Good evening, ladies and gentlemen. Welcome to China Life 2020 third quarter results briefing teleconference. My name is Li Yinghui , Securities Representative of the company. Li Mingguang , Vice President, Chief Actuary, and Board Secretary, Huang Xiumei , Vice President, Zhan Zhong , Vice President, as well as heads of relevant departments participate in today's briefing. The briefing will start with a five-minute presentation on the company's third quarter results, followed by a Q&A session for around 20 minutes, during which our management will take your questions. Let me hand over to Grace for the briefing introduction.
Hello, everybody. Good evening and good morning. This is Grace speaking. I see except that we have one representative for the English session this time, so thank you for your time. In the first three quarters of 2020, under the complicated and severe external environment, China Life closely adhered to the strategic deployment of China Life revitalization, proceeding well with both pandemic control and business development, and actively pushed forward all tasks according to the requirements for high quality development, thus maintaining the leading market position with a good development momentum. Firstly, major progress in business development. In the first three quarters of this year, we achieved the revenues from the insurance business of CNY 543 billion, an increase of 9.4% year-on-year. First-year regular premiums amounted to CNY 106 billion, an increase of 7.1% year-on-year. Our renewal premiums amounted to CNY 368 billion, an increase of 10% year-on-year.
In short- term, amounted to CNY 66 billion, an increase of 9.3% year-on-year. Secondly, achieved a continued growth in our business value. Our percentage of first-year regular premiums in premiums from new long-term insurance policies was 98%, an increase of 0.13 percentage point from the corresponding period of 2019. Also, our first-year regular premiums with the payment duration of 10 years or longer amounted to CNY 48 billion, which accounted for 45.8% in our first-year regular premiums. Prioritizing our business value growth, we continued to accelerate development of our protection-oriented business, and the percentage of premiums from designated protection-oriented products and first-year regular premiums increased by 1 percentage point year-on-year. The value of new business for the first three quarters of 2020 grew by 2.7% year-on-year, and likely, I think we are still the only positive result in the sector.
The surrender rate was 0.85%, a decrease of 0.82 percentage point year-on-year. Thirdly, the sales force remains stable. With the [ Non-English content] sales function restructuring, a strengthened individual agent business sector in coordination with other business channels, which is the definition of [ Non-English content] being completed, we maintained our sales force strategy of improving quality while expanding the size, and focused on our day-to-day management and quality enhancement, aiming for the high-quality development of our sales force. As at the end of the third quarter, our total sales force was 1.66 million, including 1.58 million agents in our individual agent business sector, which remains very stable in general. Fourthly, constantly enhanced our investment capability. As at the end of the reporting period, our investment assets reached CNY 3.88 trillion, an increase of 8.5% from the end of 2019.
The company deepened the market-oriented reform of its investment management system, coordinated asset allocation, and entrusted investment management at current level, and enhanced our investment capabilities through research of asset types and optimization of investment strategies. In the third quarter of 2020, we seized a very good opportunity of interest rate hike to increase our allocation to government bonds with long durations, flexibly control the exposure of open market equity investments by taking advantage of market fluctuations, optimize the structure of our equity holdings, and two gains, one appropriate. In the first three quarters, we achieved the growth investment income of CNY 147 billion, an increase of 9.3% year-on-year. Our gross investment yield reached 5.36%, which is also quite good. Net investment income was CNY 123 billion, an increase of 7.7% year-on-year, and net investment yield reached 4.47%, which is higher than the first half results.
Our net profit also was CNY 47 billion, a decrease of 18% year-on-year. Our core solvency ratio and the comprehensive ratio company still very solid, reached 255% and 264% respectively. For the next stage, we will continue to adhere to the strategic deployment of China Life revitalization, take proactive efforts to fulfill the overall target for the whole year, and make proper planning for the year of 2021. In addition to the regular pandemic control and focus of ensuring stability on the six fronts and maintaining security in the six areas, which is a very heated topic in China now, we will, according to the requirements for high-quality development
Strengthen business value creation, push forward reform and innovation in greater depth. Firmly maintain the bottom line of risk management and control, and strive to promote China Life revitalization to a new stage. Thank you, loads.
Okay, now we are ready to take your questions. Please.
Thank you. Ladies and gentlemen, we will now pull for questions. If you would like to register for a question, please press star one on your telephone. Thank you. Once again, ladies and gentlemen, if you would like to register for a question, please press star one on your telephone. Thank you. Our first question comes from Leon Qi with Daiwa. Please go ahead. Thank you.
Oh, hi. This is Leon from Daiwa, and thanks for taking my question. My first question is on our next step strategy for China Life revitalization. Since two years ago when we launched the China Life revitalization strategy, I think all our operating metrics have seen very steady improvements. At this point of time, given our steady improvements in VNB, margin, agency headcount, etc., it seems further improvements on that matrix might not be that kind of low hanging fruits compared with two years ago. What specific measures and what are the specific areas that we want to focus on in our next step of our China revitalization to actually go for an extra mile in our strategy down the road for 2021? We do understand that in particular from a relative basis, now we are facing a much higher basis than than years ago.
Secondly, a question on Ant. China Life, both your major shareholder, the group company and also the listed company, are one of the biggest external investors for Ant Financial, especially after its IPO. I think we might be trying to explore more strategic operations with Ant. If management could share more insights on our expectations and plans in order to realize the strategic and operational synergies with Ant, that will be much appreciated. Thanks.
[Non-English content]
[ Non-English content]
[ Non-English content]
First question about the next step for China revitalization. Our reform mainly carried out through Dingxin P roject. In this project, we have measures on our front end, middle end and back end. At the front end that we have mentioned, we will deep the integration and the coordination of [ Non-English content] . That means that strengthen the individual channel in coordination with other channels. In the middle end, we will deepen the cooperation and the synergy from the operations, finance and supporting functions.
[ Non-English content]
In the middle and next year, we plan to set up a shared service center. That means we will have shared integrated operation center and finance center that can service our sales channels as well as the risk control. That means we will have better specialization. We also plan to set up the R&D subcenter to support the technology application. In terms of investment management, we will also have the market-oriented mechanism for ou r investment team.
[ Non-English content]
Those measures I mentioned all tackle the fundamentals of the company that can help our company improve our fundamentals to address the challenges of next year. We will continue to carry out the strategy of prioritizing our business value, and also to provide better service for our customers. Even though there are challenges for next year, we are confident, and we are prepared to work hard to address those challenges
[ Non-English content]
About your question on expectation for our cooperation with Ant Group. As you know, China Life Group and the listed company both participated in the previous series of financing of the Ant Group, and its IPO will bring abundant financial return to investors like China Life. Although our investment was first from the perspective of financial in the first place. As we know, the Ant Group is the leading company in terms of payments solutions, and also service of the financial, and also micro loans to small companies. We think there are possibilities for the future cooperation with China Life, and we will proceed from the demand of our business and t o explore more opportunities for cooperation of the two sides.
Thank you very much.
Thank you. Our next question comes from Scott Russell with Macquarie in Hong Kong. Just go ahead. Thank you.
Yeah, good evening, everyone. Just one question really about the sales in the third quarter, the first-year regular premiums, they were up 7% year-to-date, but that means they were down 25% in the September quarter. That weakness seems odd given all of the observations around China getting back to normal. I would be interested to understand whether your agents are now able to do face-to-face meetings, or to what extent the residual effects of the pandemic are impacting their ability to do business. Maybe also a comment on consumer demand. Do people now want to buy life insurance products, or have you seen demand fall away? Just some explanation of the weak sales number in Q3, please.
[ Non-English content]
[ Non-English content]
As our main listed companies all release their third quarter results, you can see there is a common big growth of the sales in the third quarter itself for the whole sector.
[ Non-English content]
The COVID-19 still has very deep and profound impact on our national economy, as well as on the life insurance industry and on the agent team of different companies. As for how long the impact will linger on, they are still too early to make precise judgments. We should say it actually indeed brings restrictions on the business development, and we should regard it as a new normal and to explore new ways of development for the life insurance business.
[ Non-English content]
Also in the third quarter, we have done a lot of work. Apart from the regular sales, we have further tidied up our team and to enhance the fundamentals of the team, and also to make preparations for the jump start of next year.
[ Non-English content]
You also mentioned the customer demand. We should say the impact from COVID-19 on customer demand are two sides. On the one side, it aroused the customers' awareness of the protection and it may increase some customer demand. But on the other side, it also reduced the family income of some customers and also bring some difficulties for the sales. That's all for the answer. Thank you.
Can I quickly follow up? A separate question, just quickly. There was an impairment loss in the third quarter of CNY 6.3 billion. Is that equities or bonds? Can you confirm whether there was a default? Given the stock market rose, it's more likely to be fixed income. Just interested in where that came from.
[ Non-English content]
So all of our impairment loss comes from the equity investments. In this year, there's no defaults on our bond portfolio.
[ Non-English content]
One thing to be explained, compared with our peers, our standards for impairment loss recording is more strict and more prudent. That's all for the answer.
Okay, thank you.
Thank you. Our next question comes from Kailesh Mistry, with HSBC in Hong Kong. Please go ahead. Thank you.
Hi, good evening. Thank you for taking my question. Just to follow up on Scott's first question, actually. Given the slowdown in new business growth and FYP in the third quarter, do you still expect to achieve positive NBV growth in full year 2020? What strategies are you putting in place for 2021 or any targets that you're setting yourself in terms of agent growth, new business growth, and any quotas you're putting around jump start? Thank you.
[ Non-English content]
[ Non-English content]
Our pursuit for this year and next year will all be the same one, that is to prioritize the new business value.
[ Non-English content]
We achieved 2.7% growth in the new business value for the first three quarters. As we have mentioned earlier, in the third quarter, we actually did a lot of things. We reinforced our agent team and also accumulated more customer resources and also prepared for the jump start of next year. We have done a lot of work apart from the regular business development.
[ Non-English content]
That is also part of our answer. We should do both things in the third quarter. At the same time, we consider not only the result of this year but also the project for the next year.
Okay, this is the final question, and it wraps up the Q3 results briefing today. If you have further questions, please keep in touch with our IR team. Thank you for your participation. Bye.
Bye bye.