China Life Insurance Company Limited

International Directory of Company Histories, Volume 65 (1994) by M. Cohen

China Life Insurance Company Limited

16 Chaowai Avenue Chaoyang District Beijing 100020 China Telephone: 86 10 8565 9999 Fax: 86 10 8525 2232 Web site: http://www.chinalife.com.cn

Public Company Incorporated: 1996 Employees: 66,886 Sales: $9.53 billion (2003) Stock Exchanges: New York Hong Kong Ticker Symbol: LFC NAIC: 524113 Direct Life Insurance Carriers; 524114 Direct Health and Medical Insurance Carriers

China Life Insurance Company Limited is the largest life insurer in the People's Republic of China. The company offers individual life insurance, group life, accident insurance, and health insurance policies. China Life commands 45 percent of that market, and holds the number one position in 29 of the country's 31 major markets—only Shanghai and Beijing, where the company nonetheless is number two, escape its dominance. Formed from the breakup of former governmentowned monopoly People's Insurance Company of China, China Life is the only life insurance company in China with a national operating license, which has permitted it to develop a network of more than 8,000 field offices, 4,800 branch offices, 3,000 customer service offices, and 87,000 sales outlets in such locations as banks, post offices, hotels, airports, travel agents, and the like. The company's nearly 67,000 employees are complemented by a network of 650,000 exclusive independent sales agents. The company also operates a "one-stop" 24-hour telephone sales and service hotline. Together, China Life serves more than 100 million long-term policy holders and more than 150 million short-term policy holders, generating nearly CNY 51 billion ($6.2 billion) in net premiums and policy fees in 2003. The group's total sales topped $9.5 billion that year. China Life listed on the Hong Kong Stock Exchange and the New York Stock Exchange at the end of 2003, raising $3.5 billion in that year's largest initial public offering (IPO). China has indicated its intention to expand into other financial areas, such as asset management, brokering, and banking.

Inheriting China's Pre-Revolution Insurance Industry

The opening of China to the West in the early years of the 20th century led to a variety of new business opportunities. By the end of World War I, China, and especially Shanghai, had become a major center for international trade, although dominated by foreign interests. The lively commercial market in that city offered entrepreneurs seemingly unlimited potential; among these was the young C.V. Starr, an American, who founded an insurance agent's office in Shanghai in 1919. At first, Starr's company, American Asiatic Underwriters (AAU), served as a local representative for foreign insurers.

AAU originally dealt in fire and marine insurance policies. In the early 1920s, however, Starr recognized the vast potential for life insurance among the country's Chinese population. Starr set up a new company, Asia Life Insurance Company, which became the first to market life insurance products to the Chinese. The company's head start allowed it to build quickly into a leading insurance provider not only across the Chinese mainland, but throughout much of the Asian region. Starr's company eventually evolved into U.S. leader American Insurance Group.

In the meantime, Asia Life's success inspired a raft of competitors. Most of these were local representatives of large foreign companies. A number of local groups appeared, however, and played an important role in developing the life insurance market among the indigenous population.

One of the earliest and most important of these companies was the Tai Ping Insurance Company, which was incorporated in Shanghai in 1929. Founded by H.C. Tung and H.N. Ting, the new company received start-up investments from a number of Chinese banks and began issuing general insurance policies. The following year, Tai Ping added a life insurance component, Tai Ping Life Insurance Company. Tai Ping developed strongly through the 1930s, adding nearly 20 branches in major cities in China as well as elsewhere in southeast Asia. The company also opened some 400 secondary offices across the Chinese mainland, before adding representative offices in Europe and in the Americas.

By the mid-1930s, Tai Ping had grown sufficiently large to become a member of the Shanghai Insurance Association, the only Chinese-owned company to be included in what had previously been an exclusive club for foreign insurers. Tai Ping's fortunes began to dwindle after the start of the Sino-Japanese War in 1937, and especially with the Mao-led Communist revolution in 1949.

Tai Ping in the meantime had been joined by a growing number of other Chinese-owned insurance companies. Among these were China Insurance Company, founded in 1931 in Shanghai, which opened a life insurance subsidiary, China Life Insurance Company in 1933. Later insurance market entries included Ming An Insurance Company, established in Hong Kong in 1949. By then, China boasted more than 240 insurance companies—some 180 of which were Chinese owned.