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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good evening, ladies and gentlemen. Welcome to China Life's 2023 First Quarter Results Briefing. My name is Li Yinghui [indiscernible] of the company; Mr. Zhao Peng, President; [indiscernible], Proposed Vice President; Mr. Ruan Qi, Vice President; Ms. Yang Hong, Vice President; Mr. Zhao Guodong, Assistant President and Board Secretary; Mr. Bai Kai, Assistant President; Ms. Cheng-Hsien, Independent Director as well as heads of relevant departments in today's briefing.
The briefing will start with a five-minute presentation on the Company's first quarter results, followed by a Q&A session for about 25 minutes and is conducted in consecutive interpretation.
Now let me hand over to Grace, Head of the IR Division, for the presentation of first quarter results.
Ladies and gentlemen, good evening. This is Grace speaking. So in the first quarter, China Life pursued high-quality development and prioritized the business value growth, maintaining a solidified market-leading position in the industry.
Firstly, our new business grew rapidly with both gross written premiums and new business value maintaining number one in the industry. We achieved revenues from insurance business of RMB 327.2 billion, an increase of 3.9% year-on-year. Our premium from new policies amounted to RMB 117.7 billion, an increase of 16.6% year-on-year. Also, the value of new business for the first quarter increased by 7.7% year-on-year, which recovered positive growth from the negative and beyond consensus of the market.
First, the regular premiums reached a historical high at RMB 71.5 billion, a year-on-year increase of 9.4%. In particular, our first regular premiums with a payment duration of 10 years or longer were RMB 20.1 billion, an increase of 5.1% year-on-year and proportion in the first regular premiums was 28.1%.
Renewal premiums amounted to RMB 209.6 billion, a decrease of 2.1% year-on-year and short-term insurance premiums amounted to RMB 35 billion, an increase of 0.7% year-on-year. Also, the surrender rate was 0.4%, an increase of 0.12 percentage points year-on-year.
Secondly, our sales force was gradually stabilized with enhanced quality, regaining mortality steadily. Focused on implementation of the sales channel strengthening program, the company continued to drive insurance business development through protective agents, reinforce agent recruitment and development and consolidated the foundation for its development so as to push forward the transformation of the sales team to be more specialized and professional.
At the end of first quarter, our total sales force was RMB 0.72 million, of which individual agent sector was RMB 0.66 million, generally stable as compared to the previous quarter, showing a prominent sign of stabilization. Meantime, the quality of our sales team continued to improve with the monthly average first regular premium per agent, increasing by 28.8% year-on-year.
Thirdly, the company adhered to the asset availability interaction, releasing a year-over-year increase in investment income. We accelerated our allocation to balance by taking advantage of opportunities brought about by interest rate hikes in space to mitigate its pressure in asset allocation. Also, closely follow-up changes in equity markets as realized spread income by feeding appropriate opportunities with the aim to enhance our investment yield.
First quarter, we achieved a gross investment income of RMB 52.9 billion, an increase of 18.8% year-on-year. Our annualized growth rate investment yield reached 4.21%, a year-on-year increase of 33 basis points. Also, our non-investment income was RMB 45.6 billion. Annualized net investment yield was 3.62%.
Meanwhile, our total assets and investment assets were RMB 5.46 trillion at RMB 5.24 trillion, respectively. Due to the impact of the change in investment income an update of discount rate assumption of results of the company's traditional insurance contracts, our net profit under the old accounting standards was RMB 17.9 billion, an increase of 18% year-on-year, while under the new accounting standard, our net profit was RMB 27.3 billion, an increase of 78% year-on-year.
Please be reminded that for better market understanding of the shift between old and new standards, China Life adopted different standards for reporting starting from this year. Any comparison between companies should be based on the same standard to avoid misunderstanding.
Our core and comprehensive solvency ratio were 447.53% and 210.19%, respectively, the increase of 3.94 and 3.41 percentage points from the end of last year, respectively, which continues to remain at relatively high levels with the most strict full implementation of C-ROSS Phase II. Thank you.
Thank you, Grace. We now begin the Q&A session. In the interest of time, please limit your questions to no more than two, and please let us know your name and your institution. Now let's have the first question, please.
Thank you, ladies and gentlemen. We will now poll for questions. [Operator Instructions] Our first question comes from Shengbo Tang with Nomura. Please go ahead. Thank you.
Hi. Thank you very much, management, for the opportunities and congratulations especially on the very good results. So my question is about the agent number. And could you give us some guidance on the number of agents because we see first quarter, your number of agents already quite steady. So it is an opportunity, we will have a positive number of agent growth for this year.
And also regarding the business of agent first year premium, our understanding first quarter was quite strong in terms of sale of new business, mainly because of the bank insurance. So could you give us more color on the way of new business in the agent channel? Thanks.
[Foreign Language]
[Foreign Language]
So about the agent number. We are happy to say that the total sales force number has been stabilized in the first quarter, although it still recorded a 1% negative growth compared with the end of last year. We see a very good sign that it has been improving from month to month in March this year after 24 months consecutive negative growth. For the first time, we see a positive growth, single-month growth in the agent number.
So this shows that our hard work in last year to improve the agent team building has shown very good results. In last year, China Life had the best agent sales declining and recorded the highest growth in the per agents productivity growth.
And this year, we continue to implement the agent reform programs and will carry out a series of reform as the agent team reform and the system reform and we'll have more measures to enhance the results of the reform.
So this year, our guidelines or our target will achieve effective enhancement at the agent quality as well as stabilize for growth of the agent scale. We want to see that the quality growth is at the first place. On the condition that we can improve the quality, we will start to focus more on the scale of the sales force. But all the scale growth should be based on enhanced quality. That's all for my answer, thank you.
Let me take the second question. We focus both on the scale of the business and also the business value growth and we prioritize the business side of growth. In the first quarter, our first year regular premium recorded amounted to more than RMB 70 billion with an increase in rate of 9.4%. And the business of 10-year or longer payment duration amounted to more than RMB 20 billion and with a growth rate of 5.1%. This is the best results we have been achieving after the break out of the pandemic.
From different channels in the individual agent business sector, the FYRP growth rates was 5.9%. And the business with 10-year or longer payment duration, the growth rate was 5.1%. As from our knowledge with this performance has been better than most of our peers.
And in the bancassurance channel, the FYRP growth rate was 33.6%. This is a little bit lower than the industry average. That is because we pay attention to both scale and the business value. We sold more business with payment duration of five years or longer. So our product mix is better than our peers.
And the sales from the trend after April this year, we have been seeing improvement in all of the indicators of business. So in this year, we are fully confident about the growth of the new business as well as the new business value. Thank you. Let's take the next question.
Thank you. Our next question comes from Michelle Ma with Citi. Please go ahead, Michelle. Thank you.
Thank you. Thank you, management for giving me this opportunity to raise my question, and first, congratulations on the first quarter results. So I have two questions. So first is about the 3.5% whole life – the whole life long-term savings product. So it seems that China Life is more disciplined or have actually has more concern over this type of product versus our peers. May I know the rationale behind and also maybe in the second half, what's our product strategy? This is the first question.
And second question is about the earnings and the different accounting standards, it looks like there is a huge difference. I wonder given the very sound solvency position we have currently after the full adoption of the solvency C-ROSS II scheme, I’m wondering whether we will consider if our dividend payment base is based on the original standard, then should we consider to pay out more for dividend? That's my second question. So I will translate myself.
[Foreign Language]
Okay. For the whole life that we think that the interest risk and the risk for our asset and liability is bigger than the other products because the durations for these products is very long. So we are prudent for developing these products. Especially for the Q1, we think that it is not a good time to have the long-term bond investment.
We pay more importance for our asset liability management. So that the proportion of our whole life products business are relatively much lower than our peers. And for the future, we will hope that we will pay more attention to the interest risk management. And we will pay more attention to the pace of developing different kind of product together with our – the chance of asset allocation, especially the long-term, long duration asset allocation. So this is my answer. Thank you.
[Foreign Language]
Okay. We have time for the next question. Well, the dividend policy because we have adopted a transitional period policy. So this year, the net profit will be different under each share and each share reporting. And about the specific periods in payout foundation, we have been carrying out research in this regard.
And about the dividend policy in 2023, based on the specific performance results and also in line with the regulation from the regulator and also in line with the articles of association of the company. We will consider our dividend policy with consideration to the shareholder rewarding and also the solvency requirements as well as the requirement from the management and operations.
Okay. Next question, please.
Thank you. Our next question comes from Rick Chow with Morgan Stanley. Please go ahead. Thank you.
Okay. Thanks, management for the opportunity. Congratulations on the results. This is Rick from Morgan Stanley. So just two questions from my side. The first is about the long-term [indiscernible] product. And we have the 5% FYP growth of 10 more years payment duration. Just wondering the breakdown product if CI critical units and the long-term saving products all achieved positive growth and what's the management's expectation of CI products? Have we seen the recovery in recent months?
And the second question is about net investment yield. In first quarter, company's net investment yield is 3.6%. But I remember for the first quarter 2022 and also for the fiscal year 2022, we all achieved 4% net investment yield. So we saw a little bit decrease. And so can management give us more color on net investment yield and the judgment of interest rate.
[Foreign Language]
And about the first question, we have been paying more attention to the business with a 10-year or longer payment duration. In the first quarter, we achieved growth rate of 5.1%. And till now, these growth rates have been better than this Q1 number.
But about the critical unit business, unfortunately, the new business still had a negative growth. And the whole industry also recorded a large net yield growth in the critical units business and I think several reasons attributed to this negative growth.
And firstly, in the past few years, the industry achieved a record growth in the critical units business, in line with the record growth of the sales force and also because of some policies in the healthcare system of China. And secondly, in 2021, there was a revision on the life table of the life insurance industry that released some of the customers' demand in advance. And thirdly, because of the advancement in the healthcare technology and health checks skills, there are a lot of abnormal situation for our potential policyholders. So they have some limitation in applying for policy and also to apply for more than a short.
However, we think the critical units still had a large potential space for growth. Firstly, because of the insurable people, the group of people that will be eligible for the critical units products will be growing. And secondly, currently, the sum assures average is only RMB 100,000. We think that in the next decade, there will – this figure will increase 2x to 3x.
And finally, with the advancement in our risk control measures, we will have more space for the critical units products as well as insurance/service and insurance/technology, more wider scope of business. And also with this control improvement, we can provide insurance to people with a minor disease or chronic disease. This will also provide huge space for future development.
And from the company's perspective, we paid great attention on the growth of the critical units business. We want to enhance the sales of long-term health insurance. And based on this, we have been making full arrangements in terms of KPI of the branches and also product offerings as well as the service to customers. We want to achieve recovery growth at the critical units business. But we should admit that the growth of this regard will be slower than the recovery of the long-term savings or business out of the wealth management purpose.
And second question about the net investment yield. In first quarter, our net investment yield was 3.62%. That is 35 bps lower than the corresponding period last year.
First reason is that the timing of the dividend is different. So last year, we enhanced the allocation into funds and also equity type non-standard financial assets. And we didn't receive some of these dividends in the first quarter. And so the dividend income this year is lower than first quarter last year. And this situation will improve as time goes later this year.
And certainly, because the interest rate is declining in China, the fixed income asset investment return has been declining. The newly added fixed income had a lower investment yield than last year. And also some of the existing fixed income assets also mature this year. So in general, the fixed income investments yield is lower than the past years. This is a common phenomenon in the whole industry.
To address this issue, we will continue to carry out the investment guidelines based on long-term investments, prudent investment, and also value-oriented investments to address the challenges of the interest rate downturn. And we will enhance the allocation into countercyclical assets and to allocate more to the long-term financial assets and some to increase the allocation into the high dividend stocks as well as the alternative assets with stable investment return. Thank you.
Okay. We have already run over the time limit. Are there other questions online still? No. This concludes today's briefing. If you have any further questions, please feel free to get in touch with our IR team at any time. Thank you for participation. Goodbye.