-owned financial institution, the Company strengthened top-level design for serving national strategy, established an overall promotion mechanism consisting of “one center, one foundation, three mechanisms and five systems”(1) to enhance its ability to serve the overall interests of the nation and people. The Company has supported the real economy and promoted social prosperity. The investment in the real economy exceeded RMB920 billion, with double-digit growth in investment in areas such as self-reliance in science and technology, green development, inclusive finance and regional coordinated development. The Company also contributed to building a healthy China and ensuring people’s wellbeing. The exclusive commercial pension insurance and individual pension business continued to advance, with premium income over RMB1.5 billion. The policy-oriented medical insurance projects insured 19.65 million individuals, and long-term care insurance projects provided disability protection for 3.23 million insured individuals. ## We center on customers to enhance insurance supply. In order to provide excellent insurance services, the Company has optimized and upgraded in several aspects. By introducing a new basic law for agents, the Company made efforts to build professional and elite sales team. We remained committed to a customer-centered product approach, incorporating demand research, development, design, operation and feedback evaluation into our product mechanism. We improved service system, offered more financial, tax and legal services, and integrated healthcare and old-age care resources. The customer service system, with the high-end customer brand “Xinhua Zun” (新華尊) at its core, is being gradually implemented. We also enhanced support system, continuously improved user experience through digital technology empowerment, convenient operating support and intelligent customer service. ## We are driven by reform, innovating and developing while inheriting tradition. Following the development laws of life insurance industry, the Company strengthened top-level design and upgraded operation and management system. We further clarified the Company’s positioning as a diversified financial service group with life insurance at its core, build a wealth management system on the development paths for main responsibilities and businesses. We researched and explored internet channels, raveled out the next step to develop old-age care & healthcare industries and accelerated its promotion. We are committed to realizing one-stop financial products supply. The Company also shifted from management model centering around channels and modules in the past to emphasizing on professional and intensive operations, and adhered to high-quality development with highlighted value and optimized structure. We deepened reforms in mechanisms and systems and placed greater emphasis on systematic operations. We explored a market-oriented personnel selection mechanism and strengthened the staffing at all levels. We also gradually optimized the resource management and control system, enhanced cost-effectiveness management and elevated meticulous management. ## We prioritize prudent operation and effectively prevent and mitigate risks. As “1+N” risk management system and risk preference system continued, the Company deepened the comprehensive risk management. Emphasizing top-level design in risk management, the Company established a comprehensive and penetrative risk prevention and control system, strengthened organizational leadership in risk management for the headquarters, branches and subsidiaries, and accomplished various risk management tasks to ensure the Company’s long-term and healthy development. We worked hard to act as a strong guardian for the risk prevention and value preservation and appreciation of assets for the people. In the great journey of the new era, NCI people strived ahead. In 2024, New China Life will adhere to the political and people-oriented financial work and stick to people-centered value orientation. We will fully leverage our professional risk management capabilities and the long-term stability of insurance funds to enhance the quality and efficiency of insurance in serving the real economy. We will make overall plans to promote the development of “five target areas”, namely technology finance, green finance, inclusive finance, pension finance and digital finance, and play a significant role as a buffer and stabilizer of the economy. Note: 1. One center: put people at the center One foundation: consolidate the foundation for serving the national strategy Three mechanisms: front-end promotion mechanism, closed-loop management mechanism, and region-wide linkage mechanism Five systems: organization and promotion system, work planning system, tracking and supervision system, assessment and evaluation system, support and guarantee system. --- **We will dedicate ourselves to the nation and people and contribute to shared prosperity.** New China Life has always developed within the context of the times and the broader national development. We remain committed to helping construct multi-level social securities system, creating service models like "insurance + medical health", "insurance + home-based elderly care", and "insurance + high-quality healthcare and old-age care communities" to provide comprehensive and broader coverage of elderly care services for people. The Company will continue to upgrade insurance product system, and offer products and services aligned with the needs in technology, green, inclusive and elderly care finance. We will optimize investment layout in all aspects, increase investment in areas such as building a healthy China, addressing the aging population, technological innovation, and supporting green and inclusive, micro and small enterprises. **We will strengthen strategic leadership and advance reform and transformation.** The Company always prioritizes customers' interests and works hard to win their trust with more professional and higher-quality insurance services. To achieve this, we continue to "cultivate our internal strength" and transform towards a learning-oriented and service-empowered organization. We will build a learning-oriented organization and establish a comprehensive training system covering all internal staff and external agents to enhance their professional capabilities in customer service and insurance provision. We are also committed to forging a service-empowered organization where the headquarters serve branches, back-office supports front-office, internal staff supports external agents and agents serve customers. This involves marketing, products, customer service, operation, healthcare and old-age care, technology, assets, risk control and compliance upgrading to build an efficient collaboration and effective empowerment customer service system. **We will enhance our development capabilities and consolidate our foundation for development.** Focusing on structural optimization and value growth, the Company will make business structure longer, product structure more diverse, team structure top-notch and customer structure more balanced to comprehensively improve the quality and efficiency of management. We will strengthen asset-liability management by embedding the needs and constraints of the assets into product development and management on the liabilities. The Company will enhance the synergy and coordination of strategy formulation to ensure the long-term and prudent development of the Company. We will also comprehensively strengthen basic offices, optimize and strengthen distribution network in terms of positioning, talent, resources and incentives to achieve healthy and sustainable development. **We will shape our brand culture and cultivate a profound spiritual heritage.** We will integrate the financial culture with Chinese characteristics with NCI's cultural accumulation over the past 27 years, renewing our cultural values. Advocating competition and openness, we try to institutionalize and standardize our culture, demonstrating cultural values through action. We stay committed to building our service brand, enriching the service ecosystem, enhancing service quality and meeting the diverse needs of different customers throughout their whole life in areas such as life insurance protection, healthcare, elderly care and wealth management. We strive to make the NCI brand worthy of recognition and trust. "The road ahead is fraught with challenges, yet atop a thousand-tower peak, we witness the sunrise". The year 2024 marks the 75th anniversary of the founding of the People's Republic of China and is a crucial year for achieving the "14th Five-year Plan". New China Life will forge ahead towards a new journey of high-quality development through strategic and cultural guidance. We will harness the magnificent power accumulated by generations to build a world-leading insurance company that is professional, market-oriented, modern and international. Our mission is to safeguard the happiness of people, give back to shareholders and customers, fulfill the dreams of employees, and contribute NCI's strength to realizing the goal of building a financially strong nation! **YANG Yucheng** *Chairman* 27 March 2024 --- # SECTION 04 MANAGEMENT DISCUSSION AND ANALYSIS ## I. FINANCIAL ANALYSIS ### (I) Major accounting data and financial indicators Unit: RMB in millions | Key accounting data | 2023 | 2022 | Change(1) | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total revenues | 72,254 | 209,481 | (65.5%) | 220,027 | 203,858 | 172,103 | | Profit before income tax | 5,515 | 6,507 | (15.2%) | 15,670 | 15,491 | 13,221 | | Net profit attributable to shareholders of the Company | 8,712 | 9,822 | (11.3%) | 14,947 | 14,294 | 14,559 | | Net cash flows from operating activities | 91,548 | 89,385 | 2.4% | 73,853 | 67,179 | 42,102 | | | | | | | | | | | **As at** | **As at** | | **As at** | **As at** | **As at** | | | **31 December** | **31 December** | | **31 December** | **31 December** | **31 December** | | | **2023** | **2022** | **Change(1)** | **2021** | **2020** | **2019** | | Total assets | 1,403,257 | 1,255,044 | 11.8% | 1,127,721 | 1,004,376 | 878,970 | | Total liabilities | 1,298,165 | 1,152,139 | 12.7% | 1,019,207 | 902,696 | 794,509 | | Equity attributable to shareholders of the Company | 105,067 | 102,884 | 2.1% | 108,497 | 101,667 | 84,451 | --- Notes: 1. The data of 2022, 2021, 2020 and 2019 in the above table is under IFRS 4 and IAS 39, and not comparable with the data of 2023. 2. The Company has implemented IFRS 17 and IFRS 9 since 1 January 2023. According to the implementation requirements of IFRS 9 and IFRS 17, comparative data of the prior period is restated according to the requirements of IFRS 17 and is not restated according to the requirements of IFRS 9. Restated total revenues of 2022 were RMB108,164 million, profit before income tax was RMB22,079 million, net profit attributable to shareholders of the Company was RMB21,500 million, net cash flows from operating activities were RMB88,516 million, total assets as at 31 December 2022 were RMB1,214,936 million, total liabilities were RMB1,116,940 million and equity attributable to shareholders of the Company was RMB97,975 million, respectively. The restated data of 2022 is not comparable to that of 2023 because the data related to the financial instruments is not restated according to the requirements of IFRS 9. | Key financial indicators | 2023 | 2022 | Change(1) | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Basic weighted average earnings per share attributable to shareholders of the Company (RMB) | 2.79 | 3.15 | (11.4%) | 4.79 | 4.58 | 4.67 | | Diluted weighted average earnings per share attributable to shareholders of the Company (RMB) | 2.79 | 3.15 | (11.4%) | 4.79 | 4.58 | 4.67 | | Weighted average return on equity attributable to shareholders of the Company | 7.94% | 9.29% | (1.35pt) | 14.22% | 15.36% | 19.41% | | Weighted average net cash flows from operating activities per share (RMB) | 29.34 | 28.65 | 2.4% | 23.67 | 21.53 | 13.49 | Notes: 1. The data for 2022, 2021, 2020 and 2019 in the above table is under IFRS 4 and IAS 39, and not comparable with the data of 2023. 2. The restated basic/diluted weighted average earnings per share attributable to shareholders of the Company under IFRS 17 in 2022 amounted to RMB6.89 per share, weighted average return on equity attributable to shareholders of the Company amounted to 22.43%, and weighted average net cash flows from operating activities per share RMB28.37 per share. The restated data of 2022 is not comparable to that of 2023 because the prior data is not restated according to the requirements of IFRS 9. | | As at 31 December 2023 | As at 31 December 2022 | Change(1) | As at 31 December 2021 | As at 31 December 2020 | As at 31 December 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net assets per share attributable to shareholders of the Company (RMB) | 33.68 | 32.98 | 2.1% | 34.77 | 32.59 | 27.07 | Notes: 1. The data as at 31 December 2022, 2021, 2020 and 2019 in the above table is under IFRS 4 and IAS 39, and not comparable to the data of 2023. 2. The restated net assets per share attributable to shareholders of the Company as at 31 December 2022 amounted to RMB31.40 per share under IFRS 17. The restated data of 2022 is not comparable to that of 2023 because the prior data is not restated according to the requirements of IFRS 9. --- ### (II) Other key financial and regulatory indicators Unit: RMB in millions | Indicators | 2023 | 2022(1) | Change | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Reinsurance contracts assets | 9,802 | 10,590 | -7.4% | N/A | N/A | N/A | | Insurance contract liabilities | 1,146,497 | 1,013,191 | 13.2% | N/A | N/A | N/A | | Insurance revenue | 48,045 | 56,878 | -15.5% | N/A | N/A | N/A | | Insurance service expenses | (33,252) | (33,789) | -1.6% | N/A | N/A | N/A | | Net expenses from reinsurance contracts held | (767) | 706 | N/A | N/A | N/A | N/A | | Finance expenses from insurance contracts issued | (26,800) | (43,129) | -37.9% | N/A | N/A | N/A | | Finance income from reinsurance contracts held | 261 | 220 | 18.6% | N/A | N/A | N/A | | Surrender rate(2) | 1.9% | 1.8% | 0.1pt | 2.0% | 1.5% | 1.8% | Note: 1. The data of 2022 in the above table is restated according to the requirements of IFRS 17. The transition date of IFRS 17 was 1 January 2022. The Company did not restate the prior period data of 2019, 2020 and 2021. 2. Surrender rate = surrenders/(balance of life insurance and long-term health insurance contract liabilities at the beginning of the period + premium income of long-term insurance contracts). The indicator is calculated on the basis of IFRS 4. --- ### (III) The reasons of the change of main financial indicators Unit: RMB in millions | Indicators | 2023/As at 31 December 2023 | 2022/As at 31 December 2022(1) | Change(1) | Reason(s) for change | | :--- | :--- | :--- | :--- | :--- | | Total assets | 1,403,257 | 1,255,044 | 11.8% | The implementation of the new accounting standards for insurance contracts and the new accounting standards for financial instruments and the increase of business scale, the data is not comparable. | | Total liabilities | 1,298,165 | 1,152,139 | 12.7% | The implementation of the new accounting standards for insurance contracts and the new accounting standards for financial instruments and the increase of insurance contract liabilities, the data is not comparable. | | Equity in total | 105,092 | 102,905 | 2.1% | The implementation of the new accounting standards for insurance contracts and the new accounting standards for financial instruments and the change of comprehensive income, the data is not comparable. | | Net profit attributable to shareholders of the Company | 8,712 | 9,822 | (11.3%) | The implementation of the new accounting standards for insurance contracts and the new accounting standards for financial instruments, the data is not comparable. | Note: 1. The data of 2022/ as at 31 December 2022 in the above table is under IFRS 4 and IAS 39, and not comparable with the data of 2023. ### (IV) The discrepancy between the P.R.C. GAAP and the IFRS There is no difference between the consolidated net profit of the Company for the year 2023 and the consolidated equity of the Company as at 31 December 2023 as stated in the financial statements prepared in accordance with the IFRS and the P.R.C. GAAP. --- ### (V) The items and reasons for the change beyond 30% in the condensed consolidated financial statements Unit: RMB in millions | Balance sheet | As at 31 December 2023 | As at 31 December 2022⁽¹⁾ | Change⁽¹⁾ | Reason(s) of change | | :--- | :--- | :--- | :--- | :--- | | Financial assets at fair value through profit or loss | 380,239 | 79,465 | N/A | The implementation of the new accounting standards for financial instruments, not comparable | | Debt investments at amortized cost | 313,148 | N/A | N/A | The implementation of the new accounting standards for financial instruments, not comparable | | Debt investments at fair value through other comprehensive income | 347,262 | N/A | N/A | The implementation of the new accounting standards for financial instruments, not comparable | | Equity instruments designated at fair value through other comprehensive income | 5,370 | N/A | N/A | The implementation of the new accounting standards for financial instruments, not comparable | | Held-to-maturity investments | N/A | 378,391 | N/A | The implementation of the new accounting standards for financial instruments, not comparable | | Available-for-sale financial assets | N/A | 375,654 | N/A | The implementation of the new accounting standards for financial instruments, not comparable | | Loans and receivables | N/A | 47,456 | N/A | The implementation of the new accounting standards for financial instruments, not comparable | | Financial assets purchased under agreements to resell | 5,265 | 8,847 | (40.5%) | The allocation of investment assets and the requirement of liquidity management | | Accrued investment income | 76 | 15,137 | N/A | The implementation of the new accounting standards for financial instruments, not comparable | | Deferred tax assets | 10,709 | 7,890 | N/A | The implementation of the new accounting standards for financial instruments, not comparable | | Other assets | 14,309 | 6,544 | 118.7% | Increase of investment clearing account receivables | | Borrowings | 20,262 | 10,000 | 102.6% | Issuance of capital supplementary bonds | | Financial liabilities at fair value through profit or loss | 3,592 | 25,877 | (86.1%) | Decrease of payables to the third party investors of controlled structured entities | | Financial assets sold under agreements to repurchase | 106,987 | 43,617 | 145.3% | The allocation of investment assets and the requirement of liquidity management | | Reserves | 9,823 | 17,945 | N/A | The implementation of the new accounting standards for financial instruments and changes of discount rate in measurement of insurance contract liabilities, not comparable | --- ### Income statement Unit: RMB in millions | Income statement | 2023 | 2022(1) | Change(1) | Reason(s) of change | | :--- | :--- | :--- | :--- | :--- | | Other investment income | (9,260) | 17,613 | N/A | The implementation of the new accounting standards for financial instruments, not comparable | | Net expenses from reinsurance contracts held | (767) | 706 | N/A | Affected by the expected recovered claims and the distribution of the investment component of the expected recovered claims over the insurance period | | Finance expenses from insurance contracts issued | (26,800) | (43,129) | N/A | The implementation of the new accounting standards for financial instruments, not comparable | | Net impairment losses on financial assets | (307) | (4,958) | N/A | The implementation of the new accounting standards for financial instruments, not comparable | | Other finance costs | (2,086) | (1,173) | 77.8% | Increase of interest expense of financial assets sold under agreements to repurchase | | Profit before income tax | 5,515 | 22,079 | N/A | The implementation of the new accounting standards for financial instruments, not comparable. | | Income tax expense | 3,201 | (575) | N/A | The implementation of the new accounting standards for financial instruments, not comparable | | Net profit attributable to shareholders of the Company | 8,712 | 21,500 | N/A | The implementation of the new accounting standards for financial instruments, not comparable. If the data are basically comparable under the new accounting standards after simulation adjustments, net profit attributable to shareholders of the Company in 2023 would record a decrease of 43% year-on-year(2) | | Total comprehensive income | (5,859) | 8,610 | N/A | The implementation of the new accounting standards for financial instruments, not comparable | **Notes:** 1. The data of 2022/ as at 31 December 2022 in the above table is under IFRS 17 and IAS 39. The data associated with the standards of financial instruments in 2022 is not comparable with that in 2023. 2. To make the net profits for the year 2022 and 2023 comparable, the Company made reasonable simulation adjustments to the net profit attributable to shareholders of the Company for the year 2022 based on material changes in the implication of IFRS 9, which are discussed by the auditors. The adjusted net profits for the year 2022 and 2023 are basically comparable. --- ## II. BUSINESS ANALYSIS ### (I) Trend of Insurance Industry In 2023, China’s economic operation rebounded as a whole, the factors supporting high-quality development continued to gather and increase and the market demands gradually released. All of this created favorable conditions for the development of insurance business. However, the external situation was still complicated as the momentum of world economic growth was insufficient, and the asset business faced more pressures. As the national financial regulatory system and mechanism further improved, the development of life insurance industry continued to be regulated, and its orientation of returning to the essence of protection and serving the overall development became clearer and firmer. The life insurance industry achieved progress as a whole. ### (II) Insurance Business In 2023, the Company grasped favorable opportunities for development, emphasized business value, focused on the development of regular premium business, strengthened the construction of high-performing teams, diversified products and enhanced business quality. The Company deepened the integration of wealth, old-age care and healthcare ecosystem with life insurance business to promote the rapid growth of core business. #### Business volume In 2023, the Company realized GWP of RMB165,903 million with year-on-year growth rate of 1.7%. Among which, first year premiums from long-term insurance business totaled RMB40,900 million, increasing by 5.4% year on year. First year regular premiums from long-term insurance business totaled RMB23,538 million, increasing by 31.8% year on year. Renewal premiums amounted to RMB121,270 million, growing by 1.3% year on year. #### Value of one year’s new business The value of one year’s new business of 2023 was RMB3,024 million after the Company prudently lowered the non-unit-linked insurance funds investment return assumption to 4.5% and the risk discount rate to 9.0% for the evaluation of embedded value of 2023. The value of one year’s new business of 2023 would be RMB3,999 million,increasing by 65.1% on a like-for-like basis, if using the non-unit-linked insurance funds investment return assumption of 5.0% and the risk discount rate of 11.0%. --- ### Business structure The Company continued to optimize business structure and focus on the development of regular premium business. In 2023, first year regular premiums from long-term insurance business accounted for 57.6% of first year premiums from long-term insurance business, an increase of 11.6 percentage points over the corresponding period of last year. Renewal premiums accounted for 73.1% of GWP, being a solid contributor to premium volume. First year premiums from long-term traditional and participating insurance businesses in aggregate accounted for 95.9% of first year premiums from long-term insurance business, rising by 6.3 percentage points year on year. ### Business quality In 2023, to better manage business process, the Company strengthened system building to improve business quality. 13-month persistency ratio of individual life insurance business was 89.8%, up by 7.2 percentage points year on year. 25-month persistency ratio of individual life insurance business was 78.4%, up by 1.2 percentage points year on year. The surrender rate reached 1.9% in 2023, remaining basically flat compared with the same period of last year. Unit: RMB in millions | For the 12 months ended 31 December | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | **GWP** | **165,903** | 163,099 | 1.7% | | First year premiums from long-term insurance business | **40,900** | 38,805 | 5.4% | |     Regular premiums | **23,538** | 17,861 | 31.8% | |         Regular premiums with payment periods of ten years or more | **2,888** | 2,563 | 12.7% | |     Single premiums | **17,362** | 20,944 | (17.1%) | | Renewal premiums | **121,270** | 119,737 | 1.3% | | Premiums from short-term insurance business | **3,733** | 4,557 | (18.1%) | Notes: 1. Numbers may not be additive due to rounding. 2. The GWP and premiums mentioned above are calculated pursuant to IFRS 4. Similarly hereinafter. --- # 1. Analysis by distribution channels Unit: RMB in millions | For the 12 months ended 31 December | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | **Individual insurance channel** | | | | | First year premiums from long-term insurance business | **11,707** | 10,672 | 9.7% | |     Regular premiums | **11,058** | 10,074 | 9.8% | |     Single premiums | **649** | 598 | 8.5% | | Renewal premiums | **102,469** | 103,836 | (1.3%) | | Premiums from short-term insurance business | **1,400** | 1,854 | (24.5%) | | **Total** | **115,576** | 116,362 | (0.7%) | | **Bancassurance channel** | | | | | First year premiums from long-term insurance business | **29,073** | 28,046 | 3.7% | |     Regular premiums | **12,437** | 7,748 | 60.5% | |     Single premiums | **16,636** | 20,298 | (18.0%) | | Renewal premiums | **18,736** | 15,867 | 18.1% | | Premiums from short-term insurance business | **15** | 18 | (16.7%) | | **Total** | **47,824** | 43,931 | 8.9% | | **Group insurance** | | | | | First year premiums from long-term insurance business | **120** | 87 | 37.9% | | Renewal premiums | **65** | 34 | 91.2% | | Premiums from short-term insurance business | **2,318** | 2,685 | (13.7%) | | **Total** | **2,503** | 2,806 | (10.8%) | | **GWP** | **165,903** | 163,099 | 1.7% | Note: Numbers may not be additive due to rounding. ## (1) Individual life insurance business ### ① Individual insurance channel In 2023, individual insurance channel firmly pursued the development philosophy of "focusing on value achievement and maintaining regular premium growth", and adhered to the transformation strategy of "diversified, long-term, and high value". Through mechanism and system, the Company accelerated team transformation with high-performing agents at the core and strived to forge a "specialized", "professional" and "elite" sales team. Meanwhile, the Company strengthened customer management, comprehensively reinforced basic management for individual insurance channel. The Company also pursued compliance management and promoted high-quality development to achieve steady growth of core business. --- In 2023, individual insurance channel realized premiums of RMB115,576 million, remaining basically flat compared with last year. The first year regular premiums from long-term insurance business amounted to RMB11,058 million, representing an increase of 9.8% year on year. The agent headcounts in individual insurance channel totaled 155,000. The monthly average number of qualified agents(1) was 27,000, and monthly average qualified rate(2) was 15.8%. The monthly average comprehensive productivity per capita(3) was RMB6,293.7, growing by 94.4% year on year. Notes: 1. Monthly average number of qualified agents = (Σnumber of qualified agents in a month)/ the number of months in the reporting period, where monthly number of qualified agents refers to the number of agents who have issued one insurance policy or more (including card-type short-term accident insurance policy) which are not cancelled by policy holders in a month and whose first year commission in the month is equal to or greater than RMB800. 2. Monthly average qualified rate = monthly average number of qualified agents/monthly average number of agents*100%. Monthly average number of agents={Σ [(number of agents at start of the month + number of agents at end of the month)/2]}/the number of months in the reporting period. 3. Monthly average comprehensive productivity per capita = monthly average first year premiums/monthly average number of agents. ## ② Bancassurance channel In 2023, the bancassurance channel seized market opportunities, enhanced professional capabilities and firmly promoted transformation to build a new ecosystem for banking and insurance cooperation. The Company optimized product supply, focused on regular premium business, enhanced value contribution and achieved significantly increase in first year regular premiums. The Company optimized layout, stabilized cooperation, made breakthroughs in key areas and achieved rapid growth in important bank partners. The Company optimized team building and attached importance to high-performing team, strengthened empowerment support and productivity in high-performing team grew significantly. In 2023, bancassurance channel realized premiums of RMB47,824 million, increasing by 8.9% year on year. Of which, first year regular premiums from long-term insurance business reached a historical high of RMB12,437 million, representing an increase of 60.5% year on year. Renewal premiums totaled RMB18,736 million, up by 18.1% year on year. --- ### (2) Group insurance business The group insurance actively optimized business structure and improved business performance, strengthened underwriting for customers in key national strategy areas such as technological innovation, green development and inclusive finance. The Company provided protection for over 65,000 enterprise customers in key national strategy areas with sum assured over RMB3 trillion. Meanwhile, the Company continued to promote policy-oriented business, actively participated in the construction of the multi-level medical securities system and expanded the service group. The Company participated in 39 projects benefiting 20 million people in 17 provinces and municipalities, which offered richer medical security for insured people. In 2023, group insurance realized premiums of RMB2,503 million, decreasing by 10.8% year on year. The Company realized premiums of RMB734 million from policy-oriented health insurance(1). The policy-oriented health insurance covered 19.6545 million customers, rising by 9.5% year on year. Note: 1. Premiums from policy-oriented health insurance do not include entrusted fund business. ## 2. Analysis by types of insurance products Unit: RMB in millions | For the 12 months ended 31 December | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | **GWP** | **165,903** | 163,099 | 1.7% | | **Traditional insurance** | **80,836** | 49,842 | 62.2% | | First year premiums from long-term insurance business | 39,230 | 14,452 | 171.5% | | Renewal premiums | 41,505 | 35,268 | 17.7% | | Premiums from short-term insurance business | 101 | 122 | (17.2%) | | **Participating insurance(1)** | **29,696** | 54,008 | (45.0%) | | First year premiums from long-term insurance business | 9 | 20,335 | (100.0%) | | Renewal premiums | 29,687 | 33,673 | (11.8%) | | Premiums from short-term insurance business | – | – | – | | **Health insurance** | **54,396** | 57,861 | (6.0%) | | First year premiums from long-term insurance business | 1,661 | 4,018 | (58.7%) | | Renewal premiums | 50,021 | 50,749 | (1.4%) | | Premiums from short-term insurance business | 2,714 | 3,094 | (12.3%) | | **Accident insurance** | **918** | 1,341 | (31.5%) | | First year premiums from long-term insurance business | – | – | – | | Renewal premiums | – | – | – | | Premiums from short-term insurance business | 918 | 1,341 | (31.5%) | | **Universal insurance(1)** | **57** | 47 | 21.3% | | First year premiums from long-term insurance business | – | – | – | | Renewal premiums | 57 | 47 | 21.3% | | Premiums from short-term insurance business | – | – | – | Note: 1. Participating health insurance is included in the participating insurance. Universal health insurance is included in the universal insurance. --- In 2023, due to the changes in the economic environment, consumption demands and distribution channel development, etc, first year premiums from long-term participating insurance and health insurance decreased compared to last year. Meanwhile, the Company seized development opportunities, optimized product offerings and accelerated development paths. First year premiums from long-term traditional insurance rose significantly compared to last year. ### 3. Analysis by branches Unit: RMB in millions | For the 12 months ended 31 December | 2023 | 2022 | Change | | :--- | :---: | :---: | :---: | | **GWP** | **165,903** | 163,099 | 1.7% | | Shandong Branch | **15,881** | 15,863 | 0.1% | | Henan Branch | **11,663** | 13,335 | (12.5%) | | Beijing Branch | **11,600** | 10,567 | 9.8% | | Zhejiang Branch | **9,877** | 8,618 | 14.6% | | Guangdong Branch | **8,917** | 7,734 | 15.3% | | Shaanxi Branch | **8,514** | 8,212 | 3.7% | | Hubei Branch | **7,973** | 8,350 | (4.5%) | | Jiangsu Branch | **7,446** | 8,718 | (14.6%) | | Inner Mongolia Branch | **6,658** | 6,414 | 3.8% | | Hunan Branch | **6,216** | 6,184 | 0.5% | | Other Branches | **71,158** | 69,104 | 3.0% | As of the end of 2023, about 57.1% of GWP of the Company were derived from ten branches in populous areas or developed regions such as Shandong, Henan and Beijing. --- ### 4. The top 5 insurance products in terms of premium income Unit: RMB in millions | Rank | Product | Original premium income for the year 2023 | Main distribution channel | Surrender value | | :--- | :--- | :--- | :--- | :--- | | 1 | Wenlibao endowment insurance 穩利寶兩全保險 | 16,388 | Bancassurance channel | 19 | | 2 | Rongzunshijia whole life insurance 榮尊世家終身壽險 | 11,067 | Bancassurance channel | 70 | | 3 | Huitianfu annuity insurance 惠添富年金保險 | 9,198 | Individual insurance channel, bancassurance channel | 1,028 | | 4 | Xinrongyao whole life insurance 鑫榮耀終身壽險 | 7,892 | Individual insurance channel | 12 | | 5 | Ronghuashijia whole life insurance 榮華世家終身壽險 | 7,239 | Bancassurance channel | 251 | | Rank | Product | First year premiums for the year 2023 | | :--- | :--- | :--- | | 1 | Wenlibao endowment insurance 穩利寶兩全保險 | 16,388 | | 2 | Rongzunshijia whole life insurance 榮尊世家終身壽險 | 9,026 | | 3 | Xinrongyao whole life insurance 鑫榮耀終身壽險 | 7,823 | | 4 | Huijinxiang annuity insurance 惠金享年金保險 | 1,014 | | 5 | Rongyaoxinxiang whole life insurance 榮耀鑫享終身壽險 | 927 | ### 5. Top five customers During the reporting period, the premium income of top five customers accounted for about 0.48% of GWP of the Company, and there was no related party of the Company. In view of the Company’s business nature, the Company has no suppliers directly related to its business. ### 6. Business quality | For the 12 months ended 31 December | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | **Persistency ratio of individual life insurance business** | | | | | 13-month persistency ratio(1) | 89.8% | 82.6% | 7.2pt | | 25-month persistency ratio(2) | 78.4% | 77.2% | 1.2pt | Notes: 1. 13-month persistency ratio = premiums under in-force regular premium life insurance policies 13 months after their issuance as a percentage of premiums under life insurance policies becoming in-force during the issuance. 2. 25-month persistency ratio = premiums under in-force regular premium life insurance policies 25 months after their issuance as a percentage of premiums under life insurance policies becoming in-force during the issuance. --- ## 7. Analysis of insurance revenue and insurance service expenses Unit: RMB in millions | For the 12 months ended 31 December | 2023 | 2022(1) | Change | | :--- | :--- | :--- | :--- | | **Insurance revenue** | **48,045** | **56,878** | **(15.5%)** | | Traditional insurance | 6,157 | 5,472 | 12.5% | | Participating insurance(2) | 6,912 | 7,810 | (11.5%) | | Universal insurance | 211 | 118 | 78.8% | | Health insurance | 33,653 | 41,844 | (19.6%) | | Accident insurance | 1,112 | 1,634 | (31.9%) | | **Insurance service expenses** | **33,252** | **33,789** | **(1.6%)** | | Traditional insurance | 4,573 | 3,683 | 24.2% | | Participating insurance(2) | 4,760 | 5,567 | (14.5%) | | Universal insurance | 202 | 27 | 648.1% | | Health insurance | 22,619 | 23,385 | (3.3%) | | Accident insurance | 1,098 | 1,127 | (2.6%) | | **Insurance service result of insurance contracts issued** | **14,793** | **23,089** | **(35.9%)** | Notes: 1. The data of 2022 is restated according to IFRS 17. 2. Participating insurance is insurance business with direct participating features. In 2023, insurance service result of insurance contracts issued decreased by 35.9% compared with the same period of last year, of which, the insurance revenue decreased by 15.5% compared with the same period of last year mainly due to the reduction in insurance revenue from health insurance. The insurance service expenses decreased by 1.6% compared with the same period of last year. --- ### 8. Analysis on insurance contract liabilities Unit: RMB in millions | Component | As at 31 December 2023 | As at 31 December 2022(1) | Change | | :--- | :--- | :--- | :--- | | Liabilities for remaining coverage | **1,132,990** | 1,000,132 | 13.3% | | Liabilities for incurred claims | **13,507** | 13,059 | 3.4% | | **Insurance contract liabilities in total** | **1,146,497** | 1,013,191 | 13.2% | | Insurance contracts not measured with premium allocation approach | **1,144,021** | 1,010,171 | 13.3% | | Insurance contracts measured with general model | **532,445** | 407,659 | 30.6% | | Insurance contracts measured with variable fee approach | **611,576** | 602,512 | 1.5% | | Insurance contracts measured with premium allocation approach | **2,476** | 3,020 | (18.0%) | | **Insurance contract liabilities in total** | **1,146,497** | 1,013,191 | 13.2% | | Including: Contractual service margin for issued insurance contracts | **169,004** | 175,317 | (3.6%) | Note: 1. The data of 2022 is restated according to IFRS 17. In 2023, insurance contract liabilities increased by 13.2% compared with the end of the previous year, of which liabilities for remaining coverage increased by 13.3% compared with the end of last year, insurance contracts measured with general model increased by 30.6% compared with the end of the previous year. --- ### (III) Asset management business In 2023, the economic recovery in China continued, the various sectors fluctuated dramatically and the rotation of various industries accelerated. Staying committed to "prudent, long-term and value-oriented" investment philosophy, the Company adopted flexible investment tactics under strategic guidance in asset management business. The Company actively grasped market opportunities while ensuring controllable risks. In 2023, the total investment yield was 1.8%, and the net investment yield was 3.4%. In terms of fixed-income assets, the interest rates represented by 10-year treasury bonds decline. The potential credit risks remain significant and high-quality assets are still scarce. Based on the principle of assets liabilities matching, the Company, on the one hand, effectively undertakes large-scale assets allocation and alleviates relevant pressures through combining medium and short-duration varieties with long-duration interest rate bonds, and appropriately extends asset duration. On the other hand, the Company is looking for high-quality projects and taking measures to effectively prevent credit risks. In terms of equity investment, the Company has always adhered to value-oriented investment and long-term investment, prudently controlled positions, dynamically adjusted the structure according to market situations, and grasped the phased and structural opportunities. In 2023, the Company conscientiously implemented the requirements of serving the national strategy, and actively carried out investment in five aspects such as innovation, coordination, green, openness and sharing. The Company has built a proactive post-investment management model and continued to deepen the post-investment management. The Company continues to enhance the tracking of invested projects and maintain high-frequency communication with invested projects to enhance its influence on invested projects, and strives to improve the income from the utilization of insurance funds and maximize support for the development of invested projects. --- # 1. Investment portfolio Unit: RMB in millions | As at 31 December | 2023 Amount | 2023 Proportion | 2022(1) Amount | 2022(1) Proportion | | :--- | :--- | :--- | :--- | :--- | | **Investment assets** | **1,336,092** | **100%** | **1,157,622** | **100%** | | **Classified by investment type** | | | | | | Cash and cash equivalents(2) | 21,788 | 1.7% | 17,586 | 1.5% | | Term deposits(2) | 255,984 | 19.2% | 227,547 | 19.7% | | Financial investments | | | | | | Bonds | 673,656 | 50.4% | 481,752 | 41.6% | | Trust products | 40,765 | 3.1% | 70,146 | 6.1% | | Debt investment plans(3) | 39,174 | 2.9% | 46,663 | 4.0% | | Stocks(4) | 106,211 | 7.9% | 82,164 | 7.1% | | Funds | 84,632 | 6.3% | 87,131 | 7.5% | | Other financial investments(5) | 101,581 | 7.6% | 113,110 | 9.8% | | Investments in associates and joint ventures | 5,174 | 0.4% | 5,820 | 0.5% | | Other investment assets(6) | 7,127 | 0.5% | 25,703 | 2.2% | | **Classified by accounting methods** | | | | | | Financial assets at fair value through profit or loss | 380,239 | 28.5% | 79,465 | 6.9% | | Debt investments at fair value through other comprehensive income | 347,262 | 26.0% | N/A | N/A | | Equity investments designated at fair value through other comprehensive income | 5,370 | 0.4% | N/A | N/A | | Debt investments at amortized cost and others | 598,047 | 44.7% | N/A | N/A | | Available-for-sale financial assets | N/A | N/A | 375,654 | 32.4% | | Held-to-maturity investments | N/A | N/A | 378,391 | 32.7% | | Loans and others | N/A | N/A | 318,292 | 27.5% | | Investments in associates and joint ventures | 5,174 | 0.4% | 5,820 | 0.5% | Notes: 1. The Company has implemented IFRS 17 and IFRS 9 since 1 January 2023. The investment assets as at 31 December 2022 were not restated in accordance with IFRS 9. As the classification and measurement in IFRS 9 are different from those in IAS 39, investment assets as at 31 December 2022 are not comparable to those as at 31 December 2023. According to the requirements of IFRS 17, policyholder loan is included in insurance contract liabilities rather than a part of investment assets. 2. Term deposits exclude those with maturity of three months or less, and cash and cash equivalents include term deposits with maturity of three months or less. 3. Debt investment plans mainly consist of infrastructure and real estate funding projects. 4. Stocks include common stocks and preferred stocks. 5. Other financial investments include asset management plans, private equity, equity investment plans, unlisted equity investments, perpetual bonds, certificates of deposit, etc. 6. Other investment assets mainly include statutory deposits, financial assets purchased under agreements to resell, dividend receivables and interest receivables, etc. --- ## 2. Investment income Unit: RMB in millions | For the 12 months ended 31 December | 2023 | 2022(1) | | :--- | :--- | :--- | | Interest income from cash and cash equivalents | **276** | 168 | | Interest income from term deposits | **8,504** | 7,318 | | Interest and dividend income from financial investments | **32,635** | 40,505 | | Interest income from other investment assets(2) | **213** | 245 | | **Net investment income(3)** | **41,628** | 48,236 | | Realized gains/(losses) on investment assets | **(12,496)** | 2,820 | | Unrealized gains/(losses) on investment assets | **(5,935)** | (1,354) | | Impairment losses on financial assets | **(307)** | (4,954) | | Share of results of associates and joint ventures under equity method | **(639)** | (18) | | **Total investment income(4)** | **22,251** | 44,730 | | Net investment yield(5) | **3.4%** | 4.6% | | Total investment yield(5) | **1.8%** | 4.3% | Notes: 1. The Company has implemented IFRS 17 and IFRS 9 since 1 January 2023. The financial results of 2022 were restated in accordance with IFRS 17, not restated in accordance with IFRS 9. As the classification and measurement in IFRS 9 are different from those in IAS 39, the data related to investment income of 2022 is not comparable to that of 2023. According to IFRS 17, policyholder loan is included in insurance contract liabilities rather than a part of investment assets and the interest income generated is no longer a part of investment income. 2. Interest income from other investment assets includes interest income from statutory deposits and financial assets purchased under agreements to resell, etc. 3. Net investment income includes interest and dividend income from cash and cash equivalents, term deposits, and financial investments, etc. 4. Total investment income = net investment income + realized (losses)/gains on investment assets + unrealized gains/(losses) on investment assets + impairment losses on investment assets + share of results of associates and joint ventures under equity method. 5. Investment yield = (investment income – interest expenses of financial assets sold under agreements to repurchase)/(monthly average investment assets – monthly average financial assets sold under agreements to repurchase – monthly average interest receivables). --- ### 3. Investment in non-standard assets The non-standard assets that the Company held achieved excellent return on the conditions of strict credit and compliance requirements. Most of the underlying assets are loans in institutional financing of non-banking sectors, infrastructure financing, commercial real estate financing and consumption credit financing. The enterprises involved are industrial giants, including large financial institutions, central enterprises and important state-owned enterprises in the first and second tier cities. As at 31 December 2023, the non-standard assets amounted to RMB156,948 million, decreasing by RMB64,165 million(1) compared with the end of last year, accounting for 11.7% of total investment assets, reducing by 6.7 percentage points compared with the end of last year. The non-standard assets that the Company held had good credit enhancement measures. Apart from financing entities which are exempted from credit enhancement requirements by regulatory authorities, most of non-standard assets are taken the following credit enhancement measures, such as mortgage and pledge, joint guarantee, repurchase agreement, and management of funds, ensuring that the non-standard assets are with high quality and low risk. Note: 1. The data as at 31 December 2022 is under IAS 39. #### (1) Ratings Excluding non-fixed income financial products and portfolio products issued by insurance asset management companies not requiring external ratings, the existing non-standard assets of the Company with AAA ratings accounted for 98.6% of total non-standard assets as at 31 December 2023. The overall credit risk was limited. #### (2) Investment portfolio Unit: RMB in millions | As at 31 December 2023 | Amount | Proportion | Proportion change compared with the end of last year(1) | Amount change compared with the end of last year(1) | | :--- | :--- | :--- | :--- | :--- | | **Non-standard financial assets** | | | | | | – Trust products | 40,765 | 26.0% | -5.7pt | (29,381) | | – Debt investment plans | 39,174 | 25.0% | 3.9pt | (7,489) | | – Asset management plans | 37,107 | 23.6% | -4.8pt | (25,637) | | – Unlisted equity investments | 7,648 | 4.9% | -2.7pt | (9,060) | | – Others | 32,254 | 20.5% | 9.3pt | 7,402 | | **Total** | **156,948** | **100.0%** | | **(64,165)** | Notes: 1. The data as at 31 December 2022 is under IAS 39. 2. Others include private equity, equity investment plans, wealth investment products, etc. --- ### (3) Major management institutions Unit: RMB in millions | As at 31 December 2023 | Paid amount | Proportion | | :--- | :--- | :--- | | New China Asset Management Co., Ltd. | 59,708 | 38.0% | | Taikang Asset Management Co., Ltd. | 8,455 | 5.4% | | China Insurance Investment Co., Ltd. | 6,954 | 4.5% | | Cigna & CMB Asset Management Company Limited | 6,653 | 4.2% | | Zhongrong International Trust Co., Ltd. | 6,533 | 4.2% | | Bridge Trust Co., Ltd. | 6,012 | 3.8% | | China Fortune International Trust Co., Ltd. | 4,983 | 3.2% | | Dongguan Trust Co., Ltd. | 3,942 | 2.5% | | PICC Capital Insurance Asset Management Co., Ltd. | 3,366 | 2.1% | | Everbright Xinglong Trust Co., Ltd. | 3,240 | 2.1% | | **Total** | **109,846** | **70.0%** | --- ### III. ANALYSIS BY COMPONENT #### (I) Solvency New China Life Insurance Company Ltd. calculated and disclosed core capital, actual capital, minimum capital, core solvency margin ratio and comprehensive solvency margin ratio according to the Solvency Regulatory Rules II for Insurance Companies. Solvency margin ratios of a domestic insurance company in the PRC must meet the prescribed thresholds. Unit: RMB in millions | | As at 31 December 2023 | As at 31 December 2022 | Reason(s) of change | | :--- | :--- | :--- | :--- | | Core capital | 145,069 | 143,990 | Changes in fair value of available-for-sale financial assets(2), growth in insurance business and influence of Jin Gui No.5(3) | | Actual capital | 257,252 | 244,069 | The reasons mentioned above and the issuance of capital supplementary bonds of RMB10,000 million | | Minimum capital | 92,393 | 102,463 | Growth and structural changes in insurance and investment businesses, and influence of Jin Gui No.5(3) | | **Core solvency margin ratio(1)** | **157.01%** | 140.53% | | | **Comprehensive solvency margin ratio(1)** | **278.43%** | 238.20% | | Notes: 1. Core solvency margin ratio = core capital/minimum capital, comprehensive solvency margin ratio = actual capital/ minimum capital. 2. Available-for-sale financial assets are recognized and measured according to the *Accounting Standards for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments* issued by the Ministry of Finance of the People’s Republic of China in 2006. 3. On 10 September 2023, the NFRA issued *Notice on Optimizing the Regulatory Standards for the Solvency of Insurance Company* (Jin Gui [2023] No. 5), referred to as “Jin Gui No. 5”. --- ## (II) Liquidity ### 1. Gearing ratio | | As at 31 December 2023 | As at 31 December 2022 | | :--- | :--- | :--- | | Gearing ratio(1) | **92.5%** | 91.9% | Note: 1. Gearing ratio = total liabilities/total assets. ### 2. Consolidated statement of cash flows Unit: RMB in millions | For the 12 months ended 31 December | 2023 | 2022(1) | Change | | :--- | :--- | :--- | :--- | | Net cash flows from operating activities | **91,548** | 88,516 | 3.4% | | Net cash flows from investing activities | **(156,649)** | (89,601) | 74.8% | | Net cash flows from financing activities | **69,286** | 2,839 | 2,340.5% | Note: 1. Cash flows for the twelve months ended 31 December 2022 are restated in accordance with IFRS 17. IFRS 9 does not influence the statement of cash flows. The net cash inflows from operating activities in 2023 increased by 3.4% compared with the same period of last year mainly due to the increase of cash received from insurance premiums. The net cash outflows from investing activities in 2023 increased by 74.8% compared with the same period of last year mainly due to the increase of cash paid for investments. The net cash inflows from financing activities in 2023 have increased by 2,340.5% compared with the same period last year because cash generated from financial assets sold under agreements to repurchase has increased this year. --- ### 3. Source and use of liquidity The principal cash inflows of the Company comprise insurance premiums, proceeds from disposals and maturity of investment assets and investment income. The liquidity risks with respect to these cash inflows primarily arise from surrenders of policyholders and contract holders, defaults by debtors, fluctuation of interest rate and other market fluctuations. The Company closely monitors and manages these risks. The cash and bank deposits of the Company provided liquidity resources to satisfy the requirements of cash outflows. Substantially all of the Company's term deposits were available for utilization subject to interest losses. As of the end of the reporting period, cash and cash equivalents amounted to RMB21,788 million and term deposits amounted to RMB255,984 million. Moreover, the investment portfolio also provided liquidity resources to satisfy the requirements of unexpected cash outflows. As of the end of the reporting period, the book value of financial assets such as bonds, stocks and funds reached RMB864,499 million. The principal cash outflows of the Company comprise liabilities associated with various life insurance, annuity insurance, accident insurance and health insurance products, distribution of dividends and interest payments of insurance policies and annuity contracts, operating expenses, income taxes and dividends declared and payable to shareholders. Cash outflows arising from insurance activities primarily relate to benefit payments of insurance products, as well as payments for policy surrenders and policy loans. The sources of liquidity are sufficient to meet the Company's current cash requirements. ### (III) Reinsurance business The Company's reinsurance business currently includes business ceded through quota share, surplus and catastrophe reinsurance contracts. The current reinsurance contracts cover almost all products with risks and obligations. The Company reasonably determines the retention limit and reinsurance ratio based on relevant regulations, its business development and risk management. The Company carefully selects reinsurers to ensure the safety of reinsurance business and obtains high-quality protection and services. The selection criteria for reinsurers include factors such as financial strength, credit rating, price, technical strength, consistency of underwriting and claim policies, and services on the premise of meeting regulatory requirements. Reinsurers of the Company mainly include Swiss Reinsurance Company Ltd. Beijing Branch, China Life Reinsurance Company Ltd., General Reinsurance AG Shanghai Branch, SCOR SE Beijing Branch, and Munich Reinsurance Company Beijing Branch, etc. --- # IV. FUTURE PROSPECTS ## (I) Trend of Insurance Industry Looking ahead, the basic trend of China’s economic recovery and long-term improvement, as well as the high-quality economic development and in-depth promotion of Chinese path to modernization, will bring new development space and momentum to the insurance industry. Serving as a buffer and stabilizer of the economy and making overall plans to promote the development of “five target areas”, namely technology finance, green finance, inclusive finance, pension finance and digital finance are not only inevitable requirements for the insurance industry to promote high-quality economic and social development, but also basic needs for itself to deepen transformation and achieve long-term steady development. Insurance companies will further return to the essence of insurance and deepen supply-side structural reform, which will be reflected in every specific financial practice that serves the overall development of the nation, the real economy and the people. ## (II) Development Strategy of New China Life The Company will maintain its strategic focus, push forward high-quality development, deepen supply-side reform, build a professional talent team and prevent and resolve risks. The Company will adhere to a customer-centered development system, and deepen the reform of systems and mechanisms, optimize the layout of regional development, accelerate business transformation and digital transformation, and provide more products and services that meet the needs in the fields of science and technology, green, inclusiveness and old-age care, so as to better address people’s demands. ## (III) Business Plan In 2024, the Company will actively implement the new development philosophy, and adhere to the general principle of seeking progress while maintaining stability. The Company will stick to the value-oriented concept, continuously deepen business transformation and industrial synergy, balance development and security, focus on innovation and reform as well as risk prevention and control in key areas, improve the efficiency of resource allocation, and optimize guarantee support so as to secure results in the high-quality development. --- ### (IV) Possible Risks and Measures to be Taken 1. **Possible risks** In 2024, the current social and economic development continues to be positive, market demands are gradually recovering and positive factors are mounting. However, the international environment is still complex and severe and the complexity of the internal and external environment still exists. The social and economic environment, demographic structure and customer needs have undergone great changes in recent years, the industry is still in deep adjustment and transformation, and risk prevention and control in key areas still need continuous attention. 2. **Measures to be taken** The Company will, in accordance with the requirements and standards of regulatory authorities, optimize comprehensive risk management system, further consolidate the foundation of risk management, and improve tools, mechanism and system for risk management to make sure the effective operation of the system. --- # SECTION 05 EMBEDDED VALUE ## INDEPENDENT ACTUARY’S REPORT ON REVIEW OF EMBEDDED VALUE INFORMATION **To the Directors of New China Life Insurance Company Ltd.,** We have reviewed embedded value results (“EV Results”) of New China Life Insurance Company Ltd. (“NCI” or “the company”) as of 31 Dec 2023. Our review about EV results includes: embedded value and one year’s new business as of 31 Dec 2023, sensitivity analysis, and the analysis of change of the embedded value. The methodology NCI used to calculate the embedded value and the one year’s new business complies to “CAA Standards of Actuarial Practice: Appraisal of Embedded Value” (“Appraisal of Embedded Value”) issued by the China Association of Actuaries (“CAA”) in November 2016. As independent actuaries, it is our responsibility to review the EV results according to the review process as confirmed in the Letter of Engagement and to evaluate whether the methodology and assumptions used for calculating EV results are consistent with the requirement of Appraisal of Embedded Value and market information. ### Scope of work Our scope of work covered: * A review of whether methodology and assumptions used for calculating the embedded value and the value of one year’s new business as of 31 Dec 2023 are consistent with the requirement of Appraisal of Embedded Value and market information. * A review of the embedded value and the value of one year’s new business as of 31 Dec 2023; * A review of the sensitivity tests of the value of in-force business and value of one year’s new business as of 31 Dec 2023; and * A review of the analysis of change of the embedded value from 31 Dec 2022 to 31 Dec 2023. In carrying out our review, we have relied on the accuracy of audited and unaudited data and information provided by NCI. The calculation of embedded value relies greatly on predictions and assumptions, which include many economic/ noneconomic assumptions and assumptions on financial position that company has no control of. Therefore, the actual experience and results may differ from prediction. --- ### Opinion Based on the scope of work and data reliance, we have concluded that: * Based on our review, the embedded value methodology and assumptions used by NCI are consistent with the requirements of the “Appraisal of Embedded Value” and available market information. * The embedded value results of all significant aspects are consistent with the methodology and assumptions shown in the Embedded Value section of 2023 annual report. We confirm that the results shown in the Embedded Value section of 2023 annual report are consistent with those reviewed by us. This report has been prepared pursuant to an engagement contract between PricewaterhouseCoopers Consulting (Shenzhen) Ltd., Beijing Branch and New China Life Insurance Company Ltd. This report is solely for the purpose set forth in the first and second paragraphs of this report and is for the use of board of directors of NCI only and is not to be used for any other purpose or to be distributed to any other parties. We expressly disclaim any liability or duty to any other party for the contents of this report and howsoever arising in connection with it. Our work does not constitute an audit or other assurance engagement in accordance with applicable professional standards. Accordingly, we provide no audit opinion, attestation or other form of assurance with respect to our work or the information upon which our work was based. **Grace Jiang, FSA** **Ben Cheng, FIA** PricewaterhouseCoopers Consultants (Shenzhen) Ltd., Beijing Branch 27 March 2024 --- # 1. BACKGROUND In order to provide investors with an additional tool to understand our economic value and business results, we have prepared the Company’s Embedded Value as of 31 Dec 2023 and have disclosed the relevant information in this section. Embedded Value (EV) is an actuarially determined estimate of the economic value of the life insurance business of an insurance company based on a series of assumptions about future experience. But it does not incorporate the contribution of economic value from future new business. Value of New Business (VNB) represents an actuarially determined estimate of the economic value arising from new life insurance business issued during a certain period of time. Hence, the embedded value method can provide an alternative measure of the value and profitability of a life insurance company. The reporting of embedded value and value of new business provides useful information to investors in two respects. First, Value of In-Force business (VIF) represents the total amount of after-tax shareholder distributable profits in present value terms, which can be expected to emerge over time, based on the assumptions used. Second, Value of New Business provides a metric to measure the value created for investors from new business activities and hence the potential growth of the company. However, the information on embedded value and value of new business should not be viewed as a substitute of financial measures under other relevant financial bases. Investors should not make investment decisions based solely on embedded value and value of new business information. As standards for the disclosure of embedded value continue to develop internationally and in the PRC, the form and content of our presentation of embedded value may change. Hence, differences in definition, methodology, assumptions, accounting basis and disclosures may cause inconsistency when the results of different companies are compared. Also, embedded value calculations involve substantial technical complexity and estimates of value can vary materially as key assumptions are changed. In November 2016, China Association of Actuaries (CAA) issued CAA [2016] No. 36 “CAA Standards of Actuarial Practice: Appraisal of Embedded Value” (hereafter referred to as “Appraisal of Embedded Value” standard). The embedded value and value of new business in this section are prepared by us in accordance with the “Appraisal of Embedded Value” standard. PricewaterhouseCoopers Consultants(Shenzhen) Ltd. performed a review of our embedded value. The review statement from PricewaterhouseCoopers Consultants(Shenzhen) Ltd is contained in the “Independent Actuary’s Report on Review of Embedded Value Information” section. --- ## 2. DEFINITIONS OF EMBEDDED VALUE Embedded value is the sum of the adjusted net worth and the value of in-force business allowing for the cost of required capital held by the company. “Adjusted Net Worth” (ANW) is equal to the sum of: Net assets, defined as assets less corresponding policy liabilities and other liabilities valued; and Net-of-tax adjustments for relevant differences between the market value and the book value of assets, together with relevant net-of-tax adjustments to certain liabilities. The market value of assets can fluctuate significantly over time due to the impact of the prevailing market environment. Hence, the adjusted net worth can fluctuate significantly between valuation dates. The “value of in-force business” is the discounted value of the projected stream of future after-tax shareholder distributable profits for existing in-force business at the valuation date. The “value of one year’s new business” is the discounted value of the projected stream of future after-tax shareholder distributable profits for sales in the 6 months immediately preceding the valuation date. Shareholder distributable profits are determined based on policy liabilities, required capital in excess of policy liabilities, and minimum capital requirement quantification standards prescribed by the National Administration of Financial Regulation (“former CBIRC”). The value of in-force business and the value of one year’s new business have been determined using a traditional deterministic discounted cash flow methodology. This methodology is consistent with the “Appraisal of Embedded Value” standard and is also commonly-used in determining EVs of life insurance companies in China at the current time. This methodology makes implicit allowance for all sources of risks, including the cost of investment guarantees and policyholder options, asset/liability mismatch risk, credit risk, the deviation of the actual experience from the projected and the economic cost of capital, through the use of a risk-adjusted discount rate. --- ### 3. KEY ASSUMPTIONS In determining the value of in-force business and the value of one year’s new business as of 31 Dec 2023, we have assumed that the Company continues to operate as a going concern under the current economic and regulatory environment, and the relevant regulations for determining policy liabilities and required capital remain unchanged. The operational assumptions are mainly based on the results of experience analyses of the Company, together with reference to the overall experience of the Chinese life insurance industry, as well as with regard to expected future operating experience. As such, these assumptions represent our best estimates of the future based on information currently available at the valuation date. #### (1) Risk Discount Rate The risk discount rate used to calculate the value of in-force business and value of one year’s new business is 9.0% p.a. #### (2) Investment Returns For non-unit-linked insurance funds, the future investment return is assumed to be 4.5%. For unit-linked funds, the future investment return is assumed to be 6.0%. These assumptions are based on the current capital market conditions, the Company’s current and expected future asset allocations and investment returns for major asset classes. #### (3) Mortality Mortality assumptions have been developed based on the Company’s past mortality experience, expectations of current and future experience. Mortality assumptions are expressed as a percentage of the standard industry mortality tables: “China Life Tables (2010 to 2013)”. #### (4) Morbidity Morbidity assumptions have been developed based on the Company’s past morbidity experience, expectations of current and future experience, and taking into consideration future morbidity deterioration trend. Morbidity assumptions are expressed as a percentage of “China Life Insurance Experienced Critical Illness Table (2020)”. --- ### (5) Invalidation Rate and Surrender Rate Assumptions have been developed based on the Company’s experience of invalidation and lapse, expectations of current and future experience, and overall knowledge of the Chinese life insurance market. Assumptions vary by product type and premium payment mode. ### (6) Expenses Unit cost assumptions have been developed based on the Company’s past actual expense experience, expectations of current and future experience. Future inflation of 2.0% p.a. has been assumed in respect of per policy expenses. ### (7) Commission and Handling Fees The assumed level of commission and commission override, as well as handling fees, have been set based on the levels currently being paid. ### (8) Policyholder Bonuses and Dividends The assumptions regarding policyholder dividends have been derived in accordance with our current policyholder bonus and dividend policy, whereby 70% of surplus arising from participating business is paid to policyholders. ### (9) Tax Tax has been assumed to be payable at 25% p.a. of profits with allowance for the exemption of certain investment income, including Chinese government bonds, and dividend income from equities and equity investment funds. In addition, taxes and surcharges for short-term health and accident business are based on related tax regulation. ### (10) Cost of Required Capital It is assumed that the requirements under Solvency II Phase I is applied throughout the course of projection and 100% of the minimum capital requirement prescribed by the National Administration of Financial Regulation (“former CBIRC”) is to be held by the Company in the calculation of the value of in-force business and the value of one year’s new business. ### (11) Other Assumptions The current methods for calculating surrender values are in line with the requirements of National Administration of Financial Regulation (“former CBIRC”) and have been assumed unaltered throughout the course of projection. Our current reinsurance arrangements have been assumed to remain unaltered. --- ### 4. EMBEDDED VALUE RESULTS The table below shows our embedded value and value of one year’s new business as of 31 December 2023 and their corresponding results as of prior valuation date. ### Embedded Value Unit: RMB in millions | Valuation Date | 31 December 2023 | 31 December 2022 | | :--- | :--- | :--- | | **Adjusted Net Worth** | **162,783** | 165,666 | | Value of In-Force Business Before Cost of Required Capital Held | **116,257** | 116,863 | | Cost of Required Capital Held | **(28,529)** | (26,947) | | **Value of In-Force Business After Cost of Required Capital Held** | **87,727** | 89,916 | | **Embedded Value** | **250,510** | 255,582 | Notes: 1. The impact of major reinsurance contracts has been reflected in the embedded value. 2. Numbers may not be additive due to rounding. ### Value of One Year’s New Business Unit: RMB in millions | Valuation Date | 31 December 2023 | 31 December 2022 | | :--- | :--- | :--- | | Value of One Year’s New Business Before Cost of Required Capital Held | **5,892** | 4,565 | | Cost of Required Capital Held | **(2,868)** | (2,142) | | **Value of One Year’s New Business After Cost of Required Capital Held** | **3,024** | 2,423 | Notes: 1. The value of one year’s new business of 2023 would be RMB3,999 million if using the non-unit-linked insurance funds investment return assumption of 5.0% and the risk discount rate of 11.0%. 2. The first year premiums used to calculate the value of one year’s new business as of 31 December 2023 and 31 December 2022 were RMB44,941 million and RMB43,838 million respectively. 3. The impact of major reinsurance contracts has been reflected in the value of one year’s new business. 4. Numbers may not be additive due to rounding. --- ### Value of One Year’s New Business by Channel Unit: RMB in millions | Valuation Date | 31 December 2023 | 31 December 2022 | | :--- | :--- | :--- | | Individual insurance channel | 2,934 | 2,339 | | Bancassurance channel | 407 | 346 | | Group insurance channel | (318) | (262) | | **Total** | **3,024** | **2,423** | Notes: 1. The value of one year’s new business of 2023 would be RMB3,999 million if using the non-unit-linked insurance funds investment return assumption of 5.0% and the risk discount rate of 11.0%. 2. The first year premiums used to calculate the value of one year’s new business as of 31 December 2023 and 31 December 2022 were RMB44,941 million and RMB43,838 million respectively. 3. The impact of major reinsurance contracts has been reflected in the value of one year’s new business. 4. Numbers may not be additive due to rounding. ## 5. ANALYSIS OF CHANGE The analysis of change in Embedded Value from 31 December 2022 to 31 December 2023 is shown below. Unit: RMB in millions ### Analysis of Change in EV from 31 December 2022 to 31 December 2023 | | | | | :--- | :--- | ---: | | **1.** | **EV at the beginning of period** | **255,582** | | 2. | Impact of Value of New Business | 3,024 | | 3. | Expected Return | 19,298 | | 4. | Operating Experience Variances | 2,756 | | 5. | Economic Experience Variances | (14,315) | | 6. | Operating Assumption Changes | 398 | | 7. | Economic Assumption Changes | (13,306) | | 8. | Capital Injection/Shareholder Dividend Payment | (3,369) | | 9. | Others | 55 | | 10. | Value Change Other Than Life Insurance Business | 388 | | **11.** | **EV at the end of period** | **250,510** | Note: Numbers may not be additive due to rounding. --- Items 2 to 10 are explained below: 2. Value of new business as measured at the point of issuing. 3. Expected return on adjusted net worth and value of in-force business during the relevant period. 4. Reflects the difference between the actual operating experience in the period (including mortality, morbidity, discontinuance rates, expenses, taxes and etc.) and the assumed at the beginning of the period. 5. Reflects the difference between actual and expected investment returns and market value adjustment in the period, etc. 6. Reflects the change in operating assumptions between valuation dates. 7. Reflects the change in economic assumptions between valuation dates. 8. Capital injection and other dividend payment to shareholders. 9. Other miscellaneous items. 10. Value change other than those arising from the life insurance business. --- ### 6. SENSITIVITY TESTS Sensitivity tests are performed under a range of alternative assumptions. In each of the sensitivity tests, only the assumption referred to is changed, with all other assumptions unchanged. The results are summarized below. Unit: RMB in millions | VIF and Value of One Year’s New Business Sensitivity Results as of 31 December 2023 | VIF after Cost of Required Capital Held | Value of One Year’s New Business after Cost of Required Capital Held | | :--- | :---: | :---: | | **Scenarios** | | | | **Base Scenario** | **87,727** | **3,024** | | Risk Discount Rate at 9.5% | 82,542 | 2,685 | | Risk Discount Rate at 8.5% | 93,325 | 3,391 | | Investment Return 50bps higher | 117,278 | 5,611 | | Investment Return 50bps lower | 58,054 | 423 | | Expenses 10% higher (110% of Base) | 85,710 | 1,973 | | Expenses 10% lower (90% of Base) | 89,744 | 4,074 | | Discontinuance Rates 10% higher (110% of Base) | 87,980 | 2,806 | | Discontinuance Rates 10% lower (90% of Base) | 87,426 | 3,254 | | Mortality 10% higher (110% of Base) | 86,817 | 2,945 | | Mortality 10% lower (90% of Base) | 88,642 | 3,103 | | Morbidity and Loss Ratio 10% higher (110% of Base) | 82,100 | 2,676 | | Morbidity and Loss Ratio 10% lower (90% of Base) | 93,395 | 3,372 | | Profit Sharing between Participating Policyholders and Shareholders is assumed to be 75%/25% instead of 70%/30% | 83,127 | 3,023 | --- # SECTION 06 DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES ## I. CURRENT DIRECTORS, SUPERVISORS AND MEMBERS OF SENIOR MANAGEMENT As of the date of the disclosure of this report, details of current directors, supervisors and members of senior management of the Company are set out below: Unit: RMB10,000 | Name | Position | Gender | Date of birth | Term of office | Total after-tax remuneration received from the Company during the reporting period | Total individual income tax paid during the reporting period | Whether receiving remuneration from related parties during the reporting period | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | YANG Yucheng(1) | Chairman
Executive Director | Male | June 1971 | Since December 2023 | 15.47 | 1.39 | No | | ZHANG Hong(2) | Executive Director
President | Male | September 1964 | Since June 2021
Since April 2023 | 114.42 | 48.57 | No | | YANG Yi | Non-Executive Director | Male | February 1973 | Since July 2018 | – | – | Yes | | HE Xingda | Non-Executive Director | Male | September 1979 | Since October 2021 | – | – | Yes | | YANG Xue | Non-Executive Director | Female | June 1974 | Since October 2021 | – | – | Yes | | HU Aimin | Non-Executive Director | Male | December 1973 | Since June 2016 | – | – | Yes | | LI Qiqiang | Non-Executive Director | Male | November 1971 | Since August 2019 | – | – | Yes | | MA Yiu Tim | Independent Non-executive Director | Male | October 1954 | Since December 2019 | 22.68 | 4.32 | No | | LAI Guanrong | Independent Non-executive Director | Male | December 1962 | Since December 2022 | 20.79 | 3.96 | No | | XU Xu | Independent Non-executive Director | Female | September 1978 | Since December 2022 | 24.49 | 4.84 | No | | GUO Yongqing | Independent Non-executive Director | Male | October 1974 | Since December 2022 | 24.49 | 4.84 | No | | LIU Debin | Shareholder Representative Supervisor
Chairman of the Board of Supervisors | Male | August 1967 | Since June 2021 | – | – | Yes | | YU Jiannan | Shareholder Representative Supervisor | Male | March 1973 | Since February 2018 | – | – | Yes | | LIU Chongsong | Employee Representative Supervisor | Male | October 1965 | Since August 2019 | 147.97 | 73.64 | No | | WANG Zhongzhu | Employee Representative Supervisor | Male | October 1967 | Since March 2016 | 51.25 | 12.01 | No | | GONG Xingfeng | Vice President
Chief Actuary
Board Secretary | Male | October 1970 | Since November 2016
Since September 2010
Since March 2017 | 93.63 | 32.96 | No | | QIN Hongbo | Vice President
Chief Risk Officer | Male | August 1975 | Since November 2021
Since September 2022 | 97.28 | 33.88 | No | | WANG Lianwen | Vice President | Male | April 1968 | Since December 2022 | 97.56 | 31.05 | No | | LI Wenfeng(3) | Assistant to President | Male | October 1981 | Since February 2024 | N/A | N/A | Yes | | LIU Chen(4) | Assistant to President | Female | August 1974 | Since March 2024 | N/A | N/A | No | | LIU Zhiyong(4) | Assistant to President | Male | March 1972 | Since March 2024 | N/A | N/A | No | --- ### Notes: 1. On 25 September 2023, Mr. YANG Yucheng was elected as an executive director of the eighth session of the Board at the Second Extraordinary General Meeting of 2023. On 10 October 2023, Mr. YANG Yucheng was elected as the chairman of the eighth session of the Board at the tenth meeting of the eighth session of the Board. On 18 December 2023, the NFRA approved the qualification of Mr. YANG Yucheng as the chairman of the Board. 2. On 26 September 2022, the 35th meeting of the seventh session of the Board agreed to appoint Mr. ZHANG Hong as the president of the Company. On 11 April 2023, the CBIRC approved the qualification of Mr. ZHANG Hong as the president of the Company. 3. On 22 December 2023, the 13th meeting of the eighth session of the Board agreed to appoint Mr. LI Wenfeng as the assistant to the president of the Company. On 7 February 2024, the NFRA approved the qualification of Mr. LI Wenfeng as the assistant to the president of the Company. 4. On 25 January 2024, the 15th meeting of the eighth session of the Board agreed to appoint Ms. LIU Chen and Mr. LIU Zhiyong as assistants to the president of the Company. On 19 March 2024, the NFRA approved the qualifications of Ms. LIU Chen and Mr. LIU Zhiyong as assistants to the president of the Company. 5. The remuneration of directors, supervisors and members of senior management of the Company is calculated for their relevant term of office during the reporting period. 6. The performance bonus for the employee representative supervisor and senior management in 2023 is not finalized yet. Relevant details will be separately disclosed later. --- ## II. RESIGNED DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT The resigned directors, supervisors and members of senior management of the Company as of the date of the disclosure of this report are as follows: Unit: RMB10,000 | Name | Position | Gender | Date of birth | Term of office | Reason of change | Total after-tax remuneration received from the Company during the reporting period | Total individual income tax paid during the reporting period | Whether receiving remuneration from related parties during the reporting period | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | LI Quan(1) | Chairman
Executive Director
Chief Executive Officer | Male | August 1963 | From April 2023 to August 2023
From November 2019 to August 2023
From August 2019 to August 2023 | Resignation due to his age | 87.29 | 43.25 | No | | GENG Jianxin(2) | Independent Non-executive Director | Male | March 1954 | From September 2017 to September 2023 | Resignation after working for six years as an independent non-executive director | 22.27 | 4.4 | No | | YANG Zheng(3) | Vice President
Chief Financial Officer
(Financial Principal) | Male | May 1970 | From December 2016 to March 2024
From February 2017 to March 2024 | Resignation due to work adjustment | 108.79 | 45.46 | No | | YU Zhigang(4) | Vice president | Male | December 1964 | From November 2016 to January 2023 | Due to work adjustment | 12.39 | 2.66 | No | | YUE Ran(4) | Assistant to president | Male | February 1963 | From February 2013 to January 2023 | Due to work adjustment | 12.07 | 2.52 | No | | YUAN Chaojun(4) | Assistant to president | Male | April 1972 | From August 2011 to January 2023 | Due to work adjustment | 10.29 | 1.72 | No | Notes: 1. On 22 August 2023, Mr. LI Quan resigned from his positions as the chairman, executive director, chief executive officer, chairman of the Strategy Committee, member of the Investment Committee and the Risk Management and Consumer Rights Protection Committee of the Board due to his age. 2. On 18 September 2023, Mr. GENG Jianxin worked as independent non-executive director for 6 consecutive years and, therefore, resigned from his positions as an independent non-executive director, the chairman of the Audit and Related Party Transaction Control Committee of the Board and a member of the Nomination and Remuneration Committee of the Board in accordance with relevant regulatory provisions. 3. On 1 March 2024, Mr. YANG Zheng resigned from his positions as vice president, chief financial officer (financial principal) and all other positions in the Company due to work adjustment. 4. On 29 January 2023, the 1st meeting of the eighth session of the Board considered and approved *Proposal on the Adjustment of Certain Members of Senior Management*. Mr. YU Zhigang ceased to be vice president of the Company. Mr. YUE Ran and Mr. YUAN Chaojun ceased to be assistants to president of the Company. --- ### III. BIOGRAPHIES OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT #### (I) Biographies of Directors As of the date of the disclosure of this report, the biographies of current directors of the Company are as follows: **Mr. YANG Yucheng,** Chinese Mr. YANG Yucheng has been the executive director and chairman of the Company since December 2023 and the secretary of the Party Committee of the Company since August 2023. From May 2019 to August 2023, Mr. Yang served as the deputy secretary of the Party Committee of Shenwan Hongyuan Group Co., Ltd. (a company listed on the SZSE, stock code: 000166; the HKSE, stock code: 06806) and Shenwan Hongyuan Securities Co., Ltd., and the executive director and general manager of Shenwan Hongyuan Securities Co., Ltd. From December 2014 to May 2019, Mr. Yang served as a member of the Party Committee of Shenwan Hongyuan Group Co., Ltd. and Shenwan Hongyuan Securities Co., Ltd., and the chairman of the board of supervisors of Shenwan Hongyuan Group Co. Ltd. From May 2008 to December 2014, Mr. Yang successively served as a member of the Party Committee, the secretary of the commission for discipline inspection, the deputy general manager and the chairman of the board of supervisors of Hongyuan Securities Co., Ltd. Before that, Mr. Yang served as principal staff member of the State-owned Assets Administration Bureau, assistant to the special inspector of the State Council, full-time supervisor of the board of supervisors in state-owned enterprises under Work Committee of Central Enterprises of the Communist Party of China (中共中央企業工作委員會), director of the comprehensive affairs department of China Netcom Corporation Limited (中國網絡通信有限公司), office head and assistant to president of China Economic and Technology Investment and Guaranty Co., Ltd. (中國經濟技術投資擔保有限公司), etc. Mr. Yang obtained a master’s degree in economics from the Renmin University of China in January 2000. **Mr. ZHANG Hong,** Chinese Mr. ZHANG Hong has been the president of the Company since April 2023. Mr. Zhang has been executive director of the Company since June 2021 and deputy secretary of the Party Committee (principal level) since September 2019. Mr. Zhang once served as the director of the Asset Management Company from March 2023 to March 2024 and the vice president (principal level) of the Company from June 2021 to April 2023, and once served as the chairman of New China Health, the executive director, president, chairman of the board of supervisors of China Reinsurance (Group) Corporation (a company listed on the HKSE; stock code: 01508), the chairman of the board of directors of China Life Reinsurance Company Ltd., general manager and chairman of the board of directors of China Property & Casualty Reinsurance Company Ltd., director of China Continent Property & Casualty Insurance Company Ltd. and China Reinsurance Asset Management Co., Ltd., chairman of China Nuclear Insurance Pool. Mr. Zhang once worked in the People’s Insurance Company of China and China Insurance (UK) Co., Ltd. Mr. Zhang obtained a bachelor’s degree of arts in English from University of International Relations and was accredited as an economist. --- ### **Mr. YANG Yi,** Chinese Mr. YANG Yi has been the non-executive director of the Company since July 2018 and a director of the Asset Management Company since December 2020. Mr. Yang is currently working as deputy head of office of directly-managing enterprises/equity management department II and managing director in Huijin. Mr. Yang successively served as project manager of insurance department and manager of insurance department/comprehensive department in Sinochem Group Co., Ltd., manager of investment management department, assistant to general manager and manager of investment management department, deputy general manager and member of the Party Committee in Sinochem Finance Co., Ltd. from March 2001 to June 2018, during which Mr. Yang also worked as director of Manulife-Sinochem Life Insurance Co., Ltd. and Jiangtai Insurance Brokers Co., Ltd. Mr. Yang is a fellow member of China Association of Actuaries and a fellow member of Life Office Management Association of the United States. Mr. Yang obtained a master’s degree in economics from Nankai University in 1998 and a master’s degree in economics from Hong Kong University of Science and Technology in 2000. ### **Mr. HE Xingda,** Chinese Mr. HE Xingda has been the non-executive director of the Company since October 2021 and a director of the Asset Management Company since November 2023. Mr. He is currently working as managing director in Huijin. Mr. He joined Huijin in July 2005, and successively worked as deputy senior manager of banking department and senior manager of banking management department I of Huijin, senior manager and head of asset management group I of Central Huijin Asset Management Company (the "**Huijin Asset Management**"), senior manager and head of asset management division of capital operation department of Huijin/Huijin Asset Management. Mr. He obtained his master’s degree in accounting from Tsinghua University in July 2005. ### **Ms. YANG Xue,** Chinese Ms. YANG Xue has been the non-executive director of the Company since October 2021. Ms. Yang is currently working as managing director in Huijin. Ms. Yang joined CIC in December 2010, and successively worked as deputy senior manager, senior manager and the head of training and development team of human resources department, senior manager of organization department of the Party Committee/human resources department, director of training and development division/Party School Office in CIC. Before that, Ms. Yang worked in Societe Generale (China) Limited, BP (China) Investment Company Limited, etc. Ms. Yang obtained her master’s degree in business administration from Fordham University in February 2010. Ms. Yang possesses the human resources management qualification (Level 1). --- ### **Mr. HU Aimin,** Chinese Mr. HU Aimin has been the non-executive director of the Company since June 2016. Mr. Hu is currently the chairman of the board of directors and secretary of the Party Committee of Hwabao Investment Co., Ltd., director of Hwabao Securities Co., Ltd., Chinese Capital Ride Equity Investment and Management Co., Limited, Shanghai and China Bohai Bank Co., Ltd. (a company listed on the HKSE, stock code: 09668), as well as supervisor of Xinjiang Tianshan Iron & Steel Co., Ltd. (新疆天山鋼鐵聯合有限公司). Before that, Mr. Hu once served as the director of Hwabao Trust Co., Ltd. and Baowu Group Zhongnan Iron & Steel Co., Ltd. (寶武集團中南鋼鐵有限公司), the general manager of Industrial Financial Development Center of China Baowu, the secretary of the Party Committee of Shanghai Baosteel Packaging Co., Ltd., general manager of investment management department in Industrial Financial Development Center of China Baowu, deputy general manager of capital operation department of Hwabao Investment Co., Ltd. (capital operation department of Baosteel Group), a senior manager of asset management department in Baosteel Group. Mr. Hu obtained his bachelor’s degree in economics from Jiangxi University of Finance and Economics in 1995. ### **Mr. LI Qiqiang,** Chinese Mr. LI Qiqiang has been the non-executive director of the Company since August 2019. Mr. Li is currently the chairman of board of directors and secretary of the Party Committee of Hwabao Trust Co., Ltd. Mr. Li is also the director of Siyuanhe Private Equity Fund Management Co., Ltd. (former Siyuanhe Equity Investment Management Co., Ltd.) Before that, Mr. Li was the head of financial department of Baoshan Iron & Steel Co., Ltd., chief accountant of Baosteel Group Xinjiang Bayi Iron & Steel Co., Ltd. (寶鋼集團新疆八一鋼鐵有限公司), general manager of financial department of Baosteel Group Corporation, general manager of financial department of China Baowu, general manager of Industrial Financial Development Center and secretary of the Party Committee of industrial financial working committee in China Baowu, director and general manager of Hwabao Investment Co., Ltd., assistant to general manager of China Baowu, director of Baosteel Group Finance Co., Ltd., director of China Pacific Insurance (Group) Co., Ltd. (a company listed on the SSE, stock code: 601601; the HKSE, stock code: 02601), director of Hwabao Metallurgical Asset Management Co., Ltd. and chairman of board of directors of Hwabao Duding (Shanghai) Financial Leasing Co., Ltd. Mr. Li obtained his master’s degree in professional accounting from Chinese University of Hong Kong in 2005 and holds the title of senior accountant. ### **Mr. MA Yiu Tim,** Chinese (Hong Kong Permanent Resident) Mr. MA Yiu Tim has been the independent non-executive director of the Company since December 2019. Mr. Ma is a barrister at Liberty Chambers and a consultant of ETR Law Firm (Dongguan) (廣信君達(東莞)律師事務所) as a practicing lawyer in Guangdong-Hong Kong-Macao Greater Bay Area. Mr. Ma started his legal career as Crown Counsel in 1985 and he worked as a practicing lawyer in Guangdong-Hong Kong-Macao Greater Bay Area in 2023. He served as assistant legal adviser of the Legislative Council of Hong Kong. He also served as Counsel to the Legislative of Hong Kong from February 1996 to June 2015. Mr. Ma was admitted to the State Bar of California. He is also a senior fellow of The Hong Kong Institute of Directors, HKMAAL Accredited General Mediator, a senior fellow of Hong Kong Institute of Arbitrators and a senior fellow of the Chartered Institute of Arbitrators, an arbitrator of China International Economic and Trade Arbitration Commission, an arbitrator of Shenzhen Court of International Arbitration and an arbitrator of Hainan International Arbitration Court. Mr. Ma graduated from University of London with a master’s degree in law in 1988. He also obtained a PhD in law from Peking University in 2005. Mr. Ma was appointed as Justice of the Peace in 1998 and was awarded the Silver Bauhinia Star by the Chief Executive of Hong Kong Special Administrative Region in 2015. --- ### Mr. LAI Guanrong, Chinese Mr. LAI Guanrong has been the independent non-executive director of the Company since December 2022. Mr. LAI Guanrong is currently the independent non-executive director of Chinasoft International Limited (a company listed on the HKSE, stock code: 00354), CSC Financial Co., Ltd. (a company listed on the SSE and HKSE, stock codes: 601066 and 06066, respectively) and Dongxing Securities Co., Ltd. (a company listed on the SSE, stock code: 601198). Mr. Lai had been a director of China Sciences Group (Holding) Co., Ltd. (中科實業集團(控股)有限公司), the chief economist and member of investment committee of Shenzhen CMAF Management Co., Ltd (深圳市遠致富海投資管理有限公司), the chairman of the board of supervisors of Beijing Zhongguancun Science City Construction Holding Co., Ltd., the vice chairman of ABC Life Insurance Co., Ltd., the president of Jiahe Life Insurance Co., Ltd., the general manager of Fujian Minqiao Trust Investment Co., Ltd., the president of Huafu Securities Co., Ltd. and the deputy executive general manager (in charge of work) of Minfa Securities Co., Ltd. (now renamed as Dongxing Securities Co., Ltd.), etc. Mr. Lai obtained his doctor’s degree in economics from Xiamen University in 2001 and is a senior economist. ### Ms. XU Xu, Chinese Ms. XU Xu has been the independent non-executive director of the Company since December 2022. Ms. XU Xu is currently the head of the department of risk management and insurance and professor of Beijing Technology and Business University and the deputy dean of China Insurance Research Institute. She is also the head of academic committee of The Insurance Institute of Beijing, an industry consultant and expert in the government procurement projects for Beijing Government Procurement Center and a member of the youth committee of Health Protection Branch of China International Exchange and Promotive Association for Medical and Health Care (中國醫療保健國際交流促進會健康保障分會青年委員會). Ms. Xu obtained her doctor’s degree in economics from Renmin University of China in 2006. ### GUO Yongqing, Chinese Mr. GUO Yongqing has been the independent non-executive director of the Company since December 2022. Mr. GUO Yongqing is currently a professor of Shanghai National Accounting Institute. Mr. Guo also serves as an independent non-executive director of Shanghai Electric Power Company Limited (a company listed on the SSE, stock code: 600021), and J-Yuan Trust (Holdings) Co., Ltd. (a company listed on the SSE, stock code: 600816) and a director of Bank of Jiaxing Co., Ltd. Mr. Guo was an independent non-executive director of Shanghai Haohai Biological Technology Co., Ltd. (a company listed on the SSE, stock code: 688366), Yango Group Co., Ltd. (a company listed on the SZSE, stock code: 000671), Tianjin Capital Environmental Protection Company Limited (a company listed on the SSE and HKSE, stock codes: 600874 and 01065, respectively) and Chongqing Porton Pharmacy Science & Technology Co., Ltd. (a company listed on the SZSE, stock code: 300363), etc. Mr. Guo holds the certified public accountant (CPA) qualification and obtained his doctor’s degree in accounting theory from Shanghai University of Finance and Economics in 2002. --- ## (II) Biographies of Supervisors As of the date of the disclosure of this report, the biographies of current supervisors of the Company are as follows: ### Mr. LIU Debin, Chinese Mr. LIU Debin has been the shareholder representative supervisor and chairman of the board of supervisors of the Company since June 2021. Mr. Liu is currently a member of the Party Committee and chief accountant of Sinosteel Group Corporation Limited, a member of standing committee of the Party Committee and chief accountant of Sinosteel Corporation Limited (中國中鋼股份有限公司) (“**Sinosteel Corporation**”). Mr. Liu has worked for Sinosteel Group Corporation (“**Sinosteel Group**”) and its subsidiaries since January 1995. He served successively as the deputy general manager of assets and finance department of Sinosteel Group, deputy general manager of assets and finance department of Sinosteel Corporation, general manager of assets and finance department of Sinosteel Group, and deputy chief accountant of Sinosteel Corporation, a member of the Party Committee of Sinosteel Group, a member of standing committee of the Party Committee and chief accountant of Sinosteel Corporation. He once served as chairman of board of directors of Sinosteel Futures Co., Ltd. and secretary of the Party Committee and executive director of Sinosteel Deyuan Holding Company Limited (中鋼德遠控股有限公司), and secretary of the Party Committee and executive director of Sinosteel Trade Holding Company Limited (中鋼國貿控股有限公司). Prior to that, Mr. Liu worked for The Third Construction Co., Ltd. of China Construction First Group (中建一局三公司) and China Metallurgical Import & Export Corporation (中國冶金進出口總公司). Mr. Liu received his master’s degree in business administration from University of Science and Technology Beijing in January 2008 and holds the title of senior accountant. ### Mr. YU Jiannan, Chinese Mr. YU Jiannan has been the shareholder representative supervisor of the Company since February 2018. Mr. Yu is currently the director of general affairs department and managing director of CIC. Before that, Mr. Yu had been the senior manager, deputy director of human resources department and the deputy director of organization department of the Party Committee of CIC. He successively worked as the deputy senior manager and senior manager of human resources department in China Cinda Asset Management Corporation Co., Ltd. from May 2001 to September 2007, and was on secondment as vice head of Ledu County, Qinghai Province from November 2005 to January 2007. From July 1996 to May 2001, he worked at Guangzhou branch and Guangdong branch of China Construction Bank. Mr. Yu obtained his bachelor’s degree in economics from Guangdong College of Commerce in July 1996. --- ### Mr. LIU Chongsong, Chinese Mr. LIU Chongsong has been the employee representative supervisor of the Company since August 2019. Mr. Liu has been the general manager of eastern region of marketing center of individual insurance channel of the Company since December 2019, general manager (director level) of Shandong branch since June 2017, and general manager of Shandong branch of the Company since March 2013. Mr. Liu served as assistant to general manager of Qingdao branch, deputy general manager of Shandong branch, general manager of Qingdao branch and general manager of Shanxi branch of the Company. Before that, Mr. Liu worked in Dongying sub-branch of Qingdao branch of Ping An Insurance Company of China, Ltd. and Qingdao Chemical College. Mr. Liu obtained his bachelor’s degree in physics from Fudan University, Shanghai in 1986 and his EMBA degree from Peking University in 2012. ### Mr. WANG Zhongzhu, Chinese Mr. WANG Zhongzhu has been the employee representative supervisor of the Company since March 2016. Mr. Wang is currently the deputy secretary of the Party Committee, secretary of commission for discipline inspection of New China Pension and a supervisor of Hefei Supporting Operation. Mr. Wang had been the general manager of discipline inspection and supervision office (director of the commission for discipline inspection office) of the Company. He had once worked as supervisor of New China Pension, Xinhua Seniors Service and Electronic Commerce. Mr. Wang served as deputy director (in charge of work) of the inspection office of the Company from April 2010 to January 2011. Before that, Mr. Wang worked in Central Disciplinary Inspection of the Communist Party of China. Mr. Wang received his bachelor’s degree in investment economic management from Zhongnan University of Economics and Law in 1988. ### (III) Members of Senior Management As of the date of the disclosure of this report, the biographies of senior management of the Company are as follows: Mr. ZHANG Hong, please refer to the biographies of current directors in this section. ### Mr. GONG Xingfeng, Chinese Mr. GONG Xingfeng has been the vice president of the Company since November 2016, chief actuary of the Company since September 2010, and board secretary of the Company since March 2017. Mr. Gong has successively served as an assistant to general manager of actuarial department, deputy general manager of underwriting and claim settlement department, general manager of customer service department, chief actuary and an assistant to president since he joined the Company in January 1999. He also worked as the head of investment business, chairman of board of supervisors of the Asset Management Company, and director of the board of directors and chief actuary of New China Pension. Before joining the Company, Mr. Gong once worked in People’s Bank of China and China Insurance Regulatory Commission. Mr. Gong holds a senior economist title. He is a fellow of China Association of Actuaries (FCAA) and he is also a fellow of Chartered Institute of Management Accountants (FCMA) of Chartered Institute of Management Accountants (CIMA). He is now working as an executive member of China Association of Actuaries. Mr. Gong received his master’s degree in economics from Central University of Finance and Economics in 1996, and obtained his MBA degree from China Europe International Business School in 2011. --- ### **Mr. QIN Hongbo,** Chinese Mr. QIN Hongbo joined the Company in September 2021. He has been the vice president of the Company since November 2021 and chief risk officer of the Company since September 2022. Mr. Qin once served as the general manager of development and reform department, employee representative supervisor, director of the board of directors office, general manager of strategy and development department, chief strategy officer and spokesman of China Reinsurance (Group) Corporation. He once worked as the supervisor, director and deputy general manager of China Continent Property & Casualty Insurance Company Ltd., director of China Life Reinsurance Company Ltd. and China Reinsurance (Hong Kong) Company Limited. Mr. Qin obtained a PhD in economics from University of International Business and Economics in 2011 and holds a senior economist title. ### **Mr. WANG Lianwen,** Chinese Mr. WANG Lianwen has been the vice president of the Company since December 2022. Mr. Wang had been an assistant to president of the Company from February 2017 to December 2022 and the general manager of Zhejiang branch of the Company from September 2019 to July 2022. Since joining the Company in May 2010, Mr. Wang had successively served as the legal person business director of the Company, the director and regional general manager of Northwest China and the general manager of Shaanxi branch, an assistant to president of the Company, deputy general manager of New China Pension and temporary responsible person of Zhejiang branch of the Company. Mr. Wang is a professional intermediate accountant and economist. He received a PhD in economics from Fudan University in 2004. ### **Mr. LI Wenfeng,** Chinese Mr. LI Wenfeng has been the assistant to president of the Company since February 2024. Mr. LI Wenfeng is currently also a director of China Reinsurance (Group) Corporation (a company listed on the HKSE, stock code: 01508). From February 2019 to December 2023, Mr. Li served as deputy senior manager of the securities management department/insurance management department, director and senior manager of the office of directly-managing enterprises/the third division of equity management department II of Huijin, during which he was on secondment as a deputy director of Chaoyang Park Management Committee (Chaoyang District Science and Technology and Information Bureau) in Zhongguancun Science and Technology Park (中關村科技園區朝陽園管委會(朝陽區科技和信息化局)). From September 2009 to February 2019, Mr. Li served as manager of the board of supervisors office/internal audit department, and deputy senior manager of the office/board of directors office/Party Committee office of CIC. Mr. Li worked in Jinan Audit Office of National Audit Office (審計署濟南特派辦) and Information Postal Audit Bureau of National Audit Office (審計署信息郵政審計局). Mr. Li obtained a master’s degree in economics from Dongbei University of Finance & Economics in June 2008 and was accredited as an auditor. --- ### Ms. LIU Chen, Chinese Ms. LIU Chen has been the assistant to president of the Company since March 2024. Ms. LIU Chen is currently the general manager (director level) of customer service department/consumer rights protection department and renewal business department of the Company. Ms. Liu once served as director of the Company, the general manager of customer service department and the general manager of premium department. Ms. Liu obtained her EMBA degree from Tsinghua University in June 2012 and is an economist. ### Mr. LIU Zhiyong, Chinese Mr. LIU Zhiyong has been the assistant to president of the Company since March 2024. Mr. LIU Zhiyong is currently head of the Party Organization Committee, general manager of the human resources department of the Company and vice president of NCI Research and Training Institute. Mr. Liu once served as senior manager of the human resources department and the head of the research and planning team of CIC, the designated supervisor of the securities management department/insurance management department of Huijin. Mr. Liu once worked in PICC Property and Casualty Company Limited. Mr. Liu obtained a PhD in management from Renmin University of China in January 2017. --- # IV. POSITIONS OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT As of the date of the disclosure of this report, major positions of directors, supervisors and members of senior management of the Company in corporate shareholders and other entities are as follows: ### (I) Positions in corporate shareholders | Name | Corporate shareholders | Position | Term | | :--- | :--- | :--- | :--- | | YANG Yi | Central Huijin Investment Ltd. | Deputy Head of Office of Directly-managing Enterprises/Equity Management Department II | Since May 2022 | | | | Managing Director | Since February 2021 | | HE Xingda | Central Huijin Investment Ltd. | Managing Director | Since August 2021 | | YANG Xue | Central Huijin Investment Ltd. | Managing Director | Since August 2021 | | YU Jiannan | China Investment Corporation | Director of General Affairs Department | Since March 2022 | | | | Managing Director | Since July 2014 | ### (II) Major positions in other entities | Name | Other entities | Position | Term | | :--- | :--- | :--- | :--- | | YANG Yucheng | China Securities Internet System Co., Ltd. | Director | Since June 2020 | | HU Aimin | Hwabao Investment Co., Ltd. | Chairman of the Board of Directors | Since December 2019 | | | Chinese Capital Ride Equity Investment and Management Co., Limited, Shanghai | Director | Since January 2016 | | | China Bohai Bank Co., Ltd. | Director | Since September 2018 | | | Hwabao Securities Co., Ltd. | Director | Since December 2019 | | | Xinjiang Tianshan Iron & Steel Co., Ltd. | Supervisor | Since March 2020 | | LI Qiqiang | Hwabao Trust Co., Ltd. | Chairman of the Board of Directors | Since November 2020 | | | Siyuanhe Private Equity Fund Management Co., Ltd. | Director | Since September 2018 | | LAI Guanrong | Chinasoft International Limited | Independent Non-executive Director | Since June 2015 | | | CSC Financial Co., Ltd. | Independent Non-executive Director | Since May 2021 | | | Dongxing Securities Co., Ltd. | Independent Non-executive Director | Since December 2021 | | GUO Yongqing | Shanghai Electric Power Company Limited | Independent Non-executive Director | Since June 2021 | | | J-Yuan Trust (Holdings) Co., Ltd. | Independent Non-executive Director | Since September 2022 | | | Bank of Jiaxing Co., Ltd. | Director | Since March 2023 | | LIU Debin | Sinosteel Corporation Limited | Chief Accountant | Since December 2014 | | | Sinosteel Group Corporation Limited | Chief Accountant | Since August 2019 | | LI Wenfeng | China Reinsurance (Group) Corporation | Director | Since August 2023 | --- ## V. REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT In accordance with the principles of marketization and globalization, the remuneration of directors, supervisors and senior managers of the Company is determined based on the factors such as the Company’s operating results and performance evaluation with reference to the remuneration in the market. The remuneration of directors and supervisors is approved by shareholders’ general meeting, while the remuneration of senior management is approved by the Board meeting. The remuneration of directors, supervisors and senior managers was agreed by the Nomination and Remuneration Committee under the Board. During the reporting period, no directors or supervisors waived current and future remuneration. During the reporting period, the aggregate amount of after-tax remuneration that directors, supervisors and senior management received from the Company was RMB9.6313 million and the total amount of individual income tax paid was RMB3.5147 million. For detailed remuneration of each individual, please refer to relevant part in this section. The Nomination and Remuneration Committee under the Board is in charge of carrying out performance evaluation of senior managers of the Company. The annual performance evaluation plan is determined in accordance with the middle to long term development strategy and annual operation plan of the Company and implemented upon consideration and approval by the Board. The annual performance bonus is linked to operating results of the Company and individual evaluation results of senior managers. The Company has established a position-based and performance-oriented remuneration incentive system with reference to the market benchmark. The remuneration of senior managers comprises basic remuneration, performance bonus, welfare and allowances, etc. The Company has implemented a deferred payment system of senior management performance bonus with the payment term of three years according to the regulatory requirements. During the reporting period, the Company had no equity-based incentive plan or any other long-term incentive plans. ## VI. SHAREHOLDING OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT ### (I) Shareholding of the Company’s A shares by directors, supervisors and senior management No directors, supervisors or members of senior management of the Company currently in office or resigned during the reporting period held any of the Company’s A shares directly or indirectly. ### (II) Interests and short positions of directors, supervisors and chief executives in shares under Hong Kong laws and regulations Please refer to Section 11 “Changes in Share Capital and Shareholders’ Profile” of this report. ## VII. PUNISHMENT BY SECURITY REGULATORY AUTHORITY IN THE PREVIOUS THREE YEARS Neither the current nor resigned directors, supervisors or members of senior management of the Company during the reporting period were subject to the punishment by security regulatory authority in the previous three years. --- ## VIII. EMPLOYEES As of 31 December 2023, there were a total of 30,662 employees who entered into employment contracts with the Company (life insurance headquarters, 35 branches and major subsidiaries(1)). ### (I) Expertise | Expertise | Number | Proportion | | :--- | :--- | :--- | | Management | 1,845 | 6.0% | | Professional | 3,656 | 11.9% | | Marketing and marketing management | 17,133 | 55.9% | |     Of which: contractual field sales personnel | 7,316 | 23.9% | | Other | 8,028 | 26.2% | | **Total** | **30,662** | **100.0%** | ### (II) Education background | Education background | Number | Proportion | | :--- | :--- | :--- | | Master’s degree and above | 1,989 | 6.5% | | Bachelor’s degree | 21,753 | 70.9% | | Lower than bachelor’s degree | 6,920 | 22.6% | | **Total** | **30,662** | **100.0%** | ### (III) Gender (including senior management) | Gender | Number | Proportion | | :--- | :--- | :--- | | Male | 10,878 | 35.5% | | Female | 19,784 | 64.5% | | **Total** | **30,662** | **100.0%** | The Company believes it has achieved gender diversity in its workforce during the reporting period. The Company will continue to recruit employees and conduct annual review to maintain gender diversity in its workforce. Note: 1. Major subsidiaries refer to subsidiaries whose 50% or more of the shares are being held by the Company. --- ### (IV) Remuneration policy and training plan for employees In accordance with business nature and talent competition in the market, the Company provides employees with competitive remuneration and bonus with reference to the level of its counterparts in the industry. Insisting on the remuneration philosophy of paying according to the ability, position and performance, the Company encourages employees to steadily achieve and exceed the ability required by the positions by upgrading their own competency level, thereby gaining corresponding remuneration. As required by the PRC government, the Company provides employees with various social security and housing provident fund. At the same time, the Company established a variety of benefit plans for its employees, including enterprise annuity fund to meet the diverse needs of employees. In 2023, more than 22,000 staff completed improvement training on general skills, professional skills, management skills, etc., and 188,000 participants attended 10 NCI lectures. The average training time per capita exceeded 90 hours. The Company focused on improving professional skills in agent training. The number of trainees reached 1.19 million with an average learning time of 42.9 hours per capita. In 2024, to serve national strategies, prevent and resolve financial risks and promote high-quality development, the Company will conduct training to enhance job competency and performance ability, so as to help employees better serve the overall work of the CPC central Committee. With customers’ needs as the center, the Company will focus on the high-quality development of sales team and work hard to build a training system that meets the requirements of forging specialized, professional and elite sales team as a way to improve their ability in marketing diversified products, and to provide customers with professional and honest insurance services that cover their whole life. ### (V) The number of resigned and retired employees with expenses borne by the Company There were no resigned and retired employees with expenses borne by the Company. --- # CORPORATE GOVERNANCE ## I CORPORATE GOVERNANCE In strict compliance with the Company Law, Insurance Law, Securities Law, Corporate Governance Code and other applicable laws and administrative regulations as well as requirements of domestic and overseas regulatory authorities on corporate governance, the Company has established and improved the corporate governance system consisting of shareholders’ general meeting, the board of directors, board of supervisors and senior management, and formed an operation mechanism under which the corporate authorities, decision-making, supervisory and executive organs supported and coordinated with each other with appropriate checks and balances. During the reporting period, through various system guarantees and measures, the Company continued to promote corporate governance, improve corporate governance structure and enhance decision-making process. ### Corporate Governance Structure | Parent Entity | Subordinate/Associated Entity | | :--- | :--- | | Shareholders’ General Meeting | Board of Directors | | Shareholders’ General Meeting | Board of Supervisors | | Board of Directors | Strategy Committee | | Board of Directors | Investment Committee | | Board of Directors | Audit and Related Party Transaction Control Committee | | Board of Directors | Nomination and Remuneration Committee | | Board of Directors | Risk Management and Consumer Rights Protection Committee | | Board of Directors | Executive Committee | --- ## (I) Shareholders and Shareholders’ General Meeting ### Shareholders’ rights The Company attaches great importance to the rights of shareholders and stipulates in detail the rights of shareholders and how the rights can be realized in the *Articles of Association*, so as to ensure that the legal rights of shareholders are treated fairly. The Company attaches great importance to communication with shareholders in order to enhance shareholders’ understanding of the Company and protect their right to know. The Company also attaches great importance to reasonable investment return and dividend policies for shareholders to protect their right to profit. According to the *Articles of Association*, shareholders’ general meeting is the supreme authority of the Company and shall exercise the following functions and powers: to decide the business objective, development strategy and investment plan of the Company; to elect and replace directors and supervisors who are representatives of shareholders and to decide the remuneration of directors and supervisors; to consider and approve annual financial budget and final accounts of the Company; to consider and approve the profit distribution plan and loss recovery plan of the Company; to resolve on the increase or decrease in the registered capital of the Company; and to review and amend the *Articles of Association*, etc. Shareholder(s) shall have the right to propose convening an extraordinary general meeting. Pursuant to the *Articles of Association*, shareholder(s) individually or jointly holding 10% or more of the total voting shares of the Company for at least 90 consecutive days (the "**Proposing Shareholders**") shall have the right to propose to the Board to convene an extraordinary general meeting. When proposing an extraordinary general meeting, Proposing Shareholders shall submit topics and proposals with complete contents in writing to the Board and make sure that the aforesaid proposals do not violate laws, rules, regulations and the *Articles of Association*. Shareholders shall comply with the provisions and procedures regarding the convening of extraordinary general meeting as set out in the *Articles of Association*. Shareholder(s) shall have the right to make extraordinary proposals to the shareholders’ general meeting. Pursuant to the *Articles of Association*, shareholder(s) individually or jointly holding 3% or more of the Company’s shares shall make extraordinary proposals 10 days prior to the convening of shareholders’ general meeting and notify the convener in writing. Shareholder(s) shall have the right to make enquiries to the Company for relevant information. According to the *Articles of Association*, shareholders may obtain the information such as the list of registered shareholders, profiles of directors, supervisors and senior management, share capital and minutes of general meetings (for reference only). Shareholders shall make requests to the Company in writing and provide evidence of equity interests for inspection of or access to relevant information. The Company shall provide such information as required by shareholders after the shareholders’ identities are verified. For the contact information for making extraordinary proposals or enquiries by shareholders, please refer to Section 1 “Corporate Information” of this annual report. --- ### Shareholders’ general meetings During the reporting period, the Company held 3 shareholders’ general meetings in total as follows: | Session | Date | Date of disclosure of resolutions | Resolutions | | :--- | :--- | :--- | :--- | | The First Extraordinary General Meeting of 2023 | 2023-1-19 | 2023-1-19 | The First Extraordinary General Meeting of 2023 considered and approved the Proposal on the Election of Directors of the Eighth Session of the Board. | | The Annual General Meeting of 2022 | 2023-6-28 | 2023-6-28 | The Annual General Meeting of 2022 considered and approved the proposals including the Proposal on the Profit Distribution Plan for the Year 2022 and the Proposal on the Formulation of the Administrative Measures for the Remuneration of Directors and Supervisors (Trial). | | The Second Extraordinary General Meeting of 2023 | 2023-9-25 | 2023-9-25 | The Second Extraordinary General Meeting of 2023 considered and approved the Proposal on the Election of Mr. YANG Yucheng as the Executive Director of the Eighth Session of the Board. | The announcements on the resolutions of shareholders’ general meetings are published on the website of Hong Kong Stock Exchange (www.hkexnews.hk) and the website of Shanghai Stock Exchange (www.sse.com.cn), China Securities Journal and Shanghai Securities News. During the reporting period, the procedures of giving meeting notices, convening the meeting and voting at the meeting were all in compliance with the Company Law, Articles of Association and relevant regulations. The general meeting of shareholders improved the communication channels with shareholders, gathered comments and suggestions from shareholders, ensured that the shareholders had the rights to know, participate in and vote on material matters of the Company, and created a sound environment for shareholders to fully participate in decision-making and to equally exercise rights. Shareholders were also familiar with the procedures for conducting a poll in detail. The Company strictly abides by relevant regulations and requirements on corporate governance and the protection of minority investors. Adhering to be responsible to shareholders, the Company continuously improved corporate governance and optimized communication with investors, and built separate vote counting and public disclosure mechanisms for minority investors through the adoption of online voting during the shareholders’ general meetings to realize the protection of the interests of minority investors. --- ### Directors’ attendance of shareholders’ general meetings During the reporting period, all directors fulfilled their duties diligently, attended the shareholders’ general meetings, and earnestly listened to opinions from shareholders. All directors emphasized on communication and interaction with shareholders, made informed decisions and safeguarded the interests of the Company and all shareholders as a whole. During the reporting period, attendance of the shareholders’ general meetings of each director was as follows: | Name | Number of scheduled attendance | Number of actual attendance | Attendance rate | | :--- | :---: | :---: | :---: | | **Executive Directors** | | | | | YANG Yucheng(1) | N/A | N/A | N/A | | ZHANG Hong | 3 | 3 | 100% | | **Non-executive Directors** | | | | | YANG Yi | 3 | 3 | 100% | | HE Xingda | 3 | 3 | 100% | | YANG Xue | 3 | 3 | 100% | | HU Aimin(2) | 2 | 2 | 100% | | LI Qiqiang(2) | 2 | 2 | 100% | | **Independent Non-executive Directors** | | | | | MA Yiu Tim | 3 | 3 | 100% | | LAI Guanrong | 3 | 3 | 100% | | XU Xu | 3 | 3 | 100% | | GUO Yongqing | 3 | 3 | 100% | | **Resigned Chairman, Executive Director** | | | | | LI Quan(3) | 2 | 2 | 100% | | **Resigned Independent Non-executive Director** | | | | | GENG Jianxin(3) | 2 | 2 | 100% | Notes: 1. The chairman and executive director Mr. YANG Yucheng attended the Second Extraordinary General Meeting of 2023 and his qualification was ratified in December 2023. 2. The First Extraordinary General Meeting of 2023 held on 19 January 2023 re-elected Mr. HU Aimin and Mr. LI Qiqiang as non-executive directors of the eighth session of the Board. Mr. HU Aimin and Mr. LI Qiqiang attended the First Extraordinary General Meeting of 2023. 3. During the reporting period, for the details of the Company’s new appointment and resignation of directors, please refer to Section 6 “Directors, Supervisors, Senior Management and Employees” of this report. --- ## (II) Directors and Board of Directors As of the date of the disclosure of this report, the Board consisted of 11 directors, including 2 executive directors, 5 non-executive directors and 4 independent non-executive directors. Directors serve a term of three years and are eligible for re-election, but the cumulative term of independent non-executive directors shall not exceed 6 years. The number of directors and composition of the Board are in compliance with applicable laws and regulatory requirements and the *Articles of Association*. To the knowledge of the Company, members of the Board, directors, supervisors and senior management of the Company do not have any financial, business, family or other material relations with other directors, supervisors or senior management. ### 1. Corporate governance function The Board is responsible for exercising corporate governance function and has fulfilled its duties and responsibilities as provided by the *Corporate Governance Code*. During the reporting period, details of corporate governance function of the Board are as follows: to formulate and review the Company’s policies and practices on corporate governance; to review and monitor the training and continuous professional development of directors and members of senior management; to review and monitor the Company’s policies and practices in compliance with laws and regulatory requirements; to review the Company’s compliance with *Corporate Governance Code* and disclosure in corporate governance report; to formulate the Company’s overall strategy, objectives and approaches, business plans and investment proposals, etc. ### 2. Corporate Culture **Vision** Forge China’s best financial service group with comprehensive life insurance business as its core **Mission** To provide customers with guarantee for happy lives To contribute stable and sustainable return to shareholders To build a platform for employee to achieve self-fulfillment To add the power of harmony and tranquility to the society **Values** Honesty, Responsibility, Fairness, Innovation and Progressiveness **Business Philosophy** Value Creation, Sustainable Operation The Board remains committed to ensuring that the corporate culture is practiced across the Company and embedded in all business areas. Based on a sound governance structure, stringent risk management and effective internal control, the Company actively implements corporate culture through daily operation, workplace policies and close communication with business stakeholders, so as to sustain the development of the Company’s business and bring long-term value to shareholders. --- ### 3. Duties of the Board In accordance with the *Articles of Association*, the Board shall exercise the following functions and powers: to convene the shareholders’ general meeting and report its work to the shareholders’ general meeting; to implement the resolutions passed at the shareholders’ general meeting; to determine the operation plan and investment scheme of the Company, to control and monitor financial conditions and utilization of funds of the Company; to formulate the development strategy of the Company; to formulate the annual financial budget and final accounts of the Company; to formulate the profit distribution plan and loss recovery plan of the Company; to appoint or remove senior management of the Company, and to decide and implement the annual performance evaluation, annual remuneration, reward and punishment scheme of senior management of the Company, etc. ### 4. Board meetings During the reporting period, the Board held 4 regular Board meetings and 10 ad hoc Board meetings. The details were as follows: | Session | Date | Resolutions | | :--- | :--- | :--- | | The 1st meeting of the eighth session of the Board | 2023-1-29 | The meeting considered and approved 8 proposals including the *Proposal on the Composition of Board Committees of the Eighth Session of the Board*. | | The 2nd meeting of the eighth session of the Board | 2023-2-17 | The meeting considered and approved 4 proposals including the *Proposal on Product Retrospective Report of 2022*. | | The 3rd meeting of the eighth session of the Board | 2023-3-3 | The meeting considered and approved the *Proposal on the Profit Distribution Plan of Participating Business of 2022*. | | The 4th meeting of the eighth session of the Board | 2023-3-30 | The meeting considered and approved 23 proposals including the *Proposal on Special Explanation on Changes in Accounting Estimates for the Year 2022*. | | The 5th meeting of the eighth session of the Board | 2023-4-27 | The meeting considered and approved 17 proposals including the *Proposal on Comprehensive Evaluation Report on Development Plan of 2022*. | | The 6th meeting of the eighth session of the Board | 2023-5-26 | The meeting considered and approved 11 proposals including the *Proposal on Consolidated Statement Management Report of 2022*. | | The 7th meeting of the eighth session of the Board | 2023-7-18 | The meeting considered and approved 6 proposals including the *Proposal on the Assessment of Substantial Shareholders for the Year 2022*. | | The 8th meeting of the eighth session of the Board | 2023-7-25 | The meeting considered and approved 4 proposals including the *Proposal on Solvency Report for the Second Quarter of 2023*. | | The 9th meeting of the eighth session of the Board | 2023-8-29 | The meeting considered and approved 5 proposals including the *Proposal on the Formulation of the Capital Administrative Measures (Trial)*. | | The 10th meeting of the eighth session of the Board | 2023-10-10 | The meeting considered and approved 3 proposals including the *Proposal on Election of Chairman of the Eighth Session of the Board*. | | The 11th meeting of the eighth session of the Board | 2023-10-27 | The meeting considered and approved 4 proposals including the *Proposal on the Engagement of External Auditors for Auditing during Tenure, after Resignation of Senior Management for the Year 2024*. | | The 12th meeting of the eighth session of the Board | 2023-11-29 | The meeting considered and approved 4 proposals including the *Proposal on the Application of Pilot Investment Fund*. | | The 13th meeting of the eighth session of the Board | 2023-12-22 | The meeting considered and approved 5 proposals including the *Proposal on the Special Audit Report on Anti-money Laundering for Years 2022-2023*. | | The 14th meeting of the eighth session of the Board | 2023-12-31 | The meeting considered and approved the *Proposal on Authorizing Senior Management to Make Decisions on Investment in Special Funds*. | --- ### 5. Attendance of meetings of the Board and Board committees During the reporting period, all directors fulfilled their duties, actively participated in the meetings of the Board and Board committees, and made prudent decisions on the basis of in-depth understanding of situations. There was no attendance by proxy at Board meetings during the reporting period. The directors’ attendance at each meeting was as follows: **Attendance in person/Number of scheduled attendance** | Name | Board meetings | Strategy Committee | Investment Committee | Audit and Related Party Transaction Control Committee | Nomination and Remuneration Committee | Risk Management and Consumer Rights Protection Committee | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | | **Executive Directors** | | | | | | | | YANG Yucheng | 2/2 | 0/0 | 1/1 | – | – | – | | ZHANG Hong | 14/14 | 4/4 | 12/12 | – | – | – | | **Non-executive Directors** | | | | | | | | YANG Yi | 14/14 | 4/4 | 12/12 | 9/9 | – | – | | HE Xingda | 14/14 | – | 12/12 | – | – | 12/12 | | YANG Xue | 14/14 | – | – | – | 10/10 | 12/12 | | HU Aimin | 14/14 | 4/4 | 12/12 | – | – | – | | LI Qiqiang | 14/14 | – | – | 9/9 | 10/10 | 12/12 | | **Independent Non-executive Directors** | | | | | | | | MA Yiu Tim | 14/14 | – | – | – | 10/10 | 12/12 | | LAI Guanrong | 14/14 | 4/4 | 12/12 | 9/9 | – | – | | XU Xu | 14/14 | – | – | 9/9 | 10/10 | 12/12 | | GUO Yongqing | 14/14 | – | – | 9/9 | 10/10 | 12/12 | | **Resigned Chairman, Executive Director** | | | | | | | | LI Quan | 8/8 | 2/2 | 7/7 | – | – | 6/6 | | **Resigned Independent Non-executive Director** | | | | | | | | GENG Jianxin | 9/9 | – | – | 7/7 | 7/7 | – | Notes: 1. “–” means such director is not a member of the Board committee. 2. During the reporting period, for the details of the Company’s new appointment and resignation of directors, please refer to Section 6 “Directors, Supervisors, Senior Management and Employees” of this report. --- During the reporting period, directors of the Company articulated constructive advice and suggestions on major issues, including but not limited to corporate governance, reform and development, business operation, risk management, internal control and consumer rights protection, etc. All advice and recommendations are accepted by the Company. None of the directors raised any objection to the proposals of the Board. ### (III) Committees under the Board The Board establishes 5 committees which are Strategy Committee, Investment Committee, Audit and Related Party Transaction Control Committee, Nomination and Remuneration Committee and Risk Management and Consumer Rights Protection Committee. The Board committees are accountable to the Board and perform their duties by giving professional opinions to the Board. All important advice and recommendations put forward by members of Board committees have been adopted by the Company. #### Strategy Committee As of the date of the disclosure of this report, the Strategy Committee consisted of 5 directors, including 2 executive directors YANG Yucheng and ZHANG Hong, 2 non-executive directors YANG Yi and HU Aimin and 1 independent non-executive director LAI Guanrong, and YANG Yucheng served as the chairman. 1. **Duties of the Strategy Committee** The Strategy Committee performs the following duties and responsibilities: to review the Company’s development strategy and annual operation plan, increase or decrease in the registered capital, the profit distribution and loss recovery plan, amendment to the *Articles of Association*, etc., and make recommendations to the Board. 2. **Meetings** During the reporting period, the Strategy Committee held 4 meetings. The attendance of each member of the Strategy Committee is set out in “Attendance of meetings of the Board and Board committees” of this section. The meeting details were as follows: | Date | Content of meetings | | :--- | :--- | | 2023-3-29 | To consider 3 proposals including the *Proposal on Corporate Social Responsibility Report for the Year 2022* | | 2023-4-26 | To consider 4 proposals including the *Proposal on Operation Plan for the Year 2023* | | 2023-8-28 | To consider the *Proposal on the Recovery Plan (2023 Revised Version)* and the *Proposed Disposal Plan (2023 Revised Version)* | | 2023-10-09 | To consider the *Proposal on the Donation to New China Life Foundation* | --- ### Investment Committee As of the date of the disclosure of this report, the Investment Committee consisted of 6 directors, including 2 executive directors YANG Yucheng and ZHANG Hong, 3 non-executive directors YANG Yi, HE Xingda and HU Aimin, and 1 independent non-executive director LAI Guanrong, and YANG Yi served as the chairman. #### 1. Duties of the Investment Committee The Investment Committee performs the following duties and responsibilities: to consider the overall objective and strategy of asset and liability management of the Company, the rules and policies of asset and liability management and asset allocation, the rules and guidelines of utilization of insurance funds and asset management, management of insurance funds, etc., and make recommendations to the Board. #### 2. Meetings During the reporting period, the Investment Committee held 12 meetings. The attendance of each member of the Investment Committee is set out in "Attendance of meetings of the Board and Board committees" of this section. The meeting details were as follows: | Date | Content of meetings | | :--- | :--- | | 2023-2-16 | To consider the Proposal on Product Retrospective Report of 2022 | | 2023-3-3 | To consider the Proposal on the Profit Distribution Plan of Participating Business of 2022 | | 2023-3-29 | To consider 3 proposals including the Proposal on the Assets Allocation Plan for Years 2023-2025 | | 2023-4-26 | To consider 6 proposals including the Proposal on the Business Plan for Years 2023-2025 | | 2023-5-25 | To consider 3 proposals including the Proposal on Consolidated Statement Management Report of 2022 | | 2023-7-17 | To consider the Proposal on the Equity Interests Project | | 2023-7-24 | To consider the Proposal on the Asset-backed Securitization of Policy Loans | | 2023-8-28 | To listen to the Independent Evaluation Report on Asset Liability Management for Years 2022-2023 | | 2023-10-26 | To consider the Proposal on the Application for Investment Business in Treasury Bond Futures | | 2023-11-29 | To consider 2 proposals including the Proposal on the Application of Pilot Investment Fund | | 2023-12-21 | To consider the Proposal on Entrusted Investment Management Agreement for the Year 2024 and the Investment Guidelines for the Use of Insurance Funds for the Year 2024 with Asset Management Company (Hong Kong) | | 2023-12-31 | To consider the Proposal on Authorizing Senior Management to Make Decisions on Investment in Special Funds | --- ### Audit and Related Party Transaction Control Committee As of the date of the disclosure of this report, the Audit and Related Party Transaction Control Committee consisted of 5 directors, including 2 non-executive directors YANG Yi and LI Qiqiang, 3 independent non-executive directors LAI Guanrong, XU Xu and GUO Yongqing. 1. **Duties of the Audit and Related Party Transaction Control Committee** The Audit and Related Party Transaction Control Committee performs the following duties and responsibilities: to assess the effectiveness of risk management and internal control, to guide internal auditing, review the financial information and disclosure of financial information, to manage, review, approve and control risks of related party transactions, to manage the identification and maintenance of related parties, the information disclosure of related party transactions, etc., and make recommendations to the Board. 2. **Meetings** During the reporting period, the Audit and Related Party Transaction Control Committee held 9 meetings in total. The attendance of each member of the Audit and Related Party Transaction Control Committee is set out in "Attendance of meetings of the Board and Board committees" of this section. The meeting details were as follows: | Date | Content of meetings | | :--- | :--- | | 2023-2-16 | To listen to 2 reports including the Management Report on Related Parties for the Fourth Quarter of 2022 | | 2023-3-29 | To consider 11 proposals including the Proposal on the Special Audit Report on Internal Control of Insurance Fund Utilization of 2022 | | 2023-4-26 | To consider 8 proposals including the Proposal on the Compliance Report of 2022 | | 2023-5-25 | To consider 8 proposals including the Proposal on the Re-appointment of Accounting Firms for the Year 2023 | | 2023-7-17 | To consider 3 proposals including the Proposal on the Auditing Report during Tenure of Mr. YANG Zheng, Vice President and Chief Financial Officer (Financial Principal) | | 2023-7-24 | To listen to the Special Audit Report on Related Party Transactions for the Year 2022 | | 2023-8-28 | To consider 2 proposals including the Proposal on the Formulation of the Capital Administrative Measures (Trial) | | 2023-10-26 | To consider 2 proposals including the Proposal on the Engagement of External Auditors for Auditing during Tenure, after Resignation of Senior Management for the Year 2024 | | 2023-12-21 | To consider the Proposal on the Special Audit Report on Anti-money Laundering for Years 2022-2023 | --- ### 3. Performance of duties of the Audit and Related Party Transaction Control Committee The Audit and Related Party Transaction Control Committee, in accordance with the requirements for the preparation of annual report and relevant rules of procedures, kept sufficient and timely communication with external auditors; reviewed the financial statements; offered professional opinions on the Annual Report 2022 and agreed to the submission to the Board for its consideration. The Audit and Related Party Transaction Control Committee also reviewed the Company’s interim and quarterly results, offered professional opinions and agreed to the submission to the Board for its consideration. The Audit and Related Party Transaction Control Committee held meetings to research the re-appointment of accounting firms. The Audit and Related Party Transaction Control Committee has fully understood and reviewed Deloitte Touche Tohmatsu Certified Public Accountants LLP (“**Deloitte CPA**”) and Deloitte Touche Tohmatsu, and is of the view that the two auditors possess qualifications and competence, investor protection, good status of integrity and independence; and concerned about the decision of the Ministry of Finance to impose an administrative penalty on Deloitte CPA, and have requested and urged Deloitte CPA to ensure that there is adequate audit staff with professional competence, and to carry out relevant work in strict accordance with compliance requirements and the principle of independence, so as to give full and effective play to the role of the external auditor; and has agreed that the re-appointment of accounting firms should be submitted to the Board for consideration. The Audit and Related Party Transaction Control Committee paid special attention to internal control of the Company. Relevant departments of the Company reported to the Audit and Related Party Transaction Control Committee regularly or irregularly, so that the Audit and Related Party Transaction Control Committee promptly understood problems in the internal control of the Company. --- ### Nomination and Remuneration Committee As of the date of the disclosure of this report, the Nomination and Remuneration Committee consisted of 5 directors, including 2 non-executive directors YANG Xue and LI Qiqiang, and 3 independent non-executive directors XU Xu, MA Yiu Tim and GUO Yongqing, and XU Xu served as the chairman. 1. **Duties of the Nomination and Remuneration Committee** The Nomination and Remuneration Committee performs the following duties and responsibilities: to formulate the criteria and plan for selecting directors and members of senior management, to conduct preliminary review of the candidates for directors and senior management of the Company, and the candidate for chairman of board of directors, the chairman of board of supervisors and candidate for president of important subsidiaries (as decided by the Board via regular or irregular consideration), to formulate evaluation and remuneration schemes for directors and members of senior management, to review the overall human resources and remuneration strategies and basic policies (including those regarding senior management), etc., and make recommendations to the Board. 2. **Election of Directors** Shareholder(s) individually or jointly holding 5% or more of the total voting shares of the Company, or the Nomination and Remuneration Committee under the Board, shall have the right to nominate candidates for directors. The number of candidates for directors that a nominator proposes to nominate shall not exceed the number of directors proposed to be appointed. Shareholder(s) individually or jointly holding 3% or more of the shares of the Company, the Nomination and Remuneration Committee under the Board and the board of supervisors may nominate independent directors. Shareholders holding more than one third of shares of the Company and their related shareholders and persons acting in concert shall not nominate independent directors. The Nomination and Remuneration Committee under the Board and the board of supervisors shall nominate independent directors by meeting resolutions. The Nomination and Remuneration Committee under the Board shall review the candidates for directors pursuant to laws, rules, regulations and the *Articles of Association*, and submit its opinions to the Board. Directors are elected by the shareholders’ general meeting with a term of office for 3 years. Each director shall be reelected upon expiration of his or her term of office. But the cumulative term of independent directors shall not exceed 6 years. In 2023, the Nomination and Remuneration Committee of the eighth session of the Board nominated Mr. YANG Yucheng as candidate for the executive director of the eighth session of the Board, and reviewed the qualification of Mr. YANG Yucheng as candidate for the executive director of the eighth session of the Board. The Nomination and Remuneration Committee of the Board considered that the relevant conditions of Mr. YANG Yucheng met relevant laws, regulations, regulatory requirements and the *Articles of Association* on the qualifications of directors, and agreed to submit relevant proposal to the Board for consideration. --- ### 3. Board Diversity Policy The Company also pays attention to the diversity of directors. The Company believes that the diversification of directors has brought broad vision and rich and high-level experience to the Company, which is conducive to promoting scientific decision-making and corporate governance. The Board has formulated and has been complying with the *Board Diversity Policy*. When examining qualifications of candidates for directors, the Nomination and Remuneration Committee seeks to achieve board diversity through consideration of a number of factors, including but not limited to gender, age, cultural and educational background, race, professional experience, skills, knowledge and the term of service. Meanwhile, it will also take into consideration the business model and specific needs of the Company to ensure an appropriate balance in diversity of skills, experience and opinions of the Board members, to make the Board operate more effective and help the Company better serve customers and shareholders. The Board has reviewed the implementation of the Board Diversity Policy of the Company and confirmed its effectiveness. The Board is in the view that the policy can ensure there are potential successors to achieve gender diversity of the Board. Currently, the members of the Board have maintained a good and diversified structure in terms of gender, region, and professional background. As of the date of the disclosure of this report, the composition of the Board was as follows: | Dimension | Category | Value | | :--- | :--- | :--- | | Age | aged 50 and below | 5 | | Age | aged 51-55 | 3 | | Age | aged 56-60 | 1 | | Age | aged above 61 | 2 | | Duration of term | 2 years and below | 4 | | Duration of term | 2-6 years | 6 | | Duration of term | above 6 years | 1 | | Type of Directors | independent non-executive directors | 4 | | Type of Directors | non-executive directors | 5 | | Type of Directors | executive directors | 2 | | Gender | female | 2 | | Gender | male | 9 | Professional background: economics, finance, treasury, insurance, actuarial, accounting, law, etc. --- ### 4. Meetings During the reporting period, the Nomination and Remuneration Committee held 10 meetings in total. The attendance of each member of the Nomination and Remuneration Committee is set out in “Attendance of meetings of the Board and Board committees” of this section. The meetings were as follows: | Date | Content of meetings | | :--- | :--- | | 2023-2-16 | To consider 2 proposals including the Proposal on Amendments to Terms of Reference of the Nomination and Remuneration Committee | | 2023-3-29 | To consider 4 proposals including the Proposal on the Directors’ Performance Report for the Year 2022 | | 2023-4-26 | To consider 2 proposals including the Proposal on the Corporate Governance Report for the Year 2022 | | 2023-5-25 | To consider 2 proposals including the Proposal on the Adjustment of the Chairman of the Functional Committees under the Executive Committee | | 2023-7-17 | To consider the Proposal on the Appointment of Chief Audit Officer of the Company | | 2023-7-24 | To consider 2 proposals including the Proposal on the Amendments to the Administrative Measures on Remuneration of Senior Management | | 2023-8-28 | To consider the Proposal on the Nomination of Mr. YANG Yucheng as the Candidate for Executive Director of the Eighth Session of the Board | | 2023-10-9 | To consider 2 proposals including the Proposal on the Election of the Chairman of the Eighth Session of the Board | | 2023-10-26 | To consider 2 proposals including the Proposal on the Candidate for the Chairman of Asset Management Company (Hong Kong) | | 2023-12-21 | To consider 3 proposals including the Proposal on the Appointment of Assistant to President and Member of Executive Committee | ### Risk Management and Consumer Rights Protection Committee As of the date of the disclosure of this report, the Risk Management and Consumer Rights Protection Committee consisted of 6 directors, including 3 non-executive directors HE Xingda, YANG Xue, LI Qiqiang and 3 independent non-executive directors GUO Yongqing, MA Yiu Tim, XU Xu, and GUO Yongqing served as the chairman. --- 1. Duties of the Risk Management and Consumer Rights Protection Committee The Risk Management and Consumer Rights Protection Committee mainly performs the following duties and responsibilities: to review the overall objective, fundamental policy and work system of risk management and internal control, to review risk preference and tolerance, to review the structure and duties of risk management organization, to assess the effectiveness of solvency risk management system, to review risk assessment of major decisions and solutions of major risks of the Company, and make recommendations to the Board. 2. Meetings During the reporting period, the Risk Management and Consumer Rights Protection Committee held 12 meetings in total. The attendance of each member of the Risk Management and Consumer Rights Protection Committee is set out in “Attendance of meetings of the Board and Board committees” of this section. The meetings were as follows: | Date | Content of meetings | | :--- | :--- | | 2023-2-16 | To consider the *Proposal on the Report on Work Summary of Consumer Rights Protection for 2022 and Work Plan of Consumer Rights Protection for 2023* | | 2023-3-29 | To consider 6 proposals including the *Proposal on the Self-assessment Report on Money Laundering and Terrorist Financing Risks for the Year 2022* | | 2023-4-26 | To consider 8 proposals including the *Proposal on Comprehensive Risk Management Report for the Year 2022* | | 2023-5-25 | To consider 4 proposals including the *Proposal on the Stress Test Report on Solvency for the Year 2022* | | 2023-7-17 | To consider 2 proposals including the *Proposal on the Assessment of Substantial Shareholders for the Year 2022* | | 2023-7-24 | To consider 2 proposals including the *Proposal on Solvency Report for the Second Quarter for the Year 2023* | | 2023-8-28 | To consider 2 proposals including the *Proposal on the Formulation of the Capital Administrative Measures (Trial)* | | 2023-10-09 | To consider the *Proposal on the Donation to New China Life Foundation* | | 2023-10-26 | To listen to 2 reports including the *Independent Evaluation Report on Solvency Risk Management for Years 2022-2023* | | 2023-11-29 | To consider 2 proposals including the *Proposal on the Application of Pilot Investment Fund* | | 2023-12-21 | To consider the *Proposal on the Special Audit Report on Anti-money Laundering for Years 2022-2023* | | 2023-12-31 | To consider the *Proposal on Authorizing Senior Management to Make Decisions on Investment in Special Funds* | --- ### (IV) Performance of Independent Non-executive Directors As of the end of the reporting period, the Board consisted of 4 independent non-executive directors who were professionals in economics, accounting, laws, insurance, etc. The number of independent non-executive directors was in compliance with regulatory requirements and the *Articles of Association*. The independent non-executive directors of the Company have the requisite professional knowledge and experience, they can perform duties in strict accordance with relevant laws and regulations, regulatory documents and the *Articles of Association*, and have provided comments and suggestions towards the Company’s corporate governance, business operation, risk management and internal control, etc. Independent non-executive directors participate in the decision-making on major matters with independent and objective stances, and have paid special attention to legitimate rights and interests of minority shareholders during decision-making process. #### 1. Independent non-executive directors’ attendance of meetings The details of independent non-executive directors’ attendance in shareholders’ general meetings and Board meetings during the reporting period were set out in this section. #### 2. Objections from independent non-executive directors to major issues During the reporting period, independent non-executive directors had no objections to major issues of the Company. #### 3. Confirmation of independence of independent non-executive directors The Company has obtained written confirmation of each independent non-executive director on his/her independence from the Company. The Company confirmed that all independent non-executive directors were independent from the Company during the year ended 31 December 2023. Pursuant to the *Articles of Association*, independent non-executive directors may, if needed, independently engage an external auditor and consulting institution to obtain professional opinions at the expenses of the Company. Based on the above mechanism and the performance of independent non-executive directors, the Board effectively obtained independent views and opinions during the reporting period, and continuously optimized the Company’s operation management and corporate governance. --- ### (V) Training and Research of Directors During the reporting period, each director received reports and materials on the latest regulatory rules and updates, industry information as well as operation and management of the Company prepared on a regular basis to enable them to develop and update their knowledge and skills to work better, and to ensure that they have access to comprehensive and appropriate information in need to contribute to the Board. In addition, the Company has arranged directors to participate in trainings on insurance policies, laws and regulations, and professional knowledge, to study the latest laws and regulations and regulatory rules issued by regulatory authorities. During the reporting period, XU Xu, an independent non-executive director of the Company, participated in the pre-appointment training for independent directors held by the SSE. GUO Yongqing, an independent non-executive director of the Company, participated in the special training for directors and supervisors held by The Listed Companies Association of Beijing, the follow-up training for independent directors held by the SSE, the special training on violations of laws and regulations of listed companies held by The Listed Companies Association of China, and the training for directors, supervisors and senior management of listed companies held by The Listed Companies Association of Shanghai. Independent non-executive directors MA Yiu Tim and GUO Yongqing participated in the online special training on the performance of senior management in anti-money laundering and counter-terrorism held by Zhengzhou Training Institute of the People’s Bank of China. All directors participated in the ESG training organized by the Company. All independent non-executive directors participated in the training on the *Administrative Measures for Independent Directors of Listed Companies* organized by the Company. All directors are provided with comprehensive and necessary information when they are firstly appointed to ensure that they understand the Company’s business and operation, and fully understand their responsibilities and obligations under the listing rules and regulatory rules. In 2023, with the theme of “improving the quality and efficiency of serving national strategies”, the directors participated in the research of peer companies, external institutions and branches, and gained insight into how internal and external institutions served the real economy. Meanwhile, in order to study the deep-seated problems existing in the industry, the directors actively carried out research on the topics such as “the protection role of insurance industry in rural revitalization”, “the commercial pension insurance as the third pillar in the context of population aging”, “the development of home-based elderly care from the perspective of population aging”, “investment platform building in the insurance industry”, “risk research and judgment of urban investment debt and suggestions on risk management and control under local financial pressure”, so as to gain an in-depth understanding of the development trend and situation of the industry, and provide valuable opinions and suggestions for the high-quality development of the Company. --- # (VI) Supervisors and the Board of Supervisors ## 1. Supervisors and the Board of Supervisors As of the end of the reporting period, the board of supervisors of the Company consisted of 4 supervisors, including 2 shareholder representative supervisors and 2 employee representative supervisors. The board of supervisors performs the following duties and responsibilities: to examine the Company’s financial activities; to supervise directors and senior management in their performance of duties of the Company, and propose the removal of directors and senior management who have contravened any laws, regulations, regulatory documents, the *Articles of Association* or resolutions of shareholders’ general meetings; to nominate independent directors; to carry out internal supervision of the formulation, implementation and assessment of the development plan of the Company. During the reporting period, the board of supervisors held 4 regular meetings and 7 ad hoc meetings. The attendance was as follows: | Name | Shareholders' general meeting | Board of supervisors meeting | | :--- | :---: | :---: | | | **Attendance in person/Number of scheduled attendance** | | | **Chairman of the Board of Supervisors and Shareholder Representative Supervisor** | | | | LIU Debin | 3/3 | 11/11 | | **Shareholder Representative Supervisor** | | | | YU Jiannan | 3/3 | 11/11 | | **Employee Representative Supervisors** | | | | LIU Chongsong | 3/3 | 11/11 | | WANG Zhongzhu | 3/3 | 11/11 | The board of supervisors found no material risk to the Company and had no objection on matters under supervision during the reporting period. The announcements in relation to the meeting and the resolutions of the board of supervisors are published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk), the website of the SSE (www.sse.com.cn), China Securities Journal, and Shanghai Securities News. ## 2. Training and Research During the reporting period, the chairman of the board of supervisors LIU Debin attended the special training on the administrative measures for independent directors of listed companies in Beijing held by The Listed Companies Association of Beijing. All supervisors attended the ESG trainings organized by the Company. --- ### 3. Independent Opinions Expressed by the Board of Supervisors on Relevant Matters **(1) Legal Operation of the Company** During the reporting period, the Company insisted on management and operation in accordance with the *Company Law* and the *Articles of Association*. No violation of laws and regulations or damage to the interests of shareholders were found in the process of business operation and management. **(2) Truthfulness of Financial Statements** The Company’s financial statements 2023 were true, objective and accurate reflection of the Company’s financial situation and operating results. **(3) Related Party Transaction** During the reporting period, the board of supervisors reviewed the related party transactions and special audit report on related party transactions. The board of supervisors believed that related party transactions of the Company were fair and reasonable and found no damage to the interests of shareholders and the Company. **(4) Internal Control Report Review** During the reporting period, the board of supervisors reviewed the internal control evaluation report and internal control appraisal report and believed that the Company established a relatively complete, reasonable and effective internal control system, which greatly improved the internal control of the Company. **(5) Reputation Risk Management** During the reporting period, the board of supervisors reviewed the annual reputation risk management report, and members of the board of supervisors attended the meetings of the Board and meetings of the Risk Management and Consumer Rights Protection Committee, so as to supervise performance of the board of directors and senior management on reputation risk management. **(6) Implementation of Resolutions of Shareholders’ General Meeting** During the reporting period, members of the board of supervisors attended the annual general meeting, extraordinary general meeting. The board of supervisors supervised the implementation of resolutions of shareholders’ general meeting and believed that the Board could earnestly implement resolutions of shareholders’ general meeting of the Company. **(7) Information Disclosure Supervision** During the reporting period, the board of supervisors supervised the information disclosure of the Company, reviewed the regular reports and gave written opinions, and no illegal or non-compliance issues on information disclosure of the Company were found throughout the year 2023. --- In 2024, the board of supervisors will continue to fulfill its duties and improve its performance. In accordance with regulatory requirements and internal policies of the Company, the board of supervisors will continue to perform the supervision function in an honest and diligent manner to better prevent risks in operation and management of the Company, to protect the interests of the Company and shareholders and promote compliance management and sound development of the Company. ### (VII) Chairman and President As of the date of the disclosure of this report, Mr. YANG Yucheng served as the chairman of the Company and Mr. ZHANG Hong served as the president of the Company. The chairman is responsible for presiding over shareholders’ general meeting, convening and presiding over the meetings of the Board and exercising other powers granted by the Board. The president takes charge of ordinary operation and management of the Company. ### (VIII) Executive Committee According to the Articles of Association, the Company establishes Executive Committee as the decision-making body for the ordinary operation and management of the Company under the leadership of the board of directors. The Executive Committee comprises members of senior management, and its major duties include: to implement the specific tasks and measures of the resolutions of the Board; to implement plans in connection with material mergers and acquisitions, equity and real estate investments and financings, and assets disposals, subject to the authorization by the Board or in accordance with resolutions of the Board; to study on the material operation decisions; to monitor major operations and activities of the Company. There are six functional committees under the Executive Committee, including Business Development and Management Committee, Finance and Budget Management Committee, and Risk Management Committee, etc. ### (IX) Company Secretary The Company appointed, externally, Ms. NG Sau Mei to work as joint company secretary of the Company. The main contact person of Ms. NG Sau Mei in the Company is Mr. GONG Xingfeng, the board secretary and joint company secretary of the Company. The contact information of Mr. GONG Xingfeng is set out in Section 1 “Corporate Information” of this report. During the reporting period, both Mr. GONG Xingfeng and Ms. NG Sau Mei attended professional trainings for no less than 15 hours. ### (X) Amendments to the Articles of Association and Other Corporate Governance Systems On 17 February 2023, the second meeting of the eighth session of the Board considered and approved the proposal on amendments to Terms of Reference of the Nomination and Remuneration Committee. The responsibilities and powers of the Nomination and Remuneration Committee were expanded to include the review and/or approval of matters relating to share schemes under Chapter 17 of the Hong Kong Listing Rules. --- On 27 March 2024, in accordance with applicable laws, regulations, and Company’s practices, the 18th meeting of the eighth session of the Board considered and approved the proposal on amendments to the Articles of Association. The proposal is subject to the approval of the general meeting of shareholders of the Company. For detailed information, please refer to the announcement of the proposed amendments to the Articles of Association disclosed on the Hong Kong Stock Exchange’s website on the same day. Save as disclosed above, the Company did not amend other corporate governance systems during the reporting period and up to the date of disclosure of this annual report. ### (XI) Information Disclosure and Investor Relations During the reporting period, the Company strictly observed various regulatory rules of the listing places regarding information disclosure to ensure effective implementation. Meanwhile, the Company strengthened internal communication and training to enhance the compliance awareness of information disclosure, to ensure the standardization of information disclosure. The Company focused on investors’ needs, treated all kinds of investors fairly, fully and effectively presented the Company’s business development to investors and other stakeholders with clear and concise expressions, and made the Company’s information disclosure more effective. As of 2023, the Company has won the Class A rating in information disclosure of listed companies of the SSE for eight consecutive years. During the reporting period, the Company enriched and innovated the content and form of investor relations. The Company convened the results announcement and held annual and interim non-deal roadshow through on-site meeting, teleconference and live video broadcasting, providing investors with diversified communication channels. Through daily reception of investors and analysts visits, participation in investment summits and other activities, the Company maintained smooth communication with capital market, provided sufficient information on its operation and development timely. Meanwhile, the Company proactively protected the interests of minority investors. The senior management answered in detail the concerned questions from minority investors at results announcement and established a channel for minority investors to propose questions and in turn answer those questions. The Company had active daily interaction with minority investors by answering hotlines and replying to messages on its investor relations emails and the E-interactive platform of the SSE in order to protect the rights and interests of minority investors. The Company has reviewed the implementation and effectiveness of shareholder communication policy during the reporting period. The Company confirms its shareholder communication policy can effectively protect shareholders’ rights and interests and guarantee the smooth communication between shareholders and the Company. ## II. THE CONTROLLING SHAREHOLDER GUARANTEED THE COMPANY’S INDEPENDENCE IN ASSETS, PERSONNEL, FINANCE, INSTITUTIONS AND BUSINESS On the basis of abiding by national laws and regulations and regulatory rules and not interfering in the ordinary operation and management of the Company, Huijin, the controlling shareholder of the Company, exercised shareholders’ rights through corporate governance channel to ensure the Company’s independence in assets, personnel, finance, institutions and business. The Company runs independent and complete business and is capable of independent business operation. The Company is an independent legal person responsible for its own profits and losses. The business of the Company is independent from Huijin and other enterprises controlled by Huijin and the Company has no horizontal competition with the controlling shareholder or any unfair related party transaction with Huijin and other enterprises controlled by Huijin. --- ### III. DIVIDEND DISTRIBUTION #### (I) Dividend distribution policies According to Article 289 of the *Articles of Association*, the major dividend distribution policies of the Company are set out below: 1. The Company may distribute dividends in the form of cash, shares or a combination of cash and shares. The Company may distribute interim dividend. 2. If the profit for the year and the accumulated undistributed profit of the Company are positive, the annual profit distribution plan will be formulated by the Board based on the Company’s solvency margin ratio, business development and operation results, subject to the laws and regulations and requirements promulgated by relevant regulatory authorities on solvency margin ratio. 3. The Company shall give priority to dividend distribution in cash. Where the Company’s operation is in a sound condition, and the Board considers that the share price of the Company fails to reflect its share capital scale and that the distribution of dividend in shares will be favorable to all shareholders of the Company as a whole, the Company may propose dividend distribution in shares, provided that the above conditions of cash dividend are fully met. 4. The Board shall thoroughly discuss the rationality of profit distribution plan and produce a special resolution to the shareholders’ general meeting for consideration. In considering the profit distribution plan at the shareholders’ general meeting, the Company shall maintain active communications and exchanges with shareholders, particularly minority shareholders through various channels, carefully listen to the feedbacks and requests of minority shareholders, and give timely response to minority shareholders on the relevant matters. After a resolution approving such profit distribution plan is passed at the shareholders’ general meeting, the Board shall distribute the dividends within two months from the convention of such shareholders’ general meeting. During the reporting period, the decision-making process and mechanism of the Company’s profit distribution plan are complete, the dividend standard and proportion are clear, which are in line with the *Articles of Association* and relevant review procedures, fully protect the legitimate rights and interests of minority investors, and have been approved by all independent non-executive directors of the Company. #### (II) Distributable reserve for shareholders Net profit attributable to shareholders of the Company as contained in the 2023 Consolidated Financial Statements of the Company reached RMB8,712 million and net profit attributable to the Company as contained in the financial statements totaled RMB7,981 million. As of 31 December 2023, the accumulative profit available for distribution of the Company from previous years reached RMB83,142 million. And there was no deficit to be covered. According to the *Articles of Association*, the distributable net profit for 2023 of the Company totaled RMB7,981 million. --- ### (III) Profit distribution plan of 2023 According to the proposed profit distribution plan of 2023 considered and approved by the 18th meeting of the eighth session of the Board on 27 March 2024, the Company planned to distribute an annual cash dividend of RMB0.85 (including tax) per share to all shareholders of the Company of 2023, totaling approximately RMB2,652 million, representing approximately 30.4% of the net profit attributable to shareholders of the Company as contained in the 2023 financial statements of the Company. The remaining retained profits shall be carried forward to 2024 and distributed in future. The Company did not implement transfer of capital reserve to share capital in 2023. The aforementioned proposed profit distribution plan has yet to be approved by the shareholders’ general meeting. The Company expects that 2023 annual dividend will be distributed on Friday, 9 August 2024 to all shareholders. To the best knowledge of directors, none of the shareholders has waived or agreed to waive any dividend arrangement. ### (IV) Dividend distribution in recent three years | Year of distribution | Amount of dividend per share (RMB) (including tax) | Total amount of cash dividend (RMB million) (including tax) | Net profit attributable to shareholders of the Company achieved within the year as contained in the financial statements (RMB million) | Percentage of the total amount of cash dividend in net profit attributable to shareholders of the Company as contained in the financial statements | | :--- | :--- | :--- | :--- | :--- | | 2023 | 0.85 | 2,652 | 8,712 | 30.4% | | 2022 | 1.08 | 3,369 | 9,822 | 34.3% | | 2021 | 1.44 | 4,492 | 14,947 | 30.1% | ### (V) Withholding and payment of dividend income tax for individual foreign shareholders and non-resident enterprise shareholders Pursuant to the Enterprise Income Tax Law of the People’s Republic of China and its implementation regulations, Individual Income Tax Law of the People’s Republic of China and its implementation regulations, the Announcement of the State Administration of Taxation in relation to the Administrative Measures on Preferential Treatment Entitled by Non-residents taxpayers under Tax Treaties (Guo Shui Fa [2019] No. 35) (《國家稅務總局關於發佈〈非居民納稅人享受協議待遇管理辦法〉的公告》(國稅發[2019]35號)), the Notice of the State Administration of Taxation on the Issues Concerning the Levy and Administration of Individual Income Tax After the Repeal of Guo Shui Fa [1993] No. 045 (Guo Shui Han [2011] No. 348) (《國家稅務總局關於國稅發[1993]045號文件廢止後有關個人所得稅徵管問題的通知》(國稅函[2011]348號)) and other relevant laws and regulations and regulatory requirements, the Company shall, as a withholding agent, withhold and pay dividend income tax for H shareholders in respect of the dividend, including individual income tax for individual foreign shareholders and enterprise income tax for non-resident enterprise shareholders. For details regarding withholding and payment of dividend income tax for H shareholders and materials that H shareholders need for tax deduction, please refer to announcements to be published by the Company in due course. --- ### IV. COMPLIANCE WITH MODEL CODE The Company has formulated the *Administrative Measures for the Shares of the Company held by Directors, Supervisors and Senior Management and their Changes of New China Life Insurance Company Ltd.* (《新華人壽保險股份有限公司董事、監事和高級管理人員所持公司股份及其變動管理辦法》) to regulate the securities transactions of directors, supervisors and senior management of the Company, the standards of which are not lower than that required in *Model Code*. After making specific enquiries with all directors and supervisors, the Company confirmed that each director and supervisor has observed the code of conduct set out in *Model Code* and the *Administrative Measures for the Shares of the Company held by Directors, Supervisors and Senior Management and their Changes of New China Life Insurance Company Ltd.* during the reporting period. ### V. RESPONSIBILITIES OF DIRECTORS TOWARDS FINANCIAL STATEMENTS Directors confirmed that they were obliged to prepare financial statements and to truly and fairly report the Company’s situation. The statement made by the Company’s auditor about its responsibility for reporting the accounts is set out in *Audited Financial Statements 2023* of this report. To the knowledge of the directors, there were no issues or conditions occurred in the reporting period that might have significant adverse effects on the Company’s sustainable operation. Directors considered that the Company had enough resources for sustainable operation in the future, therefore the financial statements should be prepared on a going concern basis. ### VI. MANAGEMENT OF SUBSIDIARIES In order to strengthen the management over subsidiaries and ensure that there are laws and regulations to follow in the management of subsidiaries, the Company has formulated internal management measures such as *Administrative Measures for Insurance Subsidiaries of New China Life Insurance Company Ltd. (Trial Implementation)* (《新華人壽保險股份有限公司保險類子公司管理辦法(暫行)》) and *Administrative Measures for Non-Insurance Controlled Shareholding Companies of New China Life Insurance Company Ltd.* (《新華人壽保險股份有限公司非保險控參股公司管理辦法》). Such measures have made it clear that the Company has managed key issues with proper authorization to its subsidiaries. Subsidiaries shall operate and manage independently in accordance with the *Company Law* and other laws and regulations as well as the articles of association. And major matters of subsidiaries shall be submitted to the Company for examination and approval, and daily operation and management matters shall be independently decided by the subsidiaries in accordance with the authorization of the Company. The Company has also formulated relevant systems to strengthen the penetrating management of its subsidiaries and to improve the management system and mechanism of all departments. The Company strengthened the penetrating management in major issues, risks and personnel of subsidiaries, and further improved management efficiency. In terms of risk management, the Company has issued risk management systems such as *Comprehensive Risk Management Policy*, *Internal Auditing Policy*, *Administrative Measures for Related Party Transaction* and *Internal Control Management Policy*, all of which include subsidiaries for unified management. In addition, the Company formulated a number of administrative measures specifically for subsidiaries to carry out standardized management in various areas such as operation and management, finance and capital, and personnel performance of subsidiaries. --- ## VII. DEPARTMENT AND BRANCH OFFICES OF THE COMPANY ### (I) Department of the Company The headquarters has 30 departments, 3 directly-subordinate secondary units and 4 sales regions. | New China Life Insurance Company Ltd. | | :--- | | **Individual Life Insurance Center** | | - Sales Department | | - Renewal Business Department | | - Training Department | | - Sales Support Department | | 4 Sales Regions | | Bancassurance Business Management Department | | Group Insurance Business Department | | Health Insurance Business Department | | Innovation Business Department | | Actuary Department | | Product Development Department | | Underwriting and Claim Settlement Department | | Operation Management Department | | Customer Service Department/Consumer Rights Protection Department | | Board of Directors Office | | Strategy Planning Department | | Planning and Financial Management Department | | Accounting Department | | Fund Department | | Real Estate and Subsidiaries Management Department | | Investment Department | | Human Resources Department/Party Committee Organization Department | | Administrative Management Department | | Party Building Department/Party Committee Office, Party Committee Publicity Department and Targeted Assistance Office | | Disciplinary Inspection Office of NCI CPC Committee | | Office of NCI CPC Disciplinary Inspection Commission | | NCI Research and Training Institute | | Legal Compliance Department | | Risk Management Department | | Auditing Department | | Information Technology Department | | Business Operation Center | | Research and Development Center | | Hefei Supporting Operation | ### (II) Branch offices As of 31 December 2023, there are 1,758 branches and offices of the Company, including 35 branches, 273 sub-branches (including Guangzhou municipal branch offices), 766 outlets, 649 marketing service offices and 35 business offices. ## VIII. THE OVERALL EVALUATION OF CORPORATE GOVERNANCE The Company attaches great importance to corporate governance. The Company has a relatively sound corporate governance mechanism, good shareholder governance and effective operation of the shareholders’ general meeting, the board of directors meeting and board of supervisors meeting. The internal control system is relatively complete. The shareholders’ general meeting, the board of directors, the special committees under the board of directors, the board of supervisors and senior management all perform their duties and coordinated with each other. The corporate governance structure maintains effective checks and balances. ## IX. THE COMPANY’S COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE The Board is responsible for fulfilling corporate governance responsibilities as set out in the terms of reference of Article A.2.1 of Corporate Governance Code. During the reporting period, the Board held a meeting to review the Company’s compliance with Corporate Governance Code and the disclosures in the corporate governance report. Save as disclosed in this report, directors were not aware of any information that would reasonably indicate that the Company had not complied with the applicable code provisions as set out in Corporate Governance Code at any time during the period from 1 January 2023 to 31 December 2023. --- ### X. INTERNAL CONTROL The Company has been committed to establishing and improving its internal control system to promote the sustainable development of the Company. The internal control system aims at providing reasonable assurance that the Company’s operation and management are in compliance with relevant laws and regulations, the Company’s assets are properly safeguarded, financial statements and related information are true and complete, the operation efficiency and results are improved, and development strategies are implemented, to guarantee that the Company operates legally, robustly and efficiently. The Board is responsible for establishing, improving and implementing internal control system, as well as evaluating its effectiveness. The Audit and Related Party Transaction Control Committee under the Board is responsible for supervising the implementation and self-assessment of internal control, appointing and coordinating with external auditors. The board of supervisors is responsible for overseeing the establishment and implementation of internal control by the Board. The Risk Management Committee under Executive Committee of the Company is responsible for organizing the daily operation of internal control. The risk management department is responsible for organizing and promoting the internal control of the Company. Each of the functional departments and business units observed the provisions and requirements of internal control. The audit department is in charge of overseeing the internal control. Based on the internal control requirements such as the *Basic Standard for Enterprise Internal Control* (《企業內部控制基本規範》) (Cai Kuai [2008] No.7) and *Circular on Printing and Distributing the Implementary Guidelines for Enterprises Internal Control* (《關於印發企業內部控制配套指引的通知》) (Cai Kuai [2010] No.11), *Basic Standards for Internal Control of Insurance Companies* (《保險公司內部控制基本準則》) (Bao Jian Fa [2010] No.69), and *Internal Control Guidelines for Insurance Funds Deployment* (《保險資金運用內部控制指引》) (Bao Jian Fa [2015] No.114), the Company has observed the basic principles of comprehensiveness, significance, balancing, adaptation, and cost-effectiveness, and has established an internal control system with the *Internal Control Management Policy* as the framework, the *Internal Control Practice Manual* and the *Internal Control Self-assessment Manual* as the core systems, supplemented by internal control management systems in various fields. The Company has established and improved internal control system composing of five elements, including internal environment, risk assessment, control activities, information and communication, and internal supervision. The functional departments and business units, the internal control management department and the audit and supervision department act as the three lines of defense of the Company. Through the work division and coordination among these three lines of defense, the Company has met the requirements of internal control and risk management and established the internal control system of “complete coverage, clear highlights and effective control”. The Company adopted a combination of qualitative and quantitative methods to identify risks in the fields of business, finance, and funds utilization, determine key risk areas, comprehensively sort out internal control defects and loopholes, constantly improve the defect rectification management mechanism, strengthen the effectiveness of rectification, and coordinate the management and control mechanism of pre-prevention, in-process control and follow-up supervision to ensure the efficiency and results of all business activities. --- The Company, focusing on high-quality development, strengthened the “internalization of external regulations”, consolidated the foundation for internal control management and steadily pushed forward internal control in various business areas. In respect of marketing control, the Company improved the marketing management structure, improved systems to manage business and sales agents, continued to manage intermediary channels and improve systems to manage sales agents, training and quality, and strictly regulated promotion and marketing activities, continued to improve business quality, strengthen marketing risk monitoring, managed business quality and implemented accountability, to prevent the risk of misleading marketing. In respect of operation control, the Company continued to optimize operation management system, and the business management processes, the management and control measures in the key links and the construction of systems in new policies, underwriting, updating information, claim settlement, customer service, reinsurance and others, and continued to improve customer information management mechanism, strengthened the protection of consumers’ rights and interests and continued to defuse risks in operation. In respect of accounting and financial control, the Company established a comprehensive and standardized accounting and financial management structure and system, enhanced various systems in budget management, accounting calculation, tax management, funds payment and receivable management, expense management, etc. Besides, the Company also optimized information system, identified, managed and controlled financial and accounting risks effectively, improved efficiency of finance and information quality to ensure the truthfulness, completeness, accuracy and timeliness of financial statements and relevant information. In respect of funds utilization, the Company formulated a standardized funds management system, defined the process of funds allocation, tightened the authorization and approval system to ensure the safety of the Company’s funds. The Company also formulated administrative measures on entrusted investment, administrative measures on real estate investment, administrative measures on the risk classification of investment assets and other measures, prepared guidelines on the utilization of insurance funds annually, strictly complied with regulatory requirements on the utilization of funds, controlled risks and standardized utilization of insurance funds to effectively prevent risks. In respect of information technology control, the Company set up information security management system, strengthened overall planning and basic management of information system through the formulation of the system, preparation of process, implementation of specific operation and safety publicity training, strengthened the design, development, operation, maintenance, security management, confidentiality management, disaster relief management, outsourcing service management, and continued to improve information technology and security management and control. The Company has established a clear and effective internal and external information communication system, which imposes strict requirements on the timeliness of information transfer so as to implement the information disclosure management system and intensify the registration and filing of inside information. The Company also formulated the system of accountability for material errors of information disclosure in the annual report. The criteria for identifying material errors and the accountability mechanism have been established and strictly implemented. The Company has established an independent internal auditing system with centralized management. Under the guidance of the Audit and Related Party Transaction Control Committee under the Board, the Audit Department organized and implemented the internal audit work, and performed internal supervisory functions through regular auditing, audit during tenure, audit after resignation, economic responsibility auditing and specific auditing. The Company’s internal audit continued to expand the breadth and depth of its audits, strengthen the quality control of audit projects, promote the digitization of audit information, deepen the application of audit results, effectively play the role of audit supervision and enhance the value of audit. --- The Company has established a series of administrative measures for accountability, including accountability for non-compliances, specifying the scope, ways, criteria and procedures of accountability as well as the information reporting mechanism. Non-compliance to laws and regulations and provisions of the Company will be handled by relevant departments of the Company according to applicable criteria for accountability, giving full play to the role of punishment and deterrence. The Board is responsible for risk management and internal control and supervising their effectiveness. Meanwhile, the specialized department for risk management and internal control of the Company is designated to manage the risks of failing to achieve objectives. The Company provides reasonable assurance for non-existence of material false statements or loss. On the basis of the Basic Standard for Enterprise Internal Control (《企業內部控制基本規範》) (Cai Kuai [2008] No.7), the Circular on Printing and Distributing the Implementary Guidelines for Enterprises Internal Control (《關於印發企業內部控制配套指引的通知》) (Cai Kuai [2010] No.11) and other regulatory requirements on internal control, taking into account the internal control system and assessment methods of the Company, the Board conducted annual assessment on internal control in a comprehensive way, the scope of which covered marketing, operation, finance, funds utilization, information technology management and other aspects of headquarters, branches and subsidiaries. The time interval of 2023 assessment is from 1 January 2023 to 31 December 2023. The risk management and internal control department has confirmed to the Board that the operation of risk management and internal control was good and effective. After the assessment, the Board is of the view that the Company’s internal control system construction and operation are effective and adequate as a whole and the auditor has issued a standard and unqualified internal control audit report. For details of the Company’s internal control assessment, please refer to the Internal Control Assessment Report 2023 separately disclosed by the Company and the internal control audit report issued by the auditor. --- # SECTION 08 RISK MANAGEMENT ## I. RISK MANAGEMENT SYSTEM – OVERALL STRATEGIES The Company has established a risk management system spanning all major business areas which the Board is ultimately held accountable for, and which is under the direct leadership of the Executive Committee, coordinated by risk management department, closely assisted by relevant functional departments and branches, and independently audited by audit department. Based on value-oriented and internal control, the Company enhanced the comprehensive risk management system via both quantitative and qualitative analysis to realize the professional operation of risk management and meet requirements of solvency risk management and asset liability management required by regulatory authorities, making risk management the important basis for the decision-making of the Board and the Executive Committee. Considering the operation objective and expectations of all stakeholders, the Company formulated risk strategy aiming at striking a balance among capital, value, profit and liquidity, observing the laws and regulations and regulatory requirements, controlling operation risks effectively, and safeguarding the reputation and brand image so as to achieve sustainable and sound development of the Company. The Company made steady progress in risk management system and procedure, continued to improve risk management system and optimize the management process. In 2023, the Company carried out evaluation and inspection on annual risk preference system, updated Statement of Risk Preference of 2023 (《2023年度風險偏好陳述書》); improved special risk management systems, amended Market Risk Management System (《市場風險管理制度》), Credit Risk Management System (《信用風險管理制度》), Insurance Risk Management System (《保險風險管理制度》), Liquidity Risk Management System (《流動性風險管理制度》), Operational Risk Management System (《操作風險管理制度》) and other special risk management systems. In 2023, the Company further improved risk management procedures, improved the internal control management measures and systems, formulated Internal Control Management Policy (2023) (《內部控制管理政策(2023版)》), improved money laundering risk management system, complied with the requirements of laws and regulations of anti-money laundering, actively built anti-money laundering management culture, fulfilled the legal obligations of anti-money laundering to enhance the quality and efficiency of anti-money laundering. The Company improved its own risk management in consideration of the requirements of C-ROSS phase 2. Through self-assessment of solvency risk management and comprehensive benchmarking analysis, the Company identified problems and made specific rectification to effectively enhance risk management. In 2023, the Company constantly optimized its risk monitoring and reporting mechanism, set up early warning intervals for monthly monitoring and analysis of the key indicators for seven major risks under the comprehensive risk management system, including market risk, credit risk, insurance risk, operational risk, strategic risk, reputation risk and liquidity risk. Meanwhile, the Company focused on the progress of asset allocation and its risk control to provide the headquarters and branches with risk warning and reminder of related risks. --- In 2023, the Company constantly optimized its risk control and compliance management system. The risk management subsystem was able to collect and process data, monitor key risk indicators and give early warning, and manage risk statement, to timely identify risks and give warnings by monitoring data and indicators in the course of operation and management through modern information technology. The internal control subsystem covered the whole internal control management modules including internal control evaluation, defect rectification, operation risk event management and risk investigation, which advanced the basic risk control management. The compliance management system was able to monitor and give early warning for marketing misleading indicators, monitor key compliance assessment indicators, report important compliance information, achieved the efficient application of information technology in compliance management and enhanced the overall efficiency of compliance monitoring and compliance management. Anti-money laundering and the related system realize various functions such as customer due diligence, transaction monitoring and analysis, monitoring list maintenance and filtering to provide strong support for the risk management in money laundering. ## II. RISK IDENTIFICATION AND CONTROL The major risks of the Company in the course of operation and management include market risk, credit risk, insurance risk, operational risk, reputation risk, strategic risk, liquidity risk, etc. ### (I) Market risk Market risks refer to the risks that expose the Company to unexpected losses due to adverse movements in interest rates, equity prices, real estate prices, exchange rates, etc. The Company continued to monitor the proportion of high-risk assets, value at risk (VaR), asset duration and other key indicators. Benchmark threshold values were set up for risk warning. In addition, in case of extreme circumstances, the Company adopted sensitivity analysis and stress test to measure the potential loss to the Company under stress with focus on the impacts brought by market volatility and interest rate movements on fair value of investment assets and solvency of the Company. The proportion of each category of investment assets was in line with regulatory requirements and the internal requirements of the Company. In order to handle market risks, the Company primarily adopted the following measures: 1. placing emphasis on macroeconomic studies and prudently projecting domestic and international market trends; 2. analyzing historical risks and returns of major assets on a regular basis; 3. proactively managing the positions of equity assets and conducting regular stress tests to measure their impacts on investment return and solvency margin ratio to keep risk exposures under control; 4. making prudent investment and insisting on asset liability matching management; 5. sticking to value-oriented investment, selecting assets with potential value appreciation, and pursuing middle to long term investment earnings; 6. centering on both value and the overall liquidity of assets and gradually adjusting investment portfolio by adding new assets, so as to match the risk and return of investment portfolio with the value and risk management requirements of the Company; and 7. enhancing risk monitoring and early warning to strengthen emergency management. --- ### (II) Credit risk Credit risks refer to the risks that expose the Company to unexpected losses due to non-performance or delay in the performance of contractual obligations by counterparties, or adverse movements in their credit. The credit risks that the Company is exposed to mainly related to investment deposits, bonds, non-standard financial products and reinsurance arrangements, etc. **1. Credit risk of investment business** The Company primarily monitored the credit rating and concentration of investment targets and counterparties to ensure the overall credit risk exposure within control by limiting the proportion of investments with low credit rating. More than 95% of investment deposits and bonds held by the Company have a credit rating of AAA and credit ratings of major counterparties are AAA with low credit default risk. The non-standard financial products held by the Company have good credit enhancement arrangements. To address the credit risks of investment business, the Company primarily adopted the following measures in 2023: 1. implementing a strict internal credit and credit rating system for counterparties and stringently checking on the categories of credit investment products; 2. implementing subject credit to non-standard financial products to prevent credit risks; 3. reinforcing credit enhancement arrangements with respect to non-standard financial products; 4. monitoring the credit risk of investment portfolios, analyzing and assessing the possibility and impact of credit default events; 5. establishing a “Negative List” management mechanism in key funds utilization, and updating dynamic assessment based on market changes; and 6. optimizing the risk asset classification management system and strengthening the penetrating risk management. **2. Reinsurance credit risk** The Company assessed the credit ratings of reinsurance counterparties to mitigate reinsurance credit risk. As of the end of 2023, there were 9 reinsurers, and all of their credit ratings were above A. Six of them obtained Standard & Poor’s rating: one company had AA+, two companies AA-, one company A+, two companies A. The other three companies obtained A.M. Best’s ratings: one company A+, one company A and one company A-. The Company had good credit distribution within the ceding business. --- ### (III) Insurance risk Insurance risks refer to the risks arising from the unfavorable deviation of the actual situation from the projections in terms of assumptions on mortality rate, morbidity rate, compensation rate, surrender rate and expense rate, etc. The Company assessed and monitored insurance risks through regular review of experience and data, sensitivity analysis of main assumptions and other techniques, with focus on the impact of surrender rate, mortality rate and morbidity rate on the Company’s operating results. The Company managed insurance risks in product development, underwriting tactics and reinsurance arrangements via the following mechanisms and measures: 1. implementing effective product development and management system, designing proper insurance liabilities and setting the product price on the basis of market research, predicting the product profitability based on the Company’s empirical analysis, so as to maintain a rational expense ratio and profitability; 2. making customized underwriting through prudent underwriting tactics and processes to ensure the risk within control; 3. arranging appropriate reinsurance based on the risk characteristics of the insured, and ensuring that reinsurance contract basically covered products with risk liabilities to effectively transfer insurance risk; 4. reviewing the Company’s operating data on a regular basis to conduct empirical analysis and trend research, which served as the basis for adjusting pricing assumptions and assessing assumptions; and 5. reflecting problems identified in empirical analysis and relevant information timely to product development, underwriting approval and claim settlement to optimize business procedures and risk management. ### (IV) Operational risk Operational risks refer to the risks that expose the Company to direct or indirect losses due to inappropriate internal operation processes, personnel, internal or external events, including legal and compliance risks. The major operational risks include misleading sales, litigations within the insurance industry as well as illegal sales of non-insurance financial products. **1. _Risk of misleading sales_** Risks of misleading sales refer to various misleading acts such as deceit and fraudulent inducement in marketing caused by agents and insurance agencies, which results in customer complaints, negative media coverage, regulatory penalties and collective complaint events, and thus may bring economic loss, reputation damage or other adverse impacts to the Company. Comprehensive rectification of misleading sales based on regulatory requirements is a major task for the Company. To effectively address the risk of misleading sales, the Company mainly adopted the following measures in 2023: 1. further improving compliance assessment indicators, focusing on the rectification results of misleading sales, and urging institution to improve rectification results through regular tracking; 2. strengthening daily risk monitoring and early warning, providing risk reminders to institutions with high risk on misleading sales according to daily monitoring results, urging them to take timely measures to prevent and defuse potential risks; 3. strengthening compliance review on product promotional materials, paying close attention to regulations and enhancing the marketing management; and 4. strengthening compliance training and education, summarizing misleading sales problems, and carrying out training and education about risk prevention within the Company. --- ### 2. Risk of criminal cases and illegal sales of non-insurance financial products Risks of criminal cases and illegally selling non-insurance financial products refer to risks arising from infringement, misappropriation, fraud, professional embezzlement, illegal fund-raising and illegally selling non-insurance financial products of the insurer that result in economic losses, reputation damage or other adverse impacts for the Company. In 2023, the Company had 4 criminal cases. To effectively address risks of criminal cases and illegal sales of non-insurance financial products, the Company mainly adopted the following measures in 2023: 1. strengthening the organization and leadership of case prevention, reinforcing departmental coordination, proactively publicizing the latest regulatory requirements, and prompting all departments to implement case prevention requirements to prevent case risks; 2. launching case risk monitoring on a regular basis by means of indicators, complaints and others, supervising branches to discover and dispose risks in a timely manner, and establishing the list of high-risk personnel; 3. carrying out risk investigation of criminal cases throughout the Company, conducting investigations on agents using insurance business or the Company’s credits for illegal fund-raising, illegal sale of non-insurance financial products, fraud and embezzlement of funds of customers and the Company, private loans, and other hidden risks; 4. conducting regular warning education and training internally to ensure compliance; carrying out publicity activities to prevent risks of illegal fund-raising externally, raising the public’s rational awareness of investment, and enhancing customers’ awareness of risk prevention; and 5. strengthening disposal and reporting of criminal cases, and reinforcing the supervision of the institutions in case prevention, so as to further strengthen the responsibility of case prevention. In addition to the measures abovementioned, the Company also mitigated daily operational risks by optimizing management processes, strengthening internal control and compliance management, conducting risk investigation and strengthening internal auditing supervision. ## (V) Reputation risk Reputation risks refer to risks that expose the Company to losses due to negative comments by stakeholders as a result of operation and management of the Company or external events. Generally speaking, the coverage of the Company by external media in 2023 was primarily positive and objective. The reputation risk management follows the principle of prevention and establishes a routine, long-term and effective management mechanism with focus on advance assessment and daily precaution. The Company manages daily public opinion through 7 x 24 monitoring. The Company has established a comprehensive reputation risk management system that covers all channels and institutions in terms of organizational structure, system, daily monitoring and risk disposal with excellent linkage mechanism. In response to untrue or negative public opinion, the Company communicates with the media in a timely manner, carries out positive publicity at the earliest time, properly handles public opinion, clarifies untrue negative reports, and reduces the impact of public opinion on the Company’s reputation and image. --- ### (VI) Strategic risk Strategic risks refer to risks of mismatch between strategies, market conditions and capabilities of the Company arising from ineffective formulation or implementation of strategies or changing environment. In 2023, in the low interest rate market environment, residents’ demands for saving insurance products rose, and the life insurance business achieved sound growth, but the asset side of insurance companies continued to be under pressure. Adhering to the general principle of “seeking progress while ensuring stability”, and focusing on the customer-centered development philosophy, the Company strove to optimize the supply of products and services, strengthen the reform of systems and mechanisms, and take multiple measures to promote the high-quality development of the Company. To address strategic risks, the Company mainly adopted the following measures: 1. analyzing the macroeconomic situations and industry development trends, and in light of specific conditions of the Company, actively grasping the market development opportunities; 2. carrying out the mid-term evaluation, summarizing the achievements, finding the gaps and deficiencies, and identifying the direction for next improvement; 3. actively implementing the decisions and deployments of the CPC Central Committee, studying the guidance of the 20th CPC National Congress, the Central Economic Work Conference, and the Central Financial Work Conference, and taking better measures to implement the Company’s “14th Five-year Plan”; 4. implementing the operation measures, and advancing strategic guidance and management for the completion of operation plans, thus ensuring that strategic plans could be thoroughly implemented at all levels; 5. tracking the assessment, establishing strategies tracking and assessment system by making assessment indicators and regularly tracking their implementation; and 6. strengthening communication and coordination, strengthening the communication between strategy management department and related function departments to form a coordination and feedback system on strategy planning. ### (VII) Liquidity risk The liquidity risks refer to risks that the Company fails to have access to sufficient funds in time or at reasonable costs to pay its debts as they become due or fulfill other payment obligations. The Company constantly monitored future cash flow and carried out stress tests with attention to the indicators such as the liquidity coverage ratio, and formulated solutions in advance by putting daily risk monitoring in place and paying attention to unusual changes of indicators. To address liquidity risks, the Company primarily adopted the following measures: 1. strictly controlling illegal sales in marketing to enhance business quality and prevent the large scale payments induced by unusual concentrated surrenders; 2. establishing reserve system for contingency payments in case of short-notice request for large amount payments; 3. planning and managing long-term liquidity, and adjusting middle to long term asset allocation by considering the overall liquidity of assets and liabilities with reference to investment guidelines; and 4. strengthening emergency management and formulating emergency plans to defuse liquidity risks. --- # SECTION 09 ENVIRONMENTAL AND SOCIAL RESPONSIBILITY ## I. ENVIRONMENT INFORMATION The Company strictly abides by the *Environmental Protection Law of the People’s Republic of China*, *Energy Conservation Law of the People’s Republic of China* and other laws and regulations, actively responds to climate change, adheres to a low-carbon and environmental-friendly operation mode to push forward green finance and pursue eco-environmental progress. The Company, through technology empowerment, carries out various measures to save energy and reduce emission and builds the image of a responsible green company under “carbon neutrality”. In 2023, the Company integrated green development philosophy into its key development areas and specified the Company’s nature as a life insurance company. The Company offered insurance protection for green enterprise customers, enriched the supply of green insurance products and services, practiced responsible investment philosophy to increase green investment. Focusing on the goal of reducing carbon emission, the Company advocated green operation, green office and green travel. The Company also formulated *Twenty Proposals for Energy Reduction* and took various measures to cut carbon emission in business development and daily operation so as to drive sustainable development. The Company is not a high pollutant enterprise. During the reporting period, the Company received no administrative penalty because of environmental issue. For environmental information, please refer to the *ESG and Social Responsibility Report 2023* disclosed on the website of the HKSE on the same day. ## II. SOCIAL RESPONSIBILITY ### (I) Support the Real Economy and Serve the National Strategy The Company continued to play its role in supporting the real economy, increased investment, optimized the investment layout in key areas such as science and technology, green, micro, small and medium-sized enterprises, and made overall plans to promote the development of “five target areas”, namely technology finance, green finance, inclusive finance, pension finance and digital finance. As of the end of 2023, the Company supported the real economy with investment over RMB920 billion, with a year-on-year growth rate of 7.5%. The Company also served the national strategy with investment of RMB240 billion, increasing by 19.7% year on year. The Company supported the development of new generation information technology, biotechnology, new energy, new materials and other strategically emerging industries clusters, enterprises that use special and sophisticated technologies, with an investment balance of RMB25,796 million, a year-on-year growth rate of 43%. The Company supported green development and carbon neutrality and carbon peak strategy, with investment balance of RMB17,408 million, a year-on-year growth rate of 19%. The Company increased financing support and reasonable profit concessions to increase the quantity and reduce the cost of financing for micro, small and medium-sized enterprises, with investment balance of RMB10,629 million, a year-on-year growth rate of 253%. The Company enhanced investment in pension finance to support the development of medical and health industries, and participated in the construction of multi-level medical securities system and the commercial pension insurance as the third pillar, with investment balance of RMB4,042 million, a year-on-year growth rate of 147%. The Company also served major regional strategies and regional coordinated development, with investment balance of RMB163,263 million, a year-on-year growth rate of 11%. --- ### (II) Rural Revitalization In 2023, the Company continued to support rural revitalization with assistance funds of RMB20.66 million in total. Among them, the Company supported 20 assistance projects in Shibing County, Guizhou Province and Chayouzhong Banner, Ulanqab, Inner Mongolia, including 4 projects to consolidate and expand the achievements in poverty alleviation, 9 industrial revitalization projects, 4 organizational revitalization projects, 1 ecological revitalization project, 1 cultural revitalization project and 1 talent revitalization project. Among them, the “Mongolian Horse Industry Culture Project (蒙古馬產業文化項目)” was selected as an excellent case by Xinhuanet in 2023. The Company directly purchased agricultural products, and employees, Party members and cadres also donated money and materials to those areas. The Foundation and China Women’s Development Foundation have implemented a series of assistance projects to care for rural women in Shibing County, Guizhou province, including projects of building the genius moms dream workshop and rural physiotherapy room, distributing relief funds for women who suffer breast and cervical cancers, and setting up the mother’s entrepreneurship fund. The Foundation also joined hands with Chinese Red Cross Foundation to carry out the “Fraternity Home (博愛家園)” rural revitalization project in Shibing County, Guizhou province. ### (III) Help Employees Grow The Company has always put people first, strictly abided by various laws and regulations, including Labor Contract Law of the People’s Republic of China, and Labor Law of the People’s Republic of China. The Company always believes that the enhancement of comprehensive quality of employees is one of the most important targets. By creating a tolerant, equal, mutual trust and collaborative environment for employees, the Company makes efforts to guarantee the rights and interests of employees, promote their mental and physical health and build platforms for improvement to unify the Company’s values and employees’ values. --- ### (IV) Consumer Rights Protection 1. **Important information on consumer rights protection** The Company attaches great importance to the protection of consumer rights and interests, integrates consumer rights protection into all aspects of corporate governance, and has established a complete system and mechanism for consumer rights protection. In 2023, the Company strictly implemented and observed relevant laws and regulations, regulatory requirements and internal administrative measures for consumer rights protection. The Company formulated and revised more than 10 documents related to consumer rights protection, such as the *Administrative Measures for Protection of Consumers’ Rights and Interests* (《消費者權益保護管理辦法》), the *Administrative Measures for the Product Information Disclosure (Version 2023)* (《產品信息披露管理辦法(2023版)》) to optimize consumer rights and interests protection mechanisms such as product and service review, information disclosure, personal information protection, ensure the effective operation of various working mechanism and promote the comprehensive improvement of quality and efficiency of consumer rights protection. Meanwhile, the Company continued to strengthen the management over product and service marketing and publicity, marketing behavior, cooperation partners and service quality, carried out consumer education and publicity on a regular basis, and properly resolved various consumer complaints and disputes to effectively protect legitimate rights and interests of consumers. The Company also established a consumer rights and interests protection management system, which transformed management norms and business processes into standard and replicable system application model, and gradually implemented proactive management of consumer rights protection under multiple business processes, multiple business links and multiple business scenarios, so as to improve the management efficiency of consumer rights and interests protection. 2. **Consumer complaints and handling** The Company continued to strengthen and improve consumer complaint handling mechanisms and feedback channels to further smooth consumer complaint channels, optimize the complaint handling process, improve complaint notices, and updated announcements through the Company’s official website, official WeChat public account, official application and national customer service center, so as to respond to consumer demands in a timely manner and effectively safeguard the legitimate rights and interests of consumers. --- In 2023, the Company received a total of 3,466 complaints from the NFRA and its local offices, with marketing disputes accounting for 41% and surrender disputes accounting for 28% in terms of the main complaint categories. The distribution of complaints is as follows: | Branch | Number of complaints | Proportion | Branch | Number of complaints | Proportion | | :--- | :--- | :--- | :--- | :--- | :--- | | Jilin | 346 | 10% | Guangxi | 56 | 2% | | Shaanxi | 301 | 9% | Anhui | 53 | 2% | | Shandong | 257 | 7% | Shanxi | 46 | 1% | | Hebei | 231 | 7% | Gansu | 43 | 1% | | Xinjiang | 205 | 6% | Qingdao | 43 | 1% | | Beijing | 203 | 6% | Qinghai | 41 | 1% | | Tianjin | 176 | 5% | Yunnan | 41 | 1% | | Hubei | 167 | 5% | Sichuan | 34 | 1% | | Henan | 162 | 5% | Fujian | 32 | 1% | | Jiangsu | 141 | 4% | Dalian | 30 | 1% | | Liaoning | 117 | 3% | Chongqing | 30 | 1% | | Inner Mongolia | 115 | 3% | Shenzhen | 26 | 1% | | Heilongjiang | 108 | 3% | Guizhou | 25 | 1% | | Hunan | 92 | 3% | Ningxia | 21 | 1% | | Guangdong | 80 | 2% | Xiamen | 16 | 0% | | Zhejiang | 80 | 2% | Hainan | 7 | 0% | | Jiangxi | 71 | 2% | Ningbo | 7 | 0% | | Shanghai | 58 | 2% | | | | For other complaints of the Company, please refer to the relevant chapters of the *ESG and Social Responsibility Report 2023* disclosed on the website of the HKSE on the same day. --- ### (V) Public Welfare Actions and Charitable Donations The Company continues to respond to the call of the CPC Central Committee and give full play to the advantages of the insurance industry to gradually form a unique public welfare model of “insurance products + public welfare platforms + volunteer services”, being a distinctive path for undertaking social responsibility. In 2023, the donation for public welfare exceeded RMB16.45 million, and the donated supplies amounted to approximately RMB1.10 million. 1. In 2023, the Company continued to carry out the public welfare activity of “NCI Accompanies You in Building Beautiful Cities – Donating Insurance to Sanitation Workers Nationwide” through Foundation. More than 940,000 sanitation workers in 186 cities across the country were provided accidental injury insurance of RMB100,000 per person. Since 2017, the Company has donated total sum assured over RMB505.4 billion in the activity and settled 391 claims, with compensation amount of RMB34.74 million. 2. In response to the national strategy of Healthy China, the Foundation and Chinese Red Cross Foundation carried out the public welfare project of first-aid capacity building. By the end of 2023, 50 emergency first-aid machines were donated to densely populated public places in Jinan, Hangzhou and other cities, and 18 first-aid knowledge training sessions were conducted for the public, covering nearly 1,000 people. 3. On 18 December 2023, a 6.2-magnitude earthquake occurred in Jishishan County, Linxia Prefecture, Gansu Province. The Company immediately activated an emergency response mechanism after the disaster and donated RMB1 million in cash to the earthquake-stricken areas in Qinghai Province and Gansu Province through the Foundation. 4. As of the end of 2023, the Company set up 35 volunteer teams across the country, recruiting over 44,000 volunteers. In 2023, the voluntary service teams carried out over 3,100 activities nationwide such as achieving carbon peak and carbon neutrality, respecting and helping the elderly, and caring for sanitation workers. A total of 26,000 volunteers participated in various activities, with a total of more than 110,000 hours of service throughout the year. For details of fulfilling social responsibilities of the Company, please refer to the *ESG and Social Responsibility Report 2023* disclosed on the website of HKSE on the same day. --- # SECTION 10 THE BOARD OF DIRECTORS REPORT AND SIGNIFICANT EVENTS ## I. MAIN BUSINESSES As approved by regulatory authorities and company registration authorities, the business scope of the Company includes: providing life insurance in RMB and foreign currencies (including various life insurance, health insurance, and accident and casualty insurance); acting as an agent for domestic and foreign insurance institutions for insurance, verification and claim settlement; insurance consulting; and engaging in capital utilization in accordance with relevant regulations. There was no material change in major business scope of the Company during the reporting period. ## II. BUSINESS REVIEW ### (I) Annual business and business results analysis Analysis on the business results of the Company during the reporting period is set out in Section 4 “Management Discussion and Analysis” of this report. ### (II) Major risks and uncertain factors Please refer to Section 8 “Risk Management” of this report for details of major risks and uncertain factors of the Company. ### (III) Environment policy The Company is not a key pollutant discharge unit according to the environmental protection department. For details of environmental protection, please refer to the ESG and Social Responsibility Report 2023 disclosed on the website of Hong Kong Stock Exchange on the same day. ### (IV) Principal employees and customers Details of senior management and employees of the Company are set out in Section 6 “Directors, Supervisors, Senior Management and Employees” of this report. During the reporting period, the premium income contributed by any single customer was less than 30% of the Company’s annual premium income. The total premium income from the top five customers was also less than 30% of the Company’s annual premium income. ### (V) Compliance of relevant laws and regulations During the reporting period, the Company strictly abided by the laws and regulations which significantly affected the Company’s operation. ### (VI) Company’s relations with employees and customers Details of the Company’s relations with employees and customers are set out in Section 2 “Business Overview” and Section 9 “Environmental and Social Responsibility” of this report. --- ### (VII) Prospects Please refer to Section 4 “Management Discussion and Analysis” of this report for details of the prospects on future business of the Company. ### (VIII) Post-balance sheet events Please refer to Note 42 to “Consolidated Financial Statements” of this report for any material event that occurs after the financial year 2023 and has significant impact on the Company. ## III. USE OF PROCEEDS The Company’s proceeds raised were all used for replenishing the capital base to support sustainable business growth, consistent with the commitments in the IPO Prospectus. ## IV. PROPERTY, PLANT AND EQUIPMENT Please refer to Note 6 to “Consolidated Financial Statements” of this report for details of property, plant and equipment of the Company during the reporting period. ## V. INVESTMENT PROPERTY | No. | Address | Utilization | Term | Equity of the Company | | :--- | :--- | :--- | :--- | :--- | | 1 | New China Insurance Tower, A12 Jianguomenwai Avenue, Chaoyang District, Beijing, China | Office building | Middle-term lease | 100% | | 2 | No.7 Office Building of Shanghai Port International Passenger Transport Center, 558 Dongda Ming Road, Hongkou District, Shanghai, China | Office building | Middle-term lease | 100% | | 3 | Binhai International Center, Exhibition North Road, Siming District, Xiamen, Fujian Province, China | Office building | Middle-term lease | 100% | The directors are of the view that the listing of all investment properties would result in an excessively lengthy list of information and therefore only listed significant properties. --- ### VI. SHARE CAPITAL Please refer to Section 11 “Changes in Share Capital and Shareholders’ Profile” of this report for details of changes in share capital of the Company during the reporting period. ### VII. ISSUE OF BONDS The Company issued the capital supplementary bonds in the national inter-bank bond market with the amount of RMB10,000 million on 2 November 2023 and completed the issuance on 6 November 2023. For more details, please refer to *Completion of Issuance of the Capital Supplementary Bonds* published on the website of Hong Kong Stock Exchange on 7 November 2023 by the Company. During the reporting period, the existing issued capital supplementary bonds totalled RMB20,000 million. ### VIII. MAJOR ACQUISITION AND DISPOSAL To optimize the Company’s asset structure and focus on principal business, the Company entered into the Equity Transfer Agreement with China Oil & Gas Pipeline Network Corporation (the “**PipeChina**”) on 20 April 2023, pursuant to which the Company disposed and PipeChina acquired all approximately 3.46% equity interests in National Pipe Network Group United Pipeline Co., Ltd. held by the Company (the “**Equity Transfer**”). The consideration for the Equity Transfer reached approximately RMB9,071 million. As the highest applicable percentage ratio (as defined in Chapter 14 of the Hong Kong Listing Rules) in respect of the Equity Transfer exceeds 5% but is less than 25%, the Equity Transfer constitutes a discloseable transaction under Chapter 14 of the *Hong Kong Listing Rules*, and is subject to the announcement and reporting requirements but exempted from shareholders’ approval requirement. Please refer to announcements on the website of Hong Kong Stock Exchange published by the Company on 26 September 2022 and 21 April 2023 for more details. ### IX. MAJOR INVESTMENT During the reporting period, the Company had no major investment. ### X. MAJOR TRANSACTION 1. During the reporting period, to increase the investment in long-duration assets in line with the Company’s investment strategy, optimize the asset-liability matching of insurance funds and improve the utilisation efficiency of funds, the Company and China Life Insurance Company Limited (“**China Life**”) made a joint investment for the formation of the private investment fund, named Honghu Zhiyuan (Shanghai) Private Investment Fund Co., Ltd. (鴻鵠志遠(上海)私募投資基金有限公司), with each party intending to contribute RMB25 billion. And Asset Management Company, a subsidiary of the Company, and China Life Asset Management Company Limited (“**China Life Asset**”), a subsidiary of China Life, jointly initiated the formation of the fund management company, named Guofeng Xinghua (Beijing) Private Fund Management Co., Ltd. (國豐興華(北京)私募基金管理有限公司), with each party contributing RMB5 million, serving as the manager of the aforementioned private investment fund company. The Articles of Association of the private investment fund company was executed in respect of the formation of the fund through joint venture between the Company and China Life on 25 January 2024, and the fund management company, formulated by Asset Management Company and China Life Asset through joint venture, completed the registration with the administrative authority for industry and commerce on 22 December 2023. --- As China Life Asset is a subsidiary of China Life, the formation of the private investment fund company through joint venture shall be aggregated with the formation of the fund management company through joint venture pursuant to Rules 14.22 and 14.23 of the Hong Kong Listing Rules. As the highest applicable percentage ratio (as defined in Chapter 14 of the Hong Kong Listing Rules) in respect of the transaction exceeds 25% but is less than 100%, the transaction constitutes a major transaction under Chapter 14 of the Hong Kong Listing Rules, and is subject to the announcement, reporting and shareholders’ approval requirements. The First Extraordinary General Meeting of 2024 held on 27 February 2024 considered and approved the formation of the private investment fund company, the above-mentioned private investment fund company completed its business registration on 28 February 2024, and completed the product registration for Asset Management Association of China on 1 March 2024. For more details of the investment, please refer to the announcements of the Company dated 6 February 2024 and 27 February 2024 published on the website of Hong Kong Stock Exchange. 2. To leverages the investment advantages of professional institutions, and through a professional investment management team, the Company may expand investment channels, explore investment opportunities and diversify its assets under management. The Company entered into the Limited Partnership Agreement with CICC Capital Management Co., Ltd. (“**CICC Capital**”) for the joint formation of the fund on 31 December 2023. Pursuant to the Limited Partnership Agreement, the size of the Fund is RMB10,000 million, with the Company (as a Limited Partner) intending to subscribe for RMB9,999 million and CICC Capital (as a General Partner) intending to subscribe for RMB1 million. The term of operation of the partnership is 8 years. As the highest applicable percentage ratio (as defined in Chapter 14 of the Hong Kong Listing Rules) in respect of the formation of the fund exceeds 5% but is less than 25%, the transaction constitutes a discloseable transaction under Chapter 14 of the Hong Kong Listing Rules, and is subject to the announcement and reporting requirements but exempted from shareholders’ approval requirement. Please refer to announcement on the website of Hong Kong Stock Exchange published by the Company for more details on 1 January 2024. As of the end of the reporting period, the transaction amounts of the above two transactions accounted for less than 5% of the total assets of the Company, which does not constitute a major investment under paragraph 32 (4) of Appendix D2 of the Hong Kong Listing Rules. ## XI. BANK LOANS During the reporting period, the Company had no bank loans other than the issued capital supplementary bonds and assets sold under agreements to repurchase involved in the investment business of the Company. ## XII. PLEDGE OF ASSETS During the reporting period, the Company had no pledge of assets. ## XIII. SEIZURE, DISTRAINMENT OR FREEZE OF MAJOR ASSETS During the reporting period, the Company had no event of seizure, distrainment or freeze of major assets that was required to be disclosed. --- ### XIV. EXCHANGE RATE RISK AND HEDGING Please refer to Note 4 to “Consolidated Financial Statements” of this report for the details of exchange rate risk of the Company during the reporting period. ### XV. MANAGEMENT CONTRACTS During the reporting period, the Company did not enter into any management contract or administrative contract in relation to its entire or primary businesses. ### XVI. PURCHASE, SALE OR REDEMPTION OF THE LISTED SECURITIES OF THE COMPANY During the reporting period, the Company and its subsidiaries did not purchase, sell or redeem any listed securities of the Company. ### XVII. PRE-EMPTIVE RIGHT Pursuant to P.R.C. laws and regulations and Articles of Association, shareholders of the Company had no pre-emptive right and the Company did not have any share option plan. ### XVIII. PROFILE OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT Please refer to Section 6 “Directors, Supervisors, Senior Management and Employees” of this report for profiles of directors, supervisors and senior management. ### XIX. INTERESTS OF DIRECTORS AND SUPERVISORS IN COMPETITIVE BUSINESSES During the reporting period, there has been no interests of directors and supervisors in competitive business thereafter. ### XX. SERVICE CONTRACT AND REMUNERATION OF DIRECTORS AND SUPERVISORS During the reporting period, no director or supervisor of the Company entered into with the Company or its subsidiaries any service contract which was not terminable by the Company within one year without payment of compensation, other than statutory compensation. For details of remunerations of the directors and supervisors, please refer to Section 6 “Directors, Supervisors, Senior Management and Employees” of this report. ### XXI. INTERESTS OF DIRECTORS AND SUPERVISORS IN TRANSACTIONS, ARRANGEMENTS AND CONTRACTS OF SIGNIFICANCE During the reporting period, directors and supervisors had no material interests in the contracts of significance entered into by the Company and its subsidiaries with any third parties. ### XXII. RIGHTS OF DIRECTORS AND SUPERVISORS TO ACQUIRE SHARES During the reporting period, the Company did not grant its directors, supervisors or their respective spouses or children aged under 18 the right to purchase shares or bonds of the Company and its subsidiaries. --- ### XXIII. STATEMENT OF THE BOARD ON INTERNAL CONTROL RESPONSIBILITY According to the assessment of effectiveness of internal control performed as of 31 December 2023 by the Board in compliance with the *Basic Standard for Enterprise Internal Control* (Cai Kuai [2008] No. 7) and *Circular on Printing and Distributing the Implementary Guidelines for Enterprises Internal Control* (Cai Kuai [2010] No. 11) and other internal control regulatory requirements, the Board was of the view that the operation of internal control system was effective as a whole. ### XXIV. PERMITTED INDEMNITY PROVISION For the year ended 31 December 2023, there were no and had been no permitted indemnity provision benefiting the directors of the Company or the affiliates of the Company. The Company has purchased proper liability insurance for directors to indemnify the legal responsibility incurred by directors’ fulfilling their duties. The governing law of such policy is P.R.C. law. ### XXV. SUFFICIENT PUBLIC FLOAT According to the data obtained from public resources by the Company and according to the knowledge of the directors as of the latest practicable date before the publication of this report, no less than 25% of the issued share capital and no less than 15% of the H shares of the Company have been held by the public, in compliance with the requirement of the public float in accordance with the Hong Kong Listing Rules. ### XXVI. EQUITY-LINKED AGREEMENTS For the year ended 31 December 2023, the Company had not entered into any equity-linked agreement. ### XXVII. AUDIT AND RELATED PARTY TRANSACTION CONTROL COMMITTEE The Audit and Related Party Transaction Control Committee has reviewed the audited financial statements for this year. Please refer to Section 7 “Corporate Governance” of this report for the composition, role as well as the work summary of Audit and Related Party Transaction Control Committee for this year. ### XXVIII. FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS The Company and its subsidiaries did not have any other future plans for material investments or capital assets as at 31 December 2023. However, the Company will closely follow industry opportunities to broaden its revenue base and profit potential and maximise shareholders’ value in the long term. ### XXIX. CONNECTED TRANSACTION According to the *Hong Kong Listing Rules*, the transaction between the Company and the Company’s connected person (as stipulated in *Hong Kong Listing Rules*) constituted the connected transaction of the Company during the reporting period. The Company monitored and managed such transactions in strict accordance with the *Hong Kong Listing Rules* and abided by relevant rules and regulations of *Hong Kong Listing Rules*. Details of the related party transactions are set out in Note 35 to Consolidated Financial Statements of this report. Among which, certain related party transactions fell under the definition of connected transactions in Chapter 14A of *Hong Kong Listing Rules* and such transactions were complied with relevant requirements of *Hong Kong Listing Rules*. --- ### XXX. SIGNIFICANT CONTRACTS AND THEIR PERFORMANCE (I) During the reporting period, there were no such events as managing, contracting and leasing assets of other companies by the Company or managing, contracting and leasing the Company’s assets by other companies that brought the Company more than 10% (inclusive) of the Company’s total profit, nor there were loans or financial assistance to be disclosed. (II) During the reporting period, there was no external guarantee of the Company and its subsidiaries, and the Company and its subsidiaries did not provide any guarantee for its subsidiaries. (III) The utilization of insurance funds of the Company is carried out mainly through entrusted management and the diversified entrusted investment management system in which the internal investment managers are main players and single asset management plans are the supplemental has taken shape. The internal investment managers include Asset Management Company and Asset Management Company (Hong Kong) and single asset management plans comprise fund companies and other professional investment management institutions. The Company selects different investment managers according to the requirements of asset allocation, risk-return characteristics of different types of assets and the merits of each institution, so as to build diversified investment portfolios and improve the efficiency of insurance fund utilization. The Company enters into the entrusted investment management agreement with internal investment managers, manages the investment through measures including investment guidance, asset custody, dynamic tracking and communication, assessment and evaluation, and takes targeted risk control measures according to the characteristics of different managers and investment targets. In 2023, the Company made provisions for asset depreciation for such entrusted assets and recognized asset impairment losses of RMB307 million. (IV) Unless otherwise disclosed in this report, the Company had no other material contract during the reporting period. ### XXXI. CONTINGENT LIABILITIES So far as known to the directors of the Company, as at 31 December 2023, there had been no litigation, arbitration or claim of material importance in which the Company or its respective subsidiaries was engaged or pending or which as threatened against the Company or its respective subsidiaries. ### XXXII. MAJOR EQUITY INVESTMENT, NON-EQUITY INVESTMENT During the reporting period, the Company had no major equity investment event or non-equity investment event. ### XXXIII. MAJOR ASSET AND EQUITY SALES During the reporting period, the Company had no major asset and equity sales. --- ### XXXIV. APPOINTMENT AND DISMISSAL OF ACCOUNTING FIRMS The Annual General Meeting of 2022 of the Company held on 28 June 2023 considered and approved the Proposal on the Re-appointment of Accounting Firms for the Year 2023, and resolved to re-appoint Deloitte Touche Tohmatsu Certified Public Accountants LLP as domestic auditor to conduct the 2023 annual audit, interim review and quarterly agreed upon procedures; and to appoint Deloitte Touche Tohmatsu as international auditor to conduct the 2023 annual audit and interim review. For details, please refer to the Poll Results of the Annual General Meeting of 2022 and Distribution of 2022 Annual Dividend published by the Company on 28 June 2023. The Audit and Related Party Transaction Control Committee of the Company has no dissenting opinion regarding appointment of accounting firm. Pursuant to relevant requirements of the Administrative Measures for the Selection and Engagement of Accounting Firms by State-owned Financial Enterprises (《國有金融企業選聘會計師事務所管理辦法》) (Cai Jin [2020] No. 6) issued by the Ministry of Finance of the People’s Republic of China, Ernst & Young Hua Ming LLP and Ernst & Young have been engaged by the Company for 8 consecutive years, being the maximum consecutive tenure of service, after the conclusion of auditing for the year 2021. The Company is required to change its auditors. Therefore, the Company changed its auditors in 2022. Please refer to the Proposed Appointment of Auditors published by the Company on 25 February 2022 for details. Mr. MA Qianlu is the partner and certified public accountant for the auditing project of the Company. Mr. MA Qianlu, from Deloitte Touche Tohmatsu Certified Public Accountants LLP, has been offering auditing services for the Company since 2022. Ms. YANG Li, another certified public accountant from Deloitte Touche Tohmatsu Certified Public Accountants LLP, has also been offering auditing services for the Company since 2022. Ms. Tong, Mei Yin, the partner and certified public accountant from Deloitte Touche Tohmatsu, has been offering auditing services for the Company since 2022. Save as disclosed above, the Company did not change its auditors in the previous three years. During the reporting period, the expense paid to auditors was as follows: Unit: RMB10,000 | Items | 2023 | 2022 | | :--- | :--- | :--- | | Auditing service fees for financial statements – auditing, reviewing and executing agreed-upon procedures | 1,753.7(1) | 1,462.0(2) | | Internal control and auditing services | 194.5 | 170.0 | | Other attestation services | – | – | | **Total** | **1,948.2** | **1,632.0** | Notes: 1. The auditing service fees for financial statements includes executing agreed upon procedures payment to Deloitte Touche Tohmatsu Certified Public Accountants LLP for the first quarter of 2023. 2. The auditing service fees for financial statements includes executing agreed upon procedures payment to Ernst & Young Hua Ming LLP for the first quarter of 2022. --- ### XXXV. COMMITMENTS OF THE COMPANY OR SHAREHOLDERS WITH OVER 5% SHARES DURING THE REPORTING PERIOD OR UNTIL THE REPORTING PERIOD For details of the commitment made by Huijin, the controlling shareholder of the Company, to avoid horizontal competition, please refer to the Announcement on the Conditions of Unfulfilled Commitments of the Company’s Shareholders, Related Parties and the Company published on 13 February 2014 by the Company on the website of the Hong Kong Stock Exchange. During the reporting period, the commitment relating to avoidance of horizontal competition was still being fulfilled continuously and normally. ### XXXVI. NON-OPERATING USAGE OF FUNDS BY THE CONTROLLING SHAREHOLDER AND ITS RELATED PARTIES There is no non-operating usage of funds by the controlling shareholder and other related parties for the Company. ### XXXVII. CREDIT OF THE COMPANY AND ITS CONTROLLING SHAREHOLDER During the reporting period, the Company and its controlling shareholder were not subject to large amount enforceable judgements of the court or outstanding due and payable debts. ### XXXVIII. SUSPECTED VIOLATIONS OF LAWS OR REGULATIONS AND PENALTY OF THE COMPANY AND ITS DIRECTORS, SUPERVISORS, MEMBERS OF SENIOR MANAGEMENT AND CONTROLLING SHAREHOLDER During the reporting period, the Company was not subject to any investigations for suspected crime. Neither the Company’s controlling shareholder nor its directors, supervisors or members of senior management were subject to compulsory measures for suspected crimes. Neither the Company nor its controlling shareholders, directors, supervisors or members of senior management were subject to criminal penalties, or received investigations or administrative penalty for suspected violations of laws or regulations by the CSRC, or received major administrative penalty by other authority. Neither the Company’s controlling shareholder nor its directors, supervisors or members of senior management were subject to serious violations of discipline and law or duty crimes which led to detention by discipline inspection and supervision departments and affected their performance of duties. The Company’s directors, supervisors and members of senior management were not subject to compulsory measures that affect the performance of their duties for suspected violations of laws and regulations by other competent authorities. During the reporting period, neither the Company nor its controlling shareholder, directors, supervisors or members of senior management were subject to any administrative supervision by the CSRC and disciplinary action by the stock exchange. ### XXXIX. SIGNIFICANT LITIGATION, ARBITRATION EVENTS During the reporting period, the Company had no significant litigation or arbitration events. --- ## XXXX. CONTRIBUTION SCHEME Employees of the Company participate in the workforce social-security system established and managed by the government, including endowment insurance, medical care insurance, housing provident fund and other social security schemes. The Company contributes social insurance premiums and welfare for employees based on a certain percentage of their salary and within the upper limit prescribed by the government and pays them to the human resources and social security agency. Such expenditure is included in current costs or expenses. The abovementioned social-security system is a defined contribution plan. Contributions to basic social endowment insurance system cannot be forfeited for that all contributions are fully vesting in employees at the time of payment. In addition to the above basic social endowment insurance, the Company established enterprise annuity fund in 2014, and the enterprise annuity fund has been reported to the Ministry of Human Resources and Social Security for the record. The Company paid monthly to the enterprise annuity fund according to the agreed payment base and percentage. During the accounting period when the employees participating in the enterprise annuity plan provide services, the amount calculated and paid by the Company according to the enterprise annuity plan is recognized as liabilities and included in income statement or related asset costs. The enterprise annuity fund is a defined contribution scheme. Contribution not attributed to the resigned employee in the enterprise annuity fund shall not offset the existing contribution, instead it will be transferred into a public account of the enterprise annuity fund and distributed to other members of enterprise annuity fund after performing the stipulated approval procedures. **YANG Yucheng** *Chairman* 27 March 2024 --- # SECTION 11 CHANGES IN SHARE CAPITAL AND SHAREHOLDERS’ PROFILE ## I. CHANGES IN SHARE CAPITAL As at 31 December 2023, there was no change in the total number of shares and structure of share capital of the Company. Unit: share | | 31 December 2023 | | Increase or decrease during the reporting period (+, -) | | | | | 31 December 2022 | | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | :---: | :---: | :---: | | | **Number** | **Percentage** | **New shares issued** | **Bonus shares** | **Transfer from reserve** | **Others** | **Sub-total** | **Number** | **Percentage** | | **1. Shares with selling restrictions** | – | – | – | – | – | – | – | – | – | | **2. Shares without selling restrictions** | | | | | | | | | | | 1. Ordinary shares denominated in RMB | 2,085,439,340 | 66.85% | – | – | – | – | – | 2,085,439,340 | 66.85% | | 2. Domestically listed foreign shares | – | – | – | – | – | – | – | – | – | | 3. Overseas listed foreign shares (H Share) | 1,034,107,260 | 33.15% | – | – | – | – | – | 1,034,107,260 | 33.15% | | 4. Others | – | – | – | – | – | – | – | – | – | | **Total** | 3,119,546,600 | 100.00% | – | – | – | – | – | 3,119,546,600 | 100.00% | | **3. Total number of shares** | 3,119,546,600 | 100.00% | – | – | – | – | – | 3,119,546,600 | 100.00% | ## II. ISSUE AND LISTING OF SECURITIES During the reporting period, the Company had no issue of listed securities. As of the end of the reporting period, there was no share issued by the Company to its employees. ## III. SHAREHOLDERS PROFILE ### (I) Number of shareholders and their shareholdings As of the end of the reporting period, there are 85,775 shareholders of the Company, including 85,492 A share shareholders and 283 H share shareholders. As of 29 February 2024, there were 86,235 shareholders of the Company, including 85,951 A shareholders and 284 H shareholders. --- As of the end of the reporting period, details of the shares held by top ten shareholders were set out below: Unit: share | Name of the shareholders | Total number of shares held at the end of reporting period | Percentage of the shareholding (%) | Increase or decrease of shareholding during the reporting period (+,-) | Number of shares held with selling restrictions⁽¹⁾ | Shares pledged or frozen: Status | Shares pledged or frozen: Number of shares | Character of the shareholders | Types of shares | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Central Huijin Investment Ltd. | 977,530,534 | 31.34 | – | – | – | – | State-owned | A | | HKSCC Nominees Limited⁽²⁾ | 972,722,477 | 31.18 | (30,974,220) | – | Unknown | Unknown | Overseas legal person | H | | China Baowu Steel Group Corporation Limited | 377,162,581 | 12.09 | – | – | – | – | State-owned legal person | A | | China Securities Finance Corporation Limited | 93,339,003 | 2.99 | – | – | – | – | State-owned legal person | A | | Hwabao Investment Co., Ltd.⁽³⁾ | 60,503,300 | 1.94 | – | – | – | – | State-owned legal person | H | | Hong Kong Securities Clearing Company Limited⁽⁴⁾ | 43,469,003 | 1.39 | (636,686) | – | – | – | Overseas legal person | A | | Central Huijin Asset Management Ltd. | 28,249,200 | 0.91 | – | – | – | – | State-owned legal person | A | | Kehua Tianyuan (Tianjin) Business Operation Management Company Limited | 11,790,000 | 0.38 | (1,660,000) | – | – | – | Domestic legal person | A | | Dacheng Fund-ABC-Dacheng China Securities Financial Asset Management Plan | 8,713,289 | 0.28 | – | – | – | – | Others | A | | China Asset Management-ABC-China Asset Management Plan of CSI Financial Assets | 7,863,699 | 0.25 | – | – | – | – | Others | A | | Description of related-party relations or concerted action among the aforesaid shareholders | \multicolumn{8}{l}{Central Huijin Asset Management Ltd. is a wholly-owned subsidiary of Central Huijin Investment Ltd. and Hwabao Investment Co., Ltd. is a wholly-owned subsidiary of China Baowu Steel Group Corporation Limited. Save for the above, the Company is not aware of any related-party relationship among the shareholders or whether they are parties acting in concert.} | | | | | | | | Notes: 1. As of the end of the reporting period, none of the Company’s A shares or H shares were subject to selling restrictions. 2. HKSCC Nominees Limited is a company that holds shares on behalf of the clients of Hong Kong stock brokers and other participants of CCASS system. The relevant regulations of the HKSE do not require such persons to declare whether their shareholdings are pledged or frozen. Therefore, HKSCC Nominees Limited is unable to calculate or provide the number of shares pledged or frozen. 3. As of 31 December 2023, Hwabao Investment, the wholly-owned subsidiary of China Baowu, held 60,503,300 H shares of the Company, which are registered under the name of HKSCC Nominees Limited. To avoid repeat calculation, the number of shares held by HKSCC Nominees Limited subtracted the number of shares held by Hwabao Investment. 4. Hong Kong Securities Clearing Company Limited (HKSCC) is a nominal holder of shares in the Shanghai-Hong Kong Stock Connect. --- ### (II) Controlling shareholder and the actual controller The controlling shareholder of the Company is Huijin. Huijin is a wholly state-owned company established in Beijing on 16 December 2003. The registered capital of Huijin is RMB828,209 million. The legal representative of Huijin is Mr. PENG Chun. Huijin, in accordance with authorization by the State Council, makes equity investments in major state-owned financial enterprises, and shall to the extent of its capital contribution, exercise the rights and perform the obligations as an investor on behalf of the State in accordance with applicable laws, to achieve the goal of preserving and enhancing the value of state-owned financial assets. Huijin does not conduct any other business or commercial activity, nor does it intervene in the daily operations of major state-owned financial enterprises which it controls. As of the end of the reporting period, the information of the listed companies that Huijin controlled or participated in equity investment was listed below: | No. | Name | Percentage of Huijin's equity participation | | :--- | :--- | :--- | | 1 | Industrial and Commercial Bank of China Limited ★☆ | 34.79% | | 2 | Agricultural Bank of China Limited ★☆ | 40.14% | | 3 | Bank of China Limited ★☆ | 64.13% | | 4 | China Construction Bank Corporation ★☆ | 57.14% | | 5 | Shenwan Hongyuan Group Co., Ltd. ★☆ | 20.05% | | 6 | China Reinsurance (Group) Corporation ☆ | 71.56% | | 7 | New China Life Insurance Company Ltd. ★☆ | 31.34% | | 8 | China International Capital Corporation Limited ★☆ | 40.11% | | 9 | CSC Financial Co., Ltd. ★☆ | 30.76% | Note: ★: a company listed on SSE; ☆: a company listed on HKSE. The Company does not have such entity who is not the shareholder of the Company but can actually control the Company through investment relations, agreements or other arrangements. Therefore, the Company does not have any actual controller. ### (III) Other corporate shareholders holding 10% or more of the shares in the Company #### China Baowu China Baowu was jointly reorganized by the former Baosteel Group Corporation and Wuhan Iron and Steel (Group) Corporation. China Baowu, established on 1 December 2016 in accordance with law, is a wholly state-owned corporation for which the State-owned Assets Supervision and Administration Commission of the State Council performs the duties of investor on behalf of the State Council. The registered capital of China Baowu is RMB52,790 million. The legal representative of China Baowu is Mr. HU Wangming. The business scope of China Baowu is as follows: Licensed projects: retail of publications; wholesale of publications. (For projects that require approval according to law, business activities can only be carried out after approval by relevant departments. The specific business projects shall be subject to the approval documents or permits issued by relevant departments.) --- General projects: engaging in investment activities with self-owned funds; investment management; asset management services with self-owned funds; enterprise headquarters management; land use right leasing; non-residential real estate leasing; tax services; human resources services (excluding occupational intermediary activities and labor dispatch services); registration and agency of market entities; business agency services; undertake outsourcing of archival services; tendering and bidding agency services; big data services; enterprise management consulting (Except for projects that require approval according to law, business activities are independently carried out in accordance with the law.) Save as disclosed above, as at 31 December 2023, there were no other corporate shareholders holding 10% or more of the shares in the Company (excluding HKSCC Nominees Limited). The following chart sets forth the connections between the Company and the ultimate controllers of the corporate shareholders holding 10% or more of shares in the Company as at 31 December 2023: | Ultimate Controller | Corporate Shareholder holding 10% or more | Percentage | Company | | :--- | :--- | :--- | :--- | | China Investment Corporation | Central Huijin Investment Ltd. | 31.34% | New China Life Insurance Company Ltd. | | State-owned Assets Supervision and Administration Commission under the State Council | China Baowu Steel Group Corporation Limited | 12.09% | New China Life Insurance Company Ltd. | --- ### (IV) Interests and short positions of substantial shareholders and other persons in the shares and underlying shares So far as the directors of the Company are reasonably aware of, as at 31 December 2023, China Baowu held 377,162,581 A shares of the Company, which accounted for 12.09% of the total issued shares of the Company, and 18.09% of the total issued A shares of the Company. In addition to the above, so far as the directors of the Company are reasonably aware of, as at 31 December 2023, the following persons (other than directors, supervisors or chief executive of the Company) had interests or short positions in the shares or underlying shares of the Company which shall be disclosed to the Company under the provisions of Division 2 and 3 of Part XV of the SFO, and have been entered into the register maintained by the Company pursuant to Section 336 of the SFO: Unit: share | | Name of substantial shareholders | Type of shares | Capacity | Number of shares | Approximate percentage of the total number of shares issued (%) | Approximate percentage of the total number of A shares issued (%) | Approximate percentage of the total number of H shares issued (%) | Long Position/ Short Position/ Interest in a lending pool | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 1 | Central Huijin Investment Ltd. | A | Beneficial Owner | 977,530,534 | 31.34 | 46.87 | – | Long Position | | | | | Interests of Controlled Corporation | 28,249,200 | 0.91 | 1.35 | – | Long Position | | 2 | Fosun International Limited | H | Interests of Controlled Corporation | 108,633,900(3) | 3.48 | – | 10.50 | Long Position | | | | | Beneficial Owner | 4,942,400 | 0.16 | – | 0.48 | Long Position | | 3 | Fosun International Holdings Ltd. | H | Interests of Controlled Corporation | 113,576,300(3) | 3.64 | – | 10.98 | Long Position | | 4 | GUO Guangchang | H | Interests of Controlled Corporation | 113,576,300(3) | 3.64 | – | 10.98 | Long Position | | 5 | Fidelidade – Companhia de Seguros, S.A. | H | Beneficial Owner | 61,650,600(3) | 1.98 | – | 5.96 | Long Position | | 6 | China Baowu Steel Group Corporation Limited | H | Interests of Controlled Corporation | 60,503,300(4) | 1.94 | – | 5.85 | Long Position | | 7 | Hwabao Investment Co., Ltd. | H | Beneficial Owner | 60,503,300(4) | 1.94 | – | 5.85 | Long Position | --- Notes: 1. Data disclosed in the table above are mainly based on the information provided on the website of the Hong Kong Stock Exchange (www.hkexnews.hk). 2. Pursuant to Section 336 of the SFO, the shareholders of the Company are required to file a disclosure of interests form when certain criteria are fulfilled. When a shareholding in the Company changes, it is not necessary for the shareholder to notify the Company and the Hong Kong Stock Exchange unless several criteria have been fulfilled. Therefore a shareholder’s latest shareholding in the Company may be different from the shareholding filed with the Hong Kong Stock Exchange. 3. Mr. GUO Guangchang holds equity interests in the shares of the Company through Fosun International Limited, Fosun International Holdings Ltd., Fosun Holdings Limited, Shanghai Fosun High Technology (Group) Co., Ltd., Fidelidade – Companhia de Seguros, S.A. and other companies controlled or indirectly controlled by them. 4. According to the above disclosure, as of 31 December 2023 China Baowu held 377,162,581 A shares of the Company and 60,503,300 H shares of the Company through Hwabao Investment, representing 18.09% of the total number of issued A shares of the Company and 5.85% of the total number of issued H shares of the Company respectively, accounting for 14.03% of the total number of issued shares of the Company. Save as disclosed above, as of 31 December 2023, the Company was not aware of anyone (other than the directors, supervisors and chief executive of the Company) who had an interest or short position in the shares or underlying shares of the Company which have been entered into the register maintained by the Company pursuant to Section 336 of the SFO. ## IV. THE INTEREST AND SHORT POSITION OF DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVES UNDER HONG KONG LAWS AND REGULATIONS As of 31 December 2023, according to the information available to the Company and the information our directors are aware of, there were no interests and short positions (including interests or short positions which they are taken or deemed to have under such provisions of the SFO) held by our directors, supervisors and chief executives in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which will be required to be entered into the register maintained by the Company pursuant to Section 352 of the SFO or which shall be notified to the Company and the HKSE pursuant to the Model Code. --- ### SECTION 12 # INDEPENDENT AUDITOR’S REPORT To the members of New China Life Insurance Company Ltd. (Incorporated in the People’s Republic of China with limited liability) ### OPINION We have audited the consolidated financial statements of New China Life Insurance Company Ltd. (the “Company”) and its subsidiaries (the “Group”) set out on pages 128 to 300, which comprise the consolidated statement of financial position as at 31 December 2023, and the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information and other explanatory information. In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2023, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”) and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance. ### BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (“ISAs”) issued by the International Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. ### KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. --- ### KEY AUDIT MATTERS (CONTINUED) | Key audit matter | How our audit addressed the key audit matter | | :--- | :--- | | *Valuation of insurance contract liabilities*

As at 31 December 2023, the amount of insurance contract liabilities was RMB1,146,497 million and is of importance to the consolidated financial statements.

As disclosed in Note 3 Critical Accounting Judgements and Key Sources of Estimation Uncertainty, the Group groups insurance contracts for measuring purpose. The Group uses appropriate measurement method and actuarial model to estimate insurance contract liabilities, which includes significant actuarial assumptions, such as discount rates, lapse rates, morbidity rates, mortality rates, acquisition and maintenance expense rates, policy dividend rates as well as risk adjustment for non-financial risk to account for the uncertainties of these assumptions. These methods, models and assumptions involve management’s use of significant accounting estimates and judgments, which could make a significant impact on the insurance contract liabilities.

Based on the analysis above, we have identified the valuation of insurance contract liabilities as a key audit matter.

Refer to Note 3 Critical Accounting Judgements and Key Sources of Estimation Uncertainty, Note 4 (1)(c) and Note 14 to the consolidated financial statements. | We performed the following audit procedures:

• Obtained an understanding of the Group’s internal controls for determining insurance contract liabilities, evaluated and tested the design and operating effectiveness of key internal controls (including the effectiveness of the related IT systems for the measurement and processing of insurance contract liabilities).

• Tested completeness and accuracy of the underlying data used in the actuarial model.

• Assisted by our actuarial specialists to:
✓ Evaluate the appropriateness of the measurement method and assumptions used at IFRS17 transition date (1 January 2022). Verify the appropriateness of actuarial model and calculation accuracy on a sample basis for the date;
✓ Evaluate the appropriateness of the level of aggregation and the measurement methods adopted for each group of contracts;
✓ Evaluate the appropriateness of the determination of the coverage units;
✓ Assess the appropriateness of the actuarial model, methodology and key assumptions used, including the discount rates, lapse rates, morbidity rates, mortality rates, acquisition and maintenance expense rates, policy dividend rates, etc.;
✓ Assess the reasonableness of key actuarial assumptions and judgments, by comparing them to historical experience and industry data;
✓ Assess the reasonableness of assumptions and model changes applied to the actuarial models;
✓ Review sensitivity analysis of the key assumptions to evaluate the impact on insurance contract liabilities from the assumptions changes individually or as a whole; and
✓ Perform independent actuarial modelling to verify the calculation accuracy of the actuarial model, the calculation of contractual service margin at initial recognition and the subsequent amortisation on a sample basis. | --- ## KEY AUDIT MATTERS (CONTINUED) | Key audit matter | How our audit addressed the key audit matter | | :--- | :--- | | *Fair value of level 3 financial assets*

As at 31 December 2023, the Group held financial assets measured at fair value, with a carrying value of RMB732,873 million, of which, RMB77,130 million was level 3 financial assets. The fair value of level 3 financial assets are measured based on significant unobservable inputs.

As disclosed in Note 3 Key Sources of Estimation Uncertainty (3), the Group evaluated the fair value of financial assets with active market quotation and valuation techniques. Regarding the level 3 financial assets which primarily include trust plans, equity investment plans, unlisted equity investments, etc., the Group applies significant accounting judgment and estimation to determine the valuation techniques and significant unobservable inputs in assessing these level 3 financial assets.

We have identified the fair value of the Group’s level 3 financial assets as a key audit matter due to the significant uncertainty from the accounting judgment and estimate.

Refer to Note 3 Key Sources of Estimation Uncertainty (3) and Note 4(4) to the consolidated financial statements. | We performed the following audit procedures:

• Obtained an understanding of the Group’s internal controls for the assessment of fair value of level 3 financial assets, evaluated and tested the design and operating effectiveness of key internal controls.

• On a sample basis, performed the following procedures with the assistance of our internal valuation experts when necessary:

✓ Reviewed and evaluated the reasonableness of the Group’s valuation methodology;
✓ Tested the underlying data for fair value measurement;
✓ Reviewed the appropriateness of assumptions used to measure the fair value of financial assets;
✓ Reviewed and evaluated the accuracy of valuation results of the financial assets provided by the Group. | --- ## OTHER INFORMATION The directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the consolidated financial statements and our auditor’s report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. ## RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRSs issued by the IASB and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Those changed with governance are responsible for overseeing the Group’s financial reporting process. --- ## AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion solely to you, as a body, in accordance with section 405 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. - Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. - Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. - Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. - Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. --- ## AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) We communicate with the those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor’s report is Tong, Mei Yin. **Deloitte Touche Tohmatsu** Certified Public Accountants Hong Kong 27 March 2024 --- ### SECTION 12 # CONSOLIDATED STATEMENT OF FINANCIAL POSITION ### As at 31 December 2023 (All amounts in RMB millions unless otherwise stated) ### ASSETS | | Notes | 31 December 2023 | 31 December 2022 (Restated) (Note 2(1)(a)) | 1 January 2022 (Restated) (Note 2(1)(a)) | | :--- | :---: | :---: | :---: | :---: | | Property, plant and equipment | 6 | 18,018 | 17,750 | 17,971 | | Investment properties | 7 | 9,383 | 9,553 | 9,427 | | Right-of-use assets | 8 | 881 | 986 | 1,200 | | Intangible assets | 9 | 4,063 | 4,002 | 3,792 | | Investments in associates and joint ventures | 10 | 5,174 | 5,820 | 5,452 | | Financial investments | | | | | | – Financial assets at fair value through profit or loss | 11(1) | 380,239 | 79,465 | 70,225 | | – Debt investments at amortised cost | 11(2) | 313,148 | N/A | N/A | | – Debt investments at fair value through other comprehensive income | 11(3) | 347,262 | N/A | N/A | | – Equity investments designated at fair value through other comprehensive income | 11(4) | 5,370 | N/A | N/A | | – Held-to-maturity | 11(5) | N/A | 378,391 | 301,102 | | – Available-for-sale | 11(6) | N/A | 375,654 | 403,427 | | – Loans and receivables | 11(7) | N/A | 47,456 | 59,895 | | Term deposits | 12 | 255,984 | 227,547 | 168,540 | | Statutory deposits | 13 | 1,784 | 1,715 | 1,715 | | Financial assets purchased under agreements to resell | | 5,265 | 8,847 | 4,112 | | Derivative financial instruments | | 2 | 3 | 4 | | Accrued investment income | | 76 | 15,137 | 10,558 | | Reinsurance contract assets | 14 | 9,802 | 10,590 | 9,153 | | Deferred tax assets | 15 | 10,709 | 7,890 | 4,507 | | Other assets | 16 | 14,309 | 6,544 | 5,544 | | Cash and cash equivalents | | 21,788 | 17,586 | 15,459 | | **Total assets** | | **1,403,257** | **1,214,936** | **1,092,083** | --- ### LIABILITIES AND EQUITY | | Notes | 31 December 2023 | 31 December 2022 (Restated) (Note 2(1)(a)) | 1 January 2022 (Restated) (Note 2(1)(a)) | | :--- | :---: | :---: | :---: | :---: | | **Liabilities** | | | | | | Insurance contract liabilities | 14 | **1,146,497** | 1,013,191 | 910,936 | | Borrowings | 17 | **20,262** | 10,000 | 10,000 | | Lease liabilities | 8 | **760** | 855 | 1,040 | | Financial liabilities at fair value through profit or loss | 18 | **3,592** | 25,877 | 2,612 | | Financial assets sold under agreements to repurchase | 19 | **106,987** | 43,617 | 55,415 | | Other liabilities | 20 | **19,985** | 23,322 | 17,727 | | Current income tax liabilities | | **26** | 21 | 63 | | Deferred tax liabilities | 15 | **56** | 57 | 515 | | **Total liabilities** | | **1,298,165** | 1,116,940 | 998,308 | | | | | | | | **Shareholders’ equity** | | | | | | Share capital | 21 | **3,120** | 3,120 | 3,120 | | Reserves | 22 | **9,823** | 17,945 | 24,733 | | Retained earnings | 22 | **92,124** | 76,910 | 65,905 | | **Equity attributable to owners of the Company** | | **105,067** | 97,975 | 93,758 | | **Non-controlling interests** | | **25** | 21 | 17 | | **Total equity** | | **105,092** | 97,996 | 93,775 | | **Total liabilities and equity** | | **1,403,257** | 1,214,936 | 1,092,083 | The notes attached form an integral part of these consolidated financial statements. The consolidated financial statements were approved and authorised for issue by the Board of Directors on 27 March 2024 and are signed on its behalf by: | | | | :--- | :--- | | Mr. Yang Yucheng | Mr. Zhang Hong | | CHAIRMAN | EXECUTIVE DIRECTOR | | EXECUTIVE DIRECTOR | PRESIDENT | --- ## SECTION 12 # CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31 December 2023 (All amounts in RMB million unless otherwise stated) | | | For the year ended 31 December | | | :--- | :---: | :---: | :---: | | | Notes | **2023** | 2022 (Restated) (Note 2(1)(a)) | | **REVENUES** | | | | | Insurance revenue | 23 | **48,045** | 56,878 | | Interest income | 24 | **32,268** | 32,001 | | Other investment income | 25 | **(9,260)** | 17,613 | | Other income | 26 | **1,201** | 1,672 | | **Total revenues** | | **72,254** | 108,164 | | | | | | | **BENEFITS, CLAIMS AND EXPENSES** | | | | | Insurance service expenses | 27 | **(33,252)** | (33,789) | | Net expenses from reinsurance contracts held | | **(767)** | 706 | | Finance expenses from insurance contracts issued | 28 | **(26,800)** | (43,129) | | Less: Finance income from reinsurance contracts held | 28 | **261** | 220 | | Net impairment losses on financial assets | 29 | **(307)** | (4,958) | | Other expenses | 30 | **(3,149)** | (3,944) | | **Total benefits, claims and expenses** | | **(64,014)** | (84,894) | | | | | | | Share of profits and losses of associates and joint ventures | | **(639)** | (18) | | Other finance costs | 31 | **(2,086)** | (1,173) | | | | | | | **Profit before income tax** | | **5,515** | 22,079 | | Income tax expense | 15 | **3,201** | (575) | | | | | | | **Net profit for the year** | | **8,716** | 21,504 | | | | | | | **Net profit for the year attributable to:** | | | | | – Owners of the Company | 32 | **8,712** | 21,500 | | – Non-controlling interests | | **4** | 4 | --- For the year ended 31 December | | Notes | **2023** | 2022 (Restated) (Note 2(1)(a)) | | :--- | :---: | :---: | :---: | | **Net profit for the year** | | **8,716** | 21,504 | | | | | | | **Items that will not be reclassified subsequently to profit or loss:** | | **116** | – | | Changes in fair value on equity investments designated at fair value through other comprehensive income | | **121** | N/A | | Insurance finance expenses from insurance contracts with direct participation features for which the Group holds the underlying items | | **(5)** | – | | | | | | | **Items that may be reclassified subsequently to profit or loss:** | | **(14,691)** | (12,894) | | Changes in fair value on debt investments at fair value through other comprehensive income | | **7,345** | N/A | | Allowance for impairment losses on debt investments at fair value through other comprehensive income | | **(3)** | N/A | | Changes in fair value on available-for-sale financial assets | | **N/A** | (22,147) | | Allowance for impairment losses on available-for-sale financial assets | | **N/A** | 2,766 | | Finance (expenses)/income from insurance contracts issued | | **(22,241)** | 6,641 | | Finance income from reinsurance contracts held | | **154** | 180 | | Share of other comprehensive income of associates and joint ventures under the equity method | | **49** | (355) | | Currency translation differences | | **5** | 21 | | | | | | | **Total other comprehensive income for the year, net of tax** | | **(14,575)** | (12,894) | | | | | | | **Total comprehensive income for the year** | | **(5,859)** | 8,610 | | | | | | | **Total comprehensive income for the year attributable to:** | | | | | – Owners of the Company | | **(5,863)** | 8,606 | | – Non-controlling interests | | **4** | 4 | | | | | | | **Earnings per share (RMB)** | | | | | Basic | 33 | **2.79** | 6.89 | | Diluted | 33 | **2.79** | 6.89 | The notes attached form an integral part of these consolidated financial statements. --- # SECTION 12 # CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ### For the year ended 31 December 2023 (All amounts in RMB million unless otherwise stated) | | For the year ended 31 December 2023 | | | | | | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | | | **Attributable to owners of the Company** | | | | **Non-controlling Interests** | **Total equity** | | | **Share capital** | **Reserves** | **Retained earnings** | **Total** | | | | **As at 31 December 2022** | 3,120 | 45,771 | 53,993 | 102,884 | 21 | 102,905 | | Impact of adoption of IFRS 17 (Note 2(1)(a)(ii)) | – | (27,826) | 22,917 | (4,909) | – | (4,909) | | **As at 31 December 2022 (Restated)** | 3,120 | 17,945 | 76,910 | 97,975 | 21 | 97,996 | | Impact of adoption of IFRS 9 (Note 2(1)(a)(i)) | – | 3,769 | 12,582 | 16,351 | – | 16,351 | | **As at 1 January 2023** | 3,120 | 21,714 | 89,492 | 114,326 | 21 | 114,347 | | Net profit for the year | – | – | 8,712 | 8,712 | 4 | 8,716 | | Other comprehensive income | – | (14,575) | – | (14,575) | – | (14,575) | | **Total comprehensive income** | – | (14,575) | 8,712 | (5,863) | 4 | (5,859) | | Dividends paid | – | – | (3,369) | (3,369) | – | (3,369) | | Appropriation to reserves | – | 2,711 | (2,711) | – | – | – | | **Total transactions with owners** | – | 2,711 | (6,080) | (3,369) | – | (3,369) | | **Others** | – | (27) | – | (27) | – | (27) | | **As at 31 December 2023** | 3,120 | 9,823 | 92,124 | 105,067 | 25 | 105,092 | The notes attached form an integral part of these consolidated financial statements. --- ### For the year ended 31 December 2022 | | Attributable to owners of the Company | | | | Non-controlling | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | **Share capital** | **Reserves** | **Retained earnings** | **Total** | **Interests** | **Total equity** | | **As at 31 December 2021** | 3,120 | 53,046 | 52,331 | 108,497 | 17 | 108,514 | | Impact of adoption of IFRS 17 (Note 2(1)(a)(ii)) | – | (28,313) | 13,574 | (14,739) | – | (14,739) | | **As at 1 January 2022 (Restated)** | 3,120 | 24,733 | 65,905 | 93,758 | 17 | 93,775 | | Net profit for the year | – | – | 21,500 | 21,500 | 4 | 21,504 | | Other comprehensive income | – | (12,894) | – | (12,894) | – | (12,894) | | **Total comprehensive income** | – | (12,894) | 21,500 | 8,606 | 4 | 8,610 | | Dividends paid | – | – | (4,492) | (4,492) | – | (4,492) | | Appropriation to reserves | – | 6,003 | (6,003) | – | – | – | | **Total transactions with owners** | – | 6,003 | (10,495) | (4,492) | – | (4,492) | | **Others** | – | 103 | – | 103 | – | 103 | | **As at 31 December 2022 (Restated)** | 3,120 | 17,945 | 76,910 | 97,975 | 21 | 97,996 | The notes attached form an integral part of these consolidated financial statements. --- ### SECTION 12 # CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2023 (All amounts in RMB million unless otherwise stated) | | For the year ended 31 December | | | :--- | :---: | :---: | | | **2023** | 2022 (Restated) (Note 2(1)(a)) | | **Operating activities** | | | | Profit before income tax | **5,515** | 22,079 | | Adjustments for: | | | | Investment income | **(23,008)** | (49,614) | | Other finance costs | **2,086** | 1,173 | | Changes in insurance contract liabilities | **102,355** | 111,073 | | Changes in reinsurance contract assets | **992** | (1,200) | | Depreciation and amortization | **1,888** | 1,910 | | Net impairment losses on financial assets | **307** | 4,958 | | Losses of disposal of property, plant and equipment, intangible assets and other assets | **1** | 2 | | Changes in operational assets and liabilities: | | | | Receivables and payables | **1,471** | (674) | | Investment contracts | **(361)** | (899) | | Income tax received/(paid) | **302** | (292) | | **Net cash flows from operating activities** | **91,548** | 88,516 | | | | | | **Investing activities** | | | | Proceeds from sales and maturities of financial investments | **461,187** | 391,412 | | Purchases of financial investments | **(620,617)** | (476,154) | | Proceeds from disposal of property, plant and equipment, intangible assets and other assets | **29** | 2 | | Purchases of property, plant and equipment, intangible assets and other assets | **(2,090)** | (1,789) | | Interests received | **33,036** | 29,478 | | Dividends received | **6,720** | 11,840 | | Financial assets purchased under agreements to resell, net | **3,363** | (6,515) | | Changes from subsidiaries and structured entities | **10,584** | 7,911 | | Term deposits, net and others | **(48,861)** | (45,786) | | **Net cash flows used in investing activities** | **(156,649)** | (89,601) | The notes attached form an integral part of these consolidated financial statements. --- | | For the year ended 31 December | | | :--- | :--- | :--- | | | **2023** | **2022** (Restated) (Note 2(1)(a)) | | **Financing activities** | | | | Capital injected into structured entities by non-controlling interests | 23,917 | 34,776 | | Payment of redemption for structured entities to non-controlling interests | (18,004) | (19,563) | | Proceeds from issuance of asset funding plans | 6,440 | 9,210 | | Payment of redemption for asset funding plans | (9,210) | (2,770) | | Interests and dividends paid | (4,227) | (5,065) | | Cash received from the issuance of capital supplementary bonds | 10,000 | – | | Financial assets sold under agreements to repurchase, net | 60,846 | (13,221) | | Payment of lease liabilities | (476) | (528) | | **Net cash flows from financing activities** | **69,286** | **2,839** | | | | | | **Effects of exchange rate changes on cash and cash equivalents** | **17** | **373** | | | | | | **Net increase in cash and cash equivalents** | **4,202** | **2,127** | | **Cash and cash equivalents** | | | | Beginning of the year | 17,586 | 15,459 | | End of the year | 21,788 | 17,586 | | | | | | **Analysis of balances of cash and cash equivalents** | | | | Cash at banks and in hand | 21,788 | 17,586 | | **Cash and cash equivalents at end of the year** | **21,788** | **17,586** | The notes attached form an integral part of these consolidated financial statements. --- ### SECTION 12 # NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2023 (All amounts in RMB million unless otherwise stated) ## 1. BACKGROUND AND PRINCIPAL ACTIVITIES New China Life Insurance Company Ltd. (the "Company") was established as a joint stock limited company in September 1996 in Beijing, the People's Republic of China (the "PRC") with the authorisation of the State Council of the PRC and the approval by the People's Bank of China. The Company's initial registered capital on the date of incorporation was Renminbi ("RMB") 500 million. The registered capital was increased to RMB1,200 million in December 2000 and further increased to RMB2,600 million in March 2011, with the approval of the former China Insurance Regulatory Commission (the "former CIRC"). In December 2011, the Company completed its initial public offering of 158,540,000 A shares on the Shanghai Stock Exchange and issued 358,420,000 H shares on the Hong Kong Stock Exchange. In January 2012, the Company exercised the right of H share overallotment in overseas markets and issued 2,586,600 H shares of the overallotment shares. Upon the approval of the former CIRC, the Company's registered capital was increased to RMB3,120 million. The address of the Company's registered office is No.16 East Hunan Road (Zhongguancun Yanqing Park), Yanqing District, Beijing, the PRC. The Company is headquartered in Beijing. The business scope of the Company is: life insurance in RMB and foreign currencies (including various life insurance, health insurance, and accident and casualty insurance); acting as an agent for domestic and foreign insurance institutions for insurance, verification and claim settlement; insurance consulting; and engaging in capital operations in accordance with relevant regulations. There has not been any major change of business scope of the Company during the reporting period. As at 31 December 2023, the Company has equity interests in subsidiaries and consolidated structured entities as set out in Note 40. The Company, its subsidiaries and its consolidated structured entities are hereinafter collectively referred to as the "Group". ## 2. MATERIAL ACCOUNTING POLICY INFORMATION The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, except for the adoption of new standards/amendments effective as at 1 January 2023. ### (1) Basis of preparation of consolidated financial statements The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs"), amendments to IFRSs and interpretations issued by the International Accounting Standards Board (the "IASB"). In addition, the consolidated financial statements include applicable disclosure required by the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited ("Listing Rules") and by the Hong Kong Companies Ordinance. The directors of the Company have, at the time of approving the consolidated financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the consolidated financial statements. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (1) Basis of preparation (continued) The consolidated financial statements have been prepared under the historical cost basis, except for financial instruments measured at fair value and insurance contract liabilities measured based on actuarial methods. The preparation of the consolidated financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise professional judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3. #### (a) Standards/amendments adopted by the Group for the first time for the financial year beginning on 1 January 2023 | Standards/Amendments | Content | | :--- | :--- | | IFRS 17 (including the June 2020 and December 2021 Amendments to IFRS 17) | Insurance Contracts | | IFRS 9 (including the October 2017 Amendments to IFRS 9) | Financial Instruments | | Amendments to IAS 1 and IFRS Practice Statement 2 | Disclosure of Accounting Policies | | Amendments to IAS 8 | Definition of Accounting Estimates | | Amendments to IAS 12 | Deferred Tax related to Assets and Liabilities arising from a Single Transaction | | Amendments to IAS 12 | International Tax Reform-Pillar Two model Rules | Except for IFRS 17 and IFRS 9, the application of the amendments to IFRSs in the current year has had no material impact on the Group’s financial positions and performance for the current and prior years and/or on the disclosures set out in these consolidated financial statements. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (1) Basis of preparation (continued) #### (a) Standards/amendments adopted by the Group for the first time for the financial year beginning on 1 January 2023 (continued) (i) *Impacts and changes in accounting policies of application on IFRS 9 Financial Instruments and the related amendments* The Group had applied the temporary exemption from IFRS 9 in past years and applies IFRS 9 effective 1 January 2023, alongside IFRS 17. In the current year, the Group has also applied related consequential amendments to other IFRSs. IFRS 9 introduces new requirements for 1) the classification and measurement of financial assets and financial liabilities, 2) expected credit losses (“ECL”) for financial assets and 3) general hedge accounting. The Group has applied IFRS 9 in accordance with the transition provisions set out in IFRS 9, i.e. applied the classification and measurement requirements (including impairment) retrospectively to instruments that have not been derecognised as at 1 January 2023 (date of initial application) and has not applied the requirements to instruments that have already been derecognised as at 1 January 2023. The difference between carrying amounts as at 31 December 2022 and the carrying amounts as at 1 January 2023 are recognised in the opening retained earnings and other comprehensive income, without restating comparative information. Accordingly, certain comparative information may not be comparable as comparative information was prepared under IAS 39 Financial Instruments: Recognition and Measurement. Accounting policies resulting from application of IFRS 9 are disclosed in Note 2(10). For relevant accounting policies under IAS39 can refer to Note 2(10) of the Group’s annual consolidated financial statements for the year ended 31 December 2022, which have been audited. ① Summary of effects arising from initial application of IFRS 9 Impacts from classification and measurement The directors of the Company reviewed and assessed the Group’s financial assets and liabilities as at 1 January 2023 based on the facts and circumstances that existed at that date. Changes in classification and measurement (including impairment) on the Group’s financial assets and liabilities and the impacts thereof are detailed below. Line items that were not affected by the changes have not been included. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (1) Basis of preparation (continued) ### (a) Standards/amendments adopted by the Group for the first time for the financial year beginning on 1 January 2023 (continued) (i) Impacts and changes in accounting policies of application on IFRS 9 Financial Instruments and the related amendments (continued) ① Summary of effects arising from initial application of IFRS 9 (continued) Impacts from classification and measurement (continued) | Item | Closing balance at 31 December 2022 – IAS 39 (Restated) | Effects arising from initial application of IFRS 9: Reclassification: From loans and receivables | Effects arising from initial application of IFRS 9: Reclassification: From available-for-sale financial assets | Effects arising from initial application of IFRS 9: Reclassification: From held-to-maturity investments | Effects arising from initial application of IFRS 9: Reclassification: From financial assets/ liabilities at fair value through profit or loss | Effects arising from initial application of IFRS 9: Reclassification: Reclassification of interest receivables/ interest payables | Effects arising from initial application of IFRS 9: Remeasurement: Impairment under ECL model | Effects arising from initial application of IFRS 9: Remeasurement: Upon reclassification from amortised cost/cost less impairment to fair value | Effects arising from initial application of IFRS 9: Remeasurement: From fair value to amortised cost | Opening balance at 1 January 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Assets:** | | | | | | | | | | | | Cash and cash equivalents | 17,586 | – | – | – | – | 1 | – | – | – | 17,587 | | Financial assets purchased under agreements to resell | 8,847 | – | – | – | – | (2) | – | – | – | 8,845 | | Term deposits | 227,547 | – | – | – | – | 7,778 | (78) | – | – | 235,247 | | Statutory deposits | 1,715 | – | – | – | – | 198 | (1) | – | – | 1,912 | | Accrued investment income | 15,137 | – | – | – | – | (13,551) | – | – | – | 1,586 | | Financial assets at FVTPL | 79,465 | 3,300 | 243,851 | 52 | (20) | 576 | – | 6,322 | – | 333,546 | | Debt investments at amortised cost | N/A | 31,788 | 23,229 | 195,452 | – | 1,761 | (91) | – | (116) | 252,023 | | Debt investments at FVTOCI | N/A | 12,368 | 103,365 | 182,887 | 20 | 3,239 | – | 15,752 | – | 317,631 | | Equity investments designated at FVTOCI | N/A | – | 5,209 | – | – | – | – | 2 | – | 5,211 | | Available-for-sale financial assets | 375,654 | – | (375,654) | – | – | – | – | – | – | N/A | | Held-to-maturity investments | 378,391 | – | – | (378,391) | – | – | – | – | – | N/A | | Loans and receivables | 47,456 | (47,456) | – | – | – | – | – | – | – | N/A | | Deferred tax assets | 7,890 | – | – | – | – | – | 43 | (5,517) | 29 | 2,445 | | **Liabilities:** | | | | | | | | | | | | Financial liabilities at fair value through profit or loss | 25,877 | – | – | – | – | 3 | – | (6) | – | 25,874 | | Financial assets sold under agreements to repurchase | 43,617 | – | – | – | – | (7) | – | – | – | 43,610 | | Borrowings | 10,000 | – | – | – | – | 211 | – | – | – | 10,211 | | Other liabilities | 23,322 | – | – | – | – | (207) | – | – | – | 23,115 | | **Shareholders’ equity** | 97,996 | – | – | – | – | – | (127) | 16,565 | (87) | 114,347 | --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (1) Basis of preparation (continued) #### (a) Standards/amendments adopted by the Group for the first time for the financial year beginning on 1 January 2023 (continued) (i) Impacts and changes in accounting policies of application on IFRS 9 Financial Instruments and the related amendments (continued) ① Summary of effects arising from initial application of IFRS 9 (continued) **Impacts from ECL** As at 1 January 2023, the directors of the Company reviewed and assessed the Group’s existing financial assets for impairment using reasonable and supportable information that is available without undue cost or effort in accordance with the requirements of IFRS 9. All loss allowances for financial assets as at 31 December 2022 reconciled to the opening loss allowances as at 1 January 2023 is as follows: | | Term deposits | Statutory deposits | Available-for-sale financial assets | Debt investments at amortised cost | Debt investments at FVTOCI | | :--- | :---: | :---: | :---: | :---: | :---: | | At 31 December 2022 – IAS 39 | – | – | 7,570 | N/A | N/A | | Reclassification | – | – | (7,570) | 76 | 1,524 | | Amounts remeasured through opening retained earnings | 78 | 1 | N/A | 91 | – | | Amounts remeasured through other comprehensive income | – | – | N/A | – | 50 | | **At 1 January 2023** | 78 | 1 | N/A | 167 | 1,574 | --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (1) Basis of preparation (continued) #### (a) Standards/amendments adopted by the Group for the first time for the financial year beginning on 1 January 2023 (continued) (i) *Impacts and changes in accounting policies of application on IFRS 9 Financial Instruments and the related amendments (continued)* ② Impacts on opening consolidated statement of financial position arising from the application of IFRS 9 As a result of the changes in the Group’s accounting policies as described above, the opening consolidated statement of financial position had to be adjusted. The following table show the adjustments recognised for each individual line item. | | 31 December 2022 (Restated) | Application of IFRS 9 | 1 January 2023 | | :--- | :---: | :---: | :---: | | **ASSETS** | | | | | Property, plant and equipment | 17,750 | – | 17,750 | | Investment properties | 9,553 | – | 9,553 | | Right-of-use assets | 986 | – | 986 | | Intangible assets | 4,002 | – | 4,002 | | Investments in associates and joint ventures | 5,820 | – | 5,820 | | Financial investments | | | | | – Financial assets at fair value through profit or loss | 79,465 | 254,081 | 333,546 | | – Debt investments at amortised cost | N/A | 252,023 | 252,023 | | – Debt investments at fair value through other comprehensive income | N/A | 317,631 | 317,631 | | – Equity investments designated at fair value through other comprehensive income | N/A | 5,211 | 5,211 | | – Held-to-maturity | 378,391 | (378,391) | N/A | | – Available-for-sale | 375,654 | (375,654) | N/A | | – Loans and receivables | 47,456 | (47,456) | N/A | | Term deposits | 227,547 | 7,700 | 235,247 | | Statutory deposits | 1,715 | 197 | 1,912 | | Financial assets purchased under agreements to resell | 8,847 | (2) | 8,845 | | Derivative financial instruments | 3 | – | 3 | | Accrued investment income | 15,137 | (13,551) | 1,586 | | Reinsurance contract assets | 10,590 | – | 10,590 | | Deferred tax assets | 7,890 | (5,445) | 2,445 | | Other assets | 6,544 | – | 6,544 | | Cash and cash equivalents | 17,586 | 1 | 17,587 | | | | | | | **Total assets** | 1,214,936 | 16,345 | 1,231,281 | --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (1) Basis of preparation (continued) ### (a) Standards/amendments adopted by the Group for the first time for the financial year beginning on 1 January 2023 (continued) (i) Impacts and changes in accounting policies of application on IFRS 9 Financial Instruments and the related amendments (continued) ② Impacts on opening consolidated statement of financial position arising from the application of IFRS 9 (continued) | | 31 December 2022 (Restated) | Application of IFRS 9 | 1 January 2023 | | :--- | :--- | :--- | :--- | | **LIABILITIES AND EQUITY** | | | | | **Liabilities** | | | | | Insurance contract liabilities | 1,013,191 | – | 1,013,191 | | Borrowings | 10,000 | 211 | 10,211 | | Lease liabilities | 855 | – | 855 | | Financial liabilities at fair value through profit or loss | 25,877 | (3) | 25,874 | | Financial assets sold under agreements to repurchase | 43,617 | (7) | 43,610 | | Other liabilities | 23,322 | (207) | 23,115 | | Current income tax liabilities | 21 | – | 21 | | Deferred tax liabilities | 57 | – | 57 | | **Total liabilities** | **1,116,940** | **(6)** | **1,116,934** | | **Total equity** | **97,996** | **16,351** | **114,347** | | **Total liabilities and equity** | **1,214,936** | **16,345** | **1,231,281** | Note: In the above table, the carrying amounts as at 31 December 2022 were prepared under IAS 39 and IFRS 17, and the carrying amounts as at 1 January 2023 were prepared under IFRS 9 and IFRS 17. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (1) Basis of preparation (continued) #### (a) Standards/amendments adopted by the Group for the first time for the financial year beginning on 1 January 2023 (continued) **(ii) Impacts and changes in accounting policies of application on IFRS 17 Insurance Contracts and the related amendments** In May 2017, IASB issued IFRS 17 Insurance Contract. IFRS 17 establishes a comprehensive new applicable accounting standards for the recognition, measurement, presentation and disclosure of insurance contracts. IFRS 17 outlines a general model, which is modified for insurance contracts with direct participation features, described as the variable fee approach (the “VFA”). The general model is simplified if certain criteria are met by measuring the liability for remaining coverage (the “LRC”) using the premium allocation approach (the “PAA”). The Group applies the VFA to insurance contracts with direct participation features; applies the PAA to insurance contracts with coverage period which is one year or less; applies the general model to all other insurance contracts; and applies the general model or the PAA to reinsurance contracts held. The general model uses current assumptions to estimate the amount, timing and uncertainty of future cash flows and it explicitly measures the cost of that uncertainty. Changes in cash flows related to future services should be recognized against the contractual service margin (the “CSM”) at each reporting date. The CSM is released to profit or loss to reflect the service provided by the allocation over the current and remaining coverage period. The discount rate will be consistent with observable current market price for financial instruments with cash flows whose characteristics are consistent with those of the insurance contracts, excluding the effects of factors that influence such observable market prices but do not affect the future cash flows of the insurance contracts. The Group has adopted the “bottom-up” approach, and the discount rate assumption is determined based on the risk-free interest rate curve with consideration of the impact of the liquidity and tax premium. The VFA modifies the treatment of the general model to accommodate direct participating contracts. The entity’s obligation to the policyholder is equal to the amount of the fair value of the underlying items, less a variable fee for future service. The variable fee comprises the Group’s share of the fair value of the underlying items less fulfilment cash flows that do not vary based on the returns on underlying items. Changes in the amount of the Group’s share of the fair value of the underlying items relate to future service and adjust the CSM. The Group has chosen to apply discount rates appropriate for the estimated cash flows as a whole. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (1) Basis of preparation (continued) #### (a) Standards/amendments adopted by the Group for the first time for the financial year beginning on 1 January 2023 (continued) (ii) Impacts and changes in accounting policies of application on IFRS 17 Insurance Contracts and the related amendments (continued) For contracts applying the general model and contracts applying the VFA, the Group has chosen to disaggregate the impact of changes in financial variables including the discount rate between profit or loss and other comprehensive income. For contracts applying the general model, the Group recognizes changes in insurance contract liabilities due to changes in the discount rate in other comprehensive income. For VFA model, the Group includes in profit or loss expenses or income that exactly match the income or expenses included in profit or loss for the underlying items, with the remaining amount recognized in other comprehensive income. The insurance revenue will be recognized over the coverage period based on the provision of services. The investment component in insurance contracts will be excluded from the insurance revenue and insurance service expenses. In June 2020, the IASB issued Amendments to IFRS 17 to address concerns and implementation challenges that were identified after IFRS 17 was published. The amendments defer the date of initial application of IFRS 17 (incorporating the amendments) to annual reporting periods beginning on or after 1 January 2023. At the same time, the IASB issued Amendments to IFRS 4 Extension of the Temporary Exemption from Applying IFRS 9 that extends the fixed expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 to annual reporting periods beginning on or after 1 January 2023. The Group will begin to adopt IFRS 9 from 1 January 2023. In December 2021, the IASB issued Amendment to IFRS 17 Initial Application of IFRS 17 and IFRS 9 – Comparative Information to address implementation challenges that were identified after IFRS 17 was published. The amendment addresses challenges in the presentation of comparative information. On transition to IFRS 17, retrospective application shall be applied. If retrospective application is impracticable, the Group shall apply either the modified retrospective approach or the fair value approach to estimate the CSM, the fair value approach shall be applied if the modified retrospective approach is impracticable. The CSMs of most of the Group’s contracts are measured under the modified retrospective approach, while those of the remaining contracts are measured under the fair value approach. The Group has applied the transition provisions in IFRS 17 and has not disclosed the impact of the adoption of IFRS 17 on each financial statement line item. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (1) Basis of preparation (continued) ### (a) Standards/amendments adopted by the Group for the first time for the financial year beginning on 1 January 2023 (continued) #### (iii) Impacts on application of Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies The Group has applied the amendments for the first time in the current year. IAS 1 Presentation of Financial Statements is amended to replace all instances of the term “significant accounting policies” with “material accounting policy information”. Accounting policy information is material if, when considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments also clarify that accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material. If an entity chooses to disclose immaterial accounting policy information, such information must not obscure material accounting policy information. The application of the amendments has had no material impact on the Group’s financial positions and performance but has affected the disclosure of the Group’s accounting policies set out in Note 2. --- ### 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (1) Basis of preparation (continued) **(b) Amendments issued but are not effective for the financial year beginning on 1 January 2023** | Standards/Amendments | Content | | :--- | :--- | | Amendments to IFRS 10 and IAS 28 | Sale or Contribution of Assets between an Investor and its Associate or Joint Venture¹ | | Amendments to IFRS 16 | Lease Liability in a sale and leaseback² | | Amendments to IAS 1 | Classification of Liabilities as Current or Non-current² | | Amendments to IAS 1 | Non-current Liabilities with Covenants² | | Amendments to IFRS 7 and IAS 7 | Supplier Finance Arrangements² | | Amendments to IAS 21 | Lack of Exchangeability³ | ¹ Effective for annual periods beginning on or after a date to be determined ² Effective for annual periods beginning on or after 1 January 2024 ³ Effective for annual periods beginning on or after 1 January 2025 The directors of the Company anticipate that the application of all the amendments to IFRSs will have no material impact on consolidated financial statements in the foreseeable future. ### (2) Basis of consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries for the year ended 31 December 2023. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group contains control, and continue to be consolidated until the date that such control ceases. Control is achieved when the Company: * has power over the investee; * is exposed, or has rights, to variable returns from its involvement with the investee; and * has the ability to use its power to affect its returns. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (2) Basis of consolidation (continued) When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: * The contractual arrangement with the other vote holders of the investee * Rights arising from other contractual arrangements; and * The Group’s voting rights and potential voting rights. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over subsidiaries, it derecognizes (i) the assets (including goodwill) and liabilities of subsidiaries, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognizes (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group’s share of components previously recognised in other comprehensive income is reclassified to profit or loss or retained earnings, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities. ### (a) Subsidiaries Subsidiaries are entities (including structured entities), directly or indirectly, controlled by the Company. The Group uses the acquisition method of accounting, other than business combination under common control, to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the sum of the fair value of the assets transferred, the liabilities assumed and the equity interests issued by the Group in return for the subsidiary. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (2) Basis of consolidation (continued) #### (a) Subsidiaries (continued) The excess of the consideration transferred, the amount of any non-controlling interests in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income. Inter-company transactions, balances and unrealized gains or losses on transactions between group companies are eliminated on consolidation. Unrealized losses are also eliminated on consolidation unless they indicate impairment of the asset transferred. The investments in subsidiaries are accounted for only in the Company’s statement of financial position at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment. The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable. #### (b) Transactions with non-controlling shareholders The Group treats transactions with non-controlling shareholders as transactions with shareholders of the Group. For purchases from non-controlling shareholders, the difference between the consideration paid and the carrying value of share of the net assets of the subsidiary acquired is recorded in shareholders’ equity. Gains or losses on disposal to non-controlling shareholders are also recorded in shareholders’ equity. When the Group ceases to have control, any retained interests in the entity is re-measured at its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. #### (c) Associates and joint ventures Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a long-term interest between 20% and 50% of the equity voting rights. Significant influence is the power of participate in the financial and operating policy decisions of the investee. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (2) Basis of consolidation (continued) #### (c) Associates and joint ventures (continued) Joint ventures are the type of joint arrangements whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. Investments in associates and joint ventures are accounted for using the equity method of accounting and are initially recognised at cost adjusted for any excess of the Group’s share of the acquisition-date fair values of the investee’s identifiable net assets over the cost of the investment (if any) in both the Group’s consolidated financial statements and the Company’s separate financial statements. The Group’s investments in associates and joint ventures include goodwill identified on acquisition, net of any accumulated impairment loss. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate. The Group’s share of its associates and joint ventures’ post-acquisition profits or losses is recognised in the consolidated statement of comprehensive income, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate or the joint venture, including any other unsecured receivables, the Group does not recognize further losses unless it has incurred obligations or made payments on behalf of the associate or joint venture. Investments in associates and joint ventures are assessed for impairment. Unrealized gains on transactions between the Group and its associates or joint ventures are eliminated to the extent of the Group’s interests in the associates or joint ventures. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates and joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group. Dilution gains and losses arising from investments in associates and joint ventures are recognised in the consolidated statement of comprehensive income. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (2) Basis of consolidation (continued) #### (d) Structured entities A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when any voting rights relate to administrative tasks only, and the relevant activities are directed by means of contractual arrangements. A structured entity often has some or all of the following features or attributes: (a) restricted activities; (b) a narrow and well-defined objective, such as to provide investment opportunities for investors by passing on risks and rewards associated with the assets of the structured entity to investors; (c) insufficient equity to permit the structured entity to finance its activities without subordinated financial support; and (d) financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks. It depends on management judgment whether the Group, as the asset manager, is an agent or a principal for a structured entity. As an agent, the Group’s mainly protects the interests of stakeholders and does not control the structural entity; on the contrary, as a principal, the Group mainly protects its interests of the Group and controls the structured entity. The Group has determined that all of its trust plans, debt investment plans, equity investment plans, asset management plans, asset funding plans, funds and private equity, except for those that are controlled, are investments in unconsolidated structured entities. Trust plans, equity investment plans, asset management plans and asset funding plans are managed by trust companies or asset managers who invest the funds in loans or equities in other companies. Debt investment plans are managed by asset managers and their major investment objectives are infrastructure and real estate funding projects. The major investment objective of funds is stocks and bonds, etc., whereas the major investment objective of private equity is unlisted equities in other companies. Trust plans, debt investment plans, equity investment plans, asset management plans and asset funding plans finance their operations by issuing beneficiary certificates which entitle the holder to a proportional stake in income of the respective investment products. Funds and private equity are managed by fund managers. The Group holds beneficiary certificates for the above types of investments. ### (3) Segment reporting The Group’s segments information is presented in a manner consistent with the internal operating segments, the Group decides operating segments according to internal organization structure, management requirements, and internal management reporting policy. Operating segment refers to the segment within the Group that satisfies the following conditions: i) the segment generates income and incurs costs from daily operating activities; ii) management evaluates the operating results of the segment to make resource allocation decisions and to evaluate the business performance; iii) the Group can obtain relevant financial information of the segment, including financial condition, operation results, cash flows and other financial performance indicators. If more than two segments possess similar economic characters and meet certain conditions, they are combined into one segment for disclosure. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (4) Foreign currency translation Both the functional currency and the presentation currency are RMB. Transactions in foreign currency are translated using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currency are translated using the spot exchange rate at the end of the reporting period. Gains or losses resulted from changes in exchange rates are recognised in profit or loss in the current period. Non-monetary assets or liabilities denominated in foreign currency measured at historical cost are translated using the spot exchange rate at the date of the transaction. The effect of exchange rate changes on cash is presented separately in the consolidated statement of cash flows. In determining the exchange rate on initial recognition of the related asset, expense or income on the derecognition of a non-monetary asset or non-monetary liability relating to an advance consideration, the date of initial transaction is the date on which the Group initially recognizes the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Group determines the transaction date for each payment or receipt of the advance consideration. For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group’s operations are translated into the presentation currency of the Group using exchange rates prevailing at the end of each reporting period. Income and expenses items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transaction are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity. On disposal of a foreign operation, all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss. ### (5) Property, plant and equipment Property, plant and equipment are stated at historical costs less accumulated depreciation and any accumulated impairment losses. The historical costs of property, plant and equipment comprise its purchase price, and any directly attributable costs of bringing the asset to its working condition and location for its intended use. The cost of a major renovation is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will be received by the Group. Depreciation is computed on a straight-line basis to write down the cost of each asset to its residual value over its estimated useful life. For impaired property, plant and equipment, the related depreciation expense is prospectively determined based upon the adjusted carrying amounts over its remaining useful lives. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (5) Property, plant and equipment (continued) The estimated useful lives and the estimated residual values are as follows: | | Estimated useful lives | Estimated residual value | Annual depreciation rate | | :--- | :--- | :--- | :--- | | Buildings | 15-45 years | 5% | 2.11%-6.33% | | Office equipment | 5-8 years | 5% | 11.88%-19.00% | | Motor vehicles | 5-8 years | 5% | 11.88%-19.00% | The assets’ estimated useful lives, residual values and depreciation method are reviewed by the Group at the end of each year and adjusted if appropriate. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. Property, plant and equipment are derecognised when they are disposed of or put out of operation permanently, or no future economic benefits can be expected from operation or disposal. The gain or loss on sale, transfer, disposal or damage of property, plant and equipment is the proceeds less the carrying amount, adjusted for related taxes and expenses, and is included in profit or loss. Construction in progress represents buildings and fixtures under construction and is recorded at cost. No provision for depreciation is made on construction in progress until such time as the relevant assets are completed and ready for use. An impairment loss is recognised for the amount by which the carrying amount exceeds its recoverable amount. ### (6) Investment properties Investment properties are properties that are held for rental income, capital appreciation, or both. Investment properties comprise buildings that are leased out. Investment properties are initially measured at cost. Cost of subsequent expenditures is included in the cost of investment properties if future economic benefits associated with such expenditures will probably flow to the Group and the relevant cost can be reliably measured. Other expenditures are expensed as incurred. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (6) Investment properties (continued) The Group’s investment properties are subsequently measured using the cost method. Depreciation on investment properties is computed on a straight-line basis to write down the cost of the assets to their residual values over their estimated useful lives. The estimated useful lives and the estimated residual values expressed as a percentage of cost are as follows: | | Estimated useful lives | Estimated residual value | Annual depreciation rate | | :--- | :--- | :--- | :--- | | Buildings | 15-45 years | 5% | 2.11%-6.33% | When the purpose of investment properties changes to self-use, they are transferred to property, plant and equipment on the date of the change. When the purpose of self-use properties changes to rental income or capital appreciation, they are transferred to investment properties on the date of the change. The carrying value before transfer is the carrying value after transfer. The Group reviews the estimated useful life, the estimated residual value, and the depreciation method at the end of every year, and makes appropriate adjustments if necessary. An impairment loss is recognised for the amount by which the investment property’s carrying amount exceeds its recoverable amount (Note 2(9)). Investment properties are de-recognised if they are disposed of or are put out of operation permanently, and no future economic benefits can be expected from disposal. The gain or loss on sale, transfer, disposal, or damage of investment properties is the proceeds less the carrying amount of the investment properties, adjusted for related taxes and expenses, and is included in profit or loss. ### (7) Leases The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. #### Group as a lessee The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. At inception or on reassessment of a contract that contains a lease component and non-lease component(s), the Group adopts the practical expedient not to separate non-lease component(s) and to account for the lease component and the associated non-lease component(s) (e.g., property management services for leases of properties) as a single lease component. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (7) Leases (continued) #### *Group as a lessee (continued)* (a) *Right-of-use assets* Right-of-use assets are recognised at the commencement date of the lease (that is the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. The cost of a right-of-use asset also includes an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease terms and the estimated useful lives of the assets. If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. (b) *Lease liabilities* Lease liabilities are recognised at the commencement date of the lease at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for termination of the lease, if the lease term reflects the Group exercising the option to terminate the lease. The variable lease payments that do not depend on an index or a rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses its incremental borrowing rate (“IBR”) at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., a change to future lease payments resulting from a change in an index or rate) or a change in assessment of an option to purchase the underlying asset. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (7) Leases (continued) #### Group as a lessee (continued) ***(c) Short-term leases and leases of low-value assets*** The Group applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of assets that are considered to be low value (i.e., original value of the asset is less than or equal to RMB40,000). Lease payments on short-term leases and leases of low value assets are recognised as expense on a straight-line basis over the lease term. #### Group as a lessor When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) each of its leases as either an operating lease or a finance lease. Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. When a contract contains lease and non-lease components, the Group allocates the consideration in the contract to each component on a relative stand-alone selling price basis. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of comprehensive income due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. Leases that transfer substantially all the risks and rewards incidental to ownership of an underlying assets to the lessee, are accounted for as finance leases. When the Group is an intermediate lessor, a sublease is classified as a finance lease or operating lease with reference to the right-of-use asset arising from the head lease. If the head lease is a short-term lease to which the Group applies the on-balance sheet recognition exemption, the Group classifies the sublease as an operating lease. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (8) Intangible assets Intangible assets are purchased computer software and land use rights, and are initially measured at actual costs. Land use rights are prepayments for land under PRC law for fixed periods, and are initially stated at cost and subsequently amortized on the straight-line basis over the lease terms. All lands related to the Group’s land use right are located in Mainland China. Computer software is amortized over their estimated useful lives using the straight-line method. The estimated lease terms or useful life, and amortization method are reviewed annually and adjusted as necessary. An impairment loss is recognised for the amount by which the intangible asset’s carrying amount exceeds its recoverable amount (Note 2(9)). Useful lives of intangible assets are listed below: | | Lease terms/ Useful lives | | :--- | :--- | | Land use rights | 15-40 years | | Computer software and others | 3-10 years | ### (9) Impairment of investments in subsidiaries, associates, joint ventures and non-financial assets Assets that have an indefinite useful life – for example goodwill, are not subject to amortization and are tested annually for impairment. Assets other than financial assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are reviewed individually. When review of individual asset is impractical, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. The Group assesses at the end of each reporting period whether there is any objective evidence that its investments in associates and joint ventures are impaired. Such objective evidence includes whether there have been any significant adverse changes in the technological, market, economic or legal environment in which the associates and joint ventures operate or whether there has been a significant or prolonged decline in value below their cost. If there is an indication that an interest in an associate or a joint venture is impaired, the Group assesses whether the entire carrying amount of the investment (including goodwill) is recoverable. An impairment loss is recognised in profit or loss for the amount by which the carrying amount is higher than the higher of the investment’s fair value less costs to sell or value in use. Any reversal of such impairment loss in subsequent periods is reversed through profit or loss. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (10) Financial Instruments **(a) Classification and measurement of financial assets** All recognised financial assets that are within the scope of IFRS 9 are subsequently measured at amortised cost or fair value, including unquoted equity investments measured at cost less impairment under IAS 39. Debt instruments that meet the following conditions are subsequently measured at amortised cost: * the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and * the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (“SPPI”). Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income (“FVTOCI”): * the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and * the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. All other financial assets are subsequently measured at fair value through profit or loss (“FVTPL”), except that at the date of initial application/initial recognition of a financial asset the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income (“OCI”), if that equity investment is neither held for trading nor contingent consideration recognised by an acquirer in a business combination to which IFRS 3 Business Combinations applies. A financial asset is held for trading if: * it has been acquired principally for the purpose of selling in the near term; or * on initial recognition it is a part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or * it is a derivative, except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (10) Financial Instruments (continued) #### (a) Classification and measurement of financial assets (continued) In addition, the Group may irrevocably designate a debt investment that meets the amortised cost or FVTOCI criteria as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch. **(i) Debt investments at amortised cost** Financial assets measured at amortised cost are subsequently measured with the effective interest method, and the gains or losses arising from amortisation or impairment are recognised in profit or loss. Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired. For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset from the next reporting period. If the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset from the beginning of the reporting period following the determination that the asset is no longer credit-impaired. **(ii) Debt investments classified as at FVTOCI** Subsequent changes in the carrying amounts for debt investments classified as at FVTOCI as a result of interest income calculated using the effective interest method, foreign exchange gains and losses are recognised in profit or loss. All other changes in the carrying amount of these debt investments are recognised in OCI and accumulated under the heading of reserves. Impairment losses are recognised in profit or loss with corresponding adjustment to OCI without reducing the carrying amounts of these debt investments. The amounts that are recognised in profit or loss are the same as the amounts that would have been recognised in profit or loss if debt investments had been measured at amortised cost. When these debt investments are derecognised, the cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (10) Financial Instruments (continued) ### (a) Classification and measurement of financial assets (continued) **(iii) Equity investments designated at FVTOCI** At the date of initial application/initial recognition, the Group may make an irrevocable election (on an instrument-by-instrument basis) to designate equity investments which are not held for trading as at FVTOCI. Equity investments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in OCI and accumulated in the reserve; and are not subject to impairment assessment. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, and will be transferred to retained earnings. Dividends on these equity investments are recognised in profit or loss when the Group’s right to receive the dividends is established in accordance with IFRS 9, unless the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included in the “Other investment income” line item in profit or loss. **(iv) Financial assets at FVTPL** Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI or designated as FVTOCI are measured at FVTPL. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss. The net fair value gain or loss recognised in profit or loss excludes any dividend or interest earned on the financial asset and is included in the “Other investment income” line item. ### (b) Impairment under ECL model The Group recognises a loss allowance for ECL on financial assets which are subject to impairment under IFRS 9, including financial assets at amortised cost and debt investments at FVTOCI. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (10) Financial Instruments (continued) #### (b) Impairment under ECL model (continued) The Group assesses the ECL of financial assets with forward-looking information. 12-month ECL (“12m ECL”) represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date. In contrast, lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. Assessment is done based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future conditions. The Group always recognises lifetime ECL for lease receivables and receivables that result from transactions within the scope of “IFRS 15 Revenue from contracts with customers” without significant financing component. The ECL on these assets are assessed collectively using a provision matrix with appropriate groupings. For all other financial assets, which are subjected to impairment under IFRS 9, the Group measures the loss allowance equal to 12m ECL, unless when there has been a significant increase in credit risk since initial recognition, the Group recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in credit risk since initial recognition. **(i) Significant increase in credit risk** In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (10) Financial Instruments (continued) ### (b) Impairment under ECL model (continued) #### (i) Significant increase in credit risk (continued) In particular, the following information is taken into account when assessing whether credit risk has increased significantly: * an actual or expected significant deterioration in the financial instrument’s external or internal credit rating; * existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations; * an actual or expected significant deterioration in the operating results of the debtor; * an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations; * a significant change in the debtor’s expected performance and repayment behavior; * whether principal or interest on the financial instrument is past due. Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise. Despite the foregoing, the Group assumes that the credit risk on a debt instrument has not increased significantly since initial recognition if the debt instrument is determined to have low credit risk at the reporting date. A debt instrument is determined to have low credit risk if (i) it has a low risk of default, (ii) the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and (iii) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (10) Financial Instruments (continued) ### (b) Impairment under ECL model (continued) *(ii) Definition of default* For internal credit risk management, the Group considers an event of default occurs when information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collaterals held by the Group). Irrespective of the above, the Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. *(iii) Credit-impaired financial assets* A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events: (a) significant financial difficulty of the issuer or the borrower; (b) a breach of contract, such as a default or past due event; (c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider; (d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; (e) the disappearance of an active market for that financial asset because of financial difficulties; or (f) the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (10) Financial Instruments (continued) ### (b) Impairment under ECL model (continued) **(iv) Measurement and recognition of ECL** ECL is measured based on the probability of default, loss given default (“LGD”) and the exposure at default. Generally, the ECL is estimated as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive, discounted at the effective interest rate determined at initial recognition. Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit impaired, in which case interest income is calculated based on amortised cost of the financial asset. For investments in debt instruments that are measured at FVTOCI, the loss allowance is recognised in OCI and accumulated in the reserve without reducing the carrying amounts of these financial assets. The loss allowance for other financial assets which are subject to impairment under IFRS 9 is recognised in profit or loss through a loss allowance account. ### (c) Classification and measurement of financial liabilities **(i) Financial liabilities at FVTPL** For financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in OCI, unless the recognition of the effects of changes in the liability’s credit risk in OCI would create or enlarge an accounting mismatch in profit or loss. The remaining amount of change in the fair value of liability is recognised in profit or loss. Changes in fair value attributable to a financial liability’s credit risk that are recognised in OCI are not subsequently reclassified to profit or loss; instead, they are transferred to retained earnings upon derecognition of the financial liability. **(ii) Financial liabilities at amortised cost** Financial liabilities including borrowings, lease liabilities, financial assets sold under agreements to repurchase, and other liabilities are subsequently measured at amortised cost, using the effective interest method. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (11) Cash and cash equivalents Cash comprises cash on hand and demand deposits held in banks. Cash equivalents are short-term and highly liquid investments with original maturity of 90 days (90 days included) or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. ### (12) Insurance contracts and investment contracts #### (a) Definitions and classifications Products sold by the Group are classified as insurance contracts when the Group accepts significant insurance risk from a policyholder by agreeing to compensate the policyholder if a specified uncertain future event adversely affects the policyholder. This assessment is made on a contract-by-contract basis at the contract issue date. In making this assessment, the Group considers all its substantive rights and obligations, whether they arise from contract, law or regulation. The Group determines whether a contract contains significant insurance risk by assessing if an insured event could cause the Group to pay to the policyholder additional amounts that are significant in any single scenario with commercial substance even if the insured event is extremely unlikely or the expected present value of the contingent cash flows is a small proportion of the expected present value of the remaining cash flows from the insurance contract. The Group issues certain insurance contracts that allow policyholders to participate in investment returns with the Group, in addition to compensation for losses from insured risk. Participating contracts meet the definition of insurance contracts with direct participation features if the following three criteria are met: * The contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items; * The Group expects to pay to the policyholder an amount equal to a substantial share of the fair value returns from the underlying items; * A substantial proportion of the cash flows that the Group expects to pay to the policyholder is expected to vary with the change in the fair value of the underlying items. The Group assesses whether the above conditions and criteria are met using its expectations at the issue date of the contracts. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (a) Definitions and classifications (continued) The Group also issues investment contracts with discretionary participation features. Investment contracts with discretionary participation features provide the investor with the right to receive additional discretionary amounts contractually based on specified underlying items which are expected to be a significant portion of the total contractual benefits. These contracts are linked to the same pool of assets as insurance contracts and have economic characteristics similar to those of insurance contracts. The Group accounts for these contracts applying IFRS 17 with the VFA or general model. #### (b) Key types of insurance contracts issued and reinsurance contracts held The Group issues the following types of contracts that are accounted for in accordance with IFRS 17 Insurance Contracts. **(i) Participating Insurance** Participating insurance represents the issued insurance contracts for which the Group is obligated to pay a certain proportion of surplus generated from the operating results of the Group to policyholders. The majority of participating insurance contracts issued by the Group meet the definition of insurance contracts with direct participation features. The Group also issues certain participating insurance contracts classified as investment contracts with discretionary participation features. The Group accounts for these insurance contracts by applying the VFA. **(ii) Traditional Insurance** Traditional insurance represents life insurance contracts issued by the Group for which insurance premiums and policy benefits are determined at inception. Traditional insurance contracts do not have participation features. The Group accounts for these insurance contracts by applying the general model except for some insurance contracts where the permitted PAA simplification is applied. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts **(b) Key types of insurance contracts issued and reinsurance contracts held** **(iii) Universal Insurance** Universal insurance represents insurance contracts with individual policy account and guaranteed minimum return, in addition to providing insurance coverage. The majority of universal insurance contracts the Group issued are insurance contracts with indirect participation features. The Group also issues certain universal insurance contracts classified as investment contracts with discretionary participation features. The Group accounts for these insurance contracts by applying the general model. **(iv) Unit-linked Insurance** Unit-linked insurance represents insurance contracts with both asset value in at least one investment account and insurance coverage. The majority of unit-linked insurance contracts the Group issued are insurance contracts with direct participation features. The Group accounts for these insurance contracts by applying the VFA. **(v) Reinsurance contracts held** The Group also holds reinsurance contracts to mitigate risk exposure arising from insurance contracts issued by the Group. The Group accounts for these reinsurance contracts by applying the general model except for certain reinsurance contracts where the permitted PAA simplification is applied. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (c) Combining a set or series of contracts Sometimes, the Group enters into two or more contracts at the same time with the same or related counterparties to achieve an overall commercial effect. The Group accounts for such a set of contracts as a single insurance contract when this reflects the substance of the contracts. When making this assessment, the Group considers whether: * The rights and obligations are different when looked at together compared to when looked at individually; * The Group is unable to measure one contract without considering the other. #### (d) Separating components from insurance and reinsurance contracts In addition to the provision of the insurance coverage service, some insurance contracts issued by the Group have other components such as an investment component. The Group assesses its products to determine whether some of these components are distinct and need to be separated and accounted for applying other IFRS Accounting Standards. When these non-insurance components are non-distinct, they are accounted for together with the insurance component applying IFRS 17. The Group issues certain life insurance policies which include an investment component under which the Group is required to repay to a policyholder in all circumstances, regardless of an insured event occurring. In assessing whether an investment component is distinct and therefore required to be accounted for separately applying IFRS 9, the Group considers if the investment and insurance components are highly interrelated or not. In determining whether investment and insurance components are highly interrelated the Group assesses whether the Group is unable to measure one component without considering the other and whether the policyholder is unable to benefit from one component unless the other component is present, i.e., whether cancelling one component also terminates the other. The Group applies IFRS 17 to account for non-distinct investment components as part of its insurance contracts. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (e) Level of aggregation Insurance contracts are aggregated into groups for measurement purposes. Groups of contracts are determined by identifying portfolios of insurance contracts, each comprising contracts subject to similar risks and managed together, and dividing each portfolio into annual cohorts and each annual cohort into three groups based on the profitability of contracts: - any contracts that are onerous on initial recognition; - any contracts that, on initial recognition, have no significant possibility of becoming onerous subsequently; and - any remaining contracts in the portfolio. The Group divide portfolios of reinsurance contracts held applying the same principles above, except that the references to onerous contracts shall be replaced with a reference to contracts on which there is a net gain on initial recognition. When the contract is recognised, it is added to an existing group of contracts or, if the contract does not qualify for inclusion in an existing group, it forms a new group to which future contracts are added. Groups of contracts are established on initial recognition and their composition is not revised once all contracts have been added to the group. #### (f) Recognition The Group recognises groups of insurance contracts issued from the earliest of the following dates: - The beginning of the coverage period of the group of contracts; - The date when the first payment from a policyholder in the group becomes due (in the absence of a contractual due date, this is deemed to be when the first payment is received); - The date when a group of contracts becomes onerous. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (f) Recognition (continued) A group of reinsurance contracts held is recognised on the following dates: * Reinsurance contracts held that provide proportionate coverage: Generally later of the beginning of the coverage period of the group of reinsurance contracts held, or the date on which any underlying insurance contract is initially recognised; * Other reinsurance contracts held: The beginning of the coverage period of the group of reinsurance contracts held. However, if the Group recognises an onerous group of underlying insurance contracts on an earlier date and the related reinsurance contract held was entered into on or before that earlier date, then the group of reinsurance contracts held is recognised on that earlier date. #### (g) Contract boundaries The measurement of a group of contracts includes all of the future cash flows within the boundary of each contract in the group. Cash flows are within the boundary of a contract if they arise from substantive rights and obligations that exist during the reporting period under which the Group can compel the policyholder to pay premiums or has a substantive obligation to provide insurance contract services. A substantive obligation to provide insurance contract services ends when: * the Group has the practical ability to reassess the risks of the particular policyholder and can set a price or level of benefits that fully reflects those reassessed risks; or * the Group has the practical ability to reassess the risks of the portfolio that contains the contract and can set a price or level of benefits that fully reflects the risks of that portfolio; and the pricing of the premiums for coverage up to the reassessment date does not take into account risks that relate to periods after the reassessment date. The contract boundary is reassessed at each reporting date to include the effect of changes in circumstances on the Group’s substantive rights and obligations and, therefore, may change over time. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (12) Insurance contracts and investment contracts (continued) ### (h) Measurement of insurance contracts issued #### (i) Measurement on initial recognition for contracts other than PAA The Group measures a group of contracts on initial recognition as the sum of the expected fulfilment cash flows within the contract boundary and the CSM representing the unearned profit in the contracts relating to services that will be provided under the contracts. **Fulfilment cash flows within contract boundary** The fulfilment cash flows are the current unbiased and probability-weighted estimates of the present value of the future cash flows, including a risk adjustment for non-financial risk. In arriving at a probability-weighted mean, the Group considers a range of scenarios to establish a full range of possible outcomes incorporating all reasonable and supportable information available without undue cost or effort about the amount, timing and uncertainty of expected future cash flows. The estimates of future cash flows reflect conditions existing at the measurement date including assumptions at that date about the future. When estimating future cash flows, the Group includes all cash flows within the contract boundary including: * Premiums and any additional cash flows resulting from those premiums; * Reported claims that have not yet been paid, claims incurred but not yet reported, future claims expected to arise from the policy and potential cash inflows from recoveries on future claims covered by existing insurance contracts; * Payments to (or on behalf of) a policyholder that vary depending on returns on underlying items; * An allocation of insurance acquisition cash flows attributable to the portfolio to which the issued contract belongs; * Claim handling costs; * Costs of providing contractual benefits in kind; * Policy administration and maintenance costs, such as costs of premium billing and handling policy changes. Such costs also include recurring commission that are expected to be paid to intermediaries if a particular policyholder continues to pay the premiums within the boundary of the insurance contract. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (12) Insurance contracts and investment contracts (continued) ### (h) Measurement of insurance contracts issued (continued) #### (i) Measurement on initial recognition for contracts other than PAA (continued) Fulfilment cash flows within contract boundary (continued) - Transaction-based taxes; - An allocation of fixed and variable overheads directly attributable to the fulfilment of insurance contracts including overhead costs such as accounting, human resources, information technology and support, building depreciation, rent, and maintenance and utilities; - Costs incurred for performing investment activities that enhance insurance coverage benefits for the policyholder; - Costs incurred for providing investment-related service and investment-return service to policyholders; - Other costs specifically chargeable to the policyholder under the terms of the contract. **Discount rates** The discount rate will be consistent with observable current market price for financial instruments with cash flows whose characteristics are consistent with those of the insurance contracts, excluding the effects of factors that influence such observable market prices but do not affect the future cash flows of the insurance contracts. The Group has adopted the “bottom-up” approach, and the discount rate assumption is determined based on the risk-free interest rate curve with consideration of the impact of the liquidity and tax premium. The Group estimates the discount rate applicable to each group of contracts on initial recognition, which is based on recognised contracts. In the following reporting period, as new contracts are included in the group, the discount rate applicable to the group on initial recognition is revised from the start of the reporting period in which the new contracts are added to the group. The Group re-estimates the discount rate applicable to the group at initial recognition using a weighted average discount rate over the period the contracts in the group are issued. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (12) Insurance contracts and investment contracts (continued) ### (h) Measurement of insurance contracts issued (continued) #### (i) Measurement on initial recognition for contracts other than PAA (continued) **Risk adjustment for non-financial risk** The Group measures the compensation it would require for bearing the uncertainty about the amount and timing of cash flows arising from insurance contracts, other than financial risk, separately as an adjustment for non-financial risk. The Group has elected to disaggregate the change in the risk adjustment for non-financial risk between a change related to non-financial risk and the effect of the time value of money and changes in the time value of money. **CSM** The CSM represents unearned profit that the Group will recognise as it provides insurance contract services over the coverage period. At initial recognition, the Group measures the CSM at an amount that, unless a group of insurance contracts is onerous, results in no gains recognised in profit or loss arising from: * The expected fulfilment cash flows of the group; * The amount of any derecognised asset for insurance acquisition cash flows allocated to the group; * Any other asset or liability previously recognised for cash flows related to the group; * Any cash flows that have already arisen on the contracts as of that date. If a group of contracts is onerous, the Group recognises a loss on initial recognition. This results in the carrying amount of the liability for the group being equal to the fulfilment cash flows, and the CSM of the group being nil. A loss component is recognised for any loss on initial recognition of the group of insurance contracts. The Group determines at initial recognition the group’s coverage units. The Group then allocates the group’s CSM based on the coverage units provided in the period. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### ***(h) Measurement of insurance contracts issued (continued)*** (i) Measurement on initial recognition for contracts other than PAA (continued) **Insurance acquisition cash flows** Insurance acquisition cash flows are cash flows arising from the costs of selling, underwriting and starting a group of insurance contracts that are directly attributable to the portfolio of insurance contracts to which the group belongs. The Group includes insurance acquisition cash flows in the measurement of a group of insurance contracts if they are directly attributable to either the individual contracts in a group, the group itself or the portfolio of insurance contracts to which the group belongs. The Group estimates, at a portfolio level, insurance acquisition cash flows not directly attributable to the group but directly attributable to the portfolio. The Group then allocates them to the group of newly written and renewed contracts on a systematic and rational basis. (ii) Subsequent measurement under the general model In estimating the total future fulfilment cash flows, the Group distinguishes between those relating to already incurred claims and those relating to future service. At the end of each reporting period, the carrying amount of the group of insurance contracts will reflect a current estimate of the LRC as at that date and a current estimate of the liability for incurred claims (the "LIC"). The LRC is comprised of (a) the fulfilment cash flows relating to future service, (b) the CSM yet to be earned and (c) any outstanding premiums for insurance contract services already provided. The LIC includes the Group’s liability to pay valid claims for insured events that have already incurred, other incurred insurance expenses arising from past coverage service and the liability for claims incurred but not yet reported. It also includes the Group’s liability to pay amounts the Group is obliged to pay the policyholder under the contract. This includes repayment of investment components, when a contract is derecognised. The current estimate of LIC comprises the fulfilment cash flows related to current and past service allocated to the group at the reporting date. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (12) Insurance contracts and investment contracts (continued) ### (h) Measurement of insurance contracts issued (continued) (ii) Subsequent measurement under the general model (continued) **Changes in fulfilment cash flows** At the end of each reporting period, the Group updates the fulfilment cash flows for both LIC and LRC to reflect the current estimates of the amounts, timing and uncertainty of future cash flows, as well as discount rates and other financial variables. Experience adjustments are the difference between: * The expected cash flow estimate at the beginning of the period and the actual cash flows for premiums received in the period (and any related cash flows paid such as insurance acquisition cash flows); * The expected cash flow estimate at the beginning of the period and the actual incurred amounts of insurance service expenses in the period (excluding insurance acquisition expenses). Experience adjustments relating to current or past service are recognised in profit or loss. For incurred claims (including incurred but not reported) and other incurred insurance service expenses, experience adjustments always relate to current or past service. They are included in profit or loss as part of insurance service expenses. Experience adjustments relating to future service are included in the LRC by adjusting the CSM. **Adjustments to the CSM** For insurance contracts without direct participation features, the following changes in fulfilment cash flows are considered to be related to future service and adjust (or ‘unlock’) the CSM of the group of insurance contracts: * Experience adjustments relating to the premiums received in the period that relate to future service, and any related cash flows such as insurance acquisition cash flows and premium-based taxes measured at the ‘locked in’ discount rates applicable when the contracts in the group were initially recognised; --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (12) Insurance contracts and investment contracts (continued) ### (h) Measurement of insurance contracts issued (continued) (ii) Subsequent measurement under the general model (continued) Adjustments to the CSM (continued) * The change in the estimate of the present value of expected future cash flows in the LRC, related to non-financial variables, measured at the ‘locked in’ discount rates applicable when the contracts in the group were initially recognised. All financial variables are locked in at initial recognition; * Changes in the risk adjustment for non-financial risk relating to future service; * Differences between the amount of investment components that were expected to be payable in the period and the amount of investment components that actually became payable. The following adjustments do not relate to future service and thus do not adjust the CSM: * Changes in fulfilment cash flows for the effect of the time value of money and the effect of financial risk and changes thereof; * Changes in the fulfilment cash flows relating to the LIC; * Experience adjustments relating to insurance service expenses (excluding insurance acquisition cash flows). For onerous contracts, any further increases in fulfilment cash flows relating to future coverage are recognised in profit or loss as they occur, increasing the loss component of the group of insurance contracts. Any subsequent decreases in fulfilment cash flows related to future coverage do not adjust the CSM until the loss component of the group is fully reversed through profit or loss. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (h) Measurement of insurance contracts issued (continued) (ii) Subsequent measurement under the general model (continued) **Adjustments to the CSM (continued)** At the end of the reporting period, the carrying amount of the CSM for a group of insurance contracts without direct participation features is the carrying amount at the beginning of the period adjusted for: * The effect of any new contracts added to the group; * Interest accreted on the carrying amount of the CSM measured at the discount rates determined at initial recognition; * The changes in fulfilment cash flows related to future service, except: - Increases in fulfilment cash flows that exceed the carrying amount of the CSM, giving rise to a loss that results in the group of contracts becoming onerous or more onerous - Decreases in fulfilment cash flows that reverse a previously recognised loss on a group of onerous contracts * The effect of any currency exchange differences on the CSM; * The amount recognised as insurance revenue by the allocation of the CSM in the period. **Recognition of the CSM in profit or loss** An amount of the CSM is released to profit or loss in each period during which the insurance contract services are provided. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (h) Measurement of insurance contracts issued (continued) (ii) Subsequent measurement under the general model (continued) **Recognition of the CSM in profit or loss (continued)** In determining the amount of the CSM to be released in each period, the Group follows three steps: * Determine the total number of coverage units in the group. The amount of coverage units in the group is determined by considering the quantity of benefits provided under the contract and the expected coverage period for each contract; * Allocate the CSM at the end of the period (before any of it is released to profit or loss to reflect the insurance contract services provided in the period) equally to each of the coverage units provided in the current period and expected to be provided in the future; * Recognise in profit or loss the amount of CSM allocated to the coverage units provided during the period. **Contracts with cash flows related to underlying items that do not meet the definition of direct participating contracts (indirect participating contracts)** The Group issues contracts with cash flows related to underlying items that do not meet the definition of direct participating contracts. This is due to a general right for the Group to adjust the cash flows in view of the return from the underlying items. However, these underlying items are not specified, and the Group has full discretion in forming the portfolios of underlying items that should be considered for adjusting the cash flows of these contracts for the associated financial variables. This structure results in the VFA not being applicable to these contracts. Instead, the Group applies the general model when accounting for such contracts. The effects of financial variables do not impact the CSM measurement for a group of indirect participating contracts as changes in financial risk are recognised as part of total insurance finance income or expenses except for when the change triggers a change in the way the Group applies its discretion. In this instance, the change will adjust the CSM. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### **(h) Measurement of insurance contracts issued (continued)** (ii) Subsequent measurement under the general model (continued) **Contracts with cash flows related to underlying items that do not meet the definition of direct participating contracts (indirect participating contracts) (continued)** The Group specifies at inception what they regard as their commitment under the contract. This enables the Group to calculate the amount recognised in total insurance finance income or expenses (for changes in assumptions related to financial risk on that commitment) and the amount adjusting the CSM (because of the exercise of discretion in relation to the entity’s commitment). The commitment under the contract can be: * A specified minimum return agreed under the contract; * A discretionary amount relating to any surplus investment return on underlying items in excess of guaranteed minimum return. The CSM of indirect participating contracts accretes interest at the original locked-in non-asset dependent discount rates determined for a group of contracts at initial recognition. Those changes in fulfilment cash flows related to future service that adjust the CSM are also measured at the original ‘locked-in’ discount rates determined on initial recognition. (iii) Subsequent measurement for direct participating contracts (accounted for under the VFA) The Group’s obligation to the policyholders consists of the obligation to pay policyholders the fair value of the underlying items less a variable fee for future service provided under the insurance contract. In determining the policyholder’s share of returns from the underlying items and how substantial the degree of variability in total payments to the policyholder is due to returns from underlying items, the Group makes the assessment: * Over the duration of the insurance contract; * On a present value probability-weighted average basis. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (h) Measurement of insurance contracts issued (continued) (iii) Subsequent measurement for direct participating contracts (accounted for under the VFA) (continued) The carrying amount of the CSM for direct participating contracts at the end of the reporting period is the carrying amount at the beginning of reporting period adjusted for: * The effect of any new contracts added to the group; * The change in the amount of the Group’s share of the fair value of the underlying items except for: - The amount of CSM the Group chooses to present in profit or loss to offset the impact from its risk mitigation instruments - The decrease in the amount of the Group’s share of the fair value of the underlying items that exceeds the carrying amount of the CSM giving rise to a loss that makes the associated group of contracts onerous, or that results in a loss for an existing onerous group becoming more onerous - The increase in the amount of Group’s share of the fair value of the underlying items that reverses a previously recognised loss on an onerous group of contracts * The changes in fulfilment cash flows relating to future service, except: - The amount of the CSM the Group chooses to present in profit or loss to offset the impact from its risk mitigation instruments - Such increases in the fulfilment cash flows that exceed the carrying amount of CSM and the group of contracts becomes onerous or more onerous - Such decreases in the fulfilment cash flows that reverse a previously recognised loss on an onerous group of contracts * The effect of any currency exchange differences arising on the CSM; * The amount recognised as insurance revenue by the allocation of the CSM in the period. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (h) Measurement of insurance contracts issued (continued) ##### (iv) Insurance contracts measured under the PAA The Group generally uses the PAA to simplify the measurement of groups of contracts where the coverage period of each contract in the group of contracts is one year or less. On initial recognition of each group of contracts, the carrying amount of the LRC is measured at the premiums received on initial recognition minus any insurance acquisition cash flows allocated to the group at that date and adjusted for amounts arising from the derecognition of any assets or liabilities previously recognised for cash flows related to the group. The Group has elected the accounting policy choice to defer insurance acquisition cash flows through the LRC. Subsequently, the carrying amount of the LRC is increased by any premiums received; and any amortisation of the insurance acquisition cash flows, and decreased by insurance acquisition cash flows paid; the amount recognised as insurance revenue for coverage provided; and any investment component paid or transferred to the LIC. On initial recognition of each group of contracts, the Group expects that the time gap between providing each part of the coverage and the related premium due date is not significant. Accordingly, the Group has chosen not to adjust the LRC to reflect the time value of money and the effect of financial risk. If at any time during the coverage period, facts and circumstances indicate that a group of contracts is onerous, then the Group recognises a loss in profit or loss and increases the LRC to the extent that the current estimates of the fulfilment cash flows that relate to remaining coverage (including the risk adjustment for non-financial risk) exceed the carrying amount of the LRC as loss component. In subsequent periods, unless facts and circumstances indicate that the group of contracts is no longer onerous, the loss component is remeasured at each reporting date as the difference between the current estimates of the fulfilment cash flows that relate to remaining coverage (including the risk adjustment for non-financial risk) and the carrying amount of the LRC without loss component. The Group recognises the LIC of a group of insurance contracts for the amount of the fulfilment cash flows relating to incurred claims. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) **(h) *Measurement of insurance contracts issued (continued)*** *(v) Onerous contracts* The Group considers an insurance contract to be onerous if the expected fulfilment cash flows allocated to the contract, any previously recognised acquisition cash flows and any cash flows arising from the contract at the date of initial recognition in total result in a net cash outflow. On initial recognition, the onerous assessment is done on an individual contract level assessing future expected cash flows on a probability-weighted basis including a risk adjustment for non-financial risk. Contracts expected on initial recognition to be loss-making are grouped together and such groups are measured and presented separately. On initial recognition, the CSM of the group of onerous contracts is nil and the group’s measurement consists entirely of fulfilment cash flows. A net outflow expected from a group of contracts determined to be onerous is considered to be the group’s ‘loss component’. It is initially calculated when the group is first considered to be onerous and is recognised at that date in profit or loss. The amount of the group’s loss component is tracked for the purposes of presentation and subsequent measurement. After the loss component is recognised, the Group allocates any subsequent changes in fulfilment cash flows of the LRC on a systematic basis between the loss component and the LRC excluding the loss component. For all issued contracts, other than those accounted for applying the PAA, the subsequent changes in the fulfilment cash flows of the LRC to be allocated are: - Insurance finance income or expense; - Changes in risk adjustment for non-financial risk recognised in profit or loss representing release from risk in the period; - Estimates of the present value of future cash flows for claims and expenses released from the LRC because of incurred insurance service expenses in the period. The Group determines the systematic allocation of insurance service expenses incurred based on the percentage of loss component to the total fulfilment cash outflows included in the LRC. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (h) Measurement of insurance contracts issued (continued) **(v) Onerous contracts (continued)** The Group disaggregates the total finance income or expenses between profit or loss or OCI. For any subsequent changes in the fulfilment cash flows of the LRC, the total of insurance finance income or expenses is disaggregated between profit or loss or OCI and allocated on a systematic basis between the loss component and the LRC excluding the loss component. Any subsequent decreases in fulfilment cash flows relating to future service allocated to the group (arising from changes in estimates of future cash flows and the risk adjustments for non-financial risk) are allocated first to the loss component only. Once it is exhausted, any further decreases in fulfilment cash flows relating to future service results in the establishment of the group's CSM. For onerous groups of contracts, revenue is calculated as the amount of insurance service expenses expected at the beginning of the period that form part of revenue and reflects only: * The change in the risk adjustment for non-financial risk due to expected release from risk in the period (excluding the amount systematically allocated to the loss component); * The estimates of the present value of future cash flows related to claims expected to incur in the period (excluding the systematic allocation to the loss component); * The allocation, based on the coverage units, of the portion of premiums that relates to the recovery of the insurance acquisition cash flows. All these amounts are accounted for as a reduction of the LRC excluding the loss component. The Group recognises amounts in insurance service expenses related to the loss component arising from: * Changes in fulfilment cash flows arising from changes in estimates related to future service that establish or further increase the loss component; * Subsequent decreases in fulfilment cash flows that relate to future service and reduce the loss component until it is exhausted; --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (h) Measurement of insurance contracts issued (continued) ##### (v) Onerous contracts (continued) * For direct participating contracts only, subsequent decreases in the Group’s share of the fair value of the underlying items, that result in or further increase the loss component; * For direct participating contracts only, subsequent increases in the entity’s share of the fair value of the underlying items that reduce the loss component until it is exhausted; * Systematic allocation to the loss component arising both from changes in the risk adjustment for non-financial risk and from changes in present value of future cash flows due to incurred insurance services expenses. #### (i) Reinsurance contracts held For groups of reinsurance contracts held, the Group applies the same accounting policies as that applied to insurance contracts without direct participation features, with the following modifications. The carrying amount of a group of reinsurance contracts held at each reporting date is the sum of the asset for remaining coverage and the asset for incurred claims. The asset for remaining coverage comprises (a) the fulfilment cash flows that relate to services that will be received under the contracts in future periods and (b) CSM at that date. The Group measures the estimates of the present value of future cash flows using assumptions that are consistent with those used to measure the estimates of the present value of future cash flows for the underlying insurance contracts, with an adjustment for any risk of non-performance by the reinsurer. The effect of the non-performance risk of the reinsurer is assessed at each reporting date and the effect of changes in the non-performance risk is recognised in profit or loss. On initial recognition, the CSM of a group of reinsurance contracts held represents a net cost or net gain on purchasing reinsurance. It is measured as the equal and opposite amount of the total of (a) the fulfilment cash flows, (b) the amount arising from assets or liabilities previously recognised for cash flows related to the group, before the group is recognised, (c) cash flows arising from the contracts in the group at that date and (d) any income recognised in profit or loss because of onerous underlying contracts recognised at that date. However, if any net cost on purchasing reinsurance coverage relates to insured events that occurred before the purchase of the reinsurance, then the Group recognises the cost immediately in profit or loss as an expense. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (12) Insurance contracts and investment contracts (continued) ### (i) Reinsurance contracts held (continued) The carrying amount of the CSM at each reporting date is the carrying amount at the start of the reporting period, adjusted for: * the CSM of any new contracts that are added to the group in the period; * interest accreted on the carrying amount of the CSM during the period, measured at the discount rates determined on initial recognition that are applied to nominal cash flows; * income recognised in profit or loss in respect of a loss recognised for onerous underlying contracts. A loss-recovery component is established or adjusted in the asset for remaining coverage of reinsurance contracts held for the amount of income recognised; * reversals of a loss-recovery component to the extent that they are not changes in the fulfilment cash flows of the group; * changes in fulfilment cash flows that relate to future services, measured at the discount rates determined on initial recognition, unless the changes result from changes in fulfilment cash flows of onerous underlying contracts, in which case they are recognised in profit or loss and create or adjust a loss-recovery component; * the effect of any currency exchange differences on the CSM; and * the amount recognised in profit or loss for the services received in the period. ***Reinsurance contracts held measured under the PAA*** The Group applies the same accounting principles to measure a group of insurance contracts or reinsurance contracts held under the PAA. If a loss-recovery component is established for a group of reinsurance contracts held measured under the PAA, the Group adjusts the carrying amount of the asset. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (j) Investment contracts with discretionary participation features The Group recognises investment contracts with discretionary participation features at the date when the Group becomes a party to the contract. At initial recognition, similar to insurance contracts, the Group estimates the fulfilment cash flows based on the present value of expected future cash flows and a risk adjustment for non-financial risk. Any expected net inflows are accounted for as the initial CSM. In estimating future cash flows, the Group considers the contract boundary which only includes cash flows if they result from a substantive obligation of the Group to deliver cash at a present or future date. The Group discounts cash flows using discount rates that reflect the characteristics of the fulfilment cash flows. The Group allocates the CSM over the group’s whole duration period in a systematic way reflecting the transfer of investment services under a contract by the Group. The Group measures investment contracts with discretionary participation features under the VFA or general model depending on if they meet the VFA criteria. #### (k) Modification and derecognition The Group derecognises a contract when it is extinguished – i. e. when the specified obligations in the contract expire or are discharged or cancelled. The Group also derecognises a contract if its terms are modified in a way that would have changed the accounting for the contract significantly had the new terms always existed, in which case a new contract based on the modified terms is recognised. If a contract modification does not result in derecognition, then the Group treats the changes in cash flows caused by the modification as changes in estimates of fulfilment cash flows. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (k) Modification and derecognition (continued) On the derecognition of a contract in a group of contracts not measured under the PAA: * the fulfilment cash flows allocated to the group are adjusted to eliminate those that relate to the rights and obligations derecognised; * the CSM of the group is adjusted for the change in the fulfilment cash flows that relate to future service, except where such changes are allocated to a loss component; * the number of coverage units for the expected remaining services is adjusted to reflect the coverage units derecognised from the group. If a contract is derecognised because it is transferred to third party, then the CSM is also adjusted for the premium charged by the third party, unless the contract is onerous. If a contract is derecognised because its terms are modified, then the CSM is also adjusted for the premium that would have been charged had the Group entered into a contract with the new contract’s terms at the date of modification, less any additional premium charged for the modification. The new contract recognised is measured assuming that, at the date of modification, the issuer received the premium that it would have charged less any additional premium charged for the modification. #### (l) Presentation **(i) Insurance revenue** As the Group provides insurance services under a group of insurance contracts issued, it reduces its LRC and recognises insurance revenue, which is measured at the amount of consideration the Group expects to be entitled to in exchange for those services. For groups of insurance contracts measured under the general model and VFA, insurance revenue consists of the sum of the changes in the LRC due to: --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (l) Presentation (continued) (i) Insurance revenue (continued) * The insurance service expenses incurred in the period measured at the amounts expected at the beginning of the period, excluding: - Amounts allocated to the loss component - Repayments of investment components - Amounts that relate to transaction-based taxes collected on behalf of third parties - Insurance acquisition expenses - Amounts relating to risk adjustment for non-financial risk * The change in the risk adjustment for non-financial risk, excluding: - Changes that relate to future service that adjust the CSM - Amounts allocated to the loss component - Amounts that relate to insurance finance income and expenses * The amount of CSM for the services provided in the period; * Other amounts, such as experience adjustments for premium receipts that relate to current or past service, if any. Insurance revenue also includes the portion of premiums that relate to amortizing those insurance acquisition cash flows included in the insurance service expenses in each period. Both amounts are measured in a systematic way on the basis of the passage of time. When applying the PAA, the Group recognises insurance revenue for the period based on the passage of time by allocating expected premium receipts including premium experience adjustments to each period of service. However, when the expected pattern of release from risk during the coverage period differs significantly from the passage of time, the premium receipts are allocated based on the expected pattern of incurred insurance service expenses. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (l) Presentation (continued) (ii) Insurance service expenses Insurance service expenses arising from a group of insurance contracts issued comprises: - Changes in the LIC related to claims and expenses incurred in the period excluding repayment of investment components; - Changes in the LIC related to claims and expenses incurred in prior periods (related to past service); - Other directly attributable insurance service expenses incurred in the period; - Amortisation of insurance acquisition cash flows, which is recognised at the same amount in both insurance service expenses and insurance contract revenue; - Loss component of onerous groups of contracts initially recognised in the period; - Changes in the LRC related to future service that do not adjust the CSM, because they are changes in the loss components of onerous groups of contracts. (iii) Income or expenses from reinsurance contracts held Income or expenses from reinsurance contracts held are split into the following two amounts: - Amount recovered from reinsurers; - An allocation of the premiums paid. The Group presents cash flows that are contingent on claims as part of the amount recovered from reinsurers. Ceding commissions that are not contingent on claims of the underlying contracts are presented as a deduction in the premiums to be paid to the reinsurer which is then allocated to profit or loss. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (12) Insurance contracts and investment contracts (continued) ### (l) Presentation (continued) **(iii) Income or expenses from reinsurance contracts held (continued)** The Group establishes a loss recovery component of the asset for the remaining coverage for a group of reinsurance contracts held. This depicts the recovery of losses recognised on the initial recognition of an onerous group of underlying insurance contracts or on addition of onerous underlying insurance contracts to a group. The loss recovery component adjusts the CSM of the group of reinsurance contracts held. The loss recovery component is then adjusted to reflect: - Changes in the fulfilment cash flows of the underlying insurance contracts that relate to future service and do not adjust the CSM of the respective groups to which the underlying insurance contracts belong to; - Reversals of loss recovery component to the extent those reversals are not changes in the fulfilment cash flows of the group of reinsurance contracts held; - Allocations of the loss recovery component against the amounts recovered from reinsurers reported in line with the associated reinsured incurred claims or expenses. **(iv) Insurance finance income and expenses** Insurance finance income or expenses present the effect of the time value of money and the change in the time value of money, together with the effect of financial risk and changes in financial risk of a group of insurance contracts and a group of reinsurance contracts held. For contracts applying the general model and contracts applying the VFA, the Group has chosen to disaggregate insurance finance income or expenses between profit or loss and other comprehensive income. For contracts applying the general model, the Group recognizes changes in insurance contract liabilities due to changes in financial variables including the discount rate in other comprehensive income. For the VFA model, the Group includes in profit or loss expenses or income that exactly match the income or expenses included in profit or loss for the underlying items, with the remaining amount recognized in other comprehensive income. **(v) Other expenses** Other expenses represent general expenses that are not directly attributable to insurance and reinsurance contract portfolios. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (m) Contracts existing at transition date The Group adopts both the modified retrospective approach and the fair value approach when it is impracticable to use a retrospective approach in determining transition amounts at the IFRS 17 transition date. **(i) Contracts measured under the modified retrospective approach** The objective of this approach was to achieve the closest outcome to retrospective application possible using reasonable and supportable information available without undue cost or effort. The Group applied each of the following modifications only to the extent that it did not have reasonable and supportable information to apply IFRS 17 retrospectively. **Contracts without direct participation features** For relevant groups of contracts without direct participation features, * The future cash flows on initial recognition were estimated by adjusting the cash flows that were known to have occurred; * The risk adjustment for non-financial risk on initial recognition was determined by adjusting the amount at 1 January 2022 for the expected release of risk before 1 January 2022. The expected release of risk was determined with reference to the release of risk for similar insurance contracts that the Group issued at 1 January 2022; * When any of these modifications was used to determine the CSM (or the loss component) at initial recognition: - the amount of the CSM recognised in profit or loss before 1 January 2022 was determined by comparing the remaining coverage units at 1 January 2022 with the coverage units provided under the group of contracts before that date; and - the amount allocated to the loss component before 1 January 2022 determined using the proportion of the loss component relative to the total estimate of the present value of the future cash outflows and the risk adjustment for non- financial risk on initial recognition. --- # 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ## (12) Insurance contracts and investment contracts (continued) ### (m) Contracts existing at transition date (continued) #### (i) Contracts measured under the modified retrospective approach (continued) **Contracts with direct participation features** For relevant groups of contracts with direct participation features, * The Group determined the CSM (or the loss component) at 1 January 2022 by calculating a proxy for the total CSM for all services to be provided under the group that equal to the fair value of the underlying items at 1 January 2022 minus the fulfilment cash flows at 1 January 2022, adjusted for: * amounts charged to policyholders (including charges deducted from the underlying items) before 1 January 2022; * amounts paid before 1 January 2022 that would not have varied based on the underlying items; * the change in the risk adjustment for non-financial risk caused by the release from risk before 1 January 2022, which was estimated based on an analysis of similar contracts that the Group issued at 1 January 2022; and * insurance acquisition cash flows arising before 1 January 2022 that were allocated to the group. * If the calculation resulted in a CSM, then the Group measured the CSM at 1 January 2022 by deducting the CSM related to services provided before 1 January 2022. The CSM related to services provided before 1 January 2022 was determined by comparing the coverage units at 1 January 2022 with the coverage units provided under the group of contracts before that date; * If the calculation resulted in a loss component, then the Group adjusted the loss component to zero and increased the LRC excluding the loss component by the same amount at 1 January 2022; * The amount of insurance finance income or expenses accumulated in the insurance finance reserve at 1 January 2022 was determined to be equal to the cumulative amount recognised in the other comprehensive income on the underlying items as applicable. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (12) Insurance contracts and investment contracts (continued) #### (m) Contracts existing at transition date (continued) (ii) *Contracts measured under the fair value approach* For the groups of contracts that are measured under the fair value approach, the Group determined the CSM or loss component of the LRC at 1 January 2022 as the difference between the fair value of a group of contracts at that date and the fulfilment cash flows at that date. The fair value of groups of contracts is primarily determined by using present value technique from the perspective of a market participant with considerations of the following: * Estimate of future cash flows that a market participant would expect to incur or receive in fulfilling the liabilities; * Time value of money, represented by the risk-free interest rate plus a spread based on the characteristic of the liabilities; * Premiums that a market participant would require for bearing uncertainty inherent in the cash flows in relation to non-financial risks and compensation that a market participant would require to assume the obligations; and * Other factors that a market participant would take into account in the circumstances. To the extent possible, the Group maximised the use of relevant market data and information. For the unobservable inputs, the Group used the best information available in the circumstances, which might include the Group’s own data. For groups of contracts measured under the fair value approach, * the discount rates on initial recognition were determined at 1 January 2022 instead of at the date of initial recognition; * the amount of insurance finance income or expenses accumulated in the insurance finance reserve at 1 January 2022 was determined to be zero for contracts without direct participation features and to be equal to the cumulative amount recognised in the other comprehensive income on the underlying items for contracts with direct participation features as applicable. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (13) Derivative instruments Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently re-measured at their fair value. The resulting gain or loss of derivative financial instruments is recognised in the consolidated statement of comprehensive income. Fair values are obtained from quoted market prices in active markets, taking into consideration recent market transactions or valuation techniques, including discounted cash flow models and option pricing models, as appropriate. The best evidence of the fair value of a derivative at initial recognition is the transaction price (i.e., the fair value of the consideration given or received) unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative. Derivatives embedded in hybrid contracts that contain financial asset hosts within the scope of IFRS 9 are not separated. The entire hybrid contract is classified and subsequently measured in its entirety as either amortised cost or fair value as appropriate. Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of IFRS 9 are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts are not measured at FVTPL. The Group does not separately measure embedded derivatives that meet the definition of an insurance contract or embedded derivatives that are closely related to host insurance contracts including embedded options to surrender insurance contracts for a fixed amount (or an amount based on a fixed amount and an interest rate). ### (14) Employee benefits Employee benefits represent all forms of returns or reimbursement that the Group pays employees for their services or for termination of labor relationship. The compensation includes salaries, bonuses, allowances and subsidies, staff welfare expenses, social insurance and housing accumulation funds, labor union fees and employee education fees, etc. All employees of the Group participate in social security plans, including pension, medical, housing and other welfare benefits, organized and administered by the governmental authorities. According to the relevant regulations, the premiums and welfare benefit contributions that should be borne by the Group are calculated on a regulated basis, subject to a certain ceiling, and are paid to the labor and social welfare authorities. Contributions to the plans are expensed as incurred. These social security plans are defined contribution plans. There are no forfeited contributions in social security plans, because all contributions are fully attributable to employees at the time of the payment. In addition to the above social security plans, the Group set up an annuity fund in January 2014, whereby the Group is required to contribute to the annuity fund according to certain contribution bases and percentages monthly. Contribution amounts calculated in accordance with the annuity fund are recognised as liabilities and are recorded as expenses during the period of which service is provided by the employees participating in the scheme. The annuity fund is defined contribution plan. Forfeited contributions by those employees who leave the annuity fund prior to the full vesting of their contributions are not used to reduce the existing level of contributions and are recoded in the employer account of the annuity fund to be attributed to the members of the annuity fund after fulfilling the approval procedures. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (14) Employee benefits (continued) Other long-term employee benefits are all the other benefits besides short-term employee benefits, post-employment benefits and termination benefits, including long-term paid absences, other long-term service benefits, long-term disability benefits, long-term profit-sharing plan and long-term bonus, etc. Other long-term employee benefits provided by the Group are long-term bonus plans. For the long-term bonus plans, which are recognised in liabilities and are recorded as expenses when incurred. ### (15) Share capital Shares are classified as equity when there is no obligation to transfer cash or other assets. Incremental costs directly attributable to the issue of equity instruments are shown in equity as a deduction from the proceeds. ### (16) Revenue recognition **(a) Insurance revenue** The recognition of insurance revenue is stated in Note 2(12)(l)(i). **(b) Interest income** Interest income for all financial instruments except for those classified as at FVTPL are recognised on an accrual basis using the effective interest method. Interest on financial instruments measured as at FVTPL is included in the "Other investment income" line item. The calculation of effective interest rate and interest income is stated in Note 2(10)(a). **(c) Other investment income** Other investment income is comprised of dividend income from equity financial assets, realised gains or losses from all financial investments, interest income from financial assets at FVTPL and net fair value gains or losses on financial assets at FVTPL. Dividend income is recognised when the right to receive dividend payment is established. **(d) Other income** Other income is comprised of revenue generated from other operation activities except for the revenue above, including service management fees received under investment contracts. ### (17) Commission and brokerage expenses Commission and brokerage expenses are recognised in profit or loss when incurred. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (18) Income tax The income tax expense for the period comprises current and deferred tax. Tax is recognised in the net profit, except to the extent that it relates to goodwill generated from business combination and it relates to items recognised directly in other comprehensive income, where the tax is recognised in other comprehensive income. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company, its subsidiaries or associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Deferred income tax is recognised, using the liabilities method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements at the end of the reporting period. Substantively enacted tax rates are used in the determination of deferred income tax. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be recognised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit and at the time of the transaction does not give rise to equal taxable and deductible temporary differences. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill. Deferred income tax liabilities are not provided on taxable temporary differences arising on the goodwill at initial recognition. Deferred income tax liabilities are provided on taxable temporary differences arising on investments in subsidiaries, joint ventures and associates except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (18) Income tax (continued) Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred taxes assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. ### (19) Government grants Government grants are recognised by the Group when all attaching conditions will be complied with and the grants will be received. If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is in the form of a transfer of a non-monetary asset, it is measured at fair value; if fair value is not reliably determinable, it is measured at a nominal amount. A government grant related to income is accounted for as follows: (i) if the grant is a compensation for related expenses or losses to be incurred in subsequent periods, the grant is recognised as deferred income, and released in profit or loss or offset against related expenses over the periods in which the related costs are recognised; or (ii) if the grant is a compensation for related expenses or losses already incurred, it is recognised immediately in profit or loss or offset against relevant expenses. A government grant relating to an asset shall be recognised as deferred income and amortised in profit or loss over the useful life of the related asset by annual instalments in a systematic and rational way (however, a government grant measured at a nominal amount is recognised directly in profit or loss). Where the assets are sold, transferred, retired or damaged before the end of their useful lives, the rest of the remaining deferred income is released to profit or loss for the period in which the relevant assets are disposed of. The Group adopted the gross method to recognize the government grants. ### (20) Provisions Provisions are recognised when there is a present obligation as a result of past transactions or events, and it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Future operating losses should not be recognised as provisions. The initial measurement of provisions is based on the best estimate to the outflow of present obligation by considering relevant risks, uncertainty and time value of money, etc. Where the effect of the time value of money is material, the best estimate is determined by discounting the related future cash outflows. The increase in the discounted amount of the provision arising from passage of time is recognised as interest expense. The Group reviews the carrying amount of provisions at the end of the reporting period and makes appropriate adjustments in order to reflect the current best estimate. --- ## 2. MATERIAL ACCOUNTING POLICY INFORMATION (CONTINUED) ### (21) Contingencies A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events that are not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably. A contingent liability is not recognised in the statement of financial position but is disclosed in the notes to the consolidated financial statements. When a change in the probability of an outflow occurs so that outflow is probable and can be reliably measured, it will then be recognised as a provision. ### (22) Earnings per share Basic earnings per share are calculated by dividing net income available to ordinary shareholders by the weighted average number of ordinary shares in issue during the year. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. Potential or contingent share issuances are treated as dilutive when their conversion to shares would decrease net earnings per share. ## 3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY Judgments, estimates and assumptions made by the Group during the preparation of the consolidated financial statements would affect the reported amounts and disclosures of assets and liabilities, and the disclosure of contingent liabilities. Estimates and judgments are continually evaluated based on historical experience and other factors. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future. ### Critical judgements in applying accounting policies The following are the critical judgements, apart from those involving estimations (see below), that the Group have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements. --- # 3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY ## Critical judgements in applying accounting policies (continued) ### (1) Classification of financial assets The judgements in determining the classification of financial assets mainly include the analysis of the contractual cash flows characteristics. The contractual cash flows characteristics of financial assets refer to the cash flow attributes of the financial assets reflecting the economic characteristics of the relevant financial assets (i.e., whether the contractual cash flows generated by the relevant financial assets on a specified date solely represents the payments of principal and interest). The principal amount refers to the fair value of the financial asset at initial recognition. The principal amount may change throughout the lifetime of the financial assets due to prepayment or other reasons. The interest includes the time value of money, the credit risk associated with the outstanding principal amount for a specific period, other basic lending credit risks, and the consideration of costs and profits. ### (2) Identification of investment components The Group considers all terms of contracts it issues to determine whether there are amounts repayable to the policyholder in all circumstances, regardless of contract cancellation, maturity, and the occurrence or non-occurrence of an insured event. Some amounts, once paid by the policyholder, are repayable to the policyholder in all circumstances. The Group considers such payments to meet the definition of an investment component. ### (3) Separation of insurance components of an insurance contract The Group issues some insurance contracts that combine protection for the policyholder against different types of insurance risks in a single contract. IFRS 17 does not require or permit separating insurance components of an insurance contract unless the legal form of a single contract does not reflect the substance of its contractual rights and obligations. In such cases, separate insurance elements must be recognised. Overriding the “single contract” unit of account presumption involves significant judgement and is not an accounting policy choice. When determining whether a legal contract reflects its substance or not, the Group considers the interdependency between different risks covered, the ability of all components to lapse independently, and the ability to price and sell the components separately. --- # 3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED) ## Critical judgements in applying accounting policies (continued) ### (4) Identification of portfolios The Group defines a portfolio as insurance contracts subject to similar risks and managed together. Contracts within the same product line are expected to be in the same portfolio as they have similar risks and are managed together. The assessment of which risks are similar and how contracts are managed requires the exercise of judgement. ### (5) Assessment of the eligibility for meeting the criteria for direct participating contracts Direct participating contracts are considered to be sufficiently different from other participating contracts due to the enforceable link to the underlying items, the significance of policyholders’ share in the pool and the significance of those returns to the overall policyholder payments. The Group assesses whether a contract meets the definition of a direct participating contract using the Group’s expectations existing at inception of the contract. In assessing the significance of the policyholder’s share of returns from the underlying items and the degree of variability in total payments to the policyholder, the Group applies significant judgement. ### (6) Selecting a method of allocation of coverage units IFRS 17 establishes a principle for determining coverage units, not a set of detailed requirements or methods. The selection of the appropriate method for determining the amount of coverage units is not an accounting policy choice. It involves the exercise of significant judgement and development of estimates considering individual facts and circumstances. The Group selects the appropriate method on a portfolio-by-portfolio basis. In determining the appropriate method, the Group considers the likelihood of insured events occurring to the extent that they affect expected period of coverage in the group, different levels of service across the period and the quantity of benefits expected to be received by the policyholder. ### (7) Transition to IFRS 17 The Group applied IFRS 17 in the consolidated financial statements from 1 January 2023 and onwards. The Group has determined that it was impracticable to apply the retrospective approach for some groups of contracts because certain historical information was not available or was not available without undue cost or effort that would enable it to be used under this approach. Therefore, the Group applied the modified retrospective or fair value approaches for these groups of contracts. The Group exercises judgements in determining the transition approaches, applying the transition methods and measuring the transition impacts on the transition date, which will affect the amounts recognised in the consolidated financial statements the transition date. --- ### 3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED) **Critical judgments in applying accounting policies (continued)** ***(8) Impairment assessment on investment in associates*** An assessment is made at the end of each reporting period as to whether there is any indication that investments in associates have suffered an impairment loss. If any such indication showing the carrying amount of investment in associates may not recoverable, the impairment assessment is performed. To the extent that the carrying amount is higher than the recoverable amount of an asset, which is the greater of its fair value less costs of disposal and value in use, the extent of the impairment loss is recognized. ***(9) Assessment of control over structured entity*** The Group applies its judgment to determine whether the control indicators set out in Note 2(2)(d) indicate that the Group controls structured entities such as debt investment plans, trust plans and asset management plans. The Group issues certain structured entities (e.g. asset management plans and debt investment plans), and acts as a manager for such entities according to the contracts. In addition, the Group may be exposed to variability of returns as a result of holding shares of the structured entities. In addition, the Group may also hold structured entities (e.g. trust plans) initiated and managed by other asset management institutions. Determining whether the Group controls such structured entities usually focuses on the assessment of the aggregate economic interests of the Group in the entities (including any carried interests and expected management fees) and the decision-making rights on the entity. As at 31 December 2023, the Group has consolidated certain asset management plans and debt investment plans issued and managed by the Company’s subsidiary, New China Asset Management Co., Ltd. (“Asset Management Company”), certain debt investment plans, etc. issued by third parties in the consolidated financial statements. Please refer to Note 40 for the details. **Key sources of estimation uncertainty** ***(1) Estimates used in measuring insurance contract liabilities and reinsurance contract assets*** In measuring insurance contract liabilities and reinsurance contract assets, the Group uses assumptions about discount rates, mortality rates, morbidity rates, expense rates, policy dividend, lapse rates, etc. Estimates are made based on the most recent historical analysis and current and future economic conditions. --- ### 3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED) #### Key sources of estimation uncertainty (continued) ***(1) Estimates used in measuring insurance contract liabilities and reinsurance contract assets (continued)*** (a) Discount rate assumption The discount rate will be consistent with observable current market price for financial instruments with cash flows whose characteristics are consistent with those of the insurance contracts, excluding the effects of factors that influence such observable market prices but do not affect the future cash flows of the insurance contracts. The Group has adopted the “bottom-up” approach, and the discount rate assumption is determined based on the risk-free interest rate curve with consideration of the impact of the liquidity and tax premium. As at 31 December 2023, the spot discount rate that were used to discount the estimates of future cash flows that do not vary based on the returns of the underlying items are 2.70%-4.70% (31 December 2022: 2.54%-4.70%). (b) Mortality and morbidity assumptions The Group bases its mortality assumption on the China Life Insurance Life Mortality Table (2010-2013), adjusts where appropriate to reflect the Group’s historical mortality rate. The main source of uncertainty with life insurance contracts is epidemics, such as bird flu, AIDS and SARS, and wide-ranging lifestyle changes could result in deterioration in the future mortality rate, thus leading to an inadequate liability provision. Similarly, continuous advancements in medical care and social welfare could result in improvements in longevity that exceed the assumption used in the estimates to determine the liabilities for contracts where the Group is exposed to longevity risk. The Group bases its morbidity assumptions on the China Life Insurance Major Diseases Experience Morbidity Rate Table (2020) for critical illness products on analysis of historical experience and expectations of future developments. There are two main sources of uncertainty. First, wide-ranging lifestyle changes could result in future deterioration in the morbidity rate. Second, future development of medical technologies and improved availability of medical facilities to policyholders may lead to early diagnosis of critical illnesses, which demands earlier payment of the critical illness benefits. Both could ultimately result in an inadequate liability provision if current morbidity assumptions do not properly reflect such secular trends. Mortality and morbidity vary with the age of insured and types of contracts. --- ### 3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED) #### Key sources of estimation uncertainty (continued) ##### (1) Estimates used in measuring insurance contract liabilities and reinsurance contract assets (continued) (c) *Expenses assumptions* The Group’s expenses assumptions are determined based on actual experience analysis, with consideration of future inflation, including assumptions of acquisition costs and maintenance costs. The purpose of the expense analysis is to allocate expenses directly attributable to insurance contract portfolios between acquisition and maintenance activities, and then to allocate these acquisition and maintenance expenses to various product categories to derive unit cost assumptions. The Group’s expenses assumptions are affected by certain factors, such as inflation and market competition. The Group determines expenses assumptions based on the information obtained at the end of each reporting period. (d) *Policy dividend assumption* Policy dividend assumption is determined based upon contract terms, the investment yields of the participating account, dividend policy enacted by the Group, reasonable expectation of policyholders and other factors. Pursuant to relevant contract terms, the Group is obligated to pay to the policyholders of participating contracts at least 70% of distributable surplus. (e) *Lapse rate and other assumptions* The lapse rate and other assumptions are affected by certain factors, such as future macroeconomy, availability of financial substitutions, and market competition. The lapse rate and other assumptions are determined based on past experience, current conditions, future expectations and other information obtained at the end of each reporting period. (f) *Risk adjustment for non-financial risk* The risk adjustment for non-financial risk is the compensation the Group requires for bearing the uncertainty about the amount and timing of the cash flows arising from insurance risk and other non-financial risks such as lapse risk and expense risk. The Group use confidence level technique for determining the risk adjustment for non-financial risk. As at 31 December 2023, the Group determines the risk adjustment for non-financial risk based on the 75% confidence level (31 December 2022: 75%). --- # 3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED) ## Key sources of estimation uncertainty (continued) ### (2) Measurement of the ECL The measurement of the ECL for debt investments measured at amortised cost and FVTOCI is an area that requires the use of complex models and significant assumptions about future economic conditions and credit behavior (such as the likelihood of counterparty default and corresponding losses). The considerations in the measurement of the expected credit losses mainly include: - Significant increase in credit risk: ECL is measured as an allowance equal to 12m ECL for stage 1 assets, or lifetime ECL for stage 2 or stage 3 assets. An asset moves to stage 2 when its credit risk has increased significantly since initial recognition. In assessing whether the credit risk of an asset has significantly increased, the Group takes into account qualitative and quantitative reasonable and supportable forward-looking information. The assessment of the credit risk and expected cash flows of the respective financial investment involves a high degree of estimation and uncertainty. - Models and assumptions used: The Group uses various models and assumptions in estimating ECL. Judgement is applied in identifying the most appropriate model for each type of asset, as well as for determining the assumptions used in these models, including assumptions that relate to key drivers of credit risk. - Forward-looking information: When measuring ECL the Group uses reasonable and supportable forward-looking information, which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other as well as the correlation between historical default rate and macro-economic factors. The Group estimates these forward-looking economic factors, such as GDP growth and Consumer Price Index etc. under different scenario. - Probability of Default (“PD”): PD constitutes a key input in measuring ECL. PD is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of future conditions. - LGD: LGD is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, taking into account cash flows from collateral and integral credit enhancements. The amount of the ECL varies depending on the estimation of the Group. Please refer to Note 11 for more details. --- ### 3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED) #### Key sources of estimation uncertainty (continued) **(3) Fair value of financial instruments** For financial instruments for which no active market exists, the Group determines fair value using valuation techniques that are applicable in the current circumstances and supported by sufficient available data and other information. Valuation techniques mainly include market approach and income approach, reference to the recent arm’s length transactions, current market value of another instrument which is substantially the same, and by using the discounted cash flow analysis, etc. When using valuation techniques to determine the fair value of financial instruments, the Group selects inputs that are consistent with the characteristics of the asset or liability that would be considered by a market participant in a transaction for the underlying asset or liability, giving priority to the use of relevant observable inputs where possible. Unobservable inputs are used where the relevant observable inputs are not available or practicable to obtain. The Group regularly reviews the assumptions and estimates applied in the valuation methodologies and makes adjustments where necessary to make them reflect market conditions at the balance sheet date. The use of different valuation methods and assumptions may result in differences in fair value estimates. Please refer to Note 4(4) for more details. **(4) Taxation** Due to the uncertainty of final tax treatment for various transactions during the normal course of business, the Group needs to exercise significant judgment when determining tax expenses. The Group recognizes tax liabilities based on estimates of whether there will be additional tax payments resulting from tax inspection. If there is any difference between the final result and previously recorded amounts, the difference will impact current tax and deferred tax. Deferred income tax assets are recognised for all unused tax losses to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilized. Significant judgment is required to estimate the amount and timing of future taxable profit so as to determine, together with the tax planning strategies, the amount of deferred income tax assets to be recognised. --- # 4. RISK MANAGEMENT The Group issues contracts that transfer insurance risk or financial risk or both. This section summarizes these risks and the way the Group manages them. ## (1) Insurance risk ### (a) Types of insurance risk The risk under any one insurance contract is the possibility that an insured event occurs and there is uncertainty about the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and therefore unpredictable. For a portfolio of insurance contracts where the theory of probability is applied to pricing and provisioning, the principal risk that the Group faces under its insurance contracts is that the actual claims and benefit payments exceed the carrying amount of the insurance liabilities. This occurs when the frequency or severity of claims and benefits exceeds the estimates. Insured events are random, and the actual number of claims and the amount of benefits paid will vary each year from estimates established using statistical techniques. Experience shows that the larger the portfolio of similar insurance contracts, the more dispersive the risk will be, and the smaller the relative variability about the expected outcome will be. The Group has developed its insurance underwriting strategy to diversify the type of insurance risks accepted and within each of these categories to achieve a sufficiently large population of policies to reduce the variability of the expected outcome. The Group offers long-term life insurance, critical illness insurance, annuity, accident and short-term health insurance products. Social and economic development, widespread changes in lifestyle, epidemics and medical technology development could have significant influence on the Group’s insurance business. Insurance risk is also affected by policyholders’ rights to terminate the contract, reduce premiums, refuse to pay premiums or exercise annuity conversion rights, etc. Thus, insurance risk is also subject to policyholders’ behaviors and decisions. The Group manages insurance risks through underwriting strategy, reinsurance agreements and claim management. The Group’s reinsurance agreements include ceding on quota share basis, surplus basis or catastrophe excess of loss. The reinsurance agreements cover most of the products with risk responsibilities. These reinsurance agreements spread insured risk and stabilise financial results of the Group. However, the Group’s responsibilities for direct insurance to policyholders are not relieved because of credit risk associated with the failure of reinsurance companies to fulfill their responsibilities. The estimation of the present value of future cashflow for insurance contract liabilities and reinsurance contract assets represent the Group’s expected exposure to insurance risk. --- # 4. RISK MANAGEMENT (CONTINUED) ## (1) Insurance risk (continued) ### (b) Concentration of insurance risk Currently, the Group’s insurance businesses are all conducted in the PRC and insurance risk in each area has insignificant differences. The Group’s insurance contract liabilities of major insurance products are listed below: | Product Name | 31 December 2023 Amount | 31 December 2023 % of total | 31 December 2022 (Restated) Amount | 31 December 2022 (Restated) % of total | | :--- | :--- | :--- | :--- | :--- | | i Jixinggaozhao Type A endowment insurance (Participating) | 59,402 | 5.18% | 48,388 | 4.78% | | ii Huitianfu annuity insurance | 58,971 | 5.14% | 35,410 | 3.49% | | iii Zunxiang Rensheng annuity insurance (Participating) | 49,125 | 4.28% | 45,842 | 4.52% | | iv Furudonghai Type A whole life insurance (Participating) | 46,296 | 4.04% | 40,202 | 3.97% | | v Fuxiang Yisheng whole life annuity insurance (Participating) | 43,422 | 3.79% | 33,672 | 3.32% | | Others | 889,281 | 77.57% | 809,677 | 79.92% | | **Total** | **1,146,497** | **100.00%** | **1,013,191** | **100.00%** | --- # 4. RISK MANAGEMENT (CONTINUED) ## (1) Insurance risk (continued) ### (c) Sensitivity analysis #### (i) Sensitivity analysis for contracts not measured under PAA Insurance contract liabilities not measured under PAA are calculated based on significant assumptions. Non-financial assumptions mainly include mortality and morbidity rates, lapse rates and expense rates. The analysis below is performed to demonstrate the reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on profit and equity before income tax. | | | 31 December 2023 | 31 December 2023 | 31 December 2023 | 31 December 2023 | 31 December 2022 (Restated) | 31 December 2022 (Restated) | 31 December 2022 (Restated) | 31 December 2022 (Restated) | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | :---: | :---: | :---: | | | | **Profit before tax** | **Profit before tax** | **Equity** | **Equity** | Profit before tax | Profit before tax | Equity | Equity | | | **Change in assumption** | **Gross** | **Net** | **Gross** | **Net** | Gross | Net | Gross | Net | | Mortality and Morbidity Rate | +10% | **(1,105)** | **(1,024)** | **(1,506)** | **(1,384)** | (1,030) | (897) | (1,417) | (1,270) | | | - 10% | **1,124** | **1,031** | **1,726** | **1,575** | 1,084 | 949 | 1,630 | 1,474 | | Lapse Rate | +10% | **340** | **321** | **1,940** | **1,897** | (89) | (110) | 966 | 930 | | | - 10% | **(422)** | **(403)** | **(2,017)** | **(1,971)** | 85 | 107 | (964) | (925) | | Expense Rate | +10% | **(771)** | **(771)** | **(1,149)** | **(1,149)** | (527) | (527) | (866) | (866) | | | - 10% | **695** | **695** | **1,071** | **1,071** | 559 | 559 | 900 | 900 | #### (ii) Sensitivity analysis for contracts measured under PAA The change of claims amount for contracts measured under PAA may cause the change of loss ratio assumptions and in turn affect insurance contract liabilities. All other variables being constant, if the loss ratio increases or decreases by 100bps, estimated profit before tax would decrease or increase by RMB9 million (2022: decrease or increase by RMB9 million), estimated pre-tax equity would decrease or increase by RMB9 million (2022: decrease or increase by RMB9 million). --- ## 4. RISK MANAGEMENT (CONTINUED) ### (1) Insurance risk (continued) #### (d) Claims development analysis for contracts measured under PAA Claims development analysis for contracts measured under PAA is as follows: **Accident year** | Cumulative claims | 2019 | 2020 | 2021 | 2022 | 2023 | Total | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | | End of current year | 3,516 | 3,603 | 4,029 | 3,405 | 3,285 | | | 1 year later | 3,069 | 3,331 | 3,909 | 3,661 | | | | 2 years later | 3,044 | 3,134 | 3,384 | | | | | 3 years later | 3,044 | 3,134 | | | | | | 4 years later | 3,044 | | | | | | | | | | | | | | | Estimated accumulated claims expenses | 3,044 | 3,134 | 3,384 | 3,661 | 3,285 | 16,508 | | Less: cumulative claims paid | (3,044) | (3,134) | (3,384) | (3,016) | (2,310) | (14,888) | | | | | | | | | | Subtotal | – | – | – | 645 | 975 | 1,620 | | Add: claims handling expenses, risk adjustment for non-financial risk and effect of discounting | – | – | – | 31 | 53 | 84 | | | | | | | | | | Liability for incurred claims, gross | – | – | – | 676 | 1,028 | 1,704 | --- # 4. RISK MANAGEMENT (CONTINUED) ## (1) Insurance risk (continued) ### (d) Claims development analysis of short-term insurance contracts (continued) Claims development analysis for contracts measured under PAA net of reinsurance is as follows: | Cumulative claims | Accident year 2019 | 2020 | 2021 | 2022 | 2023 | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | End of current year | 3,343 | 3,330 | 3,704 | 3,274 | **3,202** | | | 1 year later | 2,900 | 3,093 | 3,603 | 3,525 | | | | 2 years later | 2,869 | 2,903 | 3,081 | | | | | 3 years later | 2,869 | 2,903 | | | | | | 4 years later | 2,869 | | | | | | | | | | | | | | | Estimated accumulated claims expenses | 2,869 | 2,903 | 3,081 | 3,525 | **3,202** | 15,580 | | Less: cumulative claims paid | (2,869) | (2,903) | (3,081) | (2,889) | **(2,271)** | (14,013) | | | | | | | | | | Subtotal | – | – | – | 636 | **931** | 1,567 | | Add: claims handling expenses, risk adjustment for non-financial risk and effect of discounting | – | – | – | 31 | **53** | 84 | | | | | | | | | | Liability for incurred claims, net | – | – | – | 667 | **984** | 1,651 | | | | | | | | | | Recoveries on liabilities for incurred claims | – | – | – | 9 | **44** | 53 | | | | | | | | | | Liability for incurred claims, gross | – | – | – | 676 | **1,028** | 1,704 | ## (2) Financial risk The Group’s key financial risk is that proceeds from the sale of financial assets will not be sufficient to fund obligations arising from the Group’s insurance and investment contracts. The most important components of financial risk are market risk, credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. Risk management department, investment management department, accounting department and actuarial department are in close cooperation to identify, evaluate and avoid financial risk. --- # 4. RISK MANAGEMENT (CONTINUED) ## (2) Financial risk (continued) The Group manages financial risk by holding an appropriately diversified investment portfolio as permitted by laws and regulations designed to reduce the risk of concentration in any one specific industry or issuer. The structure of the main investment portfolio held by the Group is disclosed in Note 11. The sensitivity analyses below are based on a change in an assumption while holding all other assumptions constant. In practice this is unlikely to occur, and changes in some of the assumptions may be correlated (for example, changes in interest rate and fair values). ### (a) Market risk #### (i) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market interest rates. The Group is exposed to interest rate risk in relation to term deposits, debt financial assets, insurance contract issued and reinsurance contract held. Changes in the level of interest rates can have a significant impact on the Group’s overall investment return. Many of the Group’s insurance policies offer guaranteed returns to policyholders. These guarantees expose the Group to interest rate risk. The Group manages and tests interest rate risk through adjustments to portfolio asset allocation, and to the extent possible, by monitoring the mean duration of its assets and liabilities. The sensitivity analysis for interest rate risk illustrates how the fair value of future cash flows of the financial investments and the balance of insurance contract liabilities will fluctuate because of changes in market interest rates at the reporting date. The analysis below is performed to demonstrate the reasonably possible movements if the market interest rates change by 50bps with all other variables held constant, showing increase/ (decrease) on profit and equity before income tax. | | | 31 December 2023 | 31 December 2023 | 31 December 2022 (Restated) | 31 December 2022 (Restated) | | :--- | :--- | :---: | :---: | :---: | :---: | | | **Change in market interest rates** | **Profit before tax** | **Equity** | **Profit before tax** | **Equity** | | Financial investments | +50bps | (1,350) | (17,315) | (171) | (3,145) | | Financial investments | -50bps | 1,390 | 18,978 | 172 | 3,378 | | Insurance contracts and reinsurance contracts held | +50bps | 1,221 | 46,622 | 566 | 27,166 | | Insurance contracts and reinsurance contracts held | -50bps | (1,997) | (51,990) | (635) | (29,867) | --- # 4. RISK MANAGEMENT (CONTINUED) ## (2) Financial risk (continued) ### (a) Market risk (continued) #### (ii) Price risk Price risk arises mainly from the price volatility of equity investments held by the Group. Prices of equity investments are determined by market forces. Most of the equity investments of the Group are in Chinese capital markets. The Group is subject to increased price risk largely because the PRC’s capital markets are relatively volatile. Additionally, the Group is also exposed to equity price risk from its direct participating insurance contracts and investment contracts with discretionary participation features as well as from its indirect participating insurance contracts issued and reinsurance contracts held. The benefits under these contracts are linked to the fair value of the underlying items, including equity instruments. The Group manages price risk by holding an appropriately diversified investment portfolio as permitted by laws and regulations designed to reduce the risk of concentration in any one specific industry or issuer. The analysis below is performed to show the impacts of changes in the prices of the Group’s equity investments which have quoted prices in active markets by 10% with all other variables held constant, showing increase/(decrease) on profit and equity before income tax. | | | 31 December 2023 | 31 December 2023 | 31 December 2022 (Restated) | 31 December 2022 (Restated) | | :--- | :---: | :---: | :---: | :---: | :---: | | | **Change in equity investments' prices** | **Profit before tax** | **Equity** | **Profit before tax** | **Equity** | | Equity investments | +10% | 23,540 | 24,075 | 5,175 | 27,504 | | Equity investments | -10% | (23,540) | (24,075) | (5,175) | (27,504) | | Insurance contract issued | +10% | (10,512) | (10,517) | (1,693) | (13,645) | | Insurance contract issued | -10% | 10,512 | 10,517 | 1,693 | 13,645 | #### (iii) Currency risk Currency risk arises from the volatility of fair values or future cash flows of financial instruments resulting from changes in foreign currency exchange rates. The Group’s currency risk exposure mainly arises from cash and cash equivalents, term deposits, financial investments, insurance contract issued and reinsurance contract held denominated in currencies, such as the United States dollar, Hong Kong dollar, or European dollar, etc., other than the functional currencies of reporting entities. --- # 4. RISK MANAGEMENT (CONTINUED) ## (2) Financial risk (continued) ### (a) Market risk (continued) #### (iii) Currency risk (continued) For the identified currency risk, the Company took the following measures: (1) determine the risk level based on the analysis of internal and external information, so as to determine different preventive measures; (2) evaluate the possible frequency and degree of the loss of overseas investment in a certain period of time in the future, and use currency risk exposure analysis and other methods to evaluate the impact of exchange rate changes on the assets, liabilities and equity of the Group; and (3) evaluate the price risk of overseas investments comprehensively in accordance with the level and impact of currency risk, combined with the risk appetite, to select appropriate risk management tools to hedge risk. The following table summarizes financial assets denominated in currencies other than RMB, expressed in RMB equivalent: | 31 December 2023 | USD | HKD | EUR | Others | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 2,298 | 72 | – | – | 2,370 | | Financial assets at fair value through profit or loss | 4,850 | 3,056 | 4,822 | 442 | 13,170 | | Term deposits | – | 39 | – | – | 39 | | Debt investments at amortised cost | 2,601 | 269 | – | – | 2,870 | | Debt investments at fair value through other comprehensive income | 715 | – | – | – | 715 | | Equity investments designated at fair value through other comprehensive income | – | 3,339 | – | – | 3,339 | | **Total** | **10,464** | **6,775** | **4,822** | **442** | **22,503** | | 31 December 2022 | USD | HKD | EUR | Others | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 2,565 | 1,040 | – | – | 3,605 | | Accrued investment income | 28 | – | – | – | 28 | | Held-to-maturity investments | 2,541 | – | – | – | 2,541 | | Financial assets at fair value through profit or loss | – | 64 | – | – | 64 | | Available-for-sale financial assets | 3,334 | 6,356 | 3,822 | 240 | 13,752 | | **Total** | **8,468** | **7,460** | **3,822** | **240** | **19,990** | --- # 4. RISK MANAGEMENT (CONTINUED) ## (2) Financial risk (continued) ### (a) Market risk (continued) #### (iii) Currency risk (continued) The analysis below is performed to show the impacts if RMB had strengthened or weakened by 10% against USD and other foreign currencies with all other variables being constant, showing increase/(decrease) on profit and equity before income tax. | | Change in foreign currency exchange rate | 31 December 2023 Profit before tax | 31 December 2023 Equity | 31 December 2022 (Restated) Profit before tax | 31 December 2022 (Restated) Equity | | :--- | :--- | :--- | :--- | :--- | :--- | | Financial assets | +10% | 1,845 | 2,250 | 676 | 2,060 | | Financial assets | -10% | (1,845) | (2,250) | (676) | (2,060) | | Insurance contract issued | +10% | 287 | 317 | 89 | 355 | | Insurance contract issued | -10% | (287) | (317) | (89) | (355) | ### (b) Credit risk Credit risk is the risk that one party to a financial transaction or the issuer of a financial instrument will fail to discharge an obligation and cause another party to incur a financial loss. In terms of investment vehicles, a significant portion of the portfolio of the Group is government bonds, financial bonds, corporate bonds guaranteed by state-owned commercial banks and large industrial groups, bank deposits with state-owned or other national commercial banks, trust plans, debt investment plans and asset funding plans. In term of credit risk, the Group mainly uses credit concentration as a monitoring measure in order to ensure that the whole credit risk exposure is manageable. In response to counterparties' credit risk, the Group mainly took the following measures: (1) Internal rating system was strictly implemented, and credit investment varieties were strictly controlled; (2) Accounting classification of investment varieties was clearly defined in the investment guidelines and assets with high credit risk were prevented from being classified as debt investments at amortised cost; (3) The bond market value was monitored, and the possible credit default ts were analysed and evaluated in order to enhance the predictability. In terms of counterparties, the majority of the Group's counterparties are state policy-related banks, state-owned, other national commercial banks or state-owned asset management companies. Therefore, the Group's overall exposure to credit risk is relatively low. --- # 4. RISK MANAGEMENT (CONTINUED) ## (2) Financial risk (continued) ### (b) Credit risk (continued) *Stage of financial instruments* The Group classifies financial instruments into three stages and makes provisions for ECL accordingly, depending on whether credit risk on that financial instrument has increased significantly since initial recognition and whether the assets have been impaired. * Stage 1: If no significant increase in credit risk since initial recognition is identified, the financial instrument is in “Stage 1”. The impairment provisions are measured based on 12-month expected credit losses; * Stage 2: If a significant increase in credit risk since initial recognition is identified, the financial instrument is moved to “Stage 2” but is not yet deemed to be credit-impaired. The impairment provisions are measured based on expected credit losses on a lifetime basis; * Stage 3: If the financial instrument is credit-impaired, the financial instrument is then moved to “Stage 3”. The impairment provisions are measured based on expected credit losses on lifetime basis. *Significant increase in credit risk* The assessment of significant increase in credit risk since initial recognition is performed at least on a quarterly basis for financial instruments held by the Group. The Group takes into consideration all reasonable and supportable information (including forward-looking information) that reflects significant change in credit risk for the purposes of classifying financial instruments. The main considerations are regulatory and operating environment, internal and external credit risk rating, debt-servicing capacity, operating capabilities, contractual terms and repayment records. The Group compares the risk of default of a single financial instrument or a portfolio of financial instruments with similar credit risk characteristics as at the end of the reporting period and its risk of default at the date of initial recognition to determine changes in the risk of default over the expected lifetime of a financial instrument or a portfolio of financial instruments. --- # 4. RISK MANAGEMENT (CONTINUED) ## (2) Financial risk (continued) ### (b) Credit risk (continued) **Measurement of ECL** The key inputs used for measuring ECL are probability of default, LGD and exposure at default. These figures are generally derived from internally developed statistical models and other historical data and they are adjusted to reflect probability-weighted forward-looking information. **Forward-looking information** The calculation of ECL incorporates forward-looking information. The Group has performed historical data analysis and identified Gross Domestic Product (“GDP”), Consumer Price Index (“CPI”) and other macro-economic indicators as impacting the ECL. The impact of these economic variables on the PD and LGD has been determined by performing statistical regression analysis to understand the correlations among the historical changes of the economic variables, PD and LGD. **Credit risk exposure** The carrying amount of financial assets on the Group’s consolidated statement of financial position represents the maximum credit exposure without taking into account any collateral held or other credit enhancements attached. For the information on the gross carrying amount of major financial assets and provision for expected credit losses, please refer to Note 11(2) and (3) for details. A policyholder usually has a maximum credit period of three months but a longer period can be granted on a discretionary basis. The Group’s policies relate to a large number of diversified customers and therefore there is no significant credit risk. For reinsurance contracts held, the Group is exposed to credit risk that the reinsurers fail to discharge an obligation resulting a financial loss to the Group. The Group believes these reinsurers have high credit quality and therefore there is no significant credit risk. --- # 4. RISK MANAGEMENT (CONTINUED) ## (2) Financial risk (continued) ### (b) Credit risk (continued) *Collateral and other credit enhancements* Financial assets purchased under agreements to resell are pledged by counterparts’ debt financial assets of which the Group could take the ownership if the owner of the collateral defaults. Policy loans are pledged by their policies’ cash value as collateral according to the terms and conditions of policy loan contracts and policy contracts signed between the Group and policyholders. The majority of debt investment plans and trust plans are guaranteed by third parties, collateral or by pledge as the source of funding for repayment. *Credit quality* The credit ratings of most of the bonds held by the Group are AA/A-2 or above, and the credit ratings are assessed by qualified assessment agencies in Mainland China at the time of issuance. Most of the Group’s bank deposits are with the four largest state-owned commercial banks and other commercial banks in the PRC. The majority of the Group’s reinsurance agreements are with state-owned reinsurance companies or large international reinsurance companies. The Group believes these commercial banks and reinsurance companies have high credit quality. The trustees of trust plans or the asset managers of debt investment plans and asset funding plans are well-known trust companies and asset management companies in the PRC. ### (c) Liquidity risk Liquidity risk is the risk that the Group will not have access to sufficient funds to meet its liabilities as they become due. In the normal course of business, the Group attempts to match investment assets to insurance contract liabilities through asset-liability management to reduce liquidity risk. --- # 4. RISK MANAGEMENT (CONTINUED) ## (2) Financial risk (continued) ### (c) Liquidity risk (continued) The table below presents a maturity analysis of the portfolios of major financial assets and financial liabilities in the Group based on the remaining contractual undiscounted cash flows. | As at 31 December 2023 | Carrying amount | No stated maturity | Undiscounted cash flows-Cash in/(Cash out) Within 1 year (including 1 year) | Undiscounted cash flows-Cash in/(Cash out) 1-3 years (including 3 year) | Undiscounted cash flows-Cash in/(Cash out) 3-5 years (including 5 year) | Undiscounted cash flows-Cash in/(Cash out) Over 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Financial investments** | | | | | | | | – Financial assets at fair value through profit or loss | 380,239 | 284,506 | 18,773 | 29,363 | 50,233 | 11,108 | | – Debt investments at amortised cost | 313,148 | – | 42,784 | 39,904 | 25,643 | 442,509 | | – Debt investments at fair value through other comprehensive income | 347,262 | – | 50,890 | 72,648 | 53,070 | 321,118 | | – Equity investments designated at fair value through other comprehensive income | 5,370 | 5,370 | – | – | – | – | | Term deposits | 255,984 | – | 42,501 | 197,532 | 24,303 | – | | Statutory deposits | 1,784 | – | 67 | 1,020 | 800 | – | | Financial assets purchased under agreements to resell | 5,265 | – | 5,266 | – | – | – | | Derivative financial instruments | 2 | 2 | – | – | – | – | | Accrued investment income | 76 | – | 76 | – | – | – | | Cash and cash equivalents | 21,788 | – | 21,788 | – | – | – | | Other assets | 13,211 | – | 13,211 | – | – | – | | **Total financial assets** | **1,344,129** | **289,878** | **195,356** | **340,467** | **154,049** | **774,735** | | | | | | | | | | Borrowings | 20,262 | – | (670) | (1,340) | (11,340) | (10,660) | | Lease liabilities | 760 | – | (361) | (318) | (106) | (26) | | Financial liabilities at fair value through profit or loss | 3,592 | (3,592) | – | – | – | – | | Financial assets sold under agreements to repurchase | 106,987 | – | (107,010) | – | – | – | | Other liabilities | 12,735 | – | (12,235) | (385) | (156) | (10) | | **Total financial liabilities** | **144,336** | **(3,592)** | **(120,276)** | **(2,043)** | **(11,602)** | **(10,696)** | --- # 4. RISK MANAGEMENT (CONTINUED) ## (2) Financial risk (continued) ### (c) Liquidity risk (continued) | | | | Undiscounted cash flows-Cash in/(Cash out) | Undiscounted cash flows-Cash in/(Cash out) | Undiscounted cash flows-Cash in/(Cash out) | Undiscounted cash flows-Cash in/(Cash out) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **As at 31 December 2022 (Restated)** | **Carrying amount** | **No stated maturity** | **Within 1 year (including 1 year)** | **1-3 years (including 3 year)** | **3-5 years (including 5 year)** | **Over 5 years** | | Debt financial assets | 601,794 | – | 78,905 | 426,796 | 92,751 | 626,665 | | Equity financial assets | 279,172 | 279,172 | – | – | – | – | | Derivative financial instruments | 3 | 3 | – | – | – | – | | Term deposits | 227,547 | – | 58,691 | 132,592 | 44,622 | – | | Statutory deposits | 1,715 | – | 924 | 718 | 173 | – | | Financial assets purchased under agreements to resell | 8,847 | – | 8,850 | – | – | – | | Accrued investment income | 15,137 | – | 11,117 | 3,233 | 787 | – | | Cash and cash equivalents | 17,586 | – | 17,586 | – | – | – | | Other assets | 4,508 | – | 4,508 | – | – | – | | | | | | | | | | **Total financial assets** | **1,156,309** | **279,175** | **180,581** | **563,339** | **138,333** | **626,665** | | | | | | | | | | Lease liabilities | 855 | – | (430) | (440) | (123) | (45) | | Financial liabilities at fair value through profit or loss | 25,877 | (25,877) | – | – | – | – | | Borrowings | 10,000 | – | (126) | (10,660) | – | – | | Financial assets sold under agreements to repurchase | 43,617 | – | (43,639) | – | – | – | | Other liabilities | 13,419 | – | (12,613) | (572) | (299) | (10) | | | | | | | | | | **Total financial liabilities** | **93,768** | **(25,877)** | **(56,808)** | **(11,672)** | **(422)** | **(55)** | --- # 4. RISK MANAGEMENT (CONTINUED) ## (2) Financial risk (continued) ### (c) Liquidity risk (continued) The table below presents a maturity analysis of the portfolios of insurance contracts and reinsurance contract held based on the estimated timing of the remaining contractual undiscounted cash flows: **Undiscounted cash flows-Cash in/(Cash out)** | 31 December 2023 | Carrying amount | Within 1 year | 1 to 2 years | 2 to 3 years | 3 to 4 years | 4 to 5 years | Over 5 years | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Reinsurance contract assets | 9,802 | 929 | 120 | 91 | 93 | 134 | 10,636 | 12,003 | | Insurance contract liabilities | 1,146,497 | 31,010 | 7,831 | (18,264) | (40,520) | (47,043) | (2,123,851) | (2,190,837) | **Undiscounted cash flows-Cash in/(Cash out)** | 31 December 2022 (Restated) | Carrying amount | Within 1 year | 1 to 2 years | 2 to 3 years | 3 to 4 years | 4 to 5 years | Over 5 years | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Reinsurance contract assets | 10,590 | 1,757 | 275 | 284 | 279 | 300 | 15,423 | 18,318 | | Insurance contract liabilities | 1,013,191 | 37,224 | 27,010 | (4,802) | (23,097) | (43,117) | (2,013,510) | (2,020,292) | The cash flows presented in the table above are undiscounted expected cash flows based on future benefit payments, taking into account policyholders’ future premiums or deposits. The above estimated results are affected by a number of assumptions. These assumptions relate to mortality, morbidity, lapse rates, non-life insurance loss ratios, expense assumptions, and other assumptions. Actual results may differ from estimates. Although all policyholders can exercise their right to surrender immediately and concurrently based on the terms of the contract, the Group disclosed undiscounted estimated cash flows in the above table based on experience and future expectations. As at 31 December 2023, assuming the insurance contracts of carrying amount of RMB1,114,021 million (2022: RMB1,010,171 million) were surrendered immediately, the amounts of cash flow repayable on demand are RMB897,039 million (2022: RMB796,331 million). --- # 4. RISK MANAGEMENT (CONTINUED) ## (2) Financial risk (continued) ### (d) Disclosures about interests in unconsolidated structured entities The Group’s interests in the unconsolidated structured entities are recorded as financial assets at fair value through profit or loss, debt investments at amortised cost, debt investments at FVTOCI. These structured entities typically raise funds by issuing securities or other beneficiary certificates. The purpose of these structured entities is primarily to generate management service fees or provide finance for public and private infrastructure construction. These investments held by structured entities that the Group has interests in are guaranteed by third parties with higher credit ratings or by pledging, or the borrowers are with higher credit ratings. The Group has not provided any guarantee or financing support to the structured entities that the Group has interests in or sponsored. The unconsolidated structured entities that the Group has sponsored but had no interest were mainly asset management plans, debt investment plans, endowment annuity products, occupational annuity products and enterprise annuity products, etc.. The unconsolidated structured entities were sponsored by the Group for collecting management service fees, which were recorded as other income. The Group has not transferred any assets to these structured entities. #### i) The unconsolidated structured entities that the Group has interests in The Group believes that the maximum risk exposure approximates the carrying amount of interests in these unconsolidated structured entities. The size of the unconsolidated structured entities, the carrying amount of the related assets recognised in the consolidated financial statements and the maximum risk exposure are as below: **Unconsolidated structured entities** | 31 December 2023 | Size | Carrying amount of assets | Maximum exposure of risk | Interest held by the Group | | :--- | :--- | :--- | :--- | :--- | | Funds managed by third parties | Note 1 | 84,632 | 84,632 | Investment income | | Trust plans managed by third parties | Note 1 | 40,765 | 40,765 | Investment income | | Debt investment plans managed by affiliated entities | 27,747 | 16,080 | 16,080 | Investment income and service fee | | Debt investment plans managed by third parties | Note 1 | 23,094 | 23,094 | Investment income | | Others managed by affiliated entities (Note 2) | 546,225 | 12,649 | 12,649 | Investment income and service fee | | Others managed by third parties (Note 2) | Note 1 | 53,693 | 53,693 | Investment income | --- ### 4. RISK MANAGEMENT (CONTINUED) ### (2) Financial risk (continued) #### (d) Disclosures about interests in unconsolidated structured entities ##### i) The unconsolidated structured entities that the Group has interests in (continued) | 31 December 2022 | Size | Unconsolidated structured entities Carrying amount of assets | Unconsolidated structured entities Maximum exposure of risk | Interest held by the Group | | :--- | :--- | :--- | :--- | :--- | | Funds managed by third parties | Note 1 | 87,595 | 87,595 | Investment income | | Trust plans managed by third parties | Note 1 | 70,146 | 70,146 | Investment income | | Debt investment plans managed by affiliated entities | 26,127 | 21,815 | 21,815 | Investment income and service fee | | Debt investment plans managed by third parties | Note 1 | 24,848 | 24,848 | Investment income | | Others managed by affiliated entities (Note 2) | 204,057 | 36,776 | 36,776 | Investment income and service fee | | Others managed by third parties (Note 2) | Note 1 | 50,817 | 50,817 | Investment income | Note 1: Funds, trust plans, debt investment plans and others managed by third parties are sponsored by third party financial institutions and the information related to size of these structured entities are not publicly available. Note 2: Others included asset management plans, private equity investments, equity investment plans, unlisted equity and asset funding plans, etc. As at 31 December 2023, the size of the unconsolidated structured entities that the Group sponsored but had no interest was RMB34,044 million (31 December 2022: RMB42,292 million), which were mainly asset management plans, debt investment plans, endowment annuity products, occupational annuity products and enterprise annuity products etc., sponsored by the Group for collecting management service fees. In 2023, the management service fees from these structured entities were RMB59 million (2022: RMB131 million), which were recorded as other income. The Group has not transferred any assets to these structured entities. --- ## 4. RISK MANAGEMENT (CONTINUED) ### (2) Financial risk (continued) #### (e) Matching risk of assets and liabilities The Group uses asset-liability management techniques to manage assets and liabilities. The techniques used include the scenario analysis method, the cash flow matching method and the immunity method. The Group uses the above techniques to understand the existing risk and the complex relationship from multiple perspectives, considering the timing and amount of future cash outflow and attributes of liabilities, to comprehensively and dynamically manage the Group’s assets and liabilities and its solvency. The Group takes measures to enhance its solvency, including capital contribution by shareholders, issuing subordinated bonds and capital supplementary bonds, arranging reinsurance, improving the performance of branches, optimising business structure, and establishing a competitive cost structure. ### (3) Capital management The Company’s objectives for managing capital, which is the actual capital calculated as the difference between admitted assets and admitted liabilities as defined by the former China Banking and Insurance Regulatory Commission (the “former CBIRC”, taken placed by the National Administration of Financial Regulation in May 2023), are to comply with the insurance capital requirements of the former CBIRC to meet the minimum capital and safeguard the Company’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholders. The Company manages its capital requirements by assessing shortfalls, if any, between actual capital and minimum capital on a regular basis. The Company continuously and proactively monitors the business structure, and the asset quality and allocation so as to enhance the profitability in relation to solvency margin. The table below summarises the core and comprehensive solvency margin ratios, core capital, actual capital and minimum capital of the Company: | | As at 31 December 2023 | As at 31 December 2022 | | :--- | :--- | :--- | | Core capital | **145,069** | 143,990 | | Actual capital | **257,252** | 244,069 | | Minimum capital | **92,393** | 102,463 | | Core solvency margin ratio | **157.01%** | 140.53% | | Comprehensive solvency margin ratio | **278.43%** | 238.20% | According to the evaluation results of capitalisable risks and four types of non-capitalisable risks, which comprise of operational risk, strategic risk, reputation risk and liquidity risk, the former CBIRC evaluates the intergrated solvency risk of insurance companies and supervises insurance companies in categories. According to the former CBIRC C-ROSS Supervision Information System, the comprehensive risk assessment result of the Company in the third quarter of 2023 is AA. --- ## 4. RISK MANAGEMENT (CONTINUED) ### (4) Fair value hierarchy Fair value estimates are made at a specific point in time based on relevant market information and information about financial instruments. When an active market exists, such as an authorised securities exchange, the market value is the best reflection of the fair values of financial instruments. For financial instruments where there is no active market, fair value is determined using valuation techniques. As at 31 December 2023, the Group’s financial assets mainly include cash and cash equivalents, financial assets at FVTPL, debt investments at amortised cost, debt investments at FVTOCI, equity investments designated at FVTOCI, derivative financial instruments, term deposits, statutory deposits and financial assets purchased under agreements to resell. As at 31 December 2022, the Group’s financial assets mainly include cash and cash equivalents, financial assets at FVTPL, available-for-sale financial assets, held-to-maturity investments, loans and receivables, derivative financial instruments, term deposits, statutory deposits and financial assets purchased under agreements to resell. The Group’s financial liabilities mainly include financial liabilities at FVTPL, financial assets sold under agreements to repurchase, borrowings and other liabilities in 2022 and 2023. Level 1 fair value is based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can obtain at the measurement date. Level 2 fair value is based on valuation techniques using significant inputs, other than level 1 quoted prices, that are observable for the asset being measured, either directly or indirectly, for substantially the full term of the assets through corroboration with observable market data. Observable inputs generally used to measure the fair value of financial assets classified as level 2 include quoted market prices for similar assets in active markets; quoted market prices in markets that are not active for identical or similar assets and other market observable inputs. For level 2 financial instruments, valuations are generally obtained from third party pricing services for identical or comparable assets, or through the use of valuation methodologies using observable market inputs, or recent quoted market prices. Valuation service providers typically gather, analyse and interpret information related to market transactions and other key valuation model inputs from multiple sources, and through the use of widely accepted internal valuation models, provide a theoretical quote on various securities. Debt securities traded among the Chinese interbank market are classified as level 2 when they are valued at recent quoted price from the Chinese interbank market or from valuation service providers. Substantially most financial instruments classified within level 2 of the fair value hierarchy are debt investments denominated in RMB. Fair value of debt investments denominated in RMB is determined based upon the valuation results by the China Central Depository & Clearing Co., Ltd. and China Securities Index Co., Ltd. All significant inputs are observable in the market. --- # 4. RISK MANAGEMENT (CONTINUED) ## (4) Fair value hierarchy (continued) Under certain conditions, the Group may not receive any price from independent third-party pricing service providers. In this instance, the Group may choose to apply internally developed values to the assets being measured. In such cases, the valuations are generally classified as level 3. Key inputs involved in internal valuation are not based on observable market data, and reflect assumptions made by management based on judgments and experience. Level 3 fair value is based on the Group’s valuation models, such as discounted cash flows and comparable companies approach. The Group also considers the original transaction price, recent transactions of the same or similar instruments and completed third-party transactions in comparable instruments. It adjusts the model as deemed necessary for factors such as extension, early redemption, liquidity, default risk and changes in market, economic or company specific conditions. The following table provides the significant unobservable inputs used for financial assets at fair value classified as level 3 as at 31 December 2023 and 31 December 2022: | As at 31 December 2023 | Fair value | Valuation technique | Significant unobservable inputs | Range | Relationship between unobservable inputs and fair value | | :--- | :--- | :--- | :--- | :--- | :--- | | **Financial assets at FVTPL** | | | | | | | - Stocks | 277 | Asian option model | Liquidity discount | 1.68%-9.60% | The higher the liquidity discount, the lower the fair value | | - Stocks | 76 | Comparable companies approach | Liquidity discount | 33.00% | The higher the liquidity discount, the lower the fair value | | - Trust plans | 10,418 | Discounted cash flow method | Discount rate | 4.15%-7.23% | The higher the discount rate, the lower the fair value | | - Debt investment plans | 3,400 | Discounted cash flow method | Discount rate | 5.80% | The higher the discount rate, the lower the fair value | | - Asset funding plans | 1,024 | Discounted cash flow method | Discount rate | 5.60% | The higher the discount rate, the lower the fair value | | - Equity investment | 12,139 | Discounted cash flow method | Discount rate | 3.54%-5.60% | The higher the discount rate, plans the lower the fair value | | - Unlisted equity investments | 7,629 | Comparable companies approach | Liquidity discount | 33.00% | The higher the liquidity discount, the lower the fair value | | - Private equity investments | 13,315 | Fund net assets | Net assets | / | The higher the net assets, the higher the fair value | | **Debt investments at FVTOCI** | | | | | | | - Trust plans | 15,645 | Discounted cash flow method | Discount rate | 4.33%-8.68% | The higher the discount rate, the lower the fair value | | - Debt investment plans | 11,578 | Discounted cash flow method | Discount rate | 3.86%-6.56% | The higher the discount rate, the lower the fair value | | - Asset funding plans | 1,610 | Discounted cash flow method | Discount rate | 4.08-5.30% | The higher the discount rate, the lower the fair value | | **Equity investments designated at FVTOCI** | | | | | | | - Unlisted equity investments | 19 | Comparable companies approach | Liquidity discount | 33.00% | The higher the liquidity discount, the lower the fair value | --- # 4. RISK MANAGEMENT (CONTINUED) ## (4) Fair value hierarchy (continued) | As at 31 December 2022 | Fair value | Valuation technique | Significant unobservable inputs | Range | Relationship between unobservable inputs and fair value | | :--- | :--- | :--- | :--- | :--- | :--- | | **Equity financial assets** | | | | | | | Available-for-sale | | | | | | | - Stocks | 1,081 | Asian option model | Liquidity discount | 7.10% | The higher the liquidity discount, the lower the fair value | | - Trust plans | 1,994 | Discounted cash flow method | Discount rate | 3.85% – 5.31% | The higher the discount rate, the lower the fair value | | - Equity investment plans | 11,804 | Discounted cash flow method | Discount rate | 1.62% – 5.00% | The higher the discount rate, the lower the fair value | | - Unlisted equity investments | 579 | Comparable companies approach | Liquidity discount | 33.00% | The higher the liquidity discount, the lower the fair value | | - Unlisted equity investments | 9,070 | Recent transaction method | Recent transaction price | / | / | | Financial assets at FVTPL | | | | | | | - Stocks | 14 | Asian option model | Liquidity discount | 7.10% | The higher the discount rate, the lower the fair value | | **Debt financial assets** | | | | | | | Available-for-sale | | | | | | | - Trust plans | 67,902 | Discounted cash flow method | Discount rate | 4.22% – 8.47% | The higher the discount rate, the lower the fair value | | - Asset management plans | 45 | Discounted cash flow method | Discount rate | 5.30% | The higher the discount rate, the lower the fair value | --- ### 4. RISK MANAGEMENT (CONTINUED) #### (4) Fair value hierarchy (continued) ##### (a) Assets and liabilities measured at fair value The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities measured at fair value as at 31 December 2023 and 31 December 2022: | | Inputs to fair value measurement | | | | | :--- | :--- | :--- | :--- | :--- | | | **Quoted prices in active markets** | **Significant observable inputs** | **Significant unobservable inputs** | | | **As at 31 December 2023** | **Level 1** | **Level 2** | **Level 3** | **Total** | | **Assets** | | | | | | Financial assets at FVTPL | 184,547 | 147,414 | 48,278 | 380,239 | | Debt investments at FVTOCI | 533 | 317,896 | 28,833 | 347,262 | | Equity investments designated at FVTOCI | 5,351 | – | 19 | 5,370 | | Derivative financial instruments | – | 2 | – | 2 | | **Total** | **190,431** | **465,312** | **77,130** | **732,873** | | | | | | | | **Liabilities** | | | | | | Financial liabilities at FVTPL | – | 3,592 | – | 3,592 | | **Total** | **–** | **3,592** | **–** | **3,592** | --- # 4. RISK MANAGEMENT (CONTINUED) ## (4) Fair value hierarchy (continued) ### (a) Assets and liabilities measured at fair value (continued) | | | Inputs to fair value measurement | | | | :--- | :--- | :--- | :--- | :--- | | | **Quoted prices in active markets** | **Significant observable inputs** | **Significant unobservable inputs** | | | **As at 31 December 2022 (Restated)** | **Level 1** | **Level 2** | **Level 3** | **Total** | | **Assets** | | | | | | Available-for-sale financial assets | | | | | | – Equity financial assets | 147,376 | 31,832 | 24,528 | 203,736 | | – Debt financial assets | 461 | 83,946 | 67,947 | 152,354 | | Financial assets at fair value through profit or loss | | | | | | – Equity financial assets | 13,622 | 42,236 | 14 | 55,872 | | – Debt financial assets | 1,392 | 22,201 | – | 23,593 | | Derivative financial instruments | – | 3 | – | 3 | | **Total** | **162,851** | **180,218** | **92,489** | **435,558** | | | | | | | | **Liabilities** | | | | | | Financial liabilities at FVTPL | – | 25,877 | – | 25,877 | | **Total** | **–** | **25,877** | **–** | **25,877** | The Group recognised transfers between each level at the time when the transfers occurred. The transfers between Level 1 and Level 2 are mainly caused by changes of market conditions that affect whether the Group could obtain quoted prices (unadjusted) in active markets. During the year ended 31 December 2023, the transfers between level 1 and level 2 of the fair value hierarchy for financial assets of the Group were Nil (during the year ended 31 December 2022: RMB228 million were transferred from Level 1 to Level 2 and RMB19 million were transferred from Level 2 to Level 1). --- # 4. RISK MANAGEMENT (CONTINUED) ## (4) Fair value hierarchy (continued) ### (a) Assets and liabilities measured at fair value (continued) The changes in Level 3 financial assets are analysed below: | | Financial assets at FVTPL | Debt investments at FVTOCI | Equity investments designated at FVTOCI | Total | | :--- | :---: | :---: | :---: | :---: | | 1 January 2023 | 69,262 | 40,915 | 12 | 110,189 | | Purchase | 2,555 | 4,464 | – | 7,019 | | Recognised in profit or loss | (358) | (20) | – | (378) | | Recognised in other comprehensive income | – | (207) | 7 | (200) | | Maturity/disposals | (23,181) | (16,319) | – | (39,500) | | 31 December 2023 | 48,278 | 28,833 | 19 | 77,130 | | | Available-for-sale Equity financial assets | Available-for-sale Debt financial assets | Subtotal | Financial assets at fair value through profit or loss Equity financial assets | Total | | :--- | :---: | :---: | :---: | :---: | :---: | | 1 January 2022 | 4,305 | 83,530 | 87,835 | 3,523 | 91,358 | | Purchase | 5,645 | 900 | 6,545 | 13 | 6,558 | | Transfer in | 18,090 | – | 18,090 | – | 18,090 | | Recognised in profit or loss | (588) | (475) | (1,063) | – | (1,063) | | Recognised in other comprehensive income | 1,381 | 358 | 1,739 | 1 | 1,740 | | Maturity/disposals | (4,305) | (16,366) | (20,671) | (3,523) | (24,194) | | 31 December 2022 | 24,528 | 67,947 | 92,475 | 14 | 92,489 | --- # 4. RISK MANAGEMENT (CONTINUED) ## (4) Fair value hierarchy (continued) ### (b) Assets and liabilities for which fair values are disclosed The carrying amounts of assets and liabilities not measured at fair value approximate to their fair values, except for the assets and liabilities disclosed in the following tables. | | As at 31 December 2023 | | | | | :--- | :--- | :--- | :--- | :--- | | | **Level 1** | **Level 2** | **Level 3** | **Total** | | **Assets** | | | | | | Debt investments at amortised cost | 570 | 300,517 | 47,513 | 348,600 | | Investment properties | – | – | 13,090 | 13,090 | | **Total** | **570** | **300,517** | **60,603** | **361,690** | | | | | | | | **Liabilities** | | | | | | Borrowings | – | 20,210 | – | 20,210 | | Investment contract liabilities | – | – | 864 | 864 | | **Total** | **–** | **20,210** | **864** | **21,074** | | | As at 31 December 2022 | | | | | :--- | :--- | :--- | :--- | :--- | | | **Level 1** | **Level 2** | **Level 3** | **Total** | | **Assets** | | | | | | Held-to-maturity | 235 | 406,225 | – | 406,460 | | Loans and receivables | – | – | 47,456 | 47,456 | | Investment properties | – | – | 12,792 | 12,792 | | **Total** | **235** | **406,225** | **60,248** | **466,708** | | | | | | | | **Liabilities** | | | | | | Borrowings | – | 9,881 | – | 9,881 | | Investment contract liabilities | – | – | 1,225 | 1,225 | | **Total** | **–** | **9,881** | **1,225** | **11,106** | --- ## 5. SEGMENT INFORMATION ### (1) Operating segments The Group operates in three operating segments: **(i) Traditional insurance** Traditional insurance is insurance business without participation features. Traditional insurance mainly includes traditional life insurance, health insurance and accident insurance. Reinsurance related to traditional insurance is included in traditional insurance. **(ii) Participating insurance** Participating insurance is insurance business with direct participation features. Reinsurance related to participating insurance business is included in participating insurance. **(iii) Other business** Other business of the Group mainly includes universal life business, investment management business and unallocated other income and expenses of the Group. ### (2) Allocation basis of income and expense Insurance service revenue and expenses, investment income directly attributable to segments will be allocated directly to each segment. Fixed and variable overheads directly attributable to insurance contracts will be allocated to each segment on a systematic and rational basis. Other expenses that are not directly attributable to insurance and reinsurance contract portfolios are not allocated but assigned to other business operating segments directly. --- ## 5. SEGMENT INFORMATION (CONTINUED) ### (3) Allocation basis of assets and liabilities Insurance business assets and liabilities, investment assets and liabilities directly attributable to operating segments will be directly allocated to each segment. Other assets and liabilities including statutory deposits, investment properties, property, plant and equipment, intangible assets, right-of-use assets, deferred tax assets, other assets (other than prepaid income tax), borrowings, lease liabilities, deferred tax liabilities and current income tax liabilities are not allocated but assigned to other business operating segments directly. ### (4) Information about major customers and locations Substantially all of the Group’s revenues are derived from its operations in the PRC. Substantially all of the Group’s assets are located in the PRC. All of the Group’s operating revenues are deemed as external except for those presented as inter-segment revenue. In order to better reflect the changes in the Group’s external environment and business structure, and the objectives of future development, as well as providing users of financial statements with more useful information, the Group has adjusted its internal reporting method of segments in 2023, and realigned the composition of its reporting segments by changing the previously reported individual insurance business, group insurance business and other business into three newly identified segments, namely traditional insurance, participating insurance and others. The Group’s management has conducted analysis and evaluation on the operating results based on the new reporting segments. The Group has restated prior year’s comparative amounts based on the adjusted operating segments as follows. --- ## 5. SEGMENT INFORMATION (CONTINUED) ### (5) Segment analysis | | For the year ended 31 December 2023 | | | | | | :--- | :---: | :---: | :---: | :---: | :---: | | | **Traditional Insurance** | **Participating Insurance** | **Others** | **Elimination** | **Total** | | **REVENUES** | | | | | | | Insurance revenue | 40,922 | 6,912 | 211 | – | 48,045 | | Interest income | 13,857 | 16,541 | 1,870 | – | 32,268 | | Other investment income | (4,617) | (4,769) | 126 | – | (9,260) | | Other income | 74 | 15 | 1,847 | (735) | 1,201 | | | | | | | | | Total revenue | 50,236 | 18,699 | 4,054 | (735) | 72,254 | | | | | | | | | **BENEFITS, CLAIMS AND EXPENSES** | | | | | | | Insurance service expenses | (28,635) | (5,119) | (233) | 735 | (33,252) | | Net expenses from reinsurance contracts held | (767) | – | – | – | (767) | | Finance expenses from insurance contracts issued | (13,896) | (11,270) | (1,634) | – | (26,800) | | Less: Finance income from reinsurance contracts held | 261 | – | – | – | 261 | | Net impairment losses on financial assets | (306) | 5 | (6) | – | (307) | | Other expenses | – | – | (3,149) | – | (3,149) | | | | | | | | | **Total benefits, claims and expenses** | **(43,343)** | **(16,384)** | **(5,022)** | **735** | **(64,014)** | | | | | | | | | Share of profits and losses of associates and joint ventures | (638) | (1) | – | – | (639) | | Other finance costs | (409) | (783) | (894) | – | (2,086) | | | | | | | | | **Profit before income tax** | **5,846** | **1,531** | **(1,862)** | **–** | **5,515** | | | | | | | | | **Other segment information:** | | | | | | | Capital expenditure | – | – | 2,090 | – | 2,090 | | Depreciation and amortisation | (1,385) | (248) | (255) | – | (1,888) | --- ## 5. SEGMENT INFORMATION (CONTINUED) ### (5) Segment analysis (continued) | | For the year ended 31 December 2022 (Restated) | | | | | | :--- | :--- | :--- | :--- | :--- | :--- | | | **Traditional Insurance** | **Participating Insurance** | **Others** | **Elimination** | **Total** | | **REVENUES** | | | | | | | Insurance revenue | 48,950 | 7,810 | 118 | – | 56,878 | | Interest income | 12,614 | 17,318 | 2,069 | – | 32,001 | | Other investment income | 3,641 | 13,343 | 629 | – | 17,613 | | Other income | 368 | 80 | 1,881 | (657) | 1,672 | | **Total revenue** | **65,573** | **38,551** | **4,697** | **(657)** | **108,164** | | **BENEFITS, CLAIMS AND EXPENSES** | | | | | | | Insurance service expenses | (28,491) | (5,588) | (367) | 657 | (33,789) | | Net expenses from reinsurance contracts held | 707 | – | (1) | – | 706 | | Finance expenses from insurance contracts issued | (12,111) | (29,135) | (1,883) | – | (43,129) | | Less: Finance income from reinsurance contracts held | 220 | – | – | – | 220 | | Net impairment losses on financial assets | (3,280) | (1,711) | 33 | – | (4,958) | | Other expenses | – | – | (3,944) | – | (3,944) | | **Total benefits, claims and expenses** | **(42,955)** | **(36,434)** | **(6,162)** | **657** | **(84,894)** | | Share of profits and losses of associates and joint ventures | (5) | (13) | – | – | (18) | | Other finance costs | (198) | (317) | (658) | – | (1,173) | | **Profit before income tax** | **22,415** | **1,787** | **(2,123)** | **–** | **22,079** | | **Other segment information:** | | | | | | | Capital expenditure | – | – | 1,789 | – | 1,789 | | Depreciation and amortisation | (1,321) | (259) | (330) | – | (1,910) | --- ## 5. SEGMENT INFORMATION (CONTINUED) ### (5) Segment analysis (continued) Segment assets and liabilities as at 31 December 2023 and 31 December 2022: | As at 31 December 2023 | Traditional Insurance | Participating Insurance | Others | Elimination | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Segment assets | 577,792 | 685,087 | 140,430 | (52) | 1,403,257 | | Segment liabilities | 512,438 | 681,601 | 104,178 | (52) | 1,298,165 | | | | | | | | | **As at 31 December 2022 (Restated)** | **Traditional Insurance** | **Participating Insurance** | **Others** | **Elimination** | **Total** | | Segment assets | 488,475 | 611,382 | 115,168 | (89) | 1,214,936 | | Segment liabilities | 391,629 | 627,311 | 98,089 | (89) | 1,116,940 | --- # 6. PROPERTY, PLANT AND EQUIPMENT | | Buildings | Office equipment | Motor vehicles | Construction in progress | Total | | :--- | :---: | :---: | :---: | :---: | :---: | | **Cost** | | | | | | | As at 1 January 2023 | 17,515 | 1,534 | 116 | 1,877 | 21,042 | | Additions | 19 | 101 | – | 1,307 | 1,427 | | Transfers upon completion | 377 | 301 | – | (678) | – | | Transfer from investment properties (Note 7) | 202 | – | – | – | 202 | | Transfer to investment properties (Note 7) | (234) | – | – | (91) | (325) | | Transfer to intangible assets (Note 9) | – | – | – | (376) | (376) | | Transfer to other assets | (16) | – | – | – | (16) | | Disposals | (2) | (26) | (13) | – | (41) | | Reclassification | (137) | 137 | – | – | – | | As at 31 December 2023 | 17,724 | 2,047 | 103 | 2,039 | 21,913 | | | | | | | | | **Accumulated depreciation** | | | | | | | As at 1 January 2023 | (2,219) | (1,019) | (54) | – | (3,292) | | Charges for the year | (463) | (174) | (19) | – | (656) | | Transfer from investment properties (Note 7) | (19) | – | – | – | (19) | | Transfer to investment properties (Note 7) | 36 | – | – | – | 36 | | Transfer to other assets | 1 | – | – | – | 1 | | Disposals | – | 23 | 12 | – | 35 | | Reclassification | 4 | (4) | – | – | – | | As at 31 December 2023 | (2,660) | (1,174) | (61) | – | (3,895) | | | | | | | | | **Net book value** | | | | | | | As at 1 January 2023 | 15,296 | 515 | 62 | 1,877 | 17,750 | | As at 31 December 2023 | 15,064 | 873 | 42 | 2,039 | 18,018 | --- # 6. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) | | Buildings | Office equipment | Motor vehicles | Construction in progress | Total | | :--- | :---: | :---: | :---: | :---: | :---: | | **Cost** | | | | | | | As at 1 January 2022 | 16,473 | 1,434 | 127 | 2,649 | 20,683 | | Additions | 9 | 109 | – | 1,203 | 1,321 | | Transfers upon completion | 1,466 | 9 | – | (1,475) | – | | Transfer from investment properties (Note 7) | – | – | – | 37 | 37 | | Transfer to investment properties (Note 7) | (433) | – | – | – | (433) | | Transfer to intangible assets (Note 9) | – | – | – | (536) | (536) | | Transfer to other assets | – | – | – | (1) | (1) | | Disposals | – | (18) | (11) | – | (29) | | | | | | | | | As at 31 December 2022 | 17,515 | 1,534 | 116 | 1,877 | 21,042 | | | | | | | | | **Accumulated depreciation** | | | | | | | As at 1 January 2022 | (1,776) | (885) | (51) | – | (2,712) | | Charges for the year | (450) | (152) | (10) | – | (612) | | Transfer to investment properties (Note 7) | 7 | – | – | – | 7 | | Disposals | – | 18 | 7 | – | 25 | | | | | | | | | As at 31 December 2022 | (2,219) | (1,019) | (54) | – | (3,292) | | | | | | | | | **Net book value** | | | | | | | As at 1 January 2022 | 14,697 | 549 | 76 | 2,649 | 17,971 | | | | | | | | | As at 31 December 2022 | 15,296 | 515 | 62 | 1,877 | 17,750 | The Group was in the process of obtaining the legal title in respect of the ownership of buildings with an aggregate net book value of approximately RMB155 million as at 31 December 2023 (31 December 2022: RMB946 million). As at 31 December 2023 and 2022, the Group has no property, plant and equipment under finance lease and held for sale, and no significant idle property, plant and equipment. --- ### 7. INVESTMENT PROPERTIES | | For the year ended 31 December | | | :--- | :--- | :--- | | | **2023** | 2022 | | **Cost** | | | | Beginning of the year | **11,016** | 10,625 | | Transfer from property, plant and equipment (Note 6) | **325** | 433 | | Transfer to property, plant and equipment (Note 6) | **(202)** | (42) | | End of the year | **11,139** | 11,016 | | | | | | **Accumulated depreciation** | | | | Beginning of the year | **(1,463)** | (1,198) | | Transfer from property, plant and equipment (Note 6) | **(36)** | (7) | | Transfer to property, plant and equipment (Note 6) | **19** | 5 | | Charges for the year | **(276)** | (263) | | End of the year | **(1,756)** | (1,463) | | | | | | **Net book value** | | | | Beginning of the year | **9,553** | 9,427 | | End of the year | **9,383** | 9,553 | Rental income from investment properties is recognised in “Other income” (Note 26). According to the asset valuation report issued by JLL (Beijing) Real Estate Assets Appraisal & Consultancy Co., Ltd., the fair value of investment properties as at 31 December 2023 was RMB13,090 million(31 December 2022: RMB12,792 million). The techniques used for the valuation of investment properties include the income approach and sales comparison approach. The fair value of investment properties is categorized within Level 3. Key inputs used in measuring fair value of investment properties include capitalization rate, market rent and unit price. As at 31 December 2023, capitalization rate used in valuation ranges from 4.5% to 7.0% (31 December 2022: 4.5% to 7.0%), market rent used ranges from RMB53 to RMB504 per square meter (31 December 2022: RMB54 to RMB485 per square meter), unit price used ranges from RMB7,648 to RMB69,000 per square meter (31 December 2022: RMB7,753 to RMB75,555 per square meter). An increase in capitalization rate, decrease in market rent and unit price would result in decrease in the fair value of investment properties, and vice versa. The Group has obtained the legal title in respect of the ownership of buildings as at 31 December 2023 and 2022. The investment properties held by the Group has no impairment as at 31 December 2023 and 2022. --- ## 8. LEASES ### The Group as a lessee The Group has lease contracts for various items of buildings and others used in its operations. Leases of buildings generally have lease terms between 1 and 10 years, while others generally have lease terms between 1 and 5 years. The Group’s right-of-use assets include right-of-use assets disclosed in (1) and the land use rights disclosed in Note 9. #### (1) Right-of-use assets The carrying amounts of the Group’s right-of-use assets and the movements during the year are as follows: | | Buildings | Others | Total | | :--- | :---: | :---: | :---: | | **Cost** | | | | | **As at 1 January 2023** | **1,970** | **4** | **1,974** | | Additions | 471 | 1 | 472 | | Terminations | (591) | (1) | (592) | | **As at 31 December 2023** | **1,850** | **4** | **1,854** | | | | | | | **Accumulated depreciation** | | | | | **As at 1 January 2023** | **(986)** | **(2)** | **(988)** | | Charges for the year | (455) | (1) | (456) | | Terminations | 470 | 1 | 471 | | **As at 31 December 2023** | **(971)** | **(2)** | **(973)** | | | | | | | **Net book value** | | | | | **As at 1 January 2023** | **984** | **2** | **986** | | **As at 31 December 2023** | **879** | **2** | **881** | --- ### 8. LEASES (CONTINUED) ### The Group as a lessee (continued) ### *(1) Right-of-use assets (continued)* | | Buildings | Others | Total | | :--- | :--- | :--- | :--- | | **Cost** | | | | | **As at 1 January 2022** | 2,161 | 4 | 2,165 | | Additions | 626 | 1 | 627 | | Terminations | (817) | (1) | (818) | | **As at 31 December 2022** | 1,970 | 4 | 1,974 | | | | | | | **Accumulated depreciation** | | | | | **As at 1 January 2022** | (963) | (2) | (965) | | Charges for the year | (523) | (1) | (524) | | Terminations | 500 | 1 | 501 | | **As at 31 December 2022** | (986) | (2) | (988) | | | | | | | **Net book value** | | | | | **As at 1 January 2022** | 1,198 | 2 | 1,200 | | **As at 31 December 2022** | 984 | 2 | 986 | --- # 8. LEASES (CONTINUED) ## The Group as a lessee (continued) ### (2) Lease liabilities The carrying amount of lease liabilities and the movements during the year are as follows: | | Buildings | Others | Total | | :--- | :---: | :---: | :---: | | **As at 1 January 2023** | **854** | **1** | **855** | | Additions | **360** | **1** | **361** | | Accretion of interest recognised during the year | | | | |     the year | **20** | **–** | **20** | | Payment | **(475)** | **(1)** | **(476)** | | | | | | | **As at 31 December 2023** | **759** | **1** | **760** | | | | | | | Current | **336** | **–** | **336** | | Non-current | **423** | **1** | **424** | | | Buildings | Others | Total | | :--- | :---: | :---: | :---: | | **As at 1 January 2022** | 1,039 | 1 | 1,040 | | Additions | 317 | – | 317 | | Accretion of interest recognised during the year | | | | |     the year | 26 | – | 26 | | Payment | (528) | – | (528) | | | | | | | **As at 31 December 2022** | 854 | 1 | 855 | | | | | | | Current | 401 | 1 | 402 | | Non-current | 453 | – | 453 | --- # 8. LEASES (CONTINUED) ## The Group as a lessee (continued) ### (3) The amounts recognised in expenditure in relation to leases are as follows: | | 2023 | 2022 | | :--- | :---: | :---: | | Interest on lease liabilities | **20** | 26 | | Depreciation expense of right-of-use assets | **456** | 524 | | Expense relating to short-term leases and low value assets | **68** | 62 | | | | | | **Total expenditure** | **544** | 612 | **(4)** For the year ended 31 December 2023, the total cash outflow for leases was RMB544 million (for the year ended 31 December 2022: RMB590 million) and future cash outflows relating to leases that have not yet commenced are RMB811 million (for the year ended 31 December 2022: RMB1,038 million). ## The Group as a lessor The Group leases its investment properties (Note 7) under operating lease arrangements. The terms of the leases generally require the tenants to pay security deposits and provide for periodic rent adjustments according to the then prevailing market conditions. Rental income recognised by the Group during the year was RMB413 million (for the year ended 31 December 2022: RMB336 million), details of which are included in Note 26 to the financial statements. At 31 December 2023, the undiscounted lease payments receivables by the Group in future periods under non-cancellable operating leases with its tenants are as follows: | | As at 31 December 2023 | As at 31 December 2022 | | :--- | :---: | :---: | | Within 1 year (including 1 year) | **211** | 301 | | Between 1 year and 2 years (including 2 years) | **125** | 183 | | Between 2 and 3 years (including 3 years) | **69** | 91 | | Between 3 and 4 years (including 4 years) | **39** | 57 | | Between 4 and 5 years (including 5 years) | **32** | 32 | | More than 5 years | **25** | 74 | | | | | | **Total** | **501** | 738 | --- ### 9. INTANGIBLE ASSETS | | Computer software and others | Land use rights | Total | | :--- | :---: | :---: | :---: | | **Cost** | | | | | As at 1 January 2023 | 2,732 | 3,396 | 6,128 | | Additions | 67 | – | 67 | | Transfer from property, plant and equipment (Note 6) | 376 | – | 376 | | As at 31 December 2023 | 3,175 | 3,396 | 6,571 | | | | | | | **Accumulated amortization** | | | | | As at 1 January 2023 | (1,571) | (555) | (2,126) | | Amortization | (296) | (86) | (382) | | As at 31 December 2023 | (1,867) | (641) | (2,508) | | | | | | | **Net book value** | | | | | As at 1 January 2023 | 1,161 | 2,841 | 4,002 | | As at 31 December 2023 | 1,308 | 2,755 | 4,063 | --- ### 9. INTANGIBLE ASSETS (CONTINUED) | | Computer software and others | Land use rights | Total | | :--- | :---: | :---: | :---: | | **Cost** | | | | | As at 1 January 2022 | 2,139 | 3,396 | 5,535 | | Additions | 59 | – | 59 | | Transfer from property, plant and equipment (Note 6) | 536 | – | 536 | | Disposals | (2) | – | (2) | | As at 31 December 2022 | 2,732 | 3,396 | 6,128 | | | | | | | **Accumulated amortization** | | | | | As at 1 January 2022 | (1,274) | (469) | (1,743) | | Amortization | (299) | (86) | (385) | | Disposals | 2 | – | 2 | | As at 31 December 2022 | (1,571) | (555) | (2,126) | | | | | | | **Net book value** | | | | | As at 1 January 2022 | 865 | 2,927 | 3,792 | | As at 31 December 2022 | 1,161 | 2,841 | 4,002 | The Group has obtained the legal titles in respect of the entire ownership of land use rights as at 31 December 2023 and 2022. --- ### 10. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES | | For the year ended 31 December | | | :--- | :---: | :---: | | | **2023** | 2022 | | Beginning of the year | **5,820** | 5,452 | | Additions | **5** | 866 | | Difference arising from portion of fair value of net identifiable asset in excess of the cost of purchasing associates | **–** | 51 | | Dividend from investments in associates and joint ventures | **(44)** | (203) | | Share of profit or loss | **(639)** | (18) | | Share of other comprehensive income | **66** | (476) | | Share of other reserves | **(36)** | 136 | | Currency translation differences | **2** | 12 | | **End of the year** | **5,174** | 5,820 | Details of investments in associates and joint ventures are as follows: | | **As at 31 December** | As at 31 December | | :--- | :---: | :---: | | | **2023** | 2022 | | **Associates** | | | | China Jinmao Holdings Group Limited (“China Jinmao”) | **2,990** | 3,654 | | Allinpay Network Services Co., Ltd. | **761** | 735 | | Beijing Zijin Century Real Estate Co., Ltd. (“Zijin Century”) (Note) | **700** | 705 | | Huixin Capital International Management Limited | **151** | 149 | | Beijing MJ Health Screening Center Co., Ltd. | **7** | 6 | | **Joint venture** | | | | New China Life Excellent Health Investment Management Co., Ltd. (“New China Health”) | **560** | 571 | | Guofeng Xinghua (Beijing) Private Equity Fund Management Co., Ltd (“Guofeng Xinghua”) | **5** | – | | **Total** | **5,174** | 5,820 | Note: As approved by shareholders at the fifth shareholders’ extraordinary general meeting on 23 August 2011, the Group plans to sell its shareholdings of 24% of Zijin Century. Up to the approval date of the consolidated financial statements, the Company has not signed any sales agreement. --- ## 10. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED) Details of investments in associates and joint ventures: | Name of entity | Type of legal entity | Place of incorporation/ registration and business | Particulars of issued shares held | Percentage of ownership interest For the financial year ended 31 December 2023 | Percentage of ownership interest For the financial year ended 31 December 2022 | Principal activities | Measurement method | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Associates** | | | | | | | | | China Jinmao Holdings Group Limited (“China Jinmao”) (1) | Company limited by shares | Hong Kong, the PRC | N/A | **9.03%** | 9.03% | Real estate development | Equity | | Allinpay Network Services Co., Ltd. (“ALL IN PAY”) (2) | Company limited by shares | Shanghai, the PRC | RMB1,460 million | **9.07%** | 9.07% | 3rd-party payment, etc. | Equity | | Beijing Zijin Century Real Estate Co., Ltd. (“Zijin Century”) | Other limited liability company | Beijing, the PRC | RMB2,500 million | **24%** | 24% | Real estate development, etc. | Equity | | New China Capital International Limited (“New China Capital International”) | Limited liability company | Cayman Islands | N/A | **39.86%** | 39.86% | Asset management | Equity | | Beijing MJ Health Screening Center Co., Ltd. | Limited liability company | Beijing, the PRC | USD4 million | **30%** | 30% | Medical services, etc. | Equity | | **Joint venture** | | | | | | | | | New China Life Excellent Health Investment Management Co., Ltd. (“New China Health”) | Other limited liability company | Beijing, the PRC | RMB1,127 million | **45%** | 45% | Asset management, etc. | Equity | | Guofeng Xinghua (Beijing) Private Equity Fund Management Co., Ltd (“Guofeng Xinghua”) (3) | Other limited liability company | Beijing, the PRC | RMB10 million | **50%** | – | Asset management, etc. | Equity | (1) According to the Articles of the Association of China Jinmao, the Group appointed a director to the board of directors of China Jinmao, and thus exercised significant influence on China Jinmao. Therefore, the Group measures China Jinmao as an associate of the Group through equity method. (2) The Company was approved to appoint one director to ALL IN PAY on 15 July 2022 and thereafter exercised significant influence on it. Therefore, it was accounted for as an associated company using the equity method. (3) On 22 December 2023, New China Life Asset Management Company and China Life Asset Management Company each invested RMB5 million to establish a joint venture, Guofeng Xinghua. The daily operations and investment decisions of Guofeng Xinghua must be mutually agreed upon by both parties before they can be executed. --- ### 10. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED) There are no contingent liabilities relating to the Group’s interests in the associates and joint ventures. Excepting for China Jinmao, the above investments in associates and joint ventures are all non-public entities, and there is no quoted market price available. As at the last trading day for the year ended 31 December 2023, the stock price of China Jinmao was HKD0.75 per share. The carrying amount of China Jinmao exceeded its fair value. Management performed impairment testing accordingly considering such impairment indicator exists. The recoverable amount of the interest in China Jinmao is determined based on the present value of expected future cash flows for five years, with subsequent extrapolation to perpetuity. The key assumptions used for evaluation include discount rate and perpetual growth rate. The discount rate determined by the Group that based on the weighted average cost of capital and the capital asset pricing model is 7.04%. The perpetual growth rate determined that based on inflation levels with prudence considerations is 1%. The management concluded that there was no impairment on such investment as at 31 December 2023 after performing impairment testing (31 December 2022: none). Except China Jinmao, ALL IN PAY and New China Capital International, the English names of the associates and joint ventures represent the best effort by management of the Group in translating their Chinese names as they do not have official English names. --- ### 10. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES (CONTINUED) #### Material associate investment The following tables illustrate the summarized financial information in respect of the material associate investment in the consolidated financial statements: | | As at/For the year ended 31 December | | | :--- | :--- | :--- | | | **2023** | 2022 | | **China Jinmao** | | | | Current assets | **187,151** | 191,472 | | Non-current assets | **219,968** | 230,424 | | **Total assets** | **407,119** | 421,896 | | Current liabilities | **176,090** | 188,459 | | Non-current liabilities | **121,192** | 120,750 | | **Total liabilities** | **297,282** | 309,209 | | Equity attributable to shareholders of China Jinmao | **39,291** | 47,445 | | Group’s share of net assets of the associates | **3,547** | 4,343 | | Adjustments | **(557)** | (689) | | **Carrying amount of the investment in China Jinmao** | **2,990** | 3,654 | | Revenues | **72,404** | 82,991 | | (Loss)/profit for the year | **(4,858)** | 5,221 | | Total comprehensive income attributable to shareholders of China Jinmao | **(7,785)** | (2,402) | | Dividends received | **39** | 203 | China Jinmao is a material associate investment of the Group accounted for using the equity method. --- ### 11. FINANCIAL INVESTMENTS #### (1) Financial assets at fair value through profit or loss | | As at 31 December 2023 | As at 31 December 2022 (Restated) | | :--- | :---: | :---: | | Bonds | | | |     Government bonds | 740 | 123 | |     Financial bonds | 6,373 | 667 | |     Corporate bonds | 12,705 | 16,178 | |     Subordinated bonds | 62,306 | 1,986 | | Stocks | 91,299 | 5,361 | | Funds | 84,632 | 8,275 | | Asset management plans | 37,107 | 38,404 | | Certificates of deposit | 13,609 | 4,639 | | Private equity investments | 13,315 | – | | Equity investment plans | 12,139 | – | | Trust plans | 10,418 | – | | Unlisted equity investments | 7,629 | – | | Others ⁽ⁱ⁾ | 27,967 | 3,832 | | | | | | **Total** | **380,239** | **79,465** | | | | | | Listed | 127,945 | 22,734 | | Unlisted | 252,294 | 56,731 | | | | | | **Total** | **380,239** | **79,465** | (i) Others mainly include preferred shares, perpetual bonds, bank wealth investment products, debt investment plans and assets funding plans. --- ## 11. FINANCIAL INVESTMENTS (CONTINUED) ### (2) Debt investments at amortised cost | | As at 31 December 2023 | | :--- | ---: | | Bonds | | | Government bonds | 260,108 | | Financial bonds | 3,724 | | Corporate bonds | 8,651 | | Subordinated bonds | 622 | | Debt investment plans | 24,582 | | Trust plans | 14,789 | | Asset funding plans | 1,147 | | **Subtotal** | **313,623** | | Less: Allowance for impairment losses | (475) | | **Total** | **313,148** | | | | | Listed | 122,009 | | Unlisted | 191,139 | | **Total** | **313,148** | For the year ended 31 December 2023, movements of the allowance for impairment losses on debt investments at amortised cost are as follows: | | Stage 1 (12-month ECL) | Stage 2 (Lifetime ECL- not credit-impaired) | Stage 3 (Lifetime ECL-credit-impaired) | Total | | :--- | :---: | :---: | :---: | :---: | | **1 January 2023** | | | | | | Allowance for impairment losses | 91 | - | 76 | 167 | | Transfer to: | | | | | | – Stage 2 | (2) | 2 | – | – | | – Stage 3 | – | (1) | 1 | – | | Charge/(reversal) for the year | (2) | 1 | 309 | 308 | | **31 December 2023** | | | | | | Allowance for impairment losses | 87 | 2 | 386 | 475 | | | | | | | | **31 December 2023** | | | | | | Total balance | 309,739 | 1,384 | 2,500 | 313,623 | --- # 11. FINANCIAL INVESTMENTS (CONTINUED) ## (3) Debt investments at fair value through other comprehensive income | | As at 31 December 2023 | | :--- | :---: | | Bonds | | | Government bonds | 209,259 | | Financial bonds | 54,418 | | Corporate bonds | 43,289 | | Subordinated bonds | 11,463 | | Trust plans | 15,645 | | Debt investment plans | 11,578 | | Asset funding plans | 1,610 | | **Total** | **347,262** | | | | | Listed | 127,754 | | Unlisted | 219,508 | | **Total** | **347,262** | As at 31 December 2023, the total allowance for impairment losses recognised in debt financial assets at fair value through other comprehensive income is RMB1,570 million. For the year ended 31 December 2023, movements of the allowance for impairment losses on debt investments at FVTOCI are as follows: | | Stage 1 (12-month ECL) | Stage 2 (Lifetime ECL-not credit-impaired) | Stage 3 (Lifetime ECL-credit-impaired) | Total | | :--- | :---: | :---: | :---: | :---: | | 1 January 2023 Allowance for impairment losses | 50 | – | 1,524 | 1,574 | | Transfer to: | | | | | | – Stage 2 | (2) | 2 | – | – | | Charge/(reversal) for the year | (6) | 2 | – | (4) | | 31 December 2023 Allowance for impairment losses | 42 | 4 | 1,524 | 1,570 | | | | | | | | 31 December 2023 Carrying value | 342,499 | 2,572 | 2,191 | 347,262 | --- ### 11. FINANCIAL INVESTMENTS (CONTINUED) #### (4) Equity investments designated at fair value through other comprehensive income | | As at 31 December 2023 | | :--- | :--- | | Listed stocks | 5,351 | | Unlisted equity investments | 19 | | | | | **Total** | **5,370** | (i) For equity investments which are not held for trading but for long-term investments, the Group has irrevocably elected to recognise them in such category at initial recognition. (ii) There was no disposal of equity investments designated at FVTOCI in the current period. (iii) In the current year, dividend income from equity investments designated at FVTOCI was RMB383 million. #### (5) Held-to-maturity investments | | As at 31 December 2022 | | :--- | :--- | | **Debt financial assets** | | | Government bonds | 306,059 | | Financial bonds | 27,979 | | Corporate bonds | 35,764 | | Subordinated bonds | 8,589 | | | | | **Total** | **378,391** | | | | | **Debt financial assets** | | | Listed | 130,371 | | Unlisted | 248,020 | | | | | **Total** | **378,391** | The unlisted debt financial assets refer to debt financial assets not traded on stock exchanges, but traded in interbank market. --- ## 11. FINANCIAL INVESTMENTS (CONTINUED) ### (5) Held-to-maturity investments (continued) The due dates of debt financial assets which are classified as held-to-maturity investments are as follows: | Maturity | As at 31 December 2022 | | :--- | :--- | | Within 1 year (including 1 year) | 14,589 | | After 1 year but within 3 years (including 3 years) | 18,100 | | After 3 years but within 5 years (including 5 years) | 24,308 | | After 5 years | 321,394 | | **Total** | **378,391** | --- ### 11. FINANCIAL INVESTMENTS (CONTINUED) #### (6) Available-for-sale financial assets | | As at 31 December 2022 | | :--- | :---: | | **Debt financial assets** | | | At fair value | | |     Government bonds | **47,330** | |     Financial bonds | **16,641** | |     Corporate bonds | **8,643** | |     Subordinated bonds | **11,793** | |     Trust plans | **67,902** | |     Asset management plans | **45** | | Subtotal | **152,354** | | | | | **Equity financial assets** | | | At fair value | | |     Funds | **78,856** | |     Stock | **69,145** | |     Preferred shares | **4,850** | |     Asset management plans | **24,295** | |     Equity investment plans | **11,804** | |     Unlisted equity investments | **9,649** | |     Perpetual bonds | **3,143** | |     Trust plans | **1,994** | | Subtotal | **203,736** | | | | | At cost | | |     Private equity investments | **12,505** | |     Unlisted equity investments | **7,059** | | Subtotal | **19,564** | | **Total** | **375,654** | | | | | **Debt financial assets** | | |     Listed | **24,067** | |     Unlisted | **128,287** | | Subtotal | **152,354** | | | | | **Equity financial assets** | | |     Listed | **76,604** | |     Unlisted | **146,696** | | Subtotal | **223,300** | | **Total** | **375,654** | --- ## 11. FINANCIAL INVESTMENTS (CONTINUED) ### (6) Available-for-sale financial assets (continued) The due dates of debt financial assets which are classified as available-for-sale financial assets are as follows: | Maturity | As at 31 December 2022 | | :--- | :--- | | Within 1 year (including 1 year) | 23,980 | | After 1 year but within 3 years (including 3 years) | 52,806 | | After 3 years but within 5 years (including 5 years) | 20,931 | | After 5 years | 54,637 | | **Total** | **152,354** | The unlisted financial assets refer to debt/equity financial assets not traded on stock exchanges and include both debt financial assets traded in the interbank market and financial assets not publicly traded. ### (7) Loans and receivables | | As at 31 December 2022 | | :--- | :--- | | Debt investment plans (i) | 46,663 | | Asset funding plans | 543 | | Trust plans | 250 | | | | | **Total** | **47,456** | (i) Debt investment plans mainly consist of infrastructure and property, plant and equipment funding projects. All projects are with fixed terms, and most of them are with a period of 3 years to 10 years. --- ### 12. TERM DEPOSITS The due dates of the term deposits are as follows: | Maturity | As at 31 December 2023 | As at 31 December 2022 | | :--- | :--- | :--- | | Within 1 year (including 1 year) | 41,184 | 56,597 | | After 1 year but within 3 years (including 3 years) | 190,735 | 127,450 | | After 3 years but within 5 years (including 5 years) | 24,138 | 43,500 | | | | | | Subtotal | 256,057 | 227,547 | | Less: loss allowances | (73) | N/A | | | | | | Total | 255,984 | 227,547 | ### 13. STATUTORY DEPOSITS The due dates of the statutory deposits are as follows: | Maturity | As at 31 December 2023 | As at 31 December 2022 | | :--- | :--- | :--- | | Within 1 year (including 1 year) | 59 | 900 | | After 1 year but within 3 years (including 3 years) | 965 | 665 | | After 3 years but within 5 years (including 5 years) | 760 | 150 | | | | | | Total | 1,784 | 1,715 | According to the relevant regulations issued by the former CBIRC, statutory deposits can only be used by insurance companies to discharge debt upon liquidation. --- # 14. INSURANCE CONTRACT LIABILITIES AND REINSURANCE CONTRACT ASSETS ### (1) Insurance contract liabilities The following table shows the reconciliation from the opening to the closing balances of the net liability for the remaining coverage and the liability for incurred claims for insurance contracts. | | Contracts not measured under the PAA | | | | Contracts measured under the PAA | | | | | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | :---: | :---: | :---: | | | Liability for remaining coverage | | Liability for incurred claims | | Liability for remaining coverage | | Liability for incurred claims | | | | | Excluding loss component | Loss component | | Total | Excluding loss component | Loss component | Estimates of present value of future cash flows | Risk adjustment for non-financial risk | Total | | **2023** | | | | | | | | | | | Opening liabilities | 993,427 | 5,990 | 10,754 | 1,010,171 | 573 | 143 | 2,252 | 52 | 3,020 | | Opening assets | – | – | – | – | – | – | – | – | – | | **Net opening balance** | 993,427 | 5,990 | 10,754 | 1,010,171 | 573 | 143 | 2,252 | 52 | 3,020 | | | | | | | | | | | | | Insurance revenue | | | | | | | | | | | Contracts under the modified retrospective approach | (37,414) | – | – | (37,414) | – | – | – | – | – | | Contracts under the fair value approach | (1,754) | – | – | (1,754) | – | – | – | – | – | | Other contracts | (4,990) | – | – | (4,990) | (3,887) | – | – | – | (3,887) | | **Insurance revenue** | (44,158) | – | – | (44,158) | (3,887) | – | – | – | (3,887) | | | | | | | | | | | | | Insurance service expenses | | | | | | | | | | | Incurred claims and other insurance service expenses | – | (208) | 17,005 | 16,797 | – | (630) | 2,991 | 18 | 2,379 | | Amortisation of insurance acquisition cash flows | 9,011 | – | – | 9,011 | 1,265 | – | – | – | 1,265 | | Losses and reversals of losses on onerous contracts | – | 1,722 | – | 1,722 | – | 648 | – | – | 648 | | Adjustment to liabilities for incurred claims | – | – | 1,388 | 1,388 | – | – | 70 | (28) | 42 | | **Insurance service expenses** | 9,011 | 1,514 | 18,393 | 28,918 | 1,265 | 18 | 3,061 | (10) | 4,334 | | | | | | | | | | | | | **Insurance service result** | (35,147) | 1,514 | 18,393 | (15,240) | (2,622) | 18 | 3,061 | (10) | 447 | | Insurance finance income or expenses | 56,344 | 117 | – | 56,461 | – | – | – | – | – | | | | | | | | | | | | | **Total changes in the statement of comprehensive income** | 21,197 | 1,631 | 18,393 | 41,221 | (2,622) | 18 | 3,061 | (10) | 447 | | | | | | | | | | | | | Investment components | (56,533) | – | 56,533 | – | (261) | – | 261 | – | – | | Cash flows | | | | | | | | | | | Premiums received | 178,641 | – | – | 178,641 | 4,067 | – | – | – | 4,067 | | Insurance acquisition cash flows | (12,849) | – | – | (12,849) | (1,146) | – | – | – | (1,146) | | Claims and other insurance service expenses paid | – | – | (73,877) | (73,877) | – | – | (3,912) | – | (3,912) | | Other Cash flows | 714 | – | – | 714 | – | – | – | – | – | | **Total cash flows** | 166,506 | – | (73,877) | 92,629 | 2,921 | – | (3,912) | – | (991) | | | | | | | | | | | | | Closing liabilities | 1,124,597 | 7,621 | 11,803 | 1,144,021 | 611 | 161 | 1,662 | 42 | 2,476 | | Closing assets | – | – | – | – | – | – | – | – | – | | **Net closing balance** | 1,124,597 | 7,621 | 11,803 | 1,144,021 | 611 | 161 | 1,662 | 42 | 2,476 | --- # 14. INSURANCE CONTRACT LIABILITIES AND REINSURANCE CONTRACT ASSETS (CONTINUED) ### (1) Insurance contract liabilities (continued) | | Contracts not measured under the PAA | | | | Contracts measured under the PAA | | | | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | Liability for remaining coverage | | Liability for incurred claims | | Liability for remaining coverage | | Liability for incurred claims | | | | | Excluding loss component | Loss component | | | Excluding loss component | Loss component | Estimates of present value of future cash flows | Risk adjustment for non-financial risk | | | **2022** | | | | **Total** | | | | | **Total** | | Opening liabilities | 893,158 | 3,513 | 10,188 | 906,859 | 1,559 | 229 | 2,237 | 52 | 4,077 | | Opening assets | – | – | – | – | – | – | – | – | – | | **Net opening balance** | **893,158** | **3,513** | **10,188** | **906,859** | **1,559** | **229** | **2,237** | **52** | **4,077** | | | | | | | | | | | | | Insurance revenue | | | | | | | | | | | Contracts under the modified retrospective approach | (48,636) | – | – | (48,636) | – | – | – | – | – | | Contracts under the fair value approach | (1,658) | – | – | (1,658) | – | – | – | – | – | | Other contracts | (1,675) | – | – | (1,675) | (4,909) | – | – | – | (4,909) | | **Insurance revenue** | **(51,969)** | **–** | **–** | **(51,969)** | **(4,909)** | **–** | **–** | **–** | **(4,909)** | | | | | | | | | | | | | Insurance service expenses | | | | | | | | | | | Incurred claims and other insurance service expenses | – | (266) | 16,346 | 16,080 | – | (921) | 3,439 | 20 | 2,538 | | Amortisation of insurance acquisition cash flows | 9,870 | – | – | 9,870 | 1,481 | – | – | – | 1,481 | | Losses and reversals of losses on onerous contracts | – | 2,649 | – | 2,649 | – | 835 | – | – | 835 | | Adjustment to liabilities for incurred claims | – | – | 601 | 601 | – | – | (245) | (20) | (265) | | **Insurance service expenses** | **9,870** | **2,383** | **16,947** | **29,200** | **1,481** | **(86)** | **3,194** | **–** | **4,589** | | **Insurance service result** | **(42,099)** | **2,383** | **16,947** | **(22,769)** | **(3,428)** | **(86)** | **3,194** | **–** | **(320)** | | Insurance finance income or expenses | 34,180 | 94 | – | 34,274 | – | – | – | – | – | | **Total changes in the statement of comprehensive income** | **(7,919)** | **2,477** | **16,947** | **11,505** | **(3,428)** | **(86)** | **3,194** | **–** | **(320)** | | | | | | | | | | | | | Investment components | (49,834) | – | 49,834 | – | (213) | – | 213 | – | – | | Cash flows | | | | | | | | | | | Premiums received | 170,069 | – | – | 170,069 | 3,997 | – | – | – | 3,997 | | Insurance acquisition cash flows | (11,176) | – | – | (11,176) | (1,342) | – | – | – | (1,342) | | Claims and other insurance service expenses paid | – | – | (66,215) | (66,215) | – | – | (3,392) | – | (3,392) | | Other Cash flows | (871) | – | – | (871) | – | – | – | – | – | | **Total cash flows** | **158,022** | **–** | **(66,215)** | **91,807** | **2,655** | **–** | **(3,392)** | **–** | **(737)** | | | | | | | | | | | | | Closing liabilities | 993,427 | 5,990 | 10,754 | 1,010,171 | 573 | 143 | 2,252 | 52 | 3,020 | | Closing assets | – | – | – | – | – | – | – | – | – | | **Net closing balance** | **993,427** | **5,990** | **10,754** | **1,010,171** | **573** | **143** | **2,252** | **52** | **3,020** | --- ### 14. INSURANCE CONTRACT LIABILITIES AND REINSURANCE CONTRACT ASSETS (CONTINUED) ### (1) Insurance contract liabilities (continued) The following table shows the reconciliation from the opening to the closing balances of fulfillment cash flows and CSM for contracts not measured under PAA. | 2023 | Estimates of present value of future cash flows | Risk adjustment for nonfinancial risk | CSM - Contracts under modified retrospective approach | CSM - Contracts under fair value approach | CSM - Other contracts | CSM - Subtotal | Total | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | :---: | | Opening liabilities | 826,465 | 8,389 | 159,889 | 8,397 | 7,031 | 175,317 | 1,010,171 | | Opening assets | – | – | – | – | – | – | – | | **Net opening balance** | **826,465** | **8,389** | **159,889** | **8,397** | **7,031** | **175,317** | **1,010,171** | | _Changes that relate to current service_ | | | | | | | | | CSM recognised for services provided | – | – | (13,445) | (850) | (827) | (15,122) | (15,122) | | Change in risk adjustment for non-financial risk for risk expired | – | (845) | – | – | – | – | (845) | | Experience adjustments | (2,383) | – | – | – | – | – | (2,383) | | **Total changes that relate to current service** | **(2,383)** | **(845)** | **(13,445)** | **(850)** | **(827)** | **(15,122)** | **(18,350)** | | _Changes that relate to future service_ | | | | | | | | | Contracts initially recognised in the year | (5,288) | 717 | – | – | 6,167 | 6,167 | 1,596 | | Changes in estimates that adjust the CSM | 3,030 | (174) | (4,103) | 2,088 | (841) | (2,856) | – | | Changes in estimates that do not adjust the CSM | 102 | 24 | – | – | – | – | 126 | | **Total changes that relate to future service** | **(2,156)** | **567** | **(4,103)** | **2,088** | **5,326** | **3,311** | **1,722** | | _Changes that relate to past service_ | | | | | | | | | Adjustments to liabilities for incurred claims | 1,356 | 32 | – | – | – | – | 1,388 | | **Total changes that relate to past service** | **1,356** | **32** | – | – | – | – | **1,388** | | **Insurance service result** | **(3,183)** | **(246)** | **(17,548)** | **1,238** | **4,499** | **(11,811)** | **(15,240)** | | Insurance finance income or expense | 50,433 | 530 | 5,147 | 93 | 258 | 5,498 | 56,461 | | **Total changes in the statement of comprehensive income** | **47,250** | **284** | **(12,401)** | **1,331** | **4,757** | **(6,313)** | **41,221** | | _Cash flows_ | | | | | | | | | Premiums received | 178,641 | – | – | – | – | – | 178,641 | | Insurance acquisition cash flows | (12,849) | – | – | – | – | – | (12,849) | | Claims and other insurance service expenses paid | (73,877) | – | – | – | – | – | (73,877) | | Other cash flows | 714 | – | – | – | – | – | 714 | | **Total cash flows** | **92,629** | – | – | – | – | – | **92,629** | | Closing liabilities | 966,344 | 8,673 | 147,488 | 9,728 | 11,788 | 169,004 | 1,144,021 | | Closing assets | – | – | – | – | – | – | – | | **Net closing balance** | **966,344** | **8,673** | **147,488** | **9,728** | **11,788** | **169,004** | **1,144,021** | --- ### 14. INSURANCE CONTRACT LIABILITIES AND REINSURANCE CONTRACT ASSETS (CONTINUED) ### (1) Insurance contract liabilities (continued) | 2022 | Estimates of present value of future cash flows | Risk adjustment for non-financial risk | CSM Contracts under modified retrospective approach | CSM Contracts under fair value approach | CSM Other contracts | CSM Subtotal | Total | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | :---: | | Opening liabilities | 711,027 | 8,402 | 180,136 | 7,294 | – | 187,430 | 906,859 | | Opening assets | – | – | – | – | – | – | – | | **Net opening balance** | **711,027** | **8,402** | **180,136** | **7,294** | **–** | **187,430** | **906,859** | | | | | | | | | | | Changes that relate to current service | | | | | | | | | CSM recognised for services provided | – | – | (19,818) | (692) | (352) | (20,862) | (20,862) | | Change in risk adjustment for non-financial risk for risk expired | – | (929) | – | – | – | – | (929) | | Experience adjustments | (4,228) | – | – | – | – | – | (4,228) | | **Total changes that relate to current service** | **(4,228)** | **(929)** | **(19,818)** | **(692)** | **(352)** | **(20,862)** | **(26,019)** | | | | | | | | | | | Changes that relate to future service | | | | | | | | | Contracts initially recognised in the year | (5,187) | 706 | – | – | 6,412 | 6,412 | 1,931 | | Changes in estimates that adjust the CSM | 3,863 | (106) | (6,373) | 1,727 | 889 | (3,757) | – | | Changes in estimates that do not adjust the CSM | 721 | (3) | – | – | – | – | 718 | | **Total changes that relate to future service** | **(603)** | **597** | **(6,373)** | **1,727** | **7,301** | **2,655** | **2,649** | | | | | | | | | | | Changes that relate to past service | | | | | | | | | Adjustments to liabilities for incurred claims | 587 | 14 | – | – | – | – | 601 | | **Total changes that relate to past service** | **587** | **14** | **–** | **–** | **–** | **–** | **601** | | | | | | | | | | | **Insurance service result** | **(4,244)** | **(318)** | **(26,191)** | **1,035** | **6,949** | **(18,207)** | **(22,769)** | | Insurance finance income or expense | 27,875 | 305 | 5,944 | 68 | 82 | 6,094 | 34,274 | | | | | | | | | | | **Total changes in the statement of comprehensive income** | **23,631** | **(13)** | **(20,247)** | **1,103** | **7,031** | **(12,113)** | **11,505** | | | | | | | | | | | Cash flows | | | | | | | | | Premiums received | 170,069 | – | – | – | – | – | 170,069 | | Insurance acquisition cash flows | (11,176) | – | – | – | – | – | (11,176) | | Claims and other insurance service expenses paid | (66,215) | – | – | – | – | – | (66,215) | | Other cash flows | (871) | – | – | – | – | – | (871) | | **Total cash flows** | **91,807** | **–** | **–** | **–** | **–** | **–** | **91,807** | | | | | | | | | | | Closing liabilities | 826,465 | 8,389 | 159,889 | 8,397 | 7,031 | 175,317 | 1,010,171 | | Closing assets | – | – | – | – | – | – | – | | **Net closing balance** | **826,465** | **8,389** | **159,889** | **8,397** | **7,031** | **175,317** | **1,010,171** | --- ### 14. INSURANCE CONTRACT LIABILITIES AND REINSURANCE CONTRACT ASSETS (CONTINUED) #### (1) Insurance contract liabilities (continued) The following table provides an analysis of insurance contracts initially recognised in the year: | | Contracts issued | | | | :--- | :--- | :--- | :--- | | **2023** | **Onerous contracts initially recognised in the year** | **Other contracts** | **Total** | | Insurance acquisition cash flows | 4,405 | 7,395 | 11,800 | | Claims payable, expenses and others | 45,260 | 45,148 | 90,408 | | Present value of future cash outflows | 49,665 | 52,543 | 102,208 | | Present value of future cash inflows | (48,195) | (59,301) | (107,496) | | Risk adjustment for non-financial risk | 126 | 591 | 717 | | CSM | – | 6,167 | 6,167 | | Losses recognized on initial recognition | 1,596 | – | 1,596 | | | Contracts issued | | | | :--- | :--- | :--- | :--- | | **2022** | **Onerous contracts initially recognised in the year** | **Other contracts** | **Total** | | Insurance acquisition cash flows | 5,522 | 5,454 | 10,976 | | Claims payable, expenses and others | 52,620 | 29,648 | 82,268 | | Present value of future cash outflows | 58,142 | 35,102 | 93,244 | | Present value of future cash inflows | (56,318) | (42,113) | (98,431) | | Risk adjustment for non-financial risk | 107 | 599 | 706 | | CSM | – | 6,412 | 6,412 | | Losses recognized on initial recognition | 1,931 | – | 1,931 | --- ### 14. INSURANCE CONTRACT LIABILITIES AND REINSURANCE CONTRACT ASSETS (CONTINUED) #### (1) Insurance contract liabilities (continued) The following table details the composition and the fair value of underlying items of the Group’s direct participating contracts. | | **Fair value** | | | :--- | :--- | :--- | | | **31/12/2023** | **31/12/2022** | | **Assets** | | | | Cash and cash equivalents | **8,334** | 4,518 | | Derivative financial instruments | **1** | 2 | | Financial assets purchased under agreements to resell | **1,246** | 2,813 | | Other assets | **5,457** | 1,566 | | Term deposits | **167,304** | 124,617 | | Accrued investment income | **30** | 8,733 | | Debt investments at amortised cost | **8,417** | N/A | | Debt investments at fair value through other comprehensive income | **311,460** | N/A | | Equity investments designated at fair value through other comprehensive income | **53** | N/A | | Financial assets at fair value through profit or loss | **174,219** | 49,773 | | Available-for-sale | **N/A** | 215,579 | | Held-to-maturity | **N/A** | 198,311 | | Loans and receivables | **N/A** | 22,709 | | Investments in associates and joint ventures | **546** | 797 | | **Subtotal** | **677,067** | **629,418** | | | | | | **Liabilities** | | | | Financial assets sold under agreements to repurchase | **66,808** | 23,340 | | Other liabilities | **3,984** | 2,921 | | **Subtotal** | **70,792** | **26,261** | | | | | | **Total** | **606,275** | **603,157** | --- ### 14. INSURANCE CONTRACT LIABILITIES AND REINSURANCE CONTRACT ASSETS (CONTINUED) ### (2) Reinsurance contract assets The following table shows the reconciliation from the opening to the closing balances of the asset for the remaining coverage and the assets for incurred claims recoverable from reinsurance. | | Contracts not measured under the PAA | | | | Contracts measured under the PAA | | | | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | Remaining coverage component | | Incurred claims component | | Remaining coverage component | | Incurred claims component | | | | | Excluding loss recovery component | Loss recovery component | | | Excluding loss recovery component | Loss recovery component | Estimates of present value of future cash flows | Risk adjustment for nonfinancial risk | | | **2023** | **component** | **component** | **component** | **Total** | **component** | **component** | **flows** | **risk** | **Total** | | Opening assets | 9,189 | 22 | 1,126 | 10,337 | 60 | 2 | 191 | – | 253 | | Opening liabilities | – | – | – | – | – | – | – | – | – | | **Net opening balance** | **9,189** | **22** | **1,126** | **10,337** | **60** | **2** | **191** | **–** | **253** | | **Allocation of reinsurance premiums paid** | **(2,371)** | **–** | **–** | **(2,371)** | **(77)** | **–** | **–** | **–** | **(77)** | | Recoveries on incurred claims and other incurred reinsurance service expenses | – | (2) | 1,427 | 1,425 | – | (6) | 79 | – | 73 | | Recoveries of losses on onerous group of underlying contracts and reversal of such losses | – | 4 | – | 4 | – | 5 | – | – | 5 | | Adjustment to recoveries on liabilities for incurred claims related to past service | – | – | 189 | 189 | – | – | (15) | – | (15) | | **Recoveries on insurance service expenses** | **–** | **2** | **1,616** | **1,618** | **–** | **(1)** | **64** | **–** | **63** | | **Net income (expenses) from reinsurance contracts held** | **(2,371)** | **2** | **1,616** | **(753)** | **(77)** | **(1)** | **64** | **–** | **(14)** | | Finance income or expenses from reinsurance contracts | 465 | 1 | – | 466 | – | – | – | – | – | | **Total changes in the statement of comprehensive income** | **(1,906)** | **3** | **1,616** | **(287)** | **(77)** | **(1)** | **64** | **–** | **(14)** | | Investment components | (887) | – | 887 | – | (91) | – | 91 | – | – | | Cash flows | | | | | | | | | | | Premiums paid | 2,341 | – | – | 2,341 | 150 | – | – | – | 150 | | Recoveries received from reinsurers | – | – | (2,685) | (2,685) | – | – | (293) | – | (293) | | **Total cash flows** | **2,341** | **–** | **(2,685)** | **(344)** | **150** | **–** | **(293)** | **–** | **(143)** | | Closing assets | 8,737 | 25 | 944 | 9,706 | 42 | 1 | 53 | – | 96 | | Closing liabilities | – | – | – | – | – | – | – | – | – | | **Net closing balance** | **8,737** | **25** | **944** | **9,706** | **42** | **1** | **53** | **–** | **96** | --- # 14. INSURANCE CONTRACT LIABILITIES AND REINSURANCE CONTRACT ASSETS (CONTINUED) ## (2) Reinsurance contract assets (continued) | 2022 | Contracts not measured under the PAA | Contracts not measured under the PAA | Contracts not measured under the PAA | Contracts not measured under the PAA | Contracts measured under the PAA | Contracts measured under the PAA | Contracts measured under the PAA | Contracts measured under the PAA | Contracts measured under the PAA | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | :---: | :---: | :---: | | | **Remaining coverage component** | **Remaining coverage component** | **Incurred claims component** | **Total** | **Remaining coverage component** | **Remaining coverage component** | **Incurred claims component** | **Incurred claims component** | **Total** | | | **Excluding loss recovery component** | **Loss recovery component** | | | **Excluding loss recovery component** | **Loss recovery component** | **Estimates of present value of future cash flows** | **Risk adjustment for nonfinancial risk** | | | Opening assets | 8,329 | – | 514 | 8,843 | (3) | 3 | 310 | – | 310 | | Opening liabilities | – | – | – | – | – | – | – | – | – | | **Net opening balance** | **8,329** | **–** | **514** | **8,843** | **(3)** | **3** | **310** | **–** | **310** | | **Allocation of reinsurance premiums paid** | **(1,120)** | **–** | **–** | **(1,120)** | **(48)** | **–** | **–** | **–** | **(48)** | | Recoveries on incurred claims and other incurred reinsurance service expenses | – | (2) | 1,477 | 1,475 | – | (6) | 183 | – | 177 | | Recoveries of losses on onerous group of underlying contracts and reversal of such losses | – | 24 | – | 24 | – | 5 | – | – | 5 | | Adjustment to recoveries on liabilities for incurred claims related to past service | – | – | 360 | 360 | – | – | (167) | – | (167) | | **Recoveries on insurance service expenses** | **–** | **22** | **1,837** | **1,859** | **–** | **(1)** | **16** | **–** | **15** | | **Net income (expenses) from reinsurance contracts held** | **(1,120)** | **22** | **1,837** | **739** | **(48)** | **(1)** | **16** | **–** | **(33)** | | Finance income or expenses from reinsurance contracts | 460 | – | – | 460 | – | – | – | – | – | | **Total changes in the statement of comprehensive income** | **(660)** | **22** | **1,837** | **1,199** | **(48)** | **(1)** | **16** | **–** | **(33)** | | Investment components | (1,497) | – | 1,497 | – | (141) | – | 141 | – | – | | Cash flows | | | | | | | | | | | Premiums paid | 3,017 | – | – | 3,017 | 252 | – | – | – | 252 | | Recoveries received from reinsurers | – | – | (2,722) | (2,722) | – | – | (276) | – | (276) | | **Total cash flows** | **3,017** | **–** | **(2,722)** | **295** | **252** | **–** | **(276)** | **–** | **(24)** | | Closing assets | 9,189 | 22 | 1,126 | 10,337 | 60 | 2 | 191 | – | 253 | | Closing liabilities | – | – | – | – | – | – | – | – | – | | **Net closing balance** | **9,189** | **22** | **1,126** | **10,337** | **60** | **2** | **191** | **–** | **253** | --- ### 14. INSURANCE CONTRACT LIABILITIES AND REINSURANCE CONTRACT ASSETS (CONTINUED) ### (2) Reinsurance contract assets (continued) The following table shows the reconciliation from the opening to the closing balances of fulfillment cash flows and CSM for reinsurance contracts not measured under PAA. | 2023 | Estimates of present value of future cash flows | Risk adjustment for nonfinancial risk | CSM Contracts under modified retrospective approach | CSM Contracts under fair value approach | CSM Other contracts | CSM Subtotal | Total | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | :---: | | Opening assets | 9,045 | 1,543 | - | 36 | (287) | (251) | 10,337 | | Opening liabilities | - | - | - | - | - | - | - | | **Net opening balance** | **9,045** | **1,543** | **-** | **36** | **(287)** | **(251)** | **10,337** | | Changes that relate to current service | | | | | | | | | CSM recognised for the year | - | - | - | (132) | (77) | (209) | (209) | | Change in risk adjustment for non-financial risk for risk expired | - | (93) | - | - | - | - | (93) | | Experience adjustments | (644) | - | - | - | - | - | (644) | | **Total changes that relate to current service** | **(644)** | **(93)** | **-** | **(132)** | **(77)** | **(209)** | **(946)** | | Changes that relate to future service | | | | | | | | | Contracts initially recognised in the year | (37) | 55 | - | - | (18) | (18) | - | | Changes in estimates that adjust the CSM | (2,610) | (312) | - | 1,807 | 1,115 | 2,922 | - | | Changes in loss recovery component and reversal of such changes | - | - | - | - | 4 | 4 | 4 | | **Total changes that relate to future service** | **(2,647)** | **(257)** | **-** | **1,807** | **1,101** | **2,908** | **4** | | Changes that relate to past service | | | | | | | | | Adjustment to recoveries on liabilities for incurred claims related to past service | 189 | - | - | - | - | - | 189 | | **Total changes that relate to past service** | **189** | **-** | **-** | **-** | **-** | **-** | **189** | | **Net expenses from reinsurance contracts held** | **(3,102)** | **(350)** | **-** | **1,675** | **1,024** | **2,699** | **(753)** | | Finance income or expenses from reinsurance contracts | 391 | 84 | - | 1 | (10) | (9) | 466 | | **Total changes in the statement of comprehensive income** | **(2,711)** | **(266)** | **-** | **1,676** | **1,014** | **2,690** | **(287)** | | Cash flows | | | | | | | | | Premiums paid | 2,341 | - | - | - | - | - | 2,341 | | Recoveries received from reinsurers | (2,685) | - | - | - | - | - | (2,685) | | **Total cash flows** | **(344)** | **-** | **-** | **-** | **-** | **-** | **(344)** | | Closing assets | 5,990 | 1,277 | - | 1,712 | 727 | 2,439 | 9,706 | | Closing liabilities | - | - | - | - | - | - | - | | **Net closing balance** | **5,990** | **1,277** | **-** | **1,712** | **727** | **2,439** | **9,706** | --- # 14. INSURANCE CONTRACT LIABILITIES AND REINSURANCE CONTRACT ASSETS (CONTINUED) ## (2) Reinsurance contract assets (continued) | | | | CSM | | | | | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | :---: | | **2022** | **Estimates of present value of future cash flows** | **Risk adjustment for nonfinancial risk** | **Contracts under modified retrospective approach** | **Contracts under fair value approach** | **Other contracts** | **Subtotal** | **Total** | | Opening assets | 7,497 | 1,339 | - | 7 | - | 7 | 8,843 | | Opening liabilities | - | - | - | - | - | - | - | | **Net opening balance** | **7,497** | **1,339** | **-** | **7** | **-** | **7** | **8,843** | | | | | | | | | | | Changes that relate to current service | | | | | | | | | CSM recognised for the year | - | - | - | (18) | 25 | 7 | 7 | | Change in risk adjustment for non-financial risk for risk expired | - | (81) | - | - | - | - | (81) | | Experience adjustments | 429 | - | - | - | - | - | 429 | | **Total changes that relate to current service** | **429** | **(81)** | **-** | **(18)** | **25** | **7** | **355** | | | | | | | | | | | Changes that relate to future service | | | | | | | | | Contracts initially recognised in the year | 676 | 234 | - | - | (910) | (910) | - | | Changes in estimates that adjust the CSM | (633) | (20) | - | 46 | 607 | 653 | - | | Changes in estimates that do not adjust the CSM | 21 | - | - | - | - | - | 21 | | Changes in loss recovery component and reversal of such changes | - | - | - | 1 | 2 | 3 | 3 | | **Total changes that relate to future service** | **64** | **214** | **-** | **47** | **(301)** | **(254)** | **24** | | | | | | | | | | | Changes that relate to past service | | | | | | | | | Adjustment to recoveries on liabilities for incurred claims related to past service | 360 | - | - | - | - | - | 360 | | **Total changes that relate to past service** | **360** | **-** | **-** | **-** | **-** | **-** | **360** | | | | | | | | | | | **Net expenses from reinsurance contracts held** | **853** | **133** | **-** | **29** | **(276)** | **(247)** | **739** | | Finance income or expenses from reinsurance contracts | 400 | 71 | - | - | (11) | (11) | 460 | | **Total changes in the statement of comprehensive income** | **1,253** | **204** | **-** | **29** | **(287)** | **(258)** | **1,199** | | | | | | | | | | | Cash flows | | | | | | | | | Premiums paid | 3,017 | - | - | - | - | - | 3,017 | | Recoveries received from reinsurers | (2,722) | - | - | - | - | - | (2,722) | | **Total cash flows** | **295** | **-** | **-** | **-** | **-** | **-** | **295** | | | | | | | | | | | Closing assets | 9,045 | 1,543 | - | 36 | (287) | (251) | 10,337 | | Closing liabilities | - | - | - | - | - | - | - | | **Net closing balance** | **9,045** | **1,543** | **-** | **36** | **(287)** | **(251)** | **10,337** | --- ## 14. INSURANCE CONTRACT LIABILITIES AND REINSURANCE CONTRACT ASSETS (CONTINUED) ### (2) Reinsurance contract assets (continued) The following table provides an analysis of reinsurance contracts held initially recognised in the period. | | Reinsurance contracts held | | | | :--- | :---: | :---: | :---: | | | **Contracts purchased with a net gain** | **Other reinsurance contracts** | **Total** | | **2023** | | | | | Present value of future cash outflows | **(937)** | **(761)** | **(1,698)** | | Present value of future cash inflows | **1,011** | **650** | **1,661** | | Risk adjustment for non-financial risk | **32** | **23** | **55** | | CSM | **(103)** | **88** | **(15)** | | **Total** | **3** | **–** | **3** | | | Reinsurance contracts held | | | | :--- | :---: | :---: | :---: | | | Contracts purchased with a net gain | Other reinsurance contracts | Total | | **2022** | | | | | Present value of future cash outflows | (6,823) | (100) | (6,923) | | Present value of future cash inflows | 7,507 | 92 | 7,599 | | Risk adjustment for non-financial risk | 231 | 3 | 234 | | CSM | (913) | 5 | (908) | | **Total** | **2** | **–** | **2** | --- ## 14. INSURANCE CONTRACT LIABILITIES AND REINSURANCE CONTRACT ASSETS (CONTINUED) ### (3) Contractual service margin For insurance contracts where the premium allocation method is not used, the CSM for insurance contracts issued by the Group and reinsurance contracts ceded is expected to be amortised to the income statement over the remaining period as follows: | 31 December 2023 | Within 1 year | In 1 to 3 years | In 4 to 5 years | Over 5 years | Total | | :--- | :---: | :---: | :---: | :---: | :---: | | Contracts issued | 13,743 | 25,562 | 22,744 | 106,955 | 169,004 | | Reinsurance contracts | 181 | 361 | 327 | 1,570 | 2,439 | | | | | | | | | **31 December 2022** | **Within 1 year** | **In 1 to 3 years** | **In 4 to 5 years** | **Over 5 years** | **Total** | | Contracts issued | 14,291 | 26,399 | 24,264 | 110,363 | 175,317 | | Reinsurance contracts | 2 | (13) | (19) | (221) | (251) | --- # 15. TAXATION Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax relates to the same tax authority. Most of the income taxes shown below are taxes incurred in the PRC. ### (1) The amount of income tax (credited)/charged to the net profit represents: | | For the year ended 31 December | | | :--- | :---: | :---: | | | **2023** | 2022 | | | | (Restated) | | | | | | Current tax | **202** | 141 | | Deferred tax | **(3,403)** | 434 | | | | | | **Total income tax** | **(3,201)** | **575** | ### (2) The reconciliation between the Group’s effective tax rate and the mainly applicable tax rate of 25% in the PRC is as follows: | | For the year ended 31 December | | | :--- | :---: | :---: | | | **2023** | 2022 | | | | (Restated) | | | | | | **Profit before income tax** | **5,515** | **22,079** | | | | | | Tax computed at the statutory tax rate in China | **1,379** | 5,520 | | Non-taxable income (i) | **(4,695)** | (5,052) | | Expenses not deductible for tax purposes (i) | **61** | 77 | | Effect of unrecognised deferred tax assets arising from | | | |     deductible tax losses | **62** | 61 | | Use of deductible tax losses of prior years | **(1)** | – | | Adjustments in respect of current tax of previous periods | **(6)** | (29) | | Effect of different tax rates used by subsidiaries | **(1)** | (2) | | | | | | **Income tax computed at effective tax rate** | **(3,201)** | **575** | (i) Non-taxable income mainly includes interest income from government bonds, and dividend income from applicable equity financial assets, etc.. Expenses not deductible for tax purposes mainly include those expenses such as supplementary medical insurance, penalties, donations and entertainment expenses that do not meet the criteria for deduction under relevant tax regulations issued by the tax authority. --- ## 15. TAXATION (CONTINUED) ### (3) Deferred tax assets and liabilities before and after offsetting are as follows: | | As at 31 December 2023 | As at 31 December 2022 (Restated) | | :--- | :--- | :--- | | Deferred tax assets | 18,021 | 8,747 | | Deferred tax liabilities | (7,368) | (914) | | Net deferred tax assets | 10,709 | 7,890 | | Net deferred tax liabilities | (56) | (57) | ### (4) Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable income is probable. The amount of deductible unused tax losses for which no deferred tax asset is recognised is as follows: | | As at 31 December 2023 | As at 31 December 2022 (Restated) | | :--- | :--- | :--- | | Deductible tax losses | 839 | 712 | --- # 15. TAXATION (CONTINUED) ### (5) The movements in deferred tax assets and deferred tax liabilities during the year are as follows: | | Financial assets | Insurance liabilities | Others | Total | | :--- | :---: | :---: | :---: | :---: | | Net deferred tax assets (Restated) | | | | | | As at 31 December 2021 | (4,073) | 2,754 | 913 | (406) | | Impact of adoption of IFRS 17 | — | 4,913 | — | 4,913 | | As at 1 January 2022 | (4,073) | 7,667 | 913 | 4,507 | | Credit to net profit | 1,149 | (4,095) | 2,054 | (892) | | Credit to other comprehensive income | 6,464 | (2,274) | 119 | 4,309 | | Credit to other reserve | — | 1 | (35) | (34) | | As at 31 December 2022 | 3,540 | 1,299 | 3,051 | 7,890 | | | | | | | | **As at 31 December 2022** | **3,540** | **1,299** | **3,051** | **7,890** | | **Impact of adoption of IFRS 9** | **(5,445)** | **—** | **—** | **(5,445)** | | **As at 1 January 2023** | **(1,905)** | **1,299** | **3,051** | **2,445** | | **Credit to net profit** | **1,489** | **(5,749)** | **7,662** | **3,402** | | **Credit to other comprehensive income** | **(2,488)** | **7,364** | **(16)** | **4,860** | | **Credit to other reserve** | **—** | **2** | **—** | **2** | | **As at 31 December 2023** | **(2,904)** | **2,916** | **10,697** | **10,709** | | | Financial assets | Insurance liabilities | Others | Total | | :--- | :---: | :---: | :---: | :---: | | Net deferred tax liabilities (Restated) | | | | | | As at 31 December 2021 | (467) | — | (48) | (515) | | Impact of adoption of IFRS 17 | — | — | — | — | | As at 1 January 2022 | (467) | — | (48) | (515) | | Credit to net profit | 458 | — | — | 458 | | Credit to other comprehensive income | — | — | — | — | | Credit to other reserve | — | — | — | — | | As at 31 December 2022 | (9) | — | (48) | (57) | | | | | | | | **As at 31 December 2022** | **(9)** | **—** | **(48)** | **(57)** | | **Impact of adoption of IFRS 9** | **—** | **—** | **—** | **—** | | **As at 1 January 2023** | **(9)** | **—** | **(48)** | **(57)** | | **Credit to net profit** | **7** | **—** | **(6)** | **1** | | **Credit to other comprehensive income** | **—** | **—** | **—** | **—** | | **As at 31 December 2023** | **(2)** | **—** | **(54)** | **(56)** | --- ### 15. TAXATION (CONTINUED) (6) Deferred income tax assets are recognised for tax losses carried forward to the extent that the realization of the related tax benefit through future taxable income is probable. The amount of deductible unused tax losses for which no deferred tax asset is recognised is as follows: | | As at 31 December 2023 | As at 31 December 2022 | | :--- | :--- | :--- | | 2023 | – | 117 | | 2024 | 131 | 135 | | 2025 | 111 | 111 | | 2026 | 105 | 105 | | 2027 | 244 | 244 | | 2028 | 248 | – | | Total | 839 | 712 | --- ## 16. OTHER ASSETS ### As at 31 December 2023 | | Book value balance | Provision for impairment | Net book value | | :--- | :---: | :---: | :---: | | Investment clearing account (1) | **12,890** | **–** | **12,890** | | Prepaid and deferred expenses | **510** | **–** | **510** | | Receivable from off-balance sheet repurchase transactions | **874** | **(874)** | **–** | | Prepaid income tax | **6** | **–** | **6** | | Asset management fee receivables | **158** | **–** | **158** | | Others | **860** | **(115)** | **745** | | **Total** | **15,298** | **(989)** | **14,309** | ### As at 31 December 2022 (Restated) | | Book value balance | Provision for impairment | Net book value | | :--- | :---: | :---: | :---: | | Investment clearing account (1) | 4,490 | – | 4,490 | | Prepaid and deferred expenses | 684 | – | 684 | | Receivable from off-balance sheet repurchase transactions | 874 | (874) | – | | Prepaid income tax | 318 | – | 318 | | Asset management fee receivables | 199 | – | 199 | | Others | 967 | (114) | 853 | | **Total** | 7,532 | (988) | 6,544 | | | **As at 31 December 2023** | As at 31 December 2022 | | :--- | :---: | :---: | | Current | **13,937** | 6,188 | | Non-current | **372** | 356 | | **Total** | **14,309** | 6,544 | ### (1) Investment clearing account Investment clearing account balance represents unsettled investment receivables in transit as at the end of the reporting period. --- ## 17. BORROWINGS Upon the approval by the former CBIRC and the People’s Bank of China, on 11 May 2020, the Company issued 10-year capital supplementary bonds in the inter-bank market, and completed the issuance on 13 May 2020, which were in an aggregate principal amount of RMB10,000 million, and with an interest rate of 3.3% per annum for the first five years. The Company has the right to redeem the bonds partially or wholly at the end of the fifth year. If the Company does not exercise the redemption right or partially exercises the redemption right, the interest rate will increase to 4.3% per annum beginning in the sixth year until the maturity date. Upon the approval by the National Administration of Financial Regulation and the People’s Bank of China, on 2 November 2023, the Company issued 10-year capital supplementary bonds in the inter-bank market, and completed the issuance on 6 November 2023, which were in an aggregate principal amount of RMB10,000 million, and with an interest rate of 3.4% per annum for the first five years. The Company has the right to redeem the bonds partially or wholly at the end of the fifth year. If the Company does not exercise the redemption right or partially exercises the redemption right, the interest rate will increase to 4.4% per annum beginning in the sixth year until the maturity date. The repayments of principals and interests of the capital supplementary bonds are subordinated to policy liabilities and other liabilities but prior to the Company’s equity capital. The fair value of borrowings as at 31 December 2023 was RMB20,210 (2022: RMB9,881) million, which are within Level 2 of the fair value hierarchy. ## 18. FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS | | **As at 31 December 2023** | As at 31 December 2022 | | :--- | :---: | :---: | | Payable to the third party investors of controlled structured entities | **3,592** | 25,877 | Payable to the third party investors of controlled structured entities are the portions owned by the external investors in the consolidated structured entities (asset management plans). Such financial liabilities are designated at fair value upon initial recognition, and all realised or unrealised gains or losses are recognised in net profit. --- ### 19. FINANCIAL ASSETS SOLD UNDER AGREEMENTS TO REPURCHASE | | As at 31 December 2023 | As at 31 December 2022 | | :--- | :--- | :--- | | **By market** | | | | Inter-bank market | 19,913 | 6,400 | | Stock exchange | 87,074 | 37,217 | | **Total** | **106,987** | **43,617** | | | | | | **By collateral** | | | | Bonds | 106,987 | 43,617 | Maturity: | | As at 31 December 2023 | As at 31 December 2022 | | :--- | :--- | :--- | | Within 3 months (including 3 months) | 106,987 | 43,617 | As at 31 December 2023, bonds with par value of RMB20,544 million (31 December 2022: RMB8,619 million) were pledged as collateral for financial assets sold under agreements to repurchase resulting from repurchase transactions entered into by the Group in the inter-bank market. The collateral is restricted from trading during the period of the repurchase transaction. For debt repurchase transactions through the stock exchange, the Group is required to deposit certain exchange-traded bonds into a collateral pool and the fair values converted at a standard rate pursuant to the stock exchange’s regulation which should be no less than the balances of the related repurchase transactions. As at 31 December 2023, the amount of financial assets deposited in the collateral pool amounted to RMB220,409 million (31 December 2022: RMB151,228 million). The collateral is restricted from trading during the period of the repurchase transaction. The Group can withdraw the exchange-traded bonds from the collateral pool in a short period of time under the condition that the value of certain bonds is no less than the balance of the related repurchase transactions. --- ### 20. OTHER LIABILITIES | | As at 31 December 2023 | As at 31 December 2022 | | :--- | ---: | ---: | | Salary and welfare payable | 3,915 | 4,349 | | Payables related to asset-backed securities (1) | 6,487 | 9,210 | | Commission and brokerage payable | 1,571 | 1,579 | | Investment clearing account | 3,711 | 2,585 | | Investment contract liabilities | 864 | 1,225 | | Construction cost payable | 146 | 180 | | Payable to the third party investors of controlled structured entities | 414 | 745 | | External suppliers payable | 547 | 416 | | Deferred income | 470 | 484 | | Repayment payable for non-insurance contracts | 102 | 191 | | Security deposits by agent for holding the Company’s documents | 139 | 166 | | Unrealized output value added tax | 158 | 154 | | Taxes payable other than income tax | 99 | 215 | | Insurance security fund payable | 59 | 86 | | Unallocated receipts | 176 | 161 | | Others | 1,127 | 1,576 | | | | | | **Total** | **19,985** | **23,322** | | | | | | Current | 18,742 | 22,267 | | Non-current | 1,243 | 1,055 | | | | | | **Total** | **19,985** | **23,322** | (1) The Group securitized part of policy loans and issued asset-backed securities with an amount of RMB3,000 million, RMB3,000 million, RMB4,000 million, RMB4,000 million and RMB3,000 million in May 2022, August 2022, November 2022, February 2023 and June 2023, respectively. The term is one year. The asset-backed securities issued in May 2022, August 2022, November 2022 with an aggregated amount of RMB10,000 million matured in 2023. As at 31 December 2023, the Group held all subordinated shares of the asset-backed securities with a total amount of RMB560 million (31 December 2022: RMB790 million). The subordinated shares are not transferable until the principal and interest of the senior shares are repaid. --- ### 21. SHARE CAPITAL All shares of the Company issued are fully paid common shares. The par value per share is RMB1. The Company’s number of shares is as follows: | | As at 31 December 2023 | As at 31 December 2022 | | :--- | :---: | :---: | | Number of shares registered, issued and fully paid at RMB1 per share (in million) | 3,120 | 3,120 | ### 22. RESERVES AND RETAINED EARNINGS | | Share premium (a) | Other reserve | Other comprehensive income | Surplus reserve (b) | Reserve for general risk (c) | Total | Retained earnings (d) | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | :---: | | As at 31 December 2021 | 23,964 | (59) | 7,465 | 12,815 | 8,861 | 53,046 | 52,331 | | Impact of adoption of IFRS 17 | – | (2) | (31,705) | 1,697 | 1,697 | (28,313) | 13,574 | | As at 1 January 2022 (Restated) | 23,964 | (61) | (24,240) | 14,512 | 10,558 | 24,733 | 65,905 | | Net profit for the year | – | – | – | – | – | – | 21,500 | | Other comprehensive income | – | – | (12,894) | – | – | (12,894) | – | | Others | – | 103 | – | – | – | 103 | – | | Dividends paid | – | – | – | – | – | – | (4,492) | | Appropriation to reserve | – | – | – | 3,721 | 2,282 | 6,003 | (6,003) | | As at 31 December 2022 | 23,964 | 42 | (37,134) | 18,233 | 12,840 | 17,945 | 76,910 | | Impact of adoption of IFRS 9 | – | – | 616 | 1,576 | 1,577 | 3,769 | 12,582 | | As at 1 January 2023 (Restated) | 23,964 | 42 | (36,518) | 19,809 | 14,417 | 21,714 | 89,492 | | Net profit for the year | – | – | – | – | – | – | 8,712 | | Other comprehensive income | – | – | (14,575) | – | – | (14,575) | – | | Others | – | (27) | – | – | – | (27) | – | | Dividends paid | – | – | – | – | – | – | (3,369) | | Appropriation to reserve | – | – | – | 1,912 | 799 | 2,711 | (2,711) | | As at 31 December 2023 | 23,964 | 15 | (51,093) | 21,721 | 15,216 | 9,823 | 92,124 | --- ## 22. RESERVES AND RETAINED EARNINGS (CONTINUED) ### (a) Share premium Share premium represents the excess of the paid-in capital over the par value of shares issued. ### (b) Surplus reserve Surplus reserve consists of the statutory surplus reserve and the discretionary surplus reserve. #### (i) Statutory surplus reserve In accordance with the Company Law and the Company’s Articles of Association, the Company should appropriate 10% of the net profit for the year to the statutory surplus reserve. The Company can cease appropriation when the statutory surplus reserve reaches more than 50% of the registered capital. The statutory surplus reserve can be used to make up losses or increase the Company’s share capital upon approval. The Company appropriated RMB798 million for the year ended 31 December 2023 to the statutory surplus reserve (for the year ended 31 December 2022: restated as RMB2,281 million). #### (ii) Discretionary surplus reserve (“DSR”) After making necessary appropriations to the statutory surplus reserve, the Company and its subsidiaries in the PRC may also appropriate a portion of their net profit to the DSR upon the approval of the shareholders in general meetings. The DSR may be used to offset accumulated losses, if any, and may be converted into capital. Approved at the shareholders’ general meeting on 28 June 2023, the Company appropriated RMB1,114 million to the DSR. Approved at the shareholders’ general meeting on 28 June 2022, the Company appropriated RMB1,440 million to the DSR. ### (c) Reserve for general risk Pursuant to “Financial Standards of Financial Enterprises – Implementation Guide” issued by the Ministry of Finance of the PRC on 20 March 2007, for the year ended 31 December 2023, the Group appropriated RMB799 million to the general reserve for future uncertain disasters, which cannot be used for dividend distribution or share capital increment (for the year ended 31 December 2022: restated as RMB2,282 million). ### (d) Distributable profit According to the Articles of Association of the Company, the amount of retained earnings available for distribution of the Company should be the lower of the amount determined under PRC GAAP and the amount determined under IFRSs. Pursuant to a resolution passed at the shareholders’ general meeting on 28 June 2023, a final dividend of RMB1.08 per ordinary share (inclusive of tax) totalling RMB3,369 million was declared and paid in 2023. --- ### 23. INSURANCE REVENUE | For the year ended 31 December | 2023 | 2022 (Restated) | | :--- | :---: | :---: | | Contracts not measured under the PAA | | | | Expected incurred claims and other insurance service expenses | 19,180 | 20,308 | | Change in risk adjustment for non-financial risk for risk expired | 845 | 929 | | CSM recognised for services provided | 15,122 | 20,862 | | Recovery of insurance acquisition cash flows | 9,011 | 9,870 | | Contracts measured under the PAA | 3,887 | 4,909 | | **Total** | **48,045** | **56,878** | ### 24. INTEREST INCOME | For the year ended 31 December | 2023 | 2022 (Restated) | | :--- | :---: | :---: | | Interest income from: | | | | – Cash and cash equivalents | 276 | 168 | | – Term deposits | 8,504 | 7,318 | | – Statutory deposits | 66 | 72 | | – Debt investments at amortised cost | 10,822 | N/A | | – Debt investments at FVTOCI | 12,453 | N/A | | – Financial assets purchased under agreements to resell | 147 | 173 | | – Held-to-maturity investments | N/A | 13,473 | | – Available-for-sale financial assets | N/A | 7,846 | | – Loans and receivables | N/A | 2,951 | | **Total** | **32,268** | **32,001** | --- ### 25. OTHER INVESTMENT INCOME | | For the year ended 31 December | | | :--- | :---: | :---: | | | **2023** | 2022 | | | | | | Fair value losses | | | | – Financial assets at FVTPL | **(5,931)** | (1,352) | | – Derivatives financial instruments | **(4)** | (2) | | – Financial liabilities at FVTPL | **(189)** | (88) | | Net realised gains/(losses) | | | | – Financial assets at FVTPL | **(12,713)** | (464) | | – Debt investments at FVTOCI | **217** | N/A | | – Available-for-sale financial assets | **N/A** | 3,284 | | Interest income | | | | – Financial assets at FVTPL | **2,912** | 1,089 | | Dividend income | | | | – Financial assets at FVTPL | **6,065** | 920 | | – Equity investments designated at FVTOCI | **383** | N/A | | – Available-for-sale financial assets | **N/A** | 14,226 | | | | | | Total | **(9,260)** | 17,613 | ### 26. OTHER INCOME | | For the year ended 31 December | | | :--- | :---: | :---: | | | **2023** | 2022 | | | | | | Management fee income | **435** | 421 | | Rental income from investment properties | **413** | 336 | | Exchange gains | **113** | 452 | | Government grants | **50** | 83 | | Others | **190** | 380 | | | | | | Total | **1,201** | 1,672 | --- ## 27. INSURANCE SERVICE EXPENSES ### For the year ended 31 December | | 2023 | 2022 (Restated) | | :--- | :--- | :--- | | **Contracts not measured under the PAA** | | | | Incurred claims and other incurred insurance service expenses | **16,797** | 16,080 | | Amortisation of insurance acquisition cash flows | **9,011** | 9,870 | | Losses on onerous groups of contracts and reversal of such losses | **1,722** | 2,649 | | Adjustment to the LIC | **1,388** | 601 | | **Subtotal** | **28,918** | 29,200 | | | | | | **Contracts measured under the PAA** | | | | Incurred claims and other incurred insurance service expenses | **2,379** | 2,538 | | Amortisation of insurance acquisition cash flows | **1,265** | 1,481 | | Losses on onerous groups of contracts and reversal of such losses | **648** | 835 | | Adjustment to the LIC | **42** | (265) | | **Subtotal** | **4,334** | 4,589 | | | | | | **Total** | **33,252** | 33,789 | --- ### 28. NET INVESTMENT INCOME AND INSURANCE FINANCE INCOME AND EXPENSE | | For the year ended 31 December | | | :--- | :--- | :--- | | | **2023** | 2022 | | | | | | Interest income | **32,268** | 32,001 | | Other investment income | **(9,260)** | 17,613 | | Share of losses of associates and joint ventures | **(639)** | (18) | | Impairment losses on financial assets | **(307)** | (4,958) | | Foreign exchange gains | **113** | 452 | | Others | **(1,411)** | (671) | | | | | | Total investment income recognised in profit or loss | **20,764** | 44,419 | | Total investment income/(losses) recognised in OCI | **10,016** | (26,315) | | | | | | **Total net investment income** | **30,780** | 18,104 | | | | | | Insurance finance expenses from insurance contracts issued | | | | Interest accreted | **14,557** | 13,799 | | Effect of changes in interest rates and other financial assumptions | **21,754** | 10,617 | | Changes in fulfilment cash flows and CSM of contracts measured applying VFA due to changes in fair value of underlying items | **20,150** | 9,858 | | | | | | **Insurance finance expenses from insurance contracts issued** | **56,461** | 34,274 | | | | | | Total insurance finance expenses from insurance contracts issued recognised in profit or loss | **26,800** | 43,129 | | Total insurance finance expenses from insurance contracts issued recognised in OCI | **29,661** | (8,855) | | | | | | Insurance finance income from reinsurance contracts held | | | | Interest accreted | **(261)** | (225) | | Effect of changes in interest rates and other financial assumptions | **(205)** | (235) | | | | | | **Total finance income from reinsurance contracts held** | **(466)** | (460) | | | | | | Total finance income from reinsurance contracts held recognised in profit or loss | **(261)** | (220) | | Total finance income from reinsurance contracts held recognised in OCI | **(205)** | (240) | --- ### 29. NET IMPAIRMENT LOSSES ON FINANCIAL ASSETS | | For the year ended 31 December | | | :--- | :---: | :---: | | | **2023** | 2022 | | | | | | Impairment loss recognised/(reversed) in respect of: | | | | – Debt investments at amortised cost | **308** | N/A | | – Debt investments at FVTOCI | **(4)** | N/A | | – Term deposits | **1** | N/A | | – Available-for-sale financial assets | **N/A** | 4,954 | | – Others | **2** | 4 | | | | | | **Total** | **307** | 4,958 | ### 30. OTHER EXPENSES | | For the year ended 31 December | | | :--- | :---: | :---: | | | **2023** | 2022 | | | | | | Commission and brokerage expenses | **10,753** | 10,168 | | Payroll and welfare | **7,378** | 8,043 | | Depreciation and amortisation | **1,888** | 1,910 | | Insurance guarantee fund | **517** | 280 | | Operating lease | **327** | 346 | | Electronic equipment operation fee | **307** | 284 | | Travel and conference expenses | **288** | 127 | | Taxes and surcharges | **270** | 282 | | Miscellaneous expenses | **185** | 222 | | Postage | **103** | 114 | | Others | **1,017** | 1,135 | | | | | | **Subtotal** | **23,033** | 22,911 | | | | | | Minus: | | | | Amounts attributed to insurance acquisition cash flows | **13,995** | 12,518 | | Amounts attributed to insurance service expenses | **5,889** | 6,449 | | | | | | **Total other expenses** | **3,149** | 3,944 | --- ### 31. OTHER FINANCE COSTS | | For the year ended 31 December | | | :--- | :---: | :---: | | | **2023** | 2022 | | Interest expenses for financial assets sold under agreements to repurchase | **1,411** | 671 | | Interest expenses for the capital supplementary bonds and asset-backed securities | **655** | 476 | | Interest expenses for lease liabilities | **20** | 26 | | **Total** | **2,086** | 1,173 | ### 32. NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY The net profit attributable to shareholders of the Company for the year ended 31 December 2023 was RMB8,712 million (for the year ended 31 December 2022: RMB21,500 million) which is included in the consolidated financial statements of the Group. ### 33. EARNINGS PER SHARE #### (1) Basic Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the weighted average number of ordinary shares issued during the year. | | For the year ended 31 December | | | :--- | :---: | :---: | | | **2023** | 2022 (Restated) | | Net profit for the year attributable to owners of the Company (RMB in million) | **8,712** | 21,500 | | Weighted average number of ordinary shares issued (in million) | **3,120** | 3,120 | | Basic earnings per share (RMB) | **2.79** | 6.89 | #### (2) Diluted The Company has no dilutive potential ordinary shares. Diluted earnings per share are the same as basic earnings per share for the year ended 31 December 2023 (for the year ended 31 December 2022: same). --- ## 34. DIVIDENDS Pursuant to a resolution passed at the shareholders’ general meeting on 28 June 2023, a final dividend of RMB1.08 per ordinary share (inclusive of tax) totalling RMB3,369 million was declared. Pursuant to a resolution passed at the shareholders’ general meeting on 28 June 2022, a final dividend of RMB1.44 per ordinary share (inclusive of tax) totalling RMB4,492 million was declared. ## 35. SIGNIFICANT RELATED PARTY TRANSACTIONS ### (1) Related parties #### (a) Subsidiaries Refer to Note 40 for the basic and related information of subsidiaries. #### (b) Associates and joint venture Refer to Note 10 for the basic and related information of associates and joint venture. #### (c) Other related parties The table set forth below summarises the significant related parties of the Company: | Significant related parties | Relationships | | :--- | :--- | | Central Huijin Investment Ltd. (“Huijin”) | Shareholder that has significant influence over the Company | | China Baowu Steel Group Corporation Limited | Shareholder that has significant influence over the Company | | Hwabao WP Fund Management Co., Ltd. (“Hwabao WP Fund”) | Company under indirect control of the shareholder that has significant influence over the Company | | FOSUN International Limited and its subsidiaries (“FOSUN International”)(i) | Company under direct or indirect control of the shareholder that has significant influence over the Company for the comparative period | (i) For the year ended 31 December 2023, none of the Group’s directors was appointed by Fosun International. FOSUN International has not participated in the Group’s policy-making processes in any form. Consequently, FOSUN International is no longer deemed as a significant related party of the Group. --- ### 35. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED) ### (2) Significant transactions with related parties | | For the year ended 31 December | | | :--- | :---: | :---: | | | **2023** | 2022 | | **Transactions between the Group and other related parties** | | | | – Interest from bonds issued by Huijin | **22** | 30 | | – Investment income arising from investing fund of Hwabao WP Fund | **–** | 53 | | **Transactions between the Group and its associates** | | | | – Investment income arising from investing trust plans related to China Jinmao | **59** | 242 | | – Dividends declared from China Jinmao | **39** | 203 | | – Dividends declared from ALL IN PAY | **5** | – | | **Transactions between the Group and its joint venture** | | | | – Health check and service fee paid to New China Health | **22** | 22 | | – Rent earned from New China Health | **12** | 6 | | **Transactions between the Company and its subsidiaries** | | | | – Investment management fee to Asset Management Company | **674** | 591 | | – Additional capital contribution to New China Village Health Technology (Beijing) Co., Ltd. (“Health Technology”) | **268** | – | | – Additional capital contribution to Hefei New China Life Supporting Construction Operation Management Co., Ltd. (“Hefei Supporting Operation”) | **76** | 274 | | – Investment management fee to New China Asset Management (Hong Kong) Co., Ltd. (“Asset Management Company (Hong Kong)”) | **61** | 67 | | – Rent and property fee paid to Xinhua Haoran Architecture Science and Technology Co., Ltd. (“Xinhua Haoran”) | **32** | 47 | | – Rent paid to Hefei Supporting Operation | **24** | 13 | | – Rent earned from Asset Management Company | **23** | 22 | | – IT service fee paid to New China Electronic Commerce Co., Ltd. (“Electronic Commerce”) | **21** | 19 | | – Rent earned from New China Pension Co., Ltd. (“New China Pension”) | **8** | 6 | | – Conference and training fees paid to Health Technology | **7** | 19 | | – Health check fee paid to New China Excellent Rehabilitation Hospital Co., Ltd. (“Rehabilitation Hospital”) | **3** | 3 | | – Management service fee paid to Guangzhou Yuerong Project Construction Management Co., Ltd. (“Guangzhou Yuerong”) | **2** | 2 | | – Management fee for annuity account paid to New China Pension | **1** | – | | – Additional capital contribution to Xinhua Village Seniors Operation Management (Beijing) Co., Ltd. (“Xinhua Seniors Operation”) | **–** | 50 | --- ### 35. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED) #### (2) Significant transactions with related parties (continued) The above significant transactions with related parties did not constitute the continuing connected transactions as defined in Chapter 14A of the Hong Kong Listing Rules. The investment management fees to Asset Management Company and Asset Management Company (Hong Kong), annuity account management fees paid to New China Pension are calculated based on the negotiated service charge rate and the scale of investments. All other transactions are calculated based on the negotiated price between transaction parties. #### (3) Related party balances | Balances with related parties | The Group | The Group | | :--- | :--- | :--- | | | **As at 31 December 2023** | As at 31 December 2022 | | Interest receivable | | | | Huijin | **N/A** | 7 | | Debt investments at FVTOCI | | | | Huijin | **636** | N/A | | Held-to-maturity investments | | | | Huijin | **N/A** | 600 | | Available-for-sale financial assets | | | | China Jinmao | **N/A** | 4,509 | | Other payables | | | | New China Health | **–** | 5 | | Other receivables | | | | New China Health | **4** | – | | | The Company | The Company | | :--- | :--- | :--- | | | **As at 31 December 2023** | As at 31 December 2022 | | Payables to subsidiaries | | | | Asset Management Company | **31** | 55 | | Asset Management Company (Hong Kong) | **15** | 17 | | Electronic Commerce | **22** | 20 | | Hefei Supporting Operation | **7** | – | | Guangzhou Yuerong | **5** | – | | Xinhua Haoran | **1** | 6 | --- ## 35. SIGNIFICANT RELATED PARTY TRANSACTIONS (CONTINUED) ### (3) Related party balances (continued) No impairment has been made for receivables from related parties as at 31 December 2023 (31 December 2022: same). The balances between the Company and its subsidiaries have been eliminated in the consolidated statement of financial position. ### (4) Key management’s remuneration Key management members include directors, supervisors and senior management team members. Key management members’ remuneration incurred by the Company is as follows: | | For the year ended 31 December | | | :--- | :--- | :--- | | | **2023** | **2022 (Restated)** | | Payroll and welfare | 25 | 43 | ### (5) Transactions with state-owned enterprises Under International Accounting Standard 24 (Amendment) (“IAS 24 (Amendment)”) “Related Party Disclosures”, business transactions between state-owned enterprises controlled by the PRC government are within the scope of related party transactions. The Group’s key business is insurance related and therefore, the business transactions with other state-owned enterprises are primarily related to insurance and investment activities. The related party transactions with other state-owned enterprises were conducted in the ordinary course of business. Due to the complex ownership structure, the PRC government may hold indirect interests in many companies. Some of these interests may, in themselves or when combined with other indirect interests, be controlling interests which may not be known to the Group. Nevertheless, the Group believes that the following captures the material related parties and has applied the IAS 24 (Amendment) exemption and disclosed only qualitative information. As at 31 December 2023, most of the bank deposits were with state-owned banks, the issuers of debt financial assets held by the Group were mainly state-owned enterprises; most investments were entrusted to state-owned enterprises. For the year ended 31 December 2023, a large portion of its group insurance business of the Group was with state-owned enterprises; the majority of bancassurance brokerage charges were paid to state-owned banks and postal office; almost all of the reinsurance agreements of the Group were entered into with a state-owned reinsurance company; and most of the bank deposits interest income was from state-owned banks. --- ### 36. CHANGES IN LIABILITIES ARING FROM FINANCING ACTIVITIES Changes in liabilities arising from financing activities are set out below: | | Financial assets sold under through profit or loss agreements | Borrowings | Lease liabilities | Other liabilities-Payables related to asset-backed securities | | :--- | :---: | :---: | :---: | :---: | | **As at 31 December 2022** | **43,617** | **10,000** | **855** | **9,210** | | Impact of adoption of IFRS 9 | **(7)** | **211** | **–** | **18** | | **As at 1 January 2023** | **43,610** | **10,211** | **855** | **9,228** | | Changes from financing cash flows | **61,966** | **9,670** | **(476)** | **(3,015)** | | New leases | **–** | **–** | **361** | **–** | | Interest expenses | **1,411** | **381** | **20** | **274** | | **As at 31 December 2023** | **106,987** | **20,262** | **760** | **6,487** | | | Financial assets sold under through profit or loss agreements | Borrowings | Lease liabilities | Other liabilities-Payables related to asset-backed securities | | :--- | :---: | :---: | :---: | :---: | | **As at 1 January 2022** | 55,415 | 10,000 | 1,040 | 2,770 | | Changes from financing cash flows | (12,469) | (330) | (528) | 6,294 | | New leases | – | – | 317 | – | | Interest expenses | 671 | 330 | 26 | 146 | | **As at 31 December 2022** | 43,617 | 10,000 | 855 | 9,210 | --- # 37. CONTINGENCIES The Group is involved in estimations for contingencies and legal proceedings in the ordinary course of business, including but not limited to, being the plaintiff or the defendant in litigation and arbitration. Legal proceedings mostly involve claims on the Group’s insurance policies, other claims, and litigation matters. Provision has been made for probable losses of the Group, including those claims where management can reasonably estimate the outcome of the lawsuits taking into account any legal advice. No provision has been made for pending assessments, lawsuits or possible violations of contracts when the outcome cannot be reasonably estimated or management believes the probability is low or remote. For these pending lawsuits, management also believes that any resulting liabilities will not have a material adverse effect on the financial position or operating results of the Group or any of its subsidiaries. As at 31 December 2023, except for the items described above, all kinds of estimations and contingencies resulting from insurance services within the scope of this report, the Group does not have any significant contingency that needs description. # 38. COMMITMENTS ## (1) Capital commitments The Group had capital commitments for the purchase of property, plant and equipment and software, etc. Management confirms that the Group has sufficient future income or funding to fulfil these capital commitments. | | As at 31 December 2023 | As at 31 December 2022 | | :--- | :---: | :---: | | Contracted, but not provided for | 2,784 | 3,041 | | Authorised by the board, but not contracted for | – | 163 | | **Total** | **2,784** | **3,204** | --- ### 38. COMMITMENTS (CONTINUED) #### (2) Investment commitments As at 31 December 2023, a total amount of RMB12,144 million was disclosed as investment commitments contracted but not provided for (31 December 2022: RMB2,171 million). On 31 December 2023, the Company entered into a limited partnership agreement with CICC Capital Management Co., Ltd. for the joint formation of a private fund. The formation of the fund is to invest directly or indirectly in investee enterprises with assets of real estate projects held for operation by equity and other means as permitted by applicable laws, so as to achieve investment returns for the partners. The size of the fund is RMB10,000 million, with the Company (as a Limited Partner) intending to subscribe for RMB9,999 million and CICC Capital Management Co., Ltd. (as a General Partner) intending to subscribe for RMB1 million. On 17 January 2024, the relevant regulatory procedures for formation of the fund were completed. --- ### 39. STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY #### Statement of Financial Position of the Company | | 31 December 2023 | 31 December 2022 (Restated) | 1 January 2022 (Restated) | | :--- | :---: | :---: | :---: | | **ASSETS** | | | | | Property, plant and equipment | 12,525 | 12,642 | 12,497 | | Investment properties | 9,064 | 9,161 | 9,453 | | Right-of-use assets | 865 | 953 | 1,154 | | Intangible assets | 2,197 | 2,115 | 1,871 | | Investments in subsidiaries | 37,026 | 58,929 | 60,041 | | Investments in associates and joint ventures | 4,801 | 5,455 | 5,111 | | Financial investments | | | | | – Financial assets at fair value through profit or loss | 356,144 | 48,137 | 41,897 | | – Debt investments at amortised cost | 301,009 | N/A | N/A | | – Debt investments at fair value through other comprehensive income | 354,536 | N/A | N/A | | – Equity investments designated at fair value through other comprehensive income | 5,352 | N/A | N/A | | – Held-to-maturity | N/A | 378,160 | 300,830 | | – Available-for-sale | N/A | 373,007 | 401,381 | | – Loans and receivables | N/A | 42,316 | 54,523 | | Term deposits | 250,043 | 193,027 | 147,580 | | Statutory deposits | 754 | 715 | 715 | | Financial assets purchased under agreements to resell | 4,328 | 4,576 | 2,086 | | Derivative financial instruments | 2 | 3 | 4 | | Accrued investment income | 74 | 13,407 | 9,792 | | Reinsurance contract assets | 9,802 | 10,590 | 9,153 | | Deferred tax assets | 10,305 | 7,555 | 4,310 | | Other assets | 13,434 | 5,845 | 4,786 | | Cash and cash equivalents | 19,614 | 15,026 | 13,458 | | **Total assets** | **1,391,875** | **1,181,619** | **1,080,642** | --- ### 39. STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY (CONTINUED) #### Statement of Financial Position of the Company (continued) | | 31 December 2023 | 31 December 2022 (Restated) | 1 January 2022 (Restated) | | :--- | :---: | :---: | :---: | | **LIABILITIES AND EQUITY** | | | | | **Liabilities** | | | | | Insurance contract liabilities | 1,145,668 | 1,013,154 | 910,936 | | Borrowings | 20,262 | 10,000 | 10,000 | | Lease liabilities | 743 | 822 | 993 | | Financial assets sold under agreements to repurchase | 104,276 | 40,072 | 52,906 | | Other liabilities | 18,340 | 21,544 | 15,352 | | **Total liabilities** | **1,289,289** | **1,085,592** | **990,187** | | | | | | | **Shareholders' equity** | | | | | Share capital | 3,120 | 3,120 | 3,120 | | Reserves | 9,939 | 17,893 | 24,644 | | Retained earnings | 89,527 | 75,014 | 62,691 | | **Total equity** | **102,586** | **96,027** | **90,455** | | | | | | | **Total liabilities and equity** | **1,391,875** | **1,181,619** | **1,080,642** | --- ### 39. STATEMENT OF FINANCIAL POSITION AND RESERVE MOVEMENT OF THE COMPANY (CONTINUED) #### Reserve movement of the Company **For the year ended 31 December 2023** | | Share Premium | Other Reserves | Other Comprehensive Income | Surplus Reserve | Reserve for General Risk | Total | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | | **As at 31 December 2022** | **23,962** | **41** | **(3,595)** | **15,369** | **9,943** | **45,720** | | Impact of adoption of IFRS 17 | – | 1 | (33,557) | 2,864 | 2,865 | (27,827) | | **As at 31 December 2022 (Restated)** | **23,962** | **42** | **(37,152)** | **18,233** | **12,808** | **17,893** | | Impact of adoption of IFRS 9 | – | – | 563 | 1,576 | 1,576 | 3,715 | | **As at 1 January 2023** | **23,962** | **42** | **(36,589)** | **19,809** | **14,384** | **21,608** | | Other comprehensive income | – | – | (14,352) | – | – | (14,352) | | Others | – | (27) | – | – | – | (27) | | Appropriation to reserves | – | – | – | 1,912 | 798 | 2,710 | | **As at 31 December 2023** | **23,962** | **15** | **(50,941)** | **21,721** | **15,182** | **9,939** | **For the year ended 31 December 2022** | | Share Premium | Other Reserves | Other Comprehensive Income | Surplus Reserve | Reserve for General Risk | Total | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | | **As at 31 December 2021** | 23,962 | (59) | 7,410 | 12,815 | 8,829 | 52,957 | | Impact of adoption of IFRS 17 | – | (2) | (31,705) | 1,697 | 1,697 | (28,313) | | **As at 1 January 2022 (Restated)** | 23,962 | (61) | (24,295) | 14,512 | 10,526 | 24,644 | | Other comprehensive income | – | – | (12,857) | – | – | (12,857) | | Others | – | 103 | – | – | – | 103 | | Appropriation to reserves | – | – | – | 3,721 | 2,282 | 6,003 | | **As at 31 December 2022 (Restated)** | 23,962 | 42 | (37,152) | 18,233 | 12,808 | 17,893 | --- ## 40. INVESTMENTS IN SUBSIDIARIES Details of the Company’s subsidiaries as at 31 December 2023 are as follows: | Subsidiaries | | :--- | | Asset Management Company | | Asset Management Company (Hong Kong) | | Health Technology(i) | | Xinhua Village Seniors Service (Beijing) Co., Ltd. | | Xinhua Village Seniors Operation Management (Beijing) Co., Ltd. | | Electronic Commerce | | Guangzhou Yuerong Project Construction Management Co., Ltd. | | Hefei Supporting Operation(ii) | | New China Pension | | Xinhua Village Seniors Investment Management (Hainan) Co., Ltd. | | Xinhua Haoran | | New China Excellent Rehabilitation Hospital Co., Ltd. | (i) As at 13 April 2023, the Company paid an amount of RMB268 million as capital injection to Health Technology. Up to 31 December 2023, the Company’s accumulated capital contributions to Health Technology achieved RMB1,843 million. (ii) As at 16 January 2023, the Company paid an amount of RMB76 million as capital injection to Hefei Supporting Operation. Up to 31 December 2023, the Company’s accumulated capital contributions to Hefei Supporting Operation was RMB2,530 million. Except for above mentioned, there was no significant change in investments in subsidiaries for the year ended 31 December 2023. --- ### 40. INVESTMENTS IN SUBSIDIARIES (CONTINUED) Details of the Company’s principal controlled structured entities as at 31 December 2023 are as follow: | | Principal activities | Registered/ Committed share capital | Percentage of equity attributable to the Group | | :--- | :--- | :--- | :--- | | New China Asset Management- Mingyan No.1 Asset management plans | Asset management plan | RMB3,607 million | 89.51% | | New China- Wanke Wuhan Plant and Equipment Debt Investment Plan | Debt investment plan | RMB2,625 million | 100.00% | | New China Asset Management- Mingmiao No.2 Asset management plans | Asset management plan | RMB2,204 million | 100.00% | | New China- Greatwall Group Infrastructure and Property Debt Investment Plan | Debt investment plan | RMB2,200 million | 100.00% | | New China-Urban Construction Infrastructure and Property Debt Investment Plan (Second Phase) | Debt investment plan | RMB2,000 million | 100.00% | | New China-Urban Construction Development Infrastructure and Property Debt Investment Plan (First Phase) | Debt investment plan | RMB1,800 million | 100.00% | | New China-Wanke Logistics Infrastructure and Property Debt Investment Plan (Third Phase) | Debt investment plan | RMB1,577 million | 100.00% | | New China-Urban Construction Development Infrastructure and Property Debt Investment Plan (Second Phase) | Debt investment plan | RMB1,500 million | 100.00% | | New China Asset Management – Select Hong Kong Stock Connect No.1 Asset Management Plans | Asset management plan | RMB1,421 million | 63.35% | | Cigna & CMB Asset Management– Shanghai Binjiang Center Plant and Equipment Debt Investment Plan (Second phase) | Debt investment plan | RMB1,401 million | 99.93% | | New China- Wanke Kunming Plant and Equipment Debt Investment Plan (First Phase) | Debt investment plan | RMB1,100 million | 100% | | New China Asset Management– Mingxin No.5 Asset management plans | Asset management plan | RMB1,016 million | 53.06% | | New China-Urban Construction Infrastructure and Property Debt Investment Plan (First Phase) | Debt investment plan | RMB1,000 million | 100% | | New China Asset Management– Xi’an Electronic Valley Infrastructure and Property Debt Investment Plan | Debt investment plan | RMB1,000 million | 83.80% | All subsidiary and consolidated structured entities undertakings are included in the consolidation. There are no significant restrictions on the use of assets or the discharge of liabilities of all subsidiaries and consolidated structured entities. The non-controlling interests of subsidiaries are immaterial to the Group, while the non-controlling interests of consolidated structured entities are recorded in financial liabilities at FVTPL. The English names of certain subsidiaries represent the best effort made by the management of the Company in translating their Chinese names as they do not have official English names. --- # 41. DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENT’S REMUNERATION ## (1) Directors’ emoluments The directors receive compensation in the form of directors’ fees, salaries, allowances and benefits in kind, bonuses, pension scheme contributions, employee benefits and others. Bonuses represent the variable components in the directors’ compensation which are linked to the performance of the Group and each of the individual directors. The aggregate amounts of emoluments of directors of the Company for the year ended 31 December 2023 are as follows (in RMB thousands): | Name | Directors' fees | Salaries, allowances and benefits in kind | Bonuses | 2023 Pension scheme contributions | Employee benefits | Others | Total | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | :---: | | Yucheng Yang (i) | – | 172 | – | 13 | – | – | 185 | | Hong Zhang | – | 1,671 | 1,353 | 400 | 10 | – | 3,434 | | Quan Li (ii) | – | 1,329 | 1,378 | 286 | 5 | – | 2,998 | | Yi Yang (iv) | – | – | – | – | – | – | – | | Xingda He (iv) | – | – | – | – | – | – | – | | Xue Yang (iv) | – | – | – | – | – | – | – | | Aimin Hu (iv) | – | – | – | – | – | – | – | | Qingqiang Li (iv) | – | – | – | – | – | – | – | | Yiu Tim Ma | 270 | – | – | – | – | – | 270 | | Lai Guan Rong | 248 | – | – | – | – | – | 248 | | Xu Xu | 293 | – | – | – | – | – | 293 | | Guo Yong Qing | 293 | – | – | – | – | – | 293 | | Jianxin Geng (iii) | 267 | – | – | – | – | – | 267 | During the year, no director waived or has agreed to waive any emoluments. (i) The Company held the 10th meeting of the 8th Board of Directors on 10 October 2023 and agreed to elect Mr. Yang Yucheng to serve as the Chairman of the 8th Board of Directors of the Company. Approved by the National Administration of Financial Regulation, Mr. Yang Yucheng has been serving as the Chairman from 18 December 2023. (ii) Resigned as chairman, executive director and all other positions on 22 August 2023. (iii) Resigned as independent non-executive director on 18 September 2023. (iv) These directors did not receive compensations from the Company. --- ### 41. DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENT’S REMUNERATION (CONTINUED) ### (1) Directors’ emoluments (continued) The aggregate amounts of emoluments of directors of the Company for the year ended 31 December 2022 are as follows (in RMB thousands): | | | | | 2022 (restated) | | | | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | :---: | | **Name** | **Directors’ fees** | **Salaries, allowances and benefits in kind** | **Bonuses** | **Pension scheme contributions** | **Employee benefits** | **Others** | **Total** | | Quan Li | – | 1,669 | 2,938 | 464 | 10 | – | 5,081 | | Hong Zhang | – | 1,564 | 1,919 | 400 | 10 | – | 3,893 | | Yi Yang (v) | – | – | – | – | – | – | – | | Xingda He (v) | – | – | – | – | – | – | – | | Xue Yang (v) | – | – | – | – | – | – | – | | Aimin Hu (v) | – | – | – | – | – | – | – | | Qingqiang Li (v) | – | – | – | – | – | – | – | | Yulong Peng (i) (v) | – | – | – | – | – | – | – | | Zhibin Xu (ii) (v) | – | – | – | – | – | – | – | | Edouard SCHMID (iii) (v) | – | – | – | – | – | – | – | | Jianxin Geng | 320 | – | – | – | – | – | 320 | | Yiu Tim Ma | 270 | – | – | – | – | – | 270 | | Xianglu Li (iii) | 320 | – | – | – | – | – | 320 | | Wei Zheng (iii) | 320 | – | – | – | – | – | 320 | | Lie Cheng (iii) | 270 | – | – | – | – | – | 270 | | Lai Guan Rong (iv) | – | – | – | – | – | – | – | | Xu Xu (iv) | – | – | – | – | – | – | – | | Guo Yong Qing (iv) | – | – | – | – | – | – | – | During the year, no director waived or has agreed to waive any emoluments. (i) Resigned on 20 September 2022. (ii) Resigned on 26 September 2022. (iii) Resigned on 30 December 2022. (iv) The Company held the first extraordinary general meeting of 2022 on 11 November 2022. Lan Guan Rong, Xu Xu and Guo Yong Qing were elected as directors of the eighth session of the Board of Directors. (v) These directors did not receive compensations from the Company. --- ## 41. DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENT’S REMUNERATION (CONTINUED) ### (2) Supervisors’ emoluments The aggregate amounts of emoluments of supervisors of the Company for the year ended 31 December 2023 are as follows (in RMB thousands): | Name | Salaries, allowances and benefits in kind | Bonuses | 2023 Pension scheme contributions | Employee benefits | Others | Total | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | | Debin Liu(i) | – | – | – | – | – | – | | Jiannan Yu(i) | – | – | – | – | – | – | | Chongsong Liu | 1,394 | 2,288 | 328 | 8 | – | 4,018 | | Zhongzhu Wang(i) | – | – | – | – | – | – | (i) These supervisors do not receive compensation from the company. The aggregate amounts of emoluments of supervisors of the Company for the year ended 31 December 2022 are as follows (in RMB thousands): | Name | Salaries, allowances and benefits in kind | Bonuses | 2022 (restated) Pension scheme contributions | Employee benefits | Others | Total | | :--- | :---: | :---: | :---: | :---: | :---: | :---: | | Hongyu Shi (i) (ii) | – | – | – | – | – | – | | Debin Liu (ii) | – | – | – | – | – | – | | Jiannan Yu (ii) | – | – | – | – | – | – | | Chongsong Liu | 1,390 | 3,100 | 342 | 5 | – | 4,837 | | Zhongzhu Wang | 916 | 1,664 | 207 | 2 | – | 2,789 | (i) Resigned on 30 September 2022. (ii) These supervisors did not receive compensation from the Company. --- # 41. DIRECTORS’, SUPERVISORS’ AND SENIOR MANAGEMENT’S REMUNERATION (CONTINUED) ### (3) Five highest paid individuals For the year ended 31 December 2023, the five individuals whose emoluments were the highest in the Group include 0 (for the year ended 31 December 2022: 0) director and the directors’ emoluments were reflected in the analysis presented above. For the year ended 31 December 2023, details of remuneration of the 5 (for the year ended 31 December 2022: 5) highest paid individuals are as follows (in RMB thousands): | | For the year ended 31 December | | | :--- | :--- | :--- | | | **2023** | 2022 | | Salaries, allowances and benefits in kind | **11,735** | 9,812 | | Bonuses | **864** | 23,299 | | Pension scheme contributions | **2,015** | 1,818 | | Employee benefits | **55** | 24 | | Others | **772** | 526 | | **Total** | **15,441** | 35,479 | The emoluments of the 5 highest paid individuals fell within the following bands: | | As at 31 December | | | :--- | :--- | :--- | | | **2023** | 2022 | | HK$2,500,001 – HK$3,000,000 | **3** | – | | HK$3,500,001 – HK$4,000,000 | **1** | – | | HK$5,000,001 – HK$5,500,000 | **1** | – | | HK$5,500,001 – HK$6,000,000 | **–** | 2 | | HK$7,500,001 – HK$8,000,000 | **–** | 1 | | HK$8,500,001 – HK$9,000,000 | **–** | 1 | | HK$11,500,001 – HK$12,000,000 | **–** | 1 | No emoluments have been paid by the Group to the directors, supervisors or highest paid individuals as an inducement to join or upon joining the Group or as compensation for loss of office. --- ## 42. EVENTS AFTER THE REPORTING PERIOD On 29 November 2023, the Board of the Company approved the formation of a corporate private securities investment fund as a joint investment for the Company and China Life Insurance Company Limited, with each party intending to contribute RMB25 billion. The formation of the fund is to increase the investment in long-duration assets in line with the Company’s investment strategy, optimize the asset-liability matching of insurance funds and improve the utilisation efficiency of funds. The Extraordinary General Meeting held on 27 February 2024 considered and approved the investment. On 1 March 2024, relevant regulatory procedures for formation of the fund were completed. Pursuant to a resolution passed at the meeting of the Board of Directors on 27 March 2024, a final dividend of RMB0.85 per ordinary share (inclusive of tax) totalling RMB2,652 million was proposed, after providing the statutory surplus reserve, discretionary surplus reserve and reserve for general risk. The profit distribution plan shall become effective upon the approval of the shareholders’ general meeting. ## 43. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements have been approved and authorised for issue by the Board of Directors on 27 March 2024. --- This report is printed on Environmental Friendly paper --- # 95567 ### 全國統一客服電話 ### www.newchinalife.com | NCI Official Account | IR Website | | :--- | :--- | ## 新華人壽保險股份有限公司 ## NEW CHINA LIFE INSURANCE CO., LTD. 北京市朝陽區建國門外大街甲12號新華保險大廈 New China Insurance Tower, A12 Jianguomenwai Avenue, Chaoyang District, Beijing 100022,P.R.C www.newchinalife.com