Satisfying Interests of International Investors and Stakeholders

Presented by

Davy Lee

Past President (2002)

The Hong Kong Institute of Chartered Secretaries

May 2008

CONCERNS OF CONCERNS OF INVESTORS/STAKEHOLDERSINVESTORS/STAKEHOLDERS

1. RISKS

2. LAW ENFORCEMENT

3. CORPORATE GOVERNANCE

- - 22 --

LAW ENFORCEMENTLAW ENFORCEMENT1. Common Law vs. Code Law

Ball, R., S.P. Kothari and A. Robin 2000. “The Effect of International Institutional Factors on Properties of Accounting Earnings”. Journal of Accounting and Economics 29, pp.1-51

Common Law : Better timeliness and higher conservatism

: Disclosure based

2. Protection of Investors Property Laws: protection of ownership Protection of minority’s right

3. Regulators The Stock Exchange SEC

- - 33 --

CORPORATE GOVERNANCECORPORATE GOVERNANCE

1. Disclosure/Transparency Information aymmetry (Information Risk) Stock price informativeness (SPI)

− Developed markets : higher SPI

: less volatility

- Emerging markets : lower SPI

: more volatility

2. IFRS/Int’l Accounting Standards Kim, J.-B. and H. Shi, 2007. “ International Financial Reporting Standards, Institutional

Infrastructures, and Cost of Equity Capital around the World” SSRN Working Paper (The Hong Kong Polytechnic University)

Kim, J.-B. , J.S.L. Tsui and C.H. Yi, 2007. “The Voluntary Adoption of International Accounting Standards and Loan Contracting arcound the World.” SSRN Working Paper (The Hong Kong Polytechnic University)

- - 44 --

CORPORATE GOVERNANCECORPORATE GOVERNANCE

3. Audit Quality DeAngelo, L., 1981. “Auditor Szie and Auditor Quality”, Journal of Accounting and

Economics 1, pp113-127

Hay, D. and Davis, D., 2004. “The Voluntary Choice of an Auditor of any Level of Quality”, Journal of Practice & Theory 23, 2 (September), pp 37-53

4. Foreign Institutional Investors Gul, F., J.-B. Kim, and A. Qiu, 2007. “Ownership Concentration, Foreign Shareholding,

Audit Quality and Firm-specific Return Variation: Evidence from China.” SSRN Working Paper (The Hong Kong Polytechnic University).

Kim, J.-B and C.H. Yi, 2007. “Does Trading by Foreign Investors Contribute more to Stock Price Informativeness then trading by Domestic Institutional Investors? Evidence from Korea.” SSRN Working Paper (The Hong Kong Polytechnic University)

- - 55 --

China Life Corporate Governance

towards international best practice

Oct., 2006, Hong Kong

- - 66 --

Agenda

1. Ownership Structure

2. Share Price Performance

3. Structural Governance

4. Changes in Corporate Governance since IPO

5. Stakeholders’ Focus

6. Indications of China Life Practice

7. What Next

- - 77 --

Ownership structure

China Life Insurance (Group) Company Public Shareholder

China Life Asset Management

Company Limited

Pension Company

P&C Company

72.2％

40％ 60％20％

27.8％

60％ 55％ 40％

25％

- - 88 --

Share price performance

0

50

100

150

200

250

300

350

400

03/12/17 04/05/01 04/09/14 05/01/28 05/06/13 05/10/27 06/03/12 06/09/18

中国人寿 H股指数 恒生指数

China Life vs. market indexes

2628 HK

HSCEI

HSI

Performance since Dec. 17, 2003:

2628 HK ： +313.8%

HSCEI ： + 66.5%

HSI ： + 42.3%

As of Sept. 19, 2006 ：

2628 HK closed at HKD 15 per share

China Life’s total capitalization reached HKD 401.5 billion, which made China Life the largest listed life insurer and the 6th largest listed insurer in the world

The global largest IPO in

2003

Announcement of appointing Mr. Yang Chao as President on

June 1, 2005

Announcement of separating roles of

Chairman and President on January 6, 2006

Class actionFirst time to disclose EV

in annual report

Announcement of appointing 3 additional

independent non-executive directors on June 18, 2004

China LifeChina Life HSCEIHSCEI HSIHSI

source ： Bloomberg ； data as Sept. 19, 2006

corporate strategy conveyed to the capital market

- - 99 --

Structural governanceComplete corporate governance structure Complete corporate governance structure

Board of Directors

Audit

Committee

Nomination and Remuneration

Committee

Risk Control

Committee

Strategy

Committee

Supervisory Committee

General Meeting

5 INEDs among 10 Directors of the board

All committees chaired by INEDs

The structure an principles of the corporate

governance fully comply with regulations

Harmonization of corporate governance in

line with regulatory requirements in China,

Hong Kong and US

Strong supportive platform

Effective complementary by-laws, rules and

policies regarding corporate governance

3 INEDs 2 INEDs1 Non-executive

Director

1INED

1 Non-executive

Director1 Executive

Director

1 INED

1 Non-executive

Director1 Executive

Director

Attributes

Company Secretary, Board Secretary, Qualified Accountant

Board Secretariat

- - 1010 --

Changes in corporate governance since IPOChanges in corporate governance since IPO

Built up a complete corporate governance structure

Set up a decision making mechanism with board of directors at the core

Established a business development model focusing on profitability

and value growth

Formulated clear strategy, objective and guideline policies

Transparent, timely and consistent disclosure policy

Strengthened risk management, internal control and compliance

Active investor relations

Built up a complete corporate governance structure

Set up a decision making mechanism with board of directors at the core

Established a business development model focusing on profitability

and value growth

Formulated clear strategy, objective and guideline policies

Transparent, timely and consistent disclosure policy

Strengthened risk management, internal control and compliance

Active investor relations

--1111--

Stakeholders’ focusStakeholders’ focus

Fundamentals

performance

Value growth

Fundamentals

performance

Value growth

ShareholdersShareholders

Credibility

Service

Protection

Policyholder

dividend

Credibility

Service

Protection

Policyholder

dividend

PolicyholdersPolicyholders

Compliance

Solvency

Margin

Compliance

Solvency

Margin

RegulatorsRegulators

Corporate

Development

Personal

career

Corporate

Development

Personal

career

EmployeesEmployees

StakeholdersStakeholders

--1212--

Indications of China Life practiceIndications of China Life practice

What good corporate governance matters

Add premium to share price

Establish an effective mechanism of check and balance

Ensure consistent strategy, sustainable growth and clear objectives

Improve transparency, internal control and compliance

Cultivate a corporate governance culture focusing on execution

Retain its corporate personality while acting in line with the

international best practice

What good corporate governance matters

Add premium to share price

Establish an effective mechanism of check and balance

Ensure consistent strategy, sustainable growth and clear objectives

Improve transparency, internal control and compliance

Cultivate a corporate governance culture focusing on execution

Retain its corporate personality while acting in line with the

international best practice

1313

What nextWhat next

Further optimize shareholder structure

domestic listing in A share market

introduce strategic investors

Further clarify role of the board and establish an effective

corporate governance mechanism

Further identify governance boundaries

Continue to cultivate a corporate governance culture

Further optimize shareholder structure

domestic listing in A share market

introduce strategic investors

Further clarify role of the board and establish an effective

corporate governance mechanism

Further identify governance boundaries

Continue to cultivate a corporate governance culture

1414

Thank you！

--1515 --

Recent Development of China LifeRecent Development of China Life

1. Concentrate on Investors Relationship− Regular visits with international institutional investors− Responsive in answering their questions− Roadshows to major financial markets

2. Foreign Institutional investors:

Long Position in H-Shares (%)

Deusche Bank 11.06

HSBC 5.32

JP Morgan 7.50

KBC Group 5.72

UBS 6.24

- - 1616 --

Other Major Listed Companies in PRCOther Major Listed Companies in PRC

Foreign Investors Shareholding at IPO

Bank of Communication Co. Ltd. HSBC 19.90%

China Construction Bank Corp. Bank of America 8.739%

China CITIC Bank Corp. Ltd. Banco Bilbao Vizcaya 7% (approx.)

Argentaria S.A.

- - 1717 --

Thank YouThank You

- - 1818 --