Good evening, ladies and gentlemen. Welcome to China Life 2020 First Quarter Results Briefing. My name is Li Yinghui, Securities Representative of the company. Today, the management who attends the briefing includes Mr. Li Mingguang, Vice President, Chief Actuary, and Board Secretary, Ms. Huang Xiumei, Vice President, Mr. Zhan Zhong, Vice President. We also have some heads of departments attending today's briefing. Now, we will start with a five-minute presentation on the company's 2020 first quarter results, followed by the Q&A session for around 20 minutes. I will hand over to Ms. Grace Hou, Head of the IR Division for the briefing.
Thank you. I'd like to announce our first quarter results briefing for the moment. In the first quarter of 2020, facing the complicated and severe external environment and an expected outbreak of COVID-19, the company adopted a proactive approach for both the pandemic prevention and control in its business development and proceeded steadily with all tasks by concentrating on China Life revitalization and high-quality development requirements. The company realized a continued growth in its core businesses and maintained its leading market position with a positive development momentum. Firstly, our insurance business and new business value achieved a steady growth. In the first quarter of 2020, revenues from the insurance business of the company reached RMB 307.8 billion , an increase of 13% year-on-year. Firstly, regular premiums amounted to RMB 76.1 billion , an increase of 13.9% year-on-year.
In particular, firstly, regular premiums with payment duration of 10 years or longer were RMB 25.4 billion , an increase of 2.1% year-on-year. Renewal premiums amounted to RMB 198.3 billion , an increase of 11.2%. Short-term insurance premiums amounted RMB 32.8 billion , an increase of 23.9%. During the reporting period, our protection-oriented business of the company achieved a faster growth, and the percentage of premiums from designated protection-oriented products in the first regular premium rose by two percentage points year-on-year. Especially, our value of new business for the first quarter rose by 8.3%. The surrender rate was 0.28%, a decrease of 0.34 percentage point year-on-year. Secondly, the sales force expanded, and its quality continued to improve. The company kicked off the Ding Project in 2019 under the guidance of the strategic goal of China Life revitalization with fewer centers and fewer focuses as our strategic core.
A development system was initially formed, featuring a strengthened individual sales force with an emphasis on its core role of value creation in coordination with the development of group insurance, bancassurance, and health insurance. As at the end of the reporting period, our total number of sales force from all channels was over two million. The quality of the sales force was improved constantly, and the monthly average productive agents from the strengthened individual sales force rose by 18.4% year-on-year. Thirdly, a significant achievement was made in technology empowerment. During the COVID-19 pandemic, the company proactively extended our insurance sales online by leveraging on the online platforms such as China Life Inclusive Healthcare and China Life OneService App. The company launched a 24-hour, seven-day online customer services and offer services such as quick claim settlement, online policy application, and electronic insurance policy to satisfy customers' accounts.
In addition, the company actively carried out online sales force recruitment and management, established a variety of live streaming and sharing platforms, and reinforced online training and meetings. Fourthly, the strategy of investment allocation was more aligned with the market situations. Our company's investment assets reached RMB 3.68 trillion , an increase of 2.8% from the end of last year. We also took a flexible approach towards allocation to synchronize this and asset duration strategy while controlling the risk exposure of equity investment. It allocated to core equity assets by leveraging on the long-term nature of its investment assets to grasp opportunities in equity market fluctuations. In the first quarter, despite a decline in A-share market and a significant downward trend in interest rates, our gross investment income reached RMB 45.5 billion .
Our gross investment yield was 5.13%, merely down by 158 basis points from the corresponding period of 2019, when a significant surge was seen in equity markets. Plus, our net investment income was RMB 38.1 billion , and our yield was 4.29%, a decrease of only two basis points year-on-year. Fifthly, the company fought against the pandemic with united efforts. Since the outbreak of COVID-19 in early 2020, the company voluntarily offered complimentary insurance protection against the COVID-19 to medical workers and the volunteers fighting on the front line, covering over 2.5 million people. At the end of the first quarter, the company made COVID-19 related claims payment of RMB 23.2 million , of which RMB 7.8 million was paid to the front-line medical workers. Also, our net profit attributed to equity holders of a company was RMB 17.1 billion, a decrease of 34.4% year-on-year.
The core solvency ratio and the comprehensive ratio of the company was 272.15% and 281.57% respectively. For the remaining period of 2020, we will continue to implement national instructions for the pandemic prevention and control in the consensus manner. By adhering to the strategic goal of China Life revitalization, upholding the strategic goal core of centering on customers, concentrating on local branches and field offices, focusing on business value, and strengthening individual insurance business, and sticking to the operating guideline of prioritizing business value, strengthening sales force, achieving stable growth, upgrading technology, optimizing services, and guarding against risks. The company will further promote our reform and transformation, step up our efforts in value creation, team building, reform and innovation, technology empowerment, and risk prevention and control, and threat to make further progress with China Life revitalization. Thank you.
Okay, thank you, Grace. We now begin the Q&A session, which will be conducted in consecutive interpretation. In the interest of time, please limit your questions to no more than two, and please let us know your name and the institution you represent. Now, may I invite the first question, please?
Ladies and gentlemen, we will now poll for questions. If you would like to register for a question, please press star one on your telephone. Thank you. Our first question comes from Michelle Ma with Citigroup. Please go ahead. Thank you.
Thank you, management, and congratulations on the very decent first quarter results. I have two questions. One is on the second quarter so far, operating trends. Because the situation has been improved quite a lot from the shocks of COVID-19 compared to first quarter. Have we observed a very substantial rebound of business in the first three weeks of this month? What is our expectation for the rest of the year? Do we expect a V-shape recovery or U-shape or even a slow shape recovery? That is my first question. Second is on the dividend policy. We noticed that in the first quarter, net profit decreased around 35%. Just wondering, any chances that we may tweak our dividend policy a little bit towards some more stable indicator during the year? Could you share some light on this? Thank you.
You have made very precise observation. Indeed, our operations and business were hit dramatically in February, but starting from March, we have improvement in the business and continue to turn for the better in this month. It is still so early to jump into any conclusion about the pandemic control. We will remain flexible in the measures we take to develop our business, including combining online and offline measures to expand the sales force and to sell the products. We still cannot predict whether the whole year development trend will be a V shape or U shape. Our goal will remain the same to strive for stable n ew business value growth, as well as the expansion, as well as the quality improvement on the sales force while expanding the size. Thank you.
[Non-English content]
About the second question regarding the dividend payout policy. As we have mentioned in our annual results briefing, we are aware of the investor demands and we understand their concern and interest. We will give consideration to the investor demands when making the dividend policy for the whole year.
[Non-English content]
I also think that the analysts should help the investors to understand that for insurance companies, sometimes stable or too small dividends may harm our capability to further enhance the business or to have impact on our assets and also solvency ratio. So when making the dividend policy, we should take into consideration all round factors, including the expectations from the investors, and also the demand on the assets in developing our business and also investment performance. We will take all these factors into consideration, and we will have a timely communication with the market when we make progress in revising the policy.
[Non-English content]
That is for your reference. Thank you.
Okay, the next question.
Our next question comes from HSBC in Hong Kong. Thank you.
Oh, hi. Thank you for taking my question. Two questions. Firstly, what happened to individual agent numbers in the first quarter? I just wanted to get an idea of whether your recruitment activity continued, and you continue to grow that number. Secondly, just wanted to understand on the new business outlook. I appreciate the idea is to improve new business value steadily across the year. Just so I understand, why did the new business margin fall in the first quarter it seems, versus the prior year? Is it a question of the type of business you wrote, given the circumstances, to then encourage sales later in the year or something like that? If you could just provide some color on that would be helpful. [Non-English content]
[Non-English content]
Regarding your first question about the agent number from different perspectives. First, from the new recruitment. During the outbreak of the pandemic, we have not stopped the recruitment online. Also because of the disruption of the pandemic to some industries, people from other industries may lose their jobs and they may turn to [Non-English content] industry for jobs. With the outbreak of this disease, people's awareness of the protection of the insurance also increasing. So there is higher demand for the agents. Also with the online recruitment process and online interview, it is easier for the new agents to be recruited.
[Non-English content]
On the other side, on the existing agents, this part of the agents remain stable. Because, first of all, we provide a lot of supportive measures for the existing agents, including protection against COVID-19, and also differentiated KPI evaluation system. Also we provide supportive platforms to sell the products, and also special products to meet the customer's demands. So the existing agents, they are quite stable. Also because the offline face-to-face activities were limited, there were decreasing number of people termination their contract with the company. So we have seen more people are staying with the company.
[Non-English content]
Because there is still some difference in effect from the online and offline training. We have made a clear statement that for all the new agents recruited online, there will be another retraining offline, when the outbreak of COVID-19 abates. For the people who fail this retraining, we will terminate their contracts. April is the season of performance evaluation for the first quarter business. We will also weed out the low performance activities. After we take these measures, we expect the number of the total agents will return to normal. Thank you.
[Non-English content]
I will answer your second question about the new business value. Our goal for this year is to strive for the stable growth of the new business value.
[Non-English content]
Around this goal, we have put forward a concept of integration of our business.
[Non-English content]
That means we will take integrated relevant measures in developing our business, our sales force, technology support, and also services better serve the customers.
[Non-English content]
Around this goal, we have made a differentiated development plan regarding the products, sales force development, and also service to meet the customer's demands and to develop products that are useful for the agents. Seeing from the quarterly new business value growth, it may differ from quarter to quarter, maybe on the customer's demand. But for the whole year, our goal remains the same, and we expect stable growth that will not change for the whole year. We think the 8.3% growth in the first quarter was slightly hit by the pandemic outbreak. The situation is now turning for the better. We will also flexibly react to the environment change and the customer's demand change. That is for your reference. Thank you.
Okay. Let's take the next question.
Once again, ladies and gentlemen, if you'd like to register for a question, please press star one on your telephone. Thank you. Our next question comes from Leon Qi with Daiwa in Hong Kong. Please go ahead. Thank you.
Hi. Thanks for taking my question, and again, congratulations on the very strong result given all the headwinds in your operating environment. I just have one follow-up question on the margin. We understand that margin was diluted a little bit given the special environment happening in the first quarter this year. I just want to understand that for a longer term, not necessarily just 2020, what's our strategy in terms of the product mix upgrade? Shall we still be looking at the margin heading up? Part of this question is regarding the recent definition change on the critical illness products. How do management think this will relate to the margin for longer term? Thank you very much.
[Non-English content]
Thank you, first of all, for the good words on our performance.
[Non-English content]
No worries. I remember that for the revision draft for the definition change, the China Insurance Regulatory Commission is on the official website in Chinese. Where do you read the English version? Let me think.
Yes. We read both the Chinese and English version.
[Non-English content]
You have been very sensitive about the change in the industry. I think that this draft is only for public consultation. It has not been officially published. In my opinion, the main aim and the guideline of this new draft is that the critical illness insurance should be more in line with the practice of the medical treatment, and the claim settlement of the critical illness insurance should more precisely match with the expenditure of the patients. With this as the aim, we think that for our products, maybe in the future, the controversial clause may decrease, and it will help improve the risk control for some respects.
[Non-English content]
Another impact is that for some rare diseases, and for diseases with very small morbidity rates, the insurance company cannot just include that in the scope of insurance without clear statement to the customers. That is to protect the customers' rights.
[Non-English content]
To summarize, I think there are several principles we can see in the revision of this definition. That includes based on fairness, and the predictability, and measurability of the payment. It is going with the time.
[Non-English content]
These principles actually help healthy and sustainable operation of the insurance companies. In the future, the difficulty of selling may be mitigated and the reputation of the company will increase.
[Non-English content]
As for its impact on the product margin, we should say the margin is determined by various factors including the morbidity rates, the performance of the investment, and also the cost control of the company. We cannot jump into any conclusion based on the revision of the definition on the margin of the company.
[Non-English content]
For our company, our products combination, product mix, is based on the customer's demand. It's not in the high margin of specific products.
[Non-English content]
We should say, only if the customer's long-term interest is satisfied, we can see achievable interest of the company and also interest of the shareholders.
[Non-English content]
We will keep working hard in controlling the risk for the insurance business and also cost control.
[Non-English content]
That is for your reference. Thank you.
Okay, thank you.
Thank you very much.
The end of our 2020 first quarter results briefing. If you have any questions, please get in touch with our IR Division team at any time. Thank you for participation. Good night.