As filed with the Securities and Exchange Commission on December 5, 2003

Registration No. 333-110615
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------

AMENDMENT NO. 2 TO THE

FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------

[NAME IN CHINESE CHARACTERS]

(Exact name of Registrant as specified in its charter)

China Life Insurance Company Limited
(Translation of Registrant's name in English)

The People's Republic of 6311 None
China
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code
organization) Number)

16 Chaowai Avenue
Chaoyang District
Beijing 100020, China
(86-10) 8565-9999
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
CT Corporation System
111 Eighth Avenue, 13/th/ Floor
New York, New York 10011
(212) 894-8940
(Address, including zip code, and telephone number, including area code, of
Agent for Service)
-----------------
With copies to:
Wolcott B. Dunham, Jr., Gregory Miao, Esq.
Esq. Susan J. Sutherland, Esq.
James C. Scoville, Esq. Skadden, Arps, Slate,
Debevoise & Plimpton Meagher & Flom LLP
2202 Jin Mao Tower East Wing Office, Level 4
88 Century Boulevard China World Trade Center
Shanghai 200121, China No. 1 Jian Guo Men Wai
(86-21) 5047-1800 Avenue
Beijing 100004, China
(86-10) 6505-5511
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
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CALCULATION OF REGISTRATION FEE
================================================================================

Proposed Maximum Proposed Amount of
Title of Each Class of Securities to Be Amount to be Offering Maximum Aggregate Registration
Registered Registered(1) Price Per Share Offering Price(2) Fee(3)
- ---------------------------------------------------------------------------------------------------------

Overseas listed foreign-invested shares, or 7,441,175,000
H shares, par value RMB 1.00 per share (4) H shares $0.47 $3,497,352,250 $282,936

================================================================================
(1) The amount of shares registered includes any shares initially offered or
sold outside the U.S. that are thereafter sold or resold in the U.S. Offers
and sales of shares outside the U.S. are being made pursuant to Regulation
S under the Securities Act of 1933 and are not covered by this Registration
Statement.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

(3) Previously paid.

(4) American Depositary Shares issuable on deposit of the H shares registered
hereby will be registered under a separate registration statement on Form
F-6. Each American Depositary Share represents 40 H shares.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

================================================================================

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)

Issued December 5, 2003

[LOGO]

China Life Insurance Company Limited
[NAME IN CHINESE CHARACTERS]

153,676,475 AMERICAN DEPOSITARY SHARES
REPRESENTING 6,147,059,000 H SHARES

-----------------

China Life Insurance Company Limited is offering American depositary shares, or
ADSs, representing its overseas listed foreign-invested shares, or H shares.
Each ADS represents 40 H shares. We are selling 139,705,875 ADSs, representing
5,588,235,000 H shares. China Life Insurance (Group) Company, or CLIC, which is
our controlling shareholder, also is selling 13,970,600 ADSs, representing
558,824,000 H shares. This is our initial public offering. We currently
estimate that the initial public offering price per ADS will be between
US$15.35 and US$18.80, equivalent to between HK$2.98 and HK$3.65 per H share at
the exchange rate of HK$7.7660 to US$1.00, the noon buying rate on November 28,
2003.

This offering of ADSs is part of a global offering of an aggregate of
6,470,588,000 H shares, including a Hong Kong public offering of 323,529,000 H
shares.

The ADSs have been approved for listing on the New York Stock Exchange, subject
to official notification of issuance, under the symbol "LFC". We have applied
for the listing of the H shares on the Hong Kong Stock Exchange under the stock
code "2628".

-----------------

Investing in the ADSs involves risks. See "Risk Factors" beginning on page 22.

-----------------

Underwriting
Discounts Proceeds to
Price to and Proceeds to the Selling
Public Commissions Us Shareholder
-------- ------------ ----------- -----------

Per ADS US$ US$ US$ US$
Total.. US$ US$ US$ US$
=== === === ===

The information in the above table excludes H shares offered in the Hong Kong
public offering, with aggregate proceeds to us of HK$ . We and the selling
shareholder have granted to the underwriters an option to purchase up to an
aggregate of 24,264,675 additional ADSs to cover over-allotments.

The United States Securities and Exchange Commission and state securities
regulators have not approved or disapproved these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

The underwriters expect to deliver the ADSs to purchasers in New York on
, 2003. The ADSs are expected to commence trading on the New York Stock
Exchange on , 2003. You may not be able to sell or otherwise deal in
these securities prior to the commencement of trading.

(in alphabetical order)

China International Citigroup Credit Suisse First Boston Deutsche Bank Securities
Capital Corporation

Financial Advisers to China Life
China International Capital Corporation Lehman Brothers

, 2003

TABLE OF CONTENTS

Page
----

Prospectus Summary........................ 1
Risk Factors.............................. 22
Forward-Looking Statements................ 38
Exchange Rate Information................. 39
Use of Proceeds........................... 41
Dividend Policy........................... 42
Capitalization............................ 44
Dilution.................................. 45
Selected Historical Consolidated Financial
Data.................................... 46
Unaudited Pro Forma Consolidated Financial
Data.................................... 49
Operating and Financial Review and
Prospects............................... 57
Prospective Financial Information......... 110
Embedded Value............................ 112
Life Insurance Industry in China.......... 114
Business.................................. 120
Regulation................................ 157

Page
----

Management................................. 167
Principal and Selling Shareholder.......... 173
The Restructuring.......................... 174
Relationship with CLIC..................... 184
Description of Share Capital............... 193
Description of American Depositary Receipts 207
Shares Eligible for Future Sale............ 216
Taxation................................... 217
Enforceability of Civil Liabilities........ 224
Underwriters............................... 226
Legal Matters.............................. 239
Experts.................................... 240
Expenses Relating to this Offering......... 241
Where You Can Find More Information........ 242
Glossary................................... G-1
Index to Consolidated Financial Statements. F-1
Annex A--Actuarial Consultants' Report of
Tillinghast-Towers Perrin................ A-1
Annex B--Valuation Report of Sallmanns (Far
East) Ltd................................ B-1

- --------

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell these securities and
seeking offers to buy these securities only in jurisdictions where offers and
sales are permitted. The information contained in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of delivery of
this prospectus or any sale of the securities offered by this prospectus.

Until , 2003, all dealers that buy, sell or trade H shares or ADSs,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.

CONVENTIONS

References

References in this prospectus to "we", "us", "our" or "China Life" mean
China Life Insurance Company Limited and, as the context may require, its
subsidiaries. References to "CLIC" mean, prior to the restructuring described
below, China Life Insurance Company and, as the context may require, its
subsidiaries, and subsequent to the restructuring, China Life Insurance (Group)
Company and, as the context may require, its subsidiaries, other than China
Life.

The statistical and market share information contained in this prospectus
has been derived from government sources, including the China Insurance
Yearbook 1999, the China Insurance Yearbook 2000, the China Insurance Yearbook
2001, the China Insurance Yearbook 2002, the China Insurance Yearbook 2003, the
National Bureau of Statistics of China and other public sources. The
information has not been verified by us independently. Unless otherwise
indicated, market share information set forth in this prospectus is based on
premium information as reported by the CIRC. The reported information includes
premium information that is not

determined in accordance with H.K. GAAP or U.S. GAAP. Our market share
information set forth in this prospectus is estimated by computing the market
share of our predecessor company, CLIC, and adjusting it to give effect to our
restructuring, based on premiums determined in accordance with PRC GAAP. Under
PRC GAAP, premiums include premiums and deposits.

References to "China" or "PRC" mean the People's Republic of China,
excluding, for purposes of this prospectus, Hong Kong, Macau and Taiwan.
References to the "central government" mean the government of the PRC.
References to "State Council" mean the State Council of the PRC. References to
the "CIRC" mean the China Insurance Regulatory Commission. References to "MOF"
or "Ministry of Finance" mean the Ministry of Finance of the PRC. References to
"Ministry of Commerce" mean the Ministry of Commerce of the PRC, which assumed
the regulatory functions of the former Ministry of Foreign Trade and Economic
Cooperation of the PRC, or "MOFTEC".

References to "HKSE" or "Hong Kong Stock Exchange" mean The Stock Exchange
of Hong Kong Limited. References to "NYSE" or "New York Stock Exchange" mean
New York Stock Exchange, Inc.

References to an "affiliate" of a company mean any entity of, over or in
which the company, alone or acting with others in concert, holds at least 30%
of the issued share capital or exercises or controls the exercise of at least
30% of the voting power or has the power to elect a majority of the board of
directors or otherwise exercises control.

References to "effective date" mean June 30, 2003, the effective date of the
restructuring under the restructuring agreement between CLIC and us.

References to "Renminbi" or "RMB" in this prospectus mean the currency of
the PRC, references to "U.S. dollars" or "US$" mean the currency of the United
States of America, and references to "Hong Kong dollars", "H.K. dollars" or
"HK$" mean the currency of the Hong Kong Special Administrative Region of the
PRC.

References to "U.S. GAAP" mean the generally accepted accounting principles
in the United States, references to "H.K. GAAP" mean the generally accepted
accounting principles in Hong Kong, and references to "PRC GAAP" mean the PRC
Accounting Rules and Regulations for Business Enterprises. Unless otherwise
indicated, our financial information presented in this prospectus has been
prepared in accordance with H.K. GAAP.

The glossary beginning on page G-1 of this prospectus sets forth the meaning
of various insurance-related terms used in this prospectus, which are
highlighted in bold where they first appear.

Unless otherwise indicated, translations of RMB amounts into U.S. dollars in
this prospectus have been made at the rate of US$1.00 to RMB 8.2776, the noon
buying rate in The City of New York for cable transfers payable in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of New
York on June 30, 2003. The noon buying rate on December 4, 2003 on this basis
was RMB 8.2770 to US$1.00. No representation is made that Renminbi amounts
could have been, or could be, converted into U.S. dollars at that rate on June
30, 2003 or at all.

Any discrepancies in any table between totals and sums of the amounts listed
are due to rounding.

In connection with the offering of the ADSs and the H shares, the
underwriters, for a limited period after the commencement of the offering of
the ADSs offered hereby, may over-allot or effect transactions with a view to
supporting market prices of the ADSs or H shares at levels higher than those
which might otherwise prevail. However, the underwriters are not under any
obligation to do this. Any stabilizing will be effected by one of the joint
global coordinators, acting as stabilizing manager, or its agents. Such
stabilizing, if commenced, may be discontinued at any time, and must be brought
to an end after a limited period. For a description of these activities, see
"Underwriters".

PROSPECTUS SUMMARY

This summary highlights key information contained elsewhere in this
prospectus. It may not contain all of the information that is important to you.
You should read the entire prospectus, including "Risk Factors" and our
consolidated financial statements and notes to those statements included in
this prospectus, before making an investment decision. Our consolidated balance
sheet data as of December 31, 2000, 2001 and 2002 and June 30, 2002 and 2003,
and the profit and loss accounts data for the years ended December 31, 2000,
2001 and 2002 and for the six-month periods ended June 30, 2002 and 2003
present the financial results of our predecessor company, CLIC. The policies,
contracts and assets retained by CLIC are not ours and will not be available to
generate revenues for us in current or future periods. Therefore, to reflect
our business more accurately as it will be operated following the
restructuring, other than the data described in "Summary Historical
Consolidated Financial Data", "Selected Historical Consolidated Financial Data"
and "Operating and Financial Review and Prospects", or unless we otherwise
state, all company data provided in this prospectus relate only to the policies
and assets transferred to us in the restructuring. The glossary beginning on
page G-1 of this prospectus sets forth the meaning of various insurance-related
terms used in this prospectus, which are highlighted in bold where they first
appear.

China Life

We are the leading life insurance company in China. We sell our products
through the most extensive distribution network of exclusive agents, direct
sales representatives and dedicated and non-dedicated agencies throughout
China. We had more than 44 million individual and group life insurance
policies, annuity contracts and long-term health insurance policies in force as
of June 30, 2003. We also offer accident and short-term health insurance
policies to individuals and groups.

We are ranked number one in life insurance in China, with a market share of
45% in 2002, determined on a pro forma basis after giving effect to CLIC's
restructuring described below. We are:

. The leading provider of individual life insurance and annuity products,
with a market share of 51% in 2002, nearly three times that of our
nearest competitor.

. A leading provider of group life insurance and annuity products, with a
market share of 18% in 2002. We insure the employees of many of China's
largest companies and institutions, including many of the Fortune Global
500 companies operating in China.

. The leading accident insurance provider, with a market share of 69% in
2002, and a leading health insurance provider, with a market share of 34%
in 2002 in this fast-growing market.

. One of the largest asset managers and institutional investors, with
investment assets of RMB 212,452 million (US$25,666 million), after
giving effect to the restructuring, and, together with CLIC's investment
assets, of RMB 335,840 million (US$40,572 million) as of June 30, 2003.
Through an asset management joint venture established by us and CLIC,
following the restructuring we are managing our investment assets and
substantially all of those of CLIC. These assets under management
accounted for more than one-half of all assets under management held by
Chinese life insurance companies in 2002.

We have been able to generate significant revenue growth and, on a pro forma
basis after giving effect to the restructuring, we earned significant net
profit in 2002 and in the six months ended June 30, 2003. Our total gross
premiums and policy fees from the policies transferred to us in the
restructuring grew from RMB 23,304 million (US$2,815 million) for the six
months ended June 30, 2002 to RMB 25,403 million (US$3,069 million) for the six
months ended June 30, 2003, representing an increase of 9.0%. Total deposits
from the transferred policies grew from RMB 40,626 million (US$4,908 million)
for the six months ended June 30, 2002 to RMB 58,417

million (US$7,057 million) for the six months ended June 30, 2003, representing
an increase of 43.8%. Total gross premiums and policy fees from the transferred
policies grew from RMB 21,107 million for the year ended December 31, 2000
to RMB 47,077 million (US$5,687 million) for the year ended December 31, 2002,
representing a compound annual growth rate of 49.3%. Total deposits from the
transferred policies grew from RMB 15,220 million for the year ended December
31, 2000 to RMB 58,572 million (US$7,076 million) for the year ended December
31, 2002, representing a compound annual growth rate of 96.2%. On a pro forma
basis after giving effect to the restructuring, we had a net profit of RMB
3,128 million (US$378 million) for the six months ended June 30, 2003 and a net
profit of RMB 4,524 million (US$547 million) for the year ended December 31,
2002.

As the leading life insurance company in China, we believe we are well
positioned to capitalize on the growing demand for life, annuity, accident and
health insurance products in China. We believe several trends contribute
towards the increasing demand for life insurance products in China. These
include:

. The rapid growth of China's economy in recent years, resulting in rising
income per capita.

. The continued growth of China's middle class and the ageing of its
population.

. The rapid change in China's social welfare system, shifting the provision
of social welfare benefits from the state to a mix of private and public
providers.

. Increasing demand for sophisticated insurance and investment products,
including participating products.

Although the life insurance industry has grown significantly in recent
years, the development of the life insurance market in China remains in its
early stages. According to CIRC data, from 1999 through 2002, total life
insurance premiums grew at a compound annual growth rate of 37.7%. Despite this
growth, however, China's "life insurance depth" (the proportion of premiums to
gross domestic product) was only 2.2% as of the end of 2002, and "life
insurance density" (life insurance premiums per capita) was only RMB 177.04
(US$21.38) in 2002.

We provide the following products and services:

Individual Life Insurance. Our individual life insurance business offers
life insurance and annuity products to individuals, primarily through a
distribution force comprised of approximately 650,000 exclusive agents
operating in approximately 8,000 field offices throughout China. We also sell
individual life insurance and annuity products through non-dedicated agencies
located in approximately 78,000 outlets of commercial banks, post offices and
savings cooperatives throughout China. Our individual life insurance gross
written premiums and policy fees from the transferred policies totaled RMB
20,370 million (US$2,461 million) for the six months ended June 30, 2003 and
RMB 37,662 million (US$4,550 million) for the year ended December 31, 2002,
constituting 80.2% and 80.0% of our total gross written premiums and policy
fees for those periods. Our individual life insurance deposits from the
transferred policies totaled RMB 53,271 million (US$6,436 million) for the six
months ended June 30, 2003 and RMB 52,340 million (US$6,323 million) for the
year ended December 31, 2002, constituting 91.2% and 89.4% of our total
deposits for those periods. In connection with the restructuring, CLIC
transferred its entire exclusive agency sales force to us.

insurance brokerage companies. Our group life insurance gross written premiums
and policy fees from the transferred policies totaled RMB 267 million (US$32
million) for the six months ended June 30, 2003 and RMB 477 million (US$58
million) for the year ended December 31, 2002, constituting 1.1% and 1.0% of
our total gross written premiums and policy fees for those periods. Our group
life insurance deposits from the transferred policies totaled RMB 5,146 million
(US$622 million) for the six months ended June 30, 2003 and RMB 6,232 million
(US$753 million) for the year ended December 31, 2002, constituting 8.8% and
10.6% of our total deposits for those periods.

Accident and Health Insurance. Our accident and health insurance business
offers accident and health insurance products to individuals and groups, either
as primary products, as riders or as supplementary products packaged with our
life insurance and annuity products. We sell accident and health insurance
products primarily through the same distribution channels that we use to sell
our life insurance and annuity products. Our accident insurance gross written
premiums from the transferred policies totaled RMB 2,359 million (US$285
million) for the six months ended June 30, 2003 and RMB 5,174 million (US$625
million) for the year ended December 31, 2002, constituting 9.3% and 11.0% of
our total gross written premiums and policy fees for those periods. Our health
insurance gross written premiums from the transferred policies totaled RMB
2,407 million (US$291 million) for the six months ended June 30, 2003 and RMB
3,764 million (US$455 million) for the year ended December 31, 2002,
constituting 9.5% and 8.0% of our total gross written premiums and policy fees
for those periods.

Asset Management. An asset management joint venture established by us and
CLIC manages our investment assets and, separately, substantially all of those
of CLIC. Through this joint venture, we expect to be able to offer asset
management products and services to other insurance companies. See
"Business--Asset Management Business". We own 60% of the joint venture, with
CLIC owning the remaining 40%.

Competitive Strengths

As the leading provider of life insurance, accident insurance and health
insurance products in China, we believe that our competitive strengths will
enable us to benefit from the increasing demand for these products. Our
competitive strengths include:

. Most recognized life insurance brand name. We believe our history as the
oldest and largest life insurance business in China, our leading market
share and our nationwide customer base have given us the highest brand
recognition of any life insurance company in China.

. Largest, multi-channel distribution network. We believe we have the
largest distribution force with the most extensive geographic reach as
compared to any of our competitors. Throughout China, we have
approximately 650,000 exclusive agents operating in approximately 8,000
field offices for our individual products and approximately 10,000 direct
sales representatives in more than 4,000 branch offices for our group
products.

. Nationwide customer support. We believe we have the most extensive
customer service network in the Chinese life insurance industry, with
approximately 3,000 customer service units operating in our branch and
field offices throughout China.

. Leading asset manager. Assets under our management accounted for more
than one-half of all investment assets under management by Chinese life
insurance companies in 2002 based on CIRC data, making us one of the
largest institutional investors in China in terms of assets under
management.

. Experienced management team. Our management team has in-depth industry
knowledge and extensive managerial experience in life insurance, finance
and asset management.

Business Strategy

Our goal is to build on our position as China's leading life insurance
company and become one of the top life insurance companies worldwide. Our
objectives are to achieve sustainable growth of our businesses and to create
long-term shareholder value. To achieve these objectives, we intend to
capitalize on our leading position in China's life insurance market.

We intend to pursue the following business strategies:

. Capitalize on our market leading position and capture the high growth
opportunities in the Chinese life insurance market. We intend to
capitalize on our market leading position in the Chinese life insurance
market by pursuing the following growth strategies in our individual,
group and accident and health insurance segments:

-- Build on our leading market position in the mass market and focus on
the emerging mass affluent market.

-- Capture opportunities in the fast growing group pension and annuity
businesses.

-- Strengthen leadership in accident insurance and improve the financial
performance of health insurance.

. Capitalize on our existing customer base and provide products and
services tailored to specific customer groups. As the leading provider
in China's life insurance market, we have a broader customer base than
any of our competitors. We intend to capitalize on the relationship with
our existing customers by offering value-added products and services that
meet their specific requirements and providing the highest level of
customer support in China.

. Enhance the productivity of our core distribution channels and expand our
multi-channel distribution network. We intend to implement the following
measures to further enhance the productivity of our core distribution
channels and broaden the reach of our multi-channel distribution network:

-- We believe we have the largest exclusive agency distribution system
in China, and will seek to enhance this competitive advantage by
improving our agent recruitment, training, performance evaluation
process and compensation scheme.

-- We will continue to enhance the skills and professional expertise of
our direct sales force for group insurance.

-- We will continue to dedicate substantial resources to develop our
bancassurance business.

-- We are exploring opportunities to develop the distribution of
products through other channels, including dedicated insurance
agencies, insurance brokerage companies and the Internet.

. Build on our widely recognized brand name. We will continue to build on
China Life's reputation as a provider of comprehensive and competitive
products and solutions and of reliable and convenient services.

. Build on our competitive product design capabilities to meet changing
customer needs. We will seek to develop products and services which
meet the requirements of specific customer groups and generate attractive
margins.

. Build on our asset management strength. We will seek to improve our
technological and managerial skills and enhance our ability to match the
duration of our assets and liabilities with a view to reducing risk and
improving profitability.

. Strengthen risk management. We plan to devote significant resources to
enhance our risk management policies and procedures in light of our
rapidly developing business.

. Continue to enhance efficiency through active cost control
management. To enhance our efficiency further, we are consolidating
functions and management layers in our organizational structure at both
the headquarters and local branch levels.

. Implement advanced information technology systems. Relying on advanced
information technology, we intend to build on our capacity to respond to
market feedback and various contingencies.

. Enhance performance-oriented corporate structure and compensation
systems. We are dedicated to improving the performance orientation of
our organizational structure and our compensation systems.

. Continue to enhance training and development. We seek to attract and
retain the most talented individuals in the industry and improve their
skills, productivity and career development opportunities.

For more information on our business strategies, see "Business--Business
Strategy".

Risks Relating to Our Business

As part of your evaluation of our company, you should take into account the
risks we face in our business and not solely our competitive strengths and
strategies. These risks include:

. Our ability to attract and retain productive agents and maintain their
qualifications and registrations.

. Our ability to develop other distribution channels for our products.

. The effect of any agent or employee misconduct.

. Our ability to attract and retain key personnel, including senior
management, underwriting personnel, actuaries, information technology
specialists, investment managers and other professionals.

. The effect of interest rate changes, and constraints on our ability to
match the duration of our assets and liabilities, which makes us more
exposed to interest rate changes.

. Risks relating to our investments.

. Differences in future actual claims results from the assumptions used in
pricing and establishing reserves for our insurance and annuity products.

. Competition in the Chinese insurance industry.

. Risks relating to the restructuring.

For more information about these and other risks, see "Risk Factors"
beginning on page 22. You should consider these risk factors carefully together
with all the other information included in this prospectus.

Our Restructuring

The following charts set out our corporate structure before the
restructuring, after the restructuring but before the global offering, and
after the global offering.

Before the restructuring:

LOGO

After the restructuring, but before the global offering:

LOGO

After the global offering:

[ORGANIZATIONAL CHART]

- --------
(1) Assuming the over-allotment option is not exercised.

We were formed on June 30, 2003 as a joint stock company in connection with
CLIC's restructuring. In connection with the restructuring, CLIC transferred to
us (1) all long-term insurance policies (policies having a term of more than
one year from the date of issuance) issued on or after June 10, 1999, having
policy terms approved by or filed with the CIRC on or after June 10, 1999 and
either (i) recorded as a long-term insurance policy as of June 30, 2003 in a
database attached to the restructuring agreement as an annex or (ii) having
policy terms for group supplemental medical insurance (fund type), (2)
stand-alone short-term policies (policies having a term of one year or less
from the date of issuance) issued on or after June 10, 1999 and (3) all riders
supplemental to the policies described in clauses (1) and (2) above, together
with the reinsurance contracts specified in an annex to the restructuring
agreement. We refer to these policies in this prospectus as the "transferred
policies". All other insurance policies were retained by CLIC. We refer to
these policies as the "non-transferred policies". We assumed all obligations
and liabilities of CLIC under the transferred policies. CLIC continues to be
responsible for its liabilities and obligations under the non-transferred
policies. See "The Restructuring".

The business constituted by the policies and assets transferred to us and
the obligations and liabilities assumed by us and the business constituted by
the policies, assets, obligations and liabilities retained by CLIC were, prior
to the restructuring, under common management from a number of significant
aspects. The restructuring was effected through a restructuring agreement
entered into with CLIC on September 30, 2003, with retroactive effect to June
30, 2003. Pursuant to PRC law and the restructuring agreement, the transferred
policies were transferred to us as of June 30, 2003; however, for accounting
purposes the restructuring is treated as having occurred on September 30, 2003.
Therefore, our consolidated balance sheet data as of December 31, 2000, 2001
and 2002 and June 30, 2002 and 2003, and the profit and loss accounts data for
the years ended December 31, 2000, 2001 and 2002 and for the six-month periods
ended June 30, 2002 and 2003, present the financial results of our predecessor
company, CLIC.

The policies, contracts and assets retained by CLIC are not ours and will
not be available to generate revenues for us in the current or future periods.
Therefore, to reflect our business more accurately as it will be operated
following the restructuring, other than the data described in "Selected
Historical Consolidated Financial Data" and "Operating and Financial Review and
Prospects", or unless we otherwise state, all company data provided in this
prospectus, including data concerning premiums, deposits, policy fees,
insurance policies, annuity contracts, agents, personnel, offices, distribution
channels and investment assets, do not include the data of any of the policies,
contracts and investment assets that are included in our historical
consolidated financial statements but were retained by CLIC in connection with
the restructuring.

We have agreed to provide policy management and other services to CLIC, and
CLIC will remain our majority shareholder. In connection with the
restructuring, CLIC changed its name from China Life Insurance Company to China
Life Insurance (Group) Company. CLIC is a state-owned enterprise. Accordingly,
the PRC government has the power, through CLIC, so long as CLIC holds the
majority of our shares, subject to our articles of association and applicable
laws, to control the composition of our board of directors and, through the
board, to exercise significant influence over the our management and policies.
In exercising this power, CLIC is subject to PRC laws and regulations, as well
as the applicable laws, regulations and listing rules of the jurisdictions or
exchanges in or on which our securities are sold or traded.

CLIC's restructuring was approved by the State Council and the CIRC.

Our principal executive and registered offices are located at 16 Chaowai
Avenue, Chaoyang District, Beijing 100020, China. Our telephone number is
(86-10) 8565-9999.

THE GLOBAL OFFERING

Unless otherwise indicated, information in this prospectus assumes that the
underwriters will not exercise the over-allotment option to purchase additional
ADSs. See "Underwriters".

Offering by us.............. 147,058,825 ADSs representing 5,882,353,000 H
shares (including 294,117,000 H shares offered to
the public in Hong Kong).

Offering by the selling
shareholder............... CLIC is selling 14,705,875 ADSs, representing
588,235,000 H shares, in the global offering
(including 29,412,000 H shares offered to the
public in Hong Kong). As a result of the global
offering, CLIC's ownership interest in China Life
will be reduced from 100.0% to 75.0%, or 72.2% if
the underwriters' over-allotment option is
exercised in full.

Global offering............. The global offering consists of this U.S.
offering, the international offering and the Hong
Kong public offering.

U.S. offering........... 3,073,530,000 H shares in the form of H shares or
ADSs in a public offering in the United States
and on a private placement basis in Canada.

International offering.. 3,073,529,000 H shares in the form of H shares or
ADSs offered outside the United States and
Canada, including to professional and
institutional investors in Hong Kong, the
corporate placing and a public offering without
listing in Japan.

Hong Kong public offering 323,529,000 H shares offered for public
subscription in Hong Kong. The Hong Kong public
offering is conditional upon the listing
committee of the Hong Kong Stock Exchange
granting the listing of and permission to trade
in the H shares offered in the global offering.
If the number of H shares validly applied for in
the Hong Kong public offering represents a
multiple of: (1) 15 times or more but less than
50 times, (2) 50 times or more but less than 100
times, or (3) 100 times or more than 100 times,
the number of H shares initially available in
such offering, then an additional 161,765,000 H
shares, 323,530,000 H shares or 970,589,000 H
shares, respectively, will be reallocated to the
Hong Kong public offering, such that the
additional H shares, when aggregated with the H
shares initially available in the Hong Kong
public offering, will represent approximately
7.5% in the case of (1) above, 10% in the case of
(2) above and 20% in the case of (3) above, of
the total number of H shares initially available
under the global offering, without giving effect
to the underwriters' over-allotment option. In
such case, the number of ADSs allocated to the
U.S. offering and/or the international offering
will be reduced correspondingly, in such manner
as the joint global coordinators deem
appropriate. Any unsold H shares in the Hong Kong
public offering may be reallocated to the U.S.
offering and the international offering. The
joint global coordinators also have discretion to
reallocate additional H shares to the Hong Kong
public offering from the U.S. offering and/or the
international offering.

Corporate investors......... We have, as part of the international offering,
entered into corporate placing agreements with
four corporate investors for the subscription at
the offering price for the international offering
of an aggregate of US$500 million worth (rounded
down to the nearest whole number) of H shares or
ADSs. Assuming an international IPO price of
HK$3.315 per H share, being the midpoint of the
proposed international IPO price range of HK$2.98
to HK$3.65 and using the exchange rate of
HK$7.7660 to US$1.00, the total number of H
shares subscribed by the corporate investors
would be 1,171,342,383, which is approximately
4.53% of our issued share capital or 18.10% of
the H shares outstanding after the global
offering, assuming the over-allotment option is
not exercised.

Over-allotment option....... We and the selling shareholder have granted an
option to the underwriters to purchase an
aggregate of 24,264,675 additional ADSs
representing 970,587,000 H shares, at the initial
public offering price, exercisable in whole or in
part by the underwriters.

Lock-ups.................... We and CLIC have agreed with the underwriters to
a lock-up of shares for a period of 180 days. See
"Underwriters".

Price per ADS or H share in
the U.S. and international
offerings................. The initial public offering price per ADS will be
between US$15.35 and US$18.80, equivalent to
between HK$2.98 and HK$3.65 per H share at the
exchange rate of HK$7.7660 to US$1.00, the noon
buying rate on November 28, 2003. The initial
public offering price for ADSs under the U.S. and
international offerings is payable in U.S.
dollars and the initial public offering price for
H shares under the Hong Kong public offering, the
U.S. offering and the international offering is
payable in Hong Kong dollars. The price per ADS
and price per H share will include any brokerage
fees, Hong Kong Securities and Futures Commission
transaction levies, investor compensation levies
and Hong Kong Stock Exchange trading fees payable
in connection with the initial sale and purchase
of the ADSs and H shares. These fees and levies
will be paid to the relevant authorities or
brokers by us and the selling shareholder.

Price per H share in the
Hong Kong public offering. The initial public offering price per H share in
the Hong Kong public offering, when increased by
a 1.0% brokerage fee, a 0.005% Hong Kong
Securities and Futures Commission transaction
levy, a 0.002% investor compensation levy and a
0.005% Hong Kong Stock Exchange trading fee
payable by purchasers, is effectively equivalent
to the initial public offering price per ADS in
the U.S. and international offerings, based on an
exchange rate of HK$7.7660 to US$1.00, the noon
buying rate on November 28, 2003, and adjusted
for the ratio of 40 H shares per ADS.

ADSs........................ Each ADS represents 40 H shares. The ADSs will be
evidenced by American Depositary Receipts, or
ADRs. To understand the terms of the related
ADRs, you should carefully read the section in
this prospectus entitled "Description of American
Depositary Receipts". We also encourage you to
read the deposit agreement, which is filed as an
exhibit to the registration statement of which
this prospectus forms a part.

H shares to be outstanding
immediately after this
global offering........... 6,470,588,000 H shares, or 7,441,175,000 H shares
if the underwriters' over-allotment option is
exercised in full.

Timing of global offering... The following is a tentative timetable of key
events in the global offering:

Hong Kong public offering commences Business day 1
(Hong Kong time)

Hong Kong public offering closes Business day 4
(Hong Kong time)

Pricing of global offering Business day 4
(New York time)

Final allocation of H shares Business day 8
(Hong Kong time)

Trading of ADSs commences on the New Business day 8
York Stock Exchange (New York time)

Trading of H shares commences on the Business day 9
Hong Kong Stock Exchange (Hong Kong time)

Gap between pricing and
trading of H shares....... The H shares offered in the global offering will
not commence trading on the Hong Kong Stock
Exchange until all of the conditions contained in
the underwriting agreement for the Hong Kong
public offering have been satisfied, which is
expected to be five Hong Kong business days after
the date of pricing of the H shares. The ADSs
offered in the global offering are expected to
commence trading on the New York Stock Exchange
on the business day in New York immediately
preceding the day when trading of the H shares
commences on the Hong Kong Stock Exchange. You
will not be able to sell or otherwise deal in the
H shares or ADSs prior to the commencement of
their trading on the Hong Kong Stock Exchange or
the New York Stock Exchange.

Payment and delivery........ The underwriters expect to deliver the ADSs in
New York, New York to purchasers on , 2003.

Use of proceeds............. We estimate that the net proceeds received by us
from the offering will be approximately US$2,374
million, after deducting the underwriting
discounts and expenses payable by us in the global

offering and assuming an initial public offering
price of US$17.08 per ADS, the midpoint of the
range set forth on the cover page of this
prospectus. We expect to use the net proceeds
from this offering for general corporate purposes
and to strengthen our capital base.

We estimate that the net proceeds received by
CLIC from the offering will be approximately
US$237 million, after deducting the underwriting
discount and estimated offering expenses payable
by CLIC. We will not receive any of the proceeds
from the sale of shares by CLIC. In accordance
with PRC regulations, CLIC will be required to
contribute the net proceeds it receives from this
offering to the Chinese National Social Security
Fund.

Dividend policy............. We intend to declare and pay annual cash
dividends to shareholders. Our decision to pay
any dividend will depend on our results of
operations and cash flows, our financial
position, solvency requirements, our
shareholders' interests, general business
conditions, our future prospects, statutory and
regulatory restrictions on the payment of
dividends by us and other factors that our board
of directors deems relevant. We are required to
make allocations to statutory funds from our
after-tax income. The payment of any dividend by
us must be approved by our shareholders. Subject
to these considerations and constraints, we
expect to begin paying dividends in 2005. See
"Dividend Policy".

Listings.................... Our ADSs have been approved for listing on the
New York Stock Exchange, subject to official
notification of issuance, under the symbol "LFC".
We have applied to list our H shares on the Hong
Kong Stock Exchange under the stock code "2628".

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA

The following tables set forth our summary consolidated financial
information. We have derived the summary consolidated financial information as
of and for the years ended December 31, 2000, 2001 and 2002 and as of and for
the six-month periods ended June 30, 2002 and 2003 from our audited
consolidated financial statements included elsewhere in this prospectus. As
described below, these financial statements present the financial results of
our predecessor company, CLIC. The financial statements are prepared and
presented in accordance with H.K. GAAP. For a reconciliation of our net profit
and owners' equity to U.S. GAAP, see Note 26 of the notes to the financial
statements included elsewhere in this prospectus.

We were formed on June 30, 2003 in connection with CLIC's restructuring. In
connection with the restructuring, CLIC transferred to us (1) all long-term
insurance policies (policies having a term of more than one year from the date
of issuance) issued on or after June 10, 1999, having policy terms approved by
or filed with the CIRC on or after June 10, 1999 and either (i) recorded as a
long-term insurance policy as of June 30, 2003 in a database attached to the
restructuring agreement as an annex or (ii) having policy terms for group
supplemental medical insurance (fund type), (2) stand-alone short-term policies
(policies having a term of one year or less from the date of issuance) issued
on or after June 10, 1999, and (3) all insurance policies supplemental to the
policies described in clauses (1) and (2) above, together with the reinsurance
contracts specified in an annex to the restructuring agreement. All other
insurance policies were retained by CLIC. We assumed all obligations and
liabilities of CLIC under the transferred policies. CLIC continues to be
responsible for its liabilities and obligations under the non-transferred
policies following the restructuring. The restructuring was effected through a
restructuring agreement entered into with CLIC on September 30, 2003, with
retroactive effect to June 30, 2003. Pursuant to PRC law and the restructuring
agreement, the transferred policies were transferred to us as of June 30, 2003;
however, for accounting purposes the restructuring is treated as having
occurred on September 30, 2003. The business constituted by the policies and
assets transferred to us and the obligations and liabilities assumed by us and
the business constituted by the policies, assets, obligations and liabilities
retained by CLIC were, prior to the restructuring, under common management from
a number of significant aspects. Therefore, our consolidated balance sheet data
as of December 31, 2000, 2001 and 2002 and June 30, 2002 and 2003, and the
profit and loss accounts data for the years ended December 31, 2000, 2001 and
2002 and for the six-month periods ended June 30, 2002 and 2003, present the
financial results of our predecessor company, CLIC, and they will not
necessarily be indicative of our future earnings, cash flows or financial
position as a stand-alone company.

You should read this information in conjunction with the rest of the
prospectus, including our audited consolidated financial statements and the
accompanying notes and "Operating and Financial Review and Prospects" included
elsewhere in this prospectus.

For the six months ended
For the year ended December 31, June 30,
--------------------------------- ------------------------
2000 2001 2002 2002 2002 2003 2003
------- ------- ------- ------ ------- ------- ------
RMB RMB RMB US$ RMB RMB US$
(in millions, except per share data)

Consolidated Profit and Loss Accounts Data
H.K. GAAP

Revenues
Gross written premiums and policy fees............. 44,714 56,869 68,769 8,308 34,164 36,091 4,360
Less: premiums ceded to reinsurers................. (1,501) (1,655) (1,869) (226) (765) (690) (83)
------- ------- ------- ------ ------- ------- ------
Net written premiums and policy fees............... 43,213 55,214 66,900 8,082 33,399 35,401 4,277
Net change in unearned premium reserves............ (314) (248) (476) (58) 306 17 2
------- ------- ------- ------ ------- ------- ------
Net premiums earned and policy fees................ 42,899 54,966 66,424 8,025 33,705 35,418 4,279
------- ------- ------- ------ ------- ------- ------
Net investment income.............................. 4,374 6,276 8,347 1,008 3,991 5,070 612
Net realized gains/(losses) on investments......... (23) (6) 266 32 684 691 83
Net unrealized gains/(losses) on investments....... 298 (322) (1,067) (129) (75) 280 34
Other income....................................... 827 293 338 41 121 122 15
------- ------- ------- ------ ------- ------- ------
Total revenues..................................... 48,375 61,207 74,308 8,977 38,426 41,581 5,023
------- ------- ------- ------ ------- ------- ------
Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits.......... (8,467) (10,099) (7,010) (847) (3,869) (4,580) (553)
Accident and health claims and claim adjustment
expenses........................................ (2,767) (3,829) (4,053) (490) (1,959) (2,455) (297)
Increase in future life policyholder benefits.... (27,738) (33,121) (45,374) (5,482) (22,793) (23,192) (2,802)
Policyholder dividends and participation in profits (7) (177) (641) (77) (310) (862) (104)
Amortization of deferred policy acquisition costs.. (1,745) (3,024) (3,832) (463) (2,102) (2,648) (320)
Underwriting and policy acquisition costs.......... (3,073) (2,176) (1,661) (201) (822) (708) (86)
Administrative expenses............................ (4,318) (5,100) (6,162) (744) (2,916) (3,005) (363)
Other operating expenses........................... (2,602) (1,110) (634) (77) (316) (704) (85)
Interest expense on bank borrowings................ (29) (5) (7) (1) (4) (5) (1)
Interest credited to policyholder contract deposits (4,505) (5,799) (7,095) (857) (3,209) (4,109) (496)
Statutory insurance levy........................... (59) (64) (73) (9) (30) (38) (5)
------- ------- ------- ------ ------- ------- ------
Total benefits, claims and expenses................ (55,310) (64,504) (76,542) (9,247) (38,330) (42,306) (5,111)
------- ------- ------- ------ ------- ------- ------
Profit/(loss) before income tax expense and
minority interests................................ (6,935) (3,297) (2,234) (270) 96 (725) (88)
Income tax expense................................. (14) (4) (14) (2) (3) (8) (1)
------- ------- ------- ------ ------- ------- ------
Profit/(loss) before minority interests............ (6,949) (3,301) (2,248) (272) 93 (733) (89)
Minority interests................................. (41) 6 (2) (0) (2) 19 2
------- ------- ------- ------ ------- ------- ------
Net profit/(loss).................................. (6,990) (3,295) (2,250) (272) 91 (714) (86)
======= ======= ======= ====== ======= ======= ======
U.S. GAAP
Revenues......................................... 48,375 61,207 74,308 8,977 38,426 41,581 5,023
Net profit/(loss)................................ (7,026) (3,336) (2,317) (280) 61 (556) (67)
Net profit/(loss) per share/(1)/................. (0.35) (0.17) (0.12) (0.01) 0.00 (0.03) (0.00)
Net profit/(loss) per ADS/(1)/................... (14.05) (6.67) (4.63) (0.56) 0.12 (1.11) (0.13)

- --------
(1) The 20,000,000,000 shares issued to CLIC in the restructuring have been
given retroactive treatment for purposes of computing per share and per ADS
amounts. Each ADS represents 40 H shares. Any discrepancies in the table
between the amounts per share and the amounts per ADS are due to rounding.

As of December 31, As of June 30,
------------------------------------- ---------------------------
2000 2001 2002 2002 2002 2003 2003
-------- -------- -------- ------- -------- -------- -------
RMB RMB RMB US$ RMB RMB US$
(in millions)

Consolidated Balance Sheet Data
H.K. GAAP

Assets

Investments
Fixed maturity securities......................... 37,684 53,284 76,337 9,222 61,449 82,017 9,908
Equity securities................................. 6,794 7,698 12,171 1,470 7,084 14,797 1,788
Term deposits..................................... 39,653 76,083 123,675 14,941 97,798 142,043 17,160
Statutory deposits--restricted.................... 40 990 991 120 991 992 120
Investments in associated companies............... 2,031 2,036 2,035 246 2,027 1,993 241
Policy loans...................................... 109 107 106 13 105 136 16
Securities purchased under agreements to resell... 19,840 30,480 36,388 4,396 46,247 70,061 8,464
Other............................................. 572 336 231 28 299 209 25
Cash and cash equivalents......................... 23,275 17,855 14,529 1,755 17,575 23,592 2,850
-------- -------- -------- ------- -------- -------- -------
Total investments................................... 129,998 188,869 266,463 32,191 233,575 335,840 40,572
-------- -------- -------- ------- -------- -------- -------
Other assets
Accrued investment income......................... 3,033 3,527 4,198 507 4,003 4,277 517
Premiums receivable............................... 1,388 1,844 1,757 212 2,878 3,282 396
Reinsurance assets................................ 970 1,100 1,224 148 1,091 971 117
Deferred policy acquisition costs................. 5,996 10,893 18,084 2,185 14,185 21,282 2,571
Property, plant and equipment, net of accumulated
depreciation..................................... 15,617 18,347 18,457 2,230 18,237 18,610 2,249
Other............................................. 5,375 3,528 3,587 433 4,176 3,676 444
-------- -------- -------- ------- -------- -------- -------
Total other assets.................................. 32,379 39,239 47,307 5,715 44,570 52,098 6,294
-------- -------- -------- ------- -------- -------- -------
Total assets........................................ 162,377 228,108 313,770 37,906 278,145 387,938 46,866
======== ======== ======== ======= ======== ======== =======
Liabilities and equity

Liabilities
Future life policyholder benefits................. 226,868 259,989 305,363 36,890 282,782 328,555 39,692
Policyholder contract deposits and other funds.... 89,373 105,609 156,273 18,879 139,575 210,975 25,487
Unearned premium reserves......................... 4,131 4,441 5,036 608 4,058 4,719 570
Reserves for claims and claim adjustment
expenses......................................... 716 867 879 106 1,010 910 110
Annuity and other insurance balances payable...... 4,029 6,362 8,057 973 8,257 7,987 965
Premiums received in advance...................... 735 1,481 1,767 213 1,231 1,860 225
Policyholder deposits............................. 694 629 592 72 609 570 69
Policyholder dividends payable.................... 2 177 688 83 390 1,599 193
Securities sold under agreements to repurchase.... 90 14,608 3,602 435 4,501 -- --
Bank borrowings................................... 921 379 313 38 325 311 38
Provision......................................... 73 330 445 54 388 460 56
Other liabilities................................. 3,489 4,206 4,716 570 4,967 4,800 580
Statutory insurance fund.......................... 1,132 1,215 1,337 162 1,269 1,399 169
-------- -------- -------- ------- -------- -------- -------
Total liabilities................................... 332,253 400,293 489,068 59,083 449,362 564,145 68,153
-------- -------- -------- ------- -------- -------- -------
Commitments and contingencies....................... -- -- -- -- -- -- --
Minority interests.................................. 169 163 165 20 164 146 18
Owners' equity...................................... (170,045) (172,348) (175,463) (21,197) (171,381) (176,353) (21,305)
-------- -------- -------- ------- -------- -------- -------
Total liabilities and equity........................ 162,377 228,108 313,770 37,906 278,145 387,938 46,866
======== ======== ======== ======= ======== ======== =======
U.S. GAAP
Total assets...................................... 162,307 227,997 313,592 37,884 278,004 387,918 46,864
Total liabilities................................. 332,253 400,293 489,068 59,083 449,362 564,145 68,153
Owners' equity.................................... (170,115) (172,459) (175,641) (21,219) (171,522) (176,373) (21,307)

SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA

The summary unaudited pro forma consolidated financial information for the
year ended December 31, 2002, for the six-month periods ended June 30, 2002 and
2003 and as of June 30, 2003 has been prepared in accordance with H.K. GAAP and
gives effect to the restructuring as if it had occurred at the start of the
year ended December 31, 2002 or at the start of the six-month periods ended
June 30, 2002 or 2003, respectively, for purposes of the pro forma consolidated
profit and loss accounts data and on June 30, 2003 for purposes of the pro
forma consolidated balance sheet data.

Although we believe it reflects all significant adjustments necessary to
give effect to the restructuring as set forth above, the summary unaudited pro
forma consolidated financial information is provided for illustrative purposes
only and does not necessarily represent what our consolidated financial results
actually would have been if the transactions had in fact occurred on those
dates and is not necessarily representative of our financial results for any
future periods. The notes to the pro forma consolidated financial data contain
a more detailed discussion of how the adjustments described above are
presented. For an explanation of the pro forma adjustments set forth below, see
"Unaudited Pro Forma Consolidated Financial Data" and the historical
consolidated financial statements and accompanying notes of China Life included
elsewhere in this prospectus.

For the six months ended June 30, 2003
-----------------------------------------
Historical Adjustments Pro Forma Pro Forma
---------- ----------- --------- ---------
RMB RMB RMB US$
(in millions)

Pro Forma Consolidated Profit and Loss Accounts Data
H.K. GAAP

Revenues
Gross written premiums and policy fees................... 36,091 (10,688) 25,403 3,069
Less: premiums ceded to reinsurers....................... (690) -- (690) (83)
------- ------- ------- ------
Net written premiums and policy fees..................... 35,401 (10,688) 24,713 2,986
Net change in unearned premium reserves.................. 17 -- 17 2
------- ------- ------- ------
Net premiums earned and policy fees...................... 35,418 (10,688) 24,730 2,988
------- ------- ------- ------
Net investment income.................................... 5,070 (2,032) 3,038 367
Net realized gains/(losses) on investments............... 691 (271) 420 51
Net unrealized gains/(losses) on investments............. 280 (110) 170 21
Other income............................................. 122 842 964 116
------- ------- ------- ------
Total revenues........................................... 41,581 (12,259) 29,322 3,542
------- ------- ------- ------
Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits................. (4,580) 2,946 (1,634) (197)
Accident and health claims and claim adjustment expenses (2,455) -- (2,455) (297)
Increase in future life policyholder benefits........... (23,192) 10,638 (12,554) (1,517)
Policyholder dividends and participation in profits...... (862) -- (862) (104)
Amortization of deferred policy acquisition costs........ (2,648) -- (2,648) (320)
Underwriting and policy acquisition costs................ (708) 442 (266) (32)
Administrative expenses.................................. (3,005) 175 (2,830) (342)
Other operating expenses................................. (704) 505 (199) (24)
Interest expense on bank borrowings...................... (5) 5 -- --
Interest credited to policyholder contract deposits...... (4,109) 2,832 (1,277) (154)
Statutory insurance levy................................. (38) -- (38) (5)
------- ------- ------- ------
Total benefits, claims and expenses...................... (42,306) 17,543 (24,763) (2,992)
------- ------- ------- ------
Profit/(loss) before income tax expense and minority
interests.............................................. (725) 5,284 4,559 551
Income tax expense....................................... (8) (1,406) (1,414) (171)
------- ------- ------- ------
Profit/(loss) before minority interests.................. (733) 3,878 3,145 380
Minority interests....................................... 19 (36) (17) (2)
------- ------- ------- ------
Net profit/(loss)........................................ (714) 3,842 3,128 378
------- ------- ------- ------
U.S. GAAP
Net profit.............................................. 3,128 378

For the six months ended
June 30, 2002
-------------------------------
Historical Adjustments Pro Forma
---------- ----------- ---------
(RMB in millions)

H.K. GAAP
Revenues
Gross written premiums and policy fees........................ 34,164 (10,860) 23,304
Less: premiums ceded to reinsurers............................ (765) -- (765)
------- ------- -------
Net written premiums and policy fees.......................... 33,399 (10,860) 22,539
Net change in unearned premium reserves....................... 306 -- 306
------- ------- -------
Net premiums earned and policy fees........................... 33,705 (10,860) 22,845
------- ------- -------
Net investment income......................................... 3,991 (1,977) 2,014
Net realized gains/(losses) on investments.................... 684 (337) 347
Net unrealized gains/(losses) on investments.................. (75) 37 (38)
Other income.................................................. 121 851 972
------- ------- -------
Total revenues................................................ 38,426 (12,286) 26,140
------- ------- -------
Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits...................... (3,869) 2,753 (1,116)
Accident and health claims and claim adjustment expenses..... (1,959) -- (1,959)
Increase in future life policyholder benefits................ (22,793) 9,527 (13,266)
Policyholder dividends and participation in profits........... (310) 2 (308)
Amortization of deferred policy acquisition costs............. (2,102) -- (2,102)
Underwriting and policy acquisition costs..................... (822) 644 (178)
Administrative expenses....................................... (2,916) 156 (2,760)
Other operating expenses...................................... (316) 160 (156)
Interest expense on bank borrowings........................... (4) 4 --
Interest credited to policyholder contract deposits........... (3,209) 2,524 (685)
Statutory insurance levy...................................... (30) -- (30)
------- ------- -------
Total benefits, claims and expenses........................... (38,330) 15,770 (22,560)
------- ------- -------
Profit/(loss) before income tax expense and minority interests 96 3,484 3,580
Income tax expense............................................ (3) (1,003) (1,006)
------- ------- -------
Profit/(loss) before minority interests....................... 93 2,481 2,574
Minority interests............................................ (2) (9) (11)
------- ------- -------
Net profit/(loss)............................................. 91 2,472 2,563
======= ======= =======
U.S. GAAP
Net profit................................................... 2,563

For the year ended December 31, 2002
-----------------------------------------
Historical Adjustments Pro Forma Pro Forma
---------- ----------- --------- ---------
RMB RMB RMB US$
(in millions)

H.K. GAAP
Revenues
Gross written premiums and policy fees................... 68,769 (21,692) 47,077 5,687
Less: premiums ceded to reinsurers....................... (1,869) 4 (1,865) (225)
------- ------- ------- ------
Net written premiums and policy fees..................... 66,900 (21,688) 45,212 5,462
Net change in unearned premium reserves.................. (476) 12 (464) (56)
------- ------- ------- ------
Net premiums earned and policy fees...................... 66,424 (21,676) 44,748 5,406
------- ------- ------- ------
Net investment income.................................... 8,347 (4,001) 4,346 525
Net realized gains/(losses) on investments............... 266 (126) 140 17
Net unrealized gains/(losses) on investments............. (1,067) 507 (560) (68)
Other income............................................. 338 1,728 2,066 250
------- ------- ------- ------
Total revenues........................................... 74,308 (23,568) 50,740 6,130
------- ------- ------- ------

Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits................. (7,010) 4,702 (2,308) (279)
Accident and health claims and claim adjustment expenses (4,053) -- (4,053) (490)
Increase in future life policyholder benefits........... (45,374) 20,455 (24,919) (3,010)
Policyholder dividends and participation in profits...... (641) 3 (638) (77)
Amortization of deferred policy acquisition costs........ (3,832) -- (3,832) (463)
Underwriting and policy acquisition costs................ (1,661) 1,106 (555) (67)
Administrative expenses.................................. (6,162) 256 (5,906) (713)
Other operating expenses................................. (634) 204 (430) (52)
Interest expense on bank borrowings...................... (7) 7 -- --
Interest credited to policyholder contract deposits...... (7,095) 5,527 (1,568) (189)
Statutory insurance levy................................. (73) -- (73) (9)
------- ------- ------- ------
Total benefits, claims and expenses...................... (76,542) 32,260 (44,282) (5,350)
------- ------- ------- ------
Profit/(loss) before income tax expense and minority
interests.............................................. (2,234) 8,692 6,458 780
Income tax expense....................................... (14) (1,890) (1,904) (230)
------- ------- ------- ------
Profit/(loss) before minority interests.................. (2,248) 6,802 4,554 550
Minority interests....................................... (2) (28) (30) (4)
------- ------- ------- ------
Net profit/(loss)........................................ (2,250) 6,774 4,524 546
======= ======= ======= ======
U.S. GAAP
Net profit.............................................. 4,524 546

As of June 30, 2003
------------------------------------------
Historical Adjustments Pro Forma Pro Forma
---------- ----------- --------- ---------
RMB RMB RMB US$
(in millions)

Pro Forma Consolidated Balance Sheet Data
H.K. GAAP

Assets

Investments
Fixed maturity securities........................ 82,017 (36,927) 45,090 5,447
Equity securities................................ 14,797 (6,066) 8,731 1,055
Term deposits.................................... 142,043 (44,480) 97,563 11,786
Statutory deposits--restricted................... 992 3,008 4,000 483
Investments in associated companies.............. 1,993 (1,993) -- --
Policy loans..................................... 136 (87) 49 6
Securities purchased under agreements to resell.. 70,061 (23,724) 46,337 5,598
Other............................................ 209 (209) -- --
Cash and cash equivalents........................ 23,592 (12,590) 11,002 1,329
-------- -------- ------- --------
Total investments................................. 335,840 (123,068) 212,772 25,705
-------- -------- ------- --------
Other assets
Accrued investment income........................ 4,277 (1,559) 2,718 328
Premiums receivable.............................. 3,282 (540) 2,742 331
Reinsurance assets............................... 971 -- 971 117
Deferred policy acquisition costs................ 21,282 -- 21,282 2,571
Property, plant and equipment, net of accumulated
depreciation................................... 18,610 (6,971) 11,639 1,406
Other............................................ 3,676 (3,041) 635 77
-------- -------- ------- --------
Total other assets................................ 52,098 (12,111) 39,987 4,831
-------- -------- ------- --------
Total assets...................................... 387,938 (135,179) 252,759 30,535
======== ======== ======= ========
Liabilities and equity
Future life policyholder benefits................ 328,555 (260,113) 68,442 8,268
Policyholder contract deposits and other funds... 210,975 (80,551) 130,424 15,756
Unearned premium reserves........................ 4,719 -- 4,719 570
Reserves for claims and claim adjustment expenses 910 -- 910 110
Other liabilities................................ 18,986 (10,463) 8,523 1,030
Deferred tax..................................... -- 3,239 3,239 391
Commitments and contingencies.................... -- -- -- --
Minority interests............................... 146 174 320 39
Owners' equity................................... (176,353) 212,535 36,182 4,371
-------- -------- ------- --------
Total liabilities and equity...................... 387,938 (135,179) 252,759 30,535
======== ======== ======= ========
U.S. GAAP
Total investments................................ 212,772 25,705
Total assets..................................... 252,759 30,535
Total liabilities and equity..................... 252,759 30,535

RISK FACTORS

You should consider the risks described below carefully before making an
investment decision. You should pay particular attention to the fact that we
are a Chinese company and are governed by a legal and regulatory environment
that in some respects differs from that which prevails in other countries. Our
business, financial condition or results of operations could be affected
materially and adversely by any of these risks. The trading price of our H
shares and ADSs could decline due to any of these risks, and you may lose all
or part of your investment.

This prospectus also contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of many factors,
including the risks faced by us described below and elsewhere in this
prospectus.

Risks Relating to Our Business

Our growth is dependent on our ability to attract and retain productive agents.

A substantial portion of our business is conducted through our individual
agents. Because of differences in productivity, a relatively small percentage
of our sales agents is responsible for a disproportionately high percentage of
our sales of individual products. If we are unable to retain and build on this
core group of highly productive agents, our business could be materially and
adversely affected. Competition for agents from insurance companies and other
business institutions may also force us to increase the compensation of our
agents and sales representatives, which would increase operating costs and
reduce our profitability. Although we have not had difficulty in attracting and
retaining productive agents in the recent past, and do not anticipate any
difficulties in the future, we cannot guarantee that this will continue to be
the case.

If we are unable to develop other distribution channels for our products, our
growth may be materially and adversely affected.

Banks and post offices are rapidly emerging as some of the fastest growing
distribution channels in China. We do not have exclusive arrangements with any
of the banks and post offices through which we sell insurance and annuity
products, and thus our sales may be materially and adversely affected if one or
more banks or post offices choose to favor our competitors' products over our
own. We have established a dedicated business unit to enter into strategic
alliances with partner banks. If we are unable to continue to develop our
alternative distribution channels, our growth may be materially and adversely
affected.

Agent and employee misconduct is difficult to detect and deter and could harm
our reputation or lead to regulatory sanctions or litigation costs.

Agent or employee misconduct could result in violations of law by us,
regulatory sanctions, litigation or serious reputational or financial harm.
Misconduct could include:

. engaging in misrepresentation or fraudulent activities when marketing or
selling insurance policies or annuity contracts to customers;

. hiding unauthorized or unsuccessful activities, resulting in unknown and
unmanaged risks or losses; or

. otherwise not complying with laws or our control policies or procedures.

We cannot always deter agent or employee misconduct, and the precautions we
take to prevent and detect these activities may not be effective in all cases.
We cannot assure you that agent or employee misconduct will not lead to a
material adverse effect on our business, results of operations or financial
condition.

Our business is dependent on our ability to attract and retain key personnel,
including senior management, underwriting personnel, actuaries, information
technology specialists, investment managers and other professionals.

The success of our business is dependent to a large extent on our ability to
attract and retain key personnel who have in-depth knowledge and understanding
of the life insurance market in China, including members of our senior
management, qualified underwriting personnel, actuaries, information technology
specialists and experienced investment managers. We do not carry key personnel
insurance for any of these personnel. We compete to attract and retain these
key personnel with other life insurance companies and financial institutions,
some of which may offer better compensation arrangements. The number of new
domestic and foreign-invested insurers is increasing at a significant pace,
existing insurers are expanding their operations and the number of other
financial institutions is growing. As the insurance and investment businesses
continue to expand in China, we expect that competition for these personnel
will increase in the future. Although we have not had difficulty in attracting
and retaining qualified key personnel in the past, and while to our knowledge
no member of our senior management has plans to retire or leave our company in
the near future, we cannot guarantee that this will continue to be the case. If
we were unable to continue to attract and retain key personnel, our financial
performance could be materially and adversely affected.

We are exposed to changes in interest rates.

Changes in interest rates may affect our profitability.

Our profitability is affected by changes in interest rates. We currently are
experiencing the lowest interest rate environment in several years. If interest
rates were to increase in the future, surrenders and withdrawals of insurance
and annuity policies and contracts may increase as policyholders seek other
investments with higher perceived returns. This process may result in cash
outflows requiring that we sell investment assets at a time when the prices of
those assets are adversely affected by the increase in market interest rates,
which may result in realized investment losses. If interest rates were to
decline, the income we realize from our investments may decline, affecting our
profitability. In addition, as instruments in our investment portfolio mature,
we might have to reinvest the funds we receive in investments bearing lower
interest rates.

For many of our long-term life insurance and annuity products, we are
obligated to pay a minimum interest or crediting rate to our policyholders or
annuitants, which is established when the product is priced. These products
expose us to the risk that changes in interest rates may reduce our "spread",
or the difference between the rates that we are required to pay under the
policies and the rate of return we are able to earn on our investments intended
to support our insurance obligations. Our historical results and financial
position included in this prospectus, which present the historical results of
CLIC, reflect the continuing performance of policies that were issued prior to
June 10, 1999. Many of these policies paid guaranteed fixed rates of return
that, due to declining interest rates, came to be significantly higher than the
rates of return on investment assets. From 1996 through 1999, the People's Bank
of China made a series of reductions in the interest rates Chinese commercial
banks could pay on their deposits. The interest rate on one-year term deposits,
a key benchmark rate, was reduced seven times, from 10.98% in April 1996 to
2.25% in June 1999. As a result, CLIC experienced a significant negative spread
on its guaranteed rate policies and CLIC's results of operations continue to be
adversely impacted by the effect of those interest rate cuts.

On June 10, 1999, the CIRC reduced to 2.50% the maximum guaranteed rate
which life insurance companies could commit to pay on new policies and in
response, CLIC adopted new pricing policies which reduced the guaranteed rates
on its products to a range of between 2.00% and 2.50%. We also have shifted our
mix of products to emphasize products that lessen the impact from interest rate
changes, including traditional policies that are not as sensitive to interest
rates and participating policies under which our customers receive a portion of
our distributable earnings from participating products, as well as products
having shorter terms to better match the duration of our investment portfolio.
Furthermore, we have made use of the relaxation of investment restrictions
applicable to us to diversify our investments. We and CLIC have not incurred
negative

spread on policies issued since June 10, 1999, as the average investment
returns we and CLIC have been able to generate have been higher than their
guaranteed rates. However, if the rates of return on our investments fall below
the minimum rates we guarantee, our profitability would be materially and
adversely affected.

Because of the general lack of long-term fixed income securities in the
Chinese capital markets and the restrictions on the types of investments we
may make, we are unable to match closely the duration of our assets and
liabilities, which increases our exposure to interest rate risk.

Like other insurance companies, we seek to manage interest rate risk through
managing, to the extent possible, the average duration of our investment assets
and the insurance policy liabilities they support. Matching the duration of our
assets to their related liabilities reduces our exposure to changes in interest
rates, because the effect of the changes largely will be offset against each
other. However, restrictions under the PRC insurance law on the asset classes
in which we may invest, as well as the limited availability of long-duration
investment assets in the markets in which we invest, have resulted in the
duration of our assets being shorter than that of our liabilities. Furthermore,
the financial markets currently do not provide an effective means for us to
hedge our interest rate risk through financial derivative products. We believe
that, with the gradual easing of the investment restrictions imposed on
insurance companies in China, our ability to match the duration of our assets
to that of our liabilities will improve. We also seek to manage the risk of
duration mismatch by focusing on product offerings whose maturity profiles are
in line with the duration of investments available to us in the prevailing
investment environment. However, if we are unable to match more closely the
duration of our assets and liabilities, we will continue to be exposed to
interest rate changes, which may materially and adversely affect our earnings.

Our investments are subject to risks.

We are exposed to potential investment losses if there is an economic
downturn in China.

Under the current PRC insurance law, we may invest the premiums, deposits
and other income we receive only in China. In particular, on a pro forma basis
after giving effect to the restructuring, 45.9% of our total investment assets
as of June 30, 2003 consisted of term deposits with Chinese banks, and of these
deposits, 43.9% were placed with the four largest state-owned commercial banks.
A serious downturn in the Chinese economy may lead to investment losses, which
would reduce our earnings.

Defaults on our fixed maturity investments may materially and adversely
affect our profitability.

On a pro forma basis after giving effect to the restructuring, 21.2% of our
investment assets as of June 30, 2003 were comprised of fixed maturity
securities. The issuers whose fixed maturity securities we hold may fail to pay
or otherwise default on their obligations due to bankruptcy, a lack of
liquidity, a downturn in the economy, operational failures or other reasons.
Losses due to these defaults could reduce our profitability.

Unless we are permitted to invest in a broader range of asset classes, our
ability to improve our rate of investment return will be limited.

Our premiums and deposits have grown rapidly during the last three years. As
a Chinese life insurance company we are subject to significant restrictions
under current PRC insurance law and regulations on the asset classes in which
we are permitted to invest. Chinese life insurance companies may invest their
funds only in Chinese bank deposits, government bonds, domestic corporate bonds
and securities investment funds. See "Regulation--Insurance Company
Regulation--Regulation of investments". These asset classes historically have
yielded a comparatively low return on investment. If the asset classes in which
we are permitted to invest do not expand in the future, we will be limited in
our ability to improve our rate of return, which may materially and adversely
impact our profitability.

The PRC securities markets are still emerging markets, which may expose us
to risks of loss from our investments there.

On a pro forma basis after giving effect to the restructuring, we had RMB
8,731 million (US$1,055 million) invested in securities investment funds as of
June 30, 2003. These securities investment funds are primarily invested in
equity securities that are issued by Chinese companies and traded on China's
securities exchanges. Many of our investments in securities investment funds
are publicly traded, but we also invest in non-publicly traded securities
investment funds. The PRC securities markets are characterized by companies
with relatively small market capitalizations and low trading volumes, and by
evolving regulatory, accounting and disclosure requirements. This may from time
to time result in significant price volatility, unexpected losses, lack of
liquidity or difficulties in the settlement of transactions. These factors
could cause us to incur losses on our publicly traded investments. In addition,
as one of the largest institutional investors in China, we hold significant
positions in many securities in which we invest, and any decision to sell or
any perception in the market that we are a major seller of a security could
adversely affect the liquidity and market price of that security.

Differences in future actual claims results from the assumptions used in
pricing and establishing reserves for our insurance and annuity products may
materially and adversely affect our earnings.

Our earnings depend significantly upon the extent to which our actual claims
results are consistent with the assumptions used in setting the prices for our
products and establishing the liabilities in our financial statements for our
obligations for future policy benefits and claims. Our assumptions include
those for investment returns, mortality, morbidity, expenses and persistency,
as well as macro-economic factors such as inflation. To the extent that trends
in actual claims results are less favorable than our underlying assumptions
used in establishing these liabilities, and these trends are expected to
continue in the future, we could be required to increase our liabilities. Any
such increase could have a material adverse effect on our profitability and, if
significant, our financial condition. Any material impairment in our solvency
level could change our customers' or our business associates' perception of our
financial health, which in turn could adversely affect our sales, earnings and
operations.

We establish the liabilities for obligations for future policy benefits and
claims based on the expected payout of benefits, calculated through the use of
assumptions for investment returns, mortality, morbidity, expenses and
persistency, as well as certain macroeconomic factors such as inflation. These
assumptions are based on judgments made by management. These assumptions may
deviate from our actual experience, and, as a result, we cannot determine
precisely the amounts which we will ultimately pay to settle these liabilities
or when these payments will need to be made. These amounts may vary from the
estimated amounts, particularly when those payments may not occur until well
into the future. We evaluate our liabilities periodically, based on changes in
the assumptions used to establish the liabilities, as well as on our actual
policy benefits and claims results. We record changes in our liabilities to
expenses in the period the liabilities are established or re-estimated. If the
liabilities originally established for future policy benefits prove inadequate,
we must increase our liabilities established for future policy benefits, which
may have a material adverse effect on our earnings and our financial condition.

We have data available for a shorter period of time than do insurance
companies operating in some other countries and, as a result, less claims
experience on which to base some of the assumptions used in establishing our
reserves. In particular, we based our assumptions for mortality on the "CL"
series of life tables issued by the People's Bank of China, adjusted based on
the results of an analysis of actual death claims incurred by us in 2001 and
2002. Likewise, we based our surrender and morbidity experience on an analysis
of lapses and morbidity incurred by us in 2001 and 2002. Given the limited
nature of this experience, it is possible that our actual claims could vary
significantly from the assumptions used.

Our risk management and internal reporting systems, policies and procedures may
leave us exposed to unidentified or unanticipated risks, which could materially
and adversely affect our businesses or result in losses.

Our policies and procedures to identify, monitor and manage risks may not be
fully effective. Many of our methods of managing risk and exposures are based
upon our use of observed historical market behavior or statistics based on
historical models. As a result, these methods may not predict future exposures,
which could be significantly greater than what the historical measures
indicate. Other risk management methods depend upon the evaluation of
information regarding markets, customers or other matters that is publicly
available or otherwise accessible to us, which may not always be accurate,
complete, up-to-date or properly evaluated. In addition, a significant portion
of business information needs to be centralized from our many branch offices.
Management of operational, legal and regulatory risks requires, among other
things, policies and procedures to record properly and verify a large number of
transactions and events, and these policies and procedures may not be fully
effective. Failure or the ineffectiveness of these systems could materially and
adversely affect our business or result in losses.

We are likely to offer a broader and more diverse range of insurance and
investment products in the future as the insurance market in China continues to
develop. At the same time, we anticipate that the relaxing of regulatory
restraints will result in our being able to invest in a significantly broader
range of asset classes. The combination of these factors will require us to
continue to enhance our risk management capabilities and is likely to increase
the importance of our risk management policies and procedures to our results of
operations and financial condition. If we fail to adapt our risk management
policies and procedures to our changing business, our business, results of
operations and financial condition could be materially and adversely affected.

Catastrophes could materially reduce our earnings and cash flow.

We could in the future experience catastrophic losses that may have an
adverse impact on the business, results of operations and financial condition
of our insurance business. Catastrophes can be caused by various events,
including terrorist attacks, earthquakes, hurricanes, floods, fires and
epidemics, such as severe acute respiratory syndrome, or SARS.

We establish liabilities for claims arising from a catastrophe only after
assessing the exposure and damages arising from the event. We cannot be certain
that the liabilities we establish after the assessment will be adequate to
cover actual claims. We do not currently carry reinsurance to reduce our
catastrophe exposure. Such an event could have a material adverse effect on us.

We are involved in litigation involving our insurance operations on an ongoing
basis, which could result in financial losses or harm our businesses.

We are involved in litigation involving our insurance operations on an
ongoing basis. In addition, the CIRC from time to time makes inquiries and
conducts examinations or investigations concerning our compliance with
insurance laws. While we cannot predict the outcome of any pending or future
litigation, examination or investigation, we do not believe that any pending
legal matter will have a material adverse effect on our business, financial
condition or results of operations. However, given the inherent
unpredictability of litigation, it is possible that an adverse outcome could
have a material adverse effect on our operating results or cash flows. See
"Business--Legal Proceedings".

The embedded value information we present in this prospectus is based on
several assumptions and may vary significantly as those assumptions are changed.

Value". These measures are based on a discounted cash flow valuation determined
using commonly applied actuarial methodologies. Standards with respect to the
calculation of embedded value are still evolving, however, and there is no
single adopted standard for either the form, determination or presentation of
the embedded value of an insurance company. Moreover, because of the technical
complexity involved in embedded value calculations and the fact that embedded
value estimates vary materially as key assumptions are changed, you should read
the discussion under the section entitled "Embedded Value", as well as "Annex
A--Actuarial Consultants' Report of Tillinghast-Towers Perrin", in their
entirety. You should use special care when interpreting embedded value results
and should not place undue reliance on them. See also "Forward-Looking
Statements".

We do not possess the title certificates in respect of some of the properties
owned by us.

We own 3,443 properties, including our headquarters in Beijing, China. CLIC
holds land use right certificates and building ownership certificates for all
but a small number of these properties and is in the process of applying for
certificates that it does not yet hold. As part of the restructuring, CLIC has
undertaken to have the land use right certificates and building ownership
certificates in respect of all the properties and land it owns to be registered
in our name as soon as possible and to indemnify us against all losses, claims,
charges or expenses arising from any failure to obtain these certificates. Due
to the large number of properties acquired by us as a result of the
restructuring and the fact that we were only incorporated on June 30, 2003, not
all of the properties or parcels of land have been registered in our name. Our
PRC legal counsel, King & Wood, has advised us that it is not aware of any
material legal impediment to the transfer from CLIC to us of the land use right
certificates and building ownership certificates. Upon completion of the
transfer of all such land use right certificates and building ownership
certificates to us, we will have lawful rights to occupy, let, transfer and
mortgage all of these parcels of land and properties. If we and/or CLIC cannot
obtain the relevant land use right certificates and/or building ownership
certificates, our management believes that there will be no material financial
impact on us as CLIC has undertaken to indemnify us against all losses or
expenses arising out of or in connection with a failure to obtain the relevant
land use right certificates and/or building ownership certificates. However, we
cannot predict with certainty how our rights as owner of these properties, and
our operations carried out on or from these properties, may be adversely
affected as a result of the absence of the certificates as described above.

Risk Relating to the PRC Life Insurance Industry

We expect competition in the Chinese insurance industry to increase, which may
materially and adversely affect the growth of our business.

We face competitive pressures from both domestic and foreign-invested life
insurance companies operating in China, as well as from property and casualty
insurance companies, which may compete with our accident and short-term health
insurance businesses, and other financial institutions that sell other
financial investment products in competition with ours. If we are not able to
adapt to these increasingly competitive pressures in the future, our growth
rate may decline, which could materially and adversely affect our earnings.

Competition among domestic life insurance companies is increasing.

Our nearest competitors are Ping An Insurance Company of China, Ltd., or
Ping An, and China Pacific Life Insurance Co. Ltd., or China Pacific. Together,
Ping An, China Pacific and our predecessor accounted for more than 90% of the
individual and group life insurance premiums in China in 2002. Each of Ping An
and China Pacific has operated in the Chinese insurance market for more than
ten years, and each has a recognized brand name. Ping An had a greater market
share than CLIC did in Beijing and Shanghai in 2002. We also face competition
from smaller insurance companies, which may develop strong positions in various
regions in which we operate, and new entrants to the health insurance industry,
following adoption by the Chinese government of policies that encourage the
development of health insurance and improved health care in China. See "Life
Insurance Industry in China".

Competition from foreign-invested life insurance companies is likely to
increase in the future, as restrictions on their operations in China are
relaxed.

Foreign-invested life insurance companies are insurance companies in which
foreign entities hold at least a 25.0% interest. Under current Chinese law,
foreign-invested life insurance companies are permitted to operate only in
specified cities and may not offer group life insurance, health insurance and
annuities or other pension-like products. As a result of these and other
restrictions on foreign-invested life insurance companies operating in China,
foreign-invested insurers only accounted for less than 2% of the nationwide
market share of life insurance products in 2002, although some already have
gained significant market shares in the life insurance market in some areas in
China. In Shanghai, Guangzhou and Shenzhen, where foreign-invested insurers
have been allowed to operate since 1992, 1995 and 1999, they had respective
life insurance market shares of approximately 14%, 13% and 5% in 2002. These
barriers to foreign insurers' entry into the Chinese insurance market are being
phased out as a result of China's accession to the World Trade Organization, or
WTO, in December 2001, which will allow foreign insurers to sell health,
annuity and group life insurance products nationwide by December 2004. We
believe that the relaxation of the restrictions on foreign-invested insurers
will increase the competitive pressures we will face in the future.
Foreign-invested life insurance companies, through their shareholders, may have
access to greater financial, technological or other resources than we do.

We are likely to face increasing competition from property and casualty
insurance companies and other companies offering products that compete with
our own.

In addition to competition from life insurance companies, we face
competition from other companies that may offer products that compete with our
own, including:

. Property and casualty companies. As a result of recent changes in the
insurance law, beginning on January 1, 2003, property and casualty
insurance companies were permitted to sell accident and short-term health
insurance products, but only with regulatory approval. There were 23
property and casualty insurers as of December 31, 2002. We believe
property and casualty insurers have the competitive advantage of being
able to bundle, or cross-sell, accident and health products with the
other non-life insurance products that they are currently selling to
their existing and potential customers. We believe this will lead to
greater competition in the accident and health insurance sectors,
especially for the group accident and short-term health insurance
products we offer.

. Mutual fund companies and other financial services providers. We face
potential competition from other financial services providers, primarily
licensed mutual fund companies, trust companies and securities brokerage
firms licensed to manage separate accounts. Recent changes in Chinese
investment regulations relaxing rules on the formation of mutual funds
and sales of securities have led to greater availability and variety of
financial investment products. These products may prove to be attractive
to the public and thereby adversely affect the sale of some products we
offer, including participating life insurance policies and annuities.

All of our agents are required to be qualified and to be registered as business
entities. If these qualification and registration requirements are enforced,
our business may be materially and adversely affected.

Life insurance agents are required to obtain a qualification certificate
from the CIRC in order to conduct insurance agency business. See
"Regulation--Regulation of Insurance Agencies, Insurance Brokers and Other
Intermediaries". Approximately 37% of our individual agents had not obtained
such a certificate as of June 30, 2003. To date, we do not believe the CIRC has
taken any action against an insurance company or its agents for failing to be
so qualified. However, if the CIRC were to enforce this regulation in the
future, and if a substantial number of our agents do not become licensed, our
business may be materially and adversely affected.

Under the PRC insurance law, life insurance agents are required to be
registered with and obtain business licenses from the local administrative
bureaus of industry and commerce. Historically, this requirement has not

been generally enforced, and it is our understanding that the State
Administration of Industry and Commerce, or SAIC, does not have procedures in
place to effect the registration and licensing of individual insurance agents.
Consequently, as we believe it is also the case with other insurance companies
operating in China, substantially all of our individual agents are not in
compliance with this requirement. To date, this noncompliance has not had a
material adverse effect on CLIC or ourselves. We do not know whether the local
bureaus of the SAIC will enforce this requirement in the future. If it were to
be enforced in the future, our agents would be required to register and obtain
business licenses. We cannot assure you that all of our agents would obtain
such licenses, and the enforcement of this requirement could adversely affect
the composition and effectiveness of our individual agent distribution system,
which could have a material adverse effect on our business.

The further development of regulations in China may impose additional costs and
restrictions on our activities.

We operate in a highly regulated industry. The CIRC supervises and
administers the insurance industry in China. In exercising its authority, it is
given wide discretion to administer the law. China's insurance regulatory
regime is undergoing significant changes toward a more transparent regulatory
process and a convergent movement toward international standards. Some of these
changes may result in additional costs or restrictions on our activities. Among
other things, recent changes to determinations of statutory reserves and
solvency requirements have affected adversely our income under PRC GAAP and the
amount of capital we are required to maintain. In addition, because the terms
of our products are subject to regulations, changes in regulations may affect
our profitability on the policies and contracts we issue. For instance, under
guidelines issued by the CIRC, the dividends on our participating products must
be no less than 70% of the distributable earnings from participating products
in accordance with CIRC requirements. If this level were to be increased in the
future, our profitability could be materially and adversely affected.

Our ability to comply with minimum solvency requirements is affected by a
number of factors, and our compliance may force us to raise additional capital,
which could be dilutive to you, or to reduce our growth.

We are required by CIRC regulation to maintain our solvency at a level in
excess of minimum solvency levels. Our minimum solvency is affected primarily
by the policy reserves we are required to maintain which, in turn, are affected
by the volume of policies and contracts we sell and by regulations on the
determination of statutory reserves. Our solvency also is affected by a number
of other factors, including the profit margin of our products, returns on our
investments, underwriting and acquisition costs and policyholder and
shareholder dividends. If we continue to grow rapidly in the future, or if the
required solvency level is raised in the future, we may need to raise
additional capital to meet our solvency requirement, including through
additional issuances of shares, which would be dilutive to you. If we are not
able to raise additional capital, we may be forced to reduce the growth of our
business.

Risks Relating to the Restructuring

CLIC has incurred substantial losses on the policies retained by it in the
restructuring. If CLIC is unable to meet its obligations to its policyholders,
it may seek to increase the level of dividends we pay, sell the China Life
shares it owns or take other actions which may have a material adverse effect
on the value of the shares you own.

In connection with the restructuring, CLIC transferred to us (1) all
long-term insurance policies (policies having a term of more than one year from
the date of issuance) issued on or after June 10, 1999, having policy terms
approved by or filed with the CIRC on or after June 10, 1999 and either (i)
recorded as a long-term insurance policy as of June 30, 2003 in a database
attached to the restructuring agreement as an annex or (ii) having policy terms
for group supplemental medical insurance (fund type), (2) stand-alone
short-term policies (policies having a term of one year or less from the date
of issuance) issued on or after June 10, 1999 and (3) all riders supplemental
to the policies described in clauses (1) and (2) above, together with the
reinsurance contracts

specified in an annex to the restructuring agreement. All other insurance
policies were retained by CLIC. See "The Restructuring". CLIC has incurred
substantial losses on these non-transferred policies, primarily because the
guaranteed rates it had committed to pay on these policies are higher than the
investment return it was able to generate on its investment assets. This
negative spread on non-transferred policies created substantial losses for CLIC
and a resulting negative net worth. As of June 30, 2003, CLIC's owners' equity
was a deficit of RMB 176,353 million (US$21,305 million) and as of December 31,
2002, CLIC's owners' equity was a deficit of RMB 175,463 million (US$21,197
million). The net losses incurred by CLIC were RMB 714 million (US$86 million)
for the six months ended June 30, 2003 and RMB 6,990 million (US$844 million),
RMB 3,295 million (US$398 million) and RMB 2,250 million (US$272 million) for
2000, 2001 and 2002, respectively. These losses were attributable to losses
incurred by CLIC on policies retained by CLIC in the restructuring, which has
offset the profitability of the policies transferred to us. On a pro forma
basis after giving effect to the restructuring, our net profit was RMB 3,128
million (US$378 million) for the six months ended June 30, 2003 and RMB 4,524
million (US$547 million) in 2002.

In connection with the restructuring, CLIC has established, together with
the MOF, a special purpose fund for the purpose of paying claims under the
non-transferred policies. The special purpose fund will be funded by investment
assets retained by CLIC; renewal premiums paid on the non-transferred policies
over time; a portion of the tax payments made by China Life under the tax
rebate mechanism expected to be approved by the MOF and the State Tax
Administration; profits from the investments of the special purpose fund;
shareholder dividends paid in cash to CLIC by China Life; proceeds from the
disposition of China Life shares by CLIC over time; and funds injected by the
MOF in the event of a deficiency in the special purpose fund, as described
below. The fund will be co-administered by CLIC and the MOF. The special
purpose fund will be available to satisfy CLIC's operating expenses, including
the payment of benefits and claims obligations arising from the non-transferred
policies, as well as expenses incurred in operating the special purpose fund,
including third-party management fees and professional fees, and such other
purposes as the management committee of the fund may agree. The special purpose
fund will be dissolved when all claims and benefits under the non-transferred
policies have been paid, or sooner if the management committee so agrees.

The MOF's approval of the special purpose fund issued to CLIC provides that
in the event there is any deficiency in the special purpose fund for so long as
the fund is in existence, as described above, to meet any payment obligation
arising out of the non-transferred policies, the MOF will provide support
through the injection of funds to ensure the payments of benefits and claims to
the policyholders of the non-transferred policies. See "The
Restructuring--Transfer of Insurance Policies and Related Assets--Insurance
policies retained by CLIC". We have been advised by our PRC legal counsel, King
& Wood, that (1) the MOF has the authority to issue this approval regarding the
special purpose fund, (2) the approval is valid and effective, and (3) it has
no reason to believe that the MOF will revoke the approval. We cannot assure
you, however, that a court would decide in a manner consistent with King &
Wood's conclusions.

We cannot predict the amount of funds that will be available to the special
purpose fund from CLIC's own operations to satisfy its obligations to its
policyholders as they become due. CLIC's cash requirements and available cash
resources will be affected by several factors which are subject to uncertainty,
including prevailing interest rates and the returns on investment generated by
CLIC's assets as well as the claims, expenses and persistency experience with
respect to CLIC's insurance policies. The cash resources available to CLIC will
also depend in part on our profitability, which will affect the amount of our
tax payments and hence the amount of refund contributed to the fund, the timing
and amount of our dividend payments and the market prices of our shares and
ADSs, which will affect the proceeds to CLIC from dispositions of our shares.
If it is unable to satisfy its obligations to its policyholders from other
sources, CLIC may seek, subject to our articles of association and applicable
laws, to increase the amount of dividends we pay in order to satisfy its cash
flow requirements. Any such increase in our dividend payments would reduce the
funds available for reinvestment in our business. In addition, if we are unable
to pay dividends in amounts sufficient to satisfy these requirements, CLIC may
seek to sell its shareholdings in us or take other actions in order to satisfy
these needs. The sale of these holdings or even the market perception of such a
sale may materially and adversely affect the price of our shares.

CLIC does not meet the minimum solvency requirements under CIRC solvency
regulations. The CIRC has broad powers under these regulations and the
insurance law in the event an insurance company fails to meet its minimum
solvency requirements. These may include ordering the sale of the assets or
transfer of the insurance business of an insurance company in default under
these requirements to a third party and appointing a receiver to take over the
management of the insurance company. We believe that, in light of the MOF's
approval described above, it is unlikely that the CIRC will take these actions.
However, we cannot assure you that the CIRC will not take actions against CLIC,
which could have a material adverse effect on us.

The transfer of policies to us by CLIC and/or the separation of assets between
CLIC and us may be subject to challenge.

We have been advised by our PRC legal counsel, King & Wood, that (1) the
transferred policies have been legally and validly transferred to China Life
and (2) following the restructuring, we will not have any continuing
obligations to holders of the non-transferred policies who remain policyholders
of CLIC and that there is no legal basis on which holders of the
non-transferred policies can make a claim against China Life. We also have been
advised by King & Wood that, although there is no specific law applicable to
restructurings, these conclusions are supported by, among other things, the
approval of the restructuring and various related matters by the State Council,
the MOF and the CIRC; the support provided by the MOF with respect to the
non-transferred policies as described above; and contract and other law. We
cannot assure you that policyholders of CLIC, holders of transferred policies
or other parties will not seek to challenge the transfer of the transferred
policies or the separation of assets occurring as a consequence of the
restructuring, or that a court would decide in a manner consistent with King &
Wood's conclusions. If the transfer of policies to us or the separation of
assets were challenged successfully, our financial condition and results of
operations would likely be materially and adversely affected.

We do not hold exclusive rights to the trademarks in the "China Life" name (in
English and Chinese) and "ball" logos, and CLIC, which retained these
trademarks, may take actions that would impair the benefits we derive from
their use.

We conduct our business under the "China Life" brand name and "ball" logos.
CLIC retained these trademarks and has registered one of the "ball" logo
trademarks in the PRC. CLIC has filed applications to register the trademarks
in the "China Life" name (in English and Chinese) and the other ball logo with
the Trademark Office of the State Administration for Industry and Commerce, or
the SAIC. CLIC has entered into a trademark license agreement with us, under
which CLIC has agreed to grant us and our branches a royalty-free license to
use these trademarks.

Although CLIC has undertaken in a non-competition agreement with us not to
compete with us in China in any life, accident and health insurance and any
other businesses in China which may compete with our insurance business, CLIC,
its subsidiaries and affiliates are permitted to use the brand name and logo in
their own businesses, including life insurance business outside China and any
other businesses they may enter into in the future within China, including
property and casualty (other than businesses that compete with our accident and
health businesses) and asset management businesses. In addition, they are not
precluded from taking actions that may impair the value of the brand name,
which could harm our business. See "Relationship with CLIC--Trademark License
Agreement" and "Relationship with CLIC--Non-Competition Agreement". The China
Life brand name and our reputation could be materially harmed if CLIC fails to
make payments when due on outstanding policies retained by CLIC in the
restructuring or new policies written by CLIC after the restructuring, if CLIC
reduces the rates of return payable on policies retained by CLIC or if CLIC is
placed into receivership.

As our controlling shareholder, CLIC will be able to exert influence on our
affairs and could cause us to make decisions or enter into transactions that
may not be in your best interests.

We are controlled by CLIC, whose interests may conflict with those of our
other shareholders. Upon completion of the global offering, CLIC will hold
75.0% of our share capital, or approximately 72.2% if the

underwriters' over-allotment option is exercised in full. In addition, our
president and chairman of the board of directors is also the president of CLIC.
As a result of these factors, CLIC, which is wholly-owned by the PRC
government, will, so long as it holds the majority of our shares, effectively
be able to control the composition of our board of directors and, through the
board, exercise a significant influence over the company's management and
policies. In addition, subject to our articles of association and applicable
laws, CLIC will, so long as it holds the majority of our shares, effectively be
able to determine the timing and amount of our dividend payments and approve
increases or decreases of our share capital, the issuance of new securities,
amendments of our articles of association, mergers and acquisitions and other
major corporate transactions. CLIC may also be able to prevent us effectively
from taking actions to enforce or exercise our rights under agreements to which
we are a party, including the agreements we entered into with CLIC in
connection with the restructuring. See "Relationship with CLIC". As majority
shareholder, CLIC may be able to take these actions without your approval. In
addition, CLIC's control could have the effect of deterring hostile takeovers
or delaying or preventing changes in control or changes in management that
might be desirable to other shareholders.

CLIC may direct business opportunities elsewhere.

CLIC has other business interests, including the run-off of the insurance
policies retained by it in the restructuring. Notwithstanding a general
undertaking pursuant to a non-competition agreement with us not to compete with
us in our principal areas of business in China, CLIC is permitted to sell
riders to these retained policies and enter into other businesses, including
life insurance businesses outside of China and property and casualty (other
than businesses that compete with our accident and health businesses) and asset
management businesses, both inside and outside of China. CLIC also is engaged
in the life insurance business in Shanghai through its joint venture with
Colonial Mutual Group, an Australian financial services company, of which CLIC
owns 51.0% and which CLIC has agreed to dispose of within three years. It also
may engage in insurance business in other regions outside China in the future.
Although it is required under the non-competition agreement to give us a right
of first refusal over any business opportunities it develops in these areas, we
may not be in a position to take advantage of these opportunities at that time,
which could harm our business. See "Relationship with CLIC--Non-Competition
Agreement".

In addition, while we provide policy administration and other services to
CLIC for the policies retained by CLIC in the restructuring, and provide
investment management services to CLIC through our asset management subsidiary,
these agreements can be terminated with notice or upon expiration in a limited
number of years. If CLIC were to terminate its policy administration and asset
management arrangements with us, our loss of fees could materially and
adversely affect us.

Our historical financial information includes the results of the businesses
retained by CLIC, and thus is not indicative of our future results.

Our consolidated financial statements present the results of the insurance
polices and assets transferred to us in the restructuring, as well as the
assets, liabilities and operations retained by CLIC. See "Operating and
Financial Review and Prospects--Overview--Restructuring" and "--Consolidated
Results of Operations". As a result, they will not necessarily be indicative of
our future earnings, cash flows or financial position as an independent
company. Historical performance is not necessarily representative of our
financial results for any future periods.

As a newly established independent entity, we face additional uncertainties in
our management, business and operations.

Prior to our restructuring, the insurance policies and assets transferred to
us were owned and operated by CLIC, a state-owned enterprise. Most of our
current directors and executive officers are former officers and employees of
CLIC who have no prior experience in operating an independent, publicly traded
company or in carrying out the arrangements under our restructuring and related
agreements. Our newly established

management structure and management information systems may need further
adjustments and development to meet the challenges of a public company.

Risks Relating to the People's Republic of China

China's economic, political and social conditions, as well as government
policies, could affect our business.

Substantially all of our assets are located in China and substantially all
of our revenues are derived from our operations in China. Accordingly, our
results of operations and prospects are subject, to a significant degree, to
economic, political and legal developments in China. The economy of China
differs from the economies of most developed countries in many respects,
including:

. the extent of government involvement;

. its level of development;

. its growth rate; and

. its control of foreign exchange.

The economy of China has been transitioning from a planned economy to a more
market-oriented economy. Although in recent years the Chinese government has
implemented measures emphasizing the utilization of market forces for economic
reform, the reduction of state ownership of productive assets and the
establishment of sound corporate governance in business enterprises, a
substantial portion of productive assets in China is still owned by the Chinese
government. In addition, the Chinese government continues to play a significant
role in regulating industrial development. It also exercises significant
control over China's economic growth through the allocation of resources,
controlling payment of foreign currency-denominated obligations, setting
monetary policy and providing preferential treatment to particular industries
or companies.

While China's economy has experienced significant growth in the past twenty
years, growth has been uneven across both geographic regions and the various
sectors of the economy. The Chinese government has implemented various measures
to encourage economic growth and guide the allocation of resources. Some of
these measures benefit the overall economy of China but may have a negative
effect on us. For example, our operating results and financial condition could
be materially and adversely affected by government monetary policies, changes
in interest rate polices, tax regulations or policies and regulations affecting
the securities markets and asset management industry.

The PRC legal system has inherent uncertainties that could limit the legal
protections available to you.

We are organized under the laws of China and are governed by our articles of
association. The Chinese legal system is based on written statutes. Prior court
decisions may be cited for reference but are not binding on subsequent cases
and have limited precedential value. Since 1979, the Chinese legislative bodies
have promulgated laws and regulations dealing with such economic matters as
foreign investment, corporate organization and governance, commerce, taxation
and trade. However, because these laws and regulations are relatively new, and
because of the limited volume of published decisions and their non-binding
nature, the interpretation and enforcement of these laws and regulations
involve uncertainties.

Holders of H shares and ADSs generally are required to resolve disputes with
us, our senior management and holders of our domestic shares only through
arbitration in Hong Kong or China.

company law or other relevant laws or administrative rules, and concerning
matters between holders of H shares and holders of domestic shares, us, or our
directors, supervisors, president, vice presidents or other senior officers,
must be submitted for arbitration at either the China International Economic
and Trade Arbitration Commission or the Hong Kong International Arbitration
Centre. If an applicant chooses to have the dispute arbitrated at the Hong Kong
International Arbitration Centre, either party may request that the venue be
changed to Shenzhen, a city in China near Hong Kong. The governing law for any
such disputes or claims is Chinese law, unless Chinese law itself provides
otherwise. Pursuant to an arrangement of mutual enforcement of arbitration
awards between the PRC courts and the Hong Kong courts, Hong Kong arbitration
awards are enforceable in China. However, to our knowledge, no action has been
brought in China by any holder of shares issued by a Chinese company to enforce
an arbitral award. As a result, we are uncertain as to the outcome of any
action brought in China to enforce an arbitral award made in favor of holders
of H shares.

The laws in China differ from the laws in the United States and may afford less
protection to our minority shareholders.

Unlike laws in the United States, the applicable laws of China do not
specifically allow shareholders to sue the directors, supervisors, officers or
other shareholders on behalf of the company to enforce a claim against these
parties that the company has failed to enforce itself, and class action
lawsuits are generally not available in China. In addition, PRC company law
imposes few obligations on a controlling shareholder with respect to protection
of minority shareholders, although overseas listed joint stock companies, such
as ourselves, are required to adopt certain provisions in their articles of
association that are designed to protect minority shareholder rights. These
mandatory provisions provide, among other things, that the rights of any class
of shares, including H shares, may not be varied without a resolution approved
by holders of shares in the affected class holding not less than two-thirds of
the shares of the affected class entitled to vote, and provide that in
connection with a merger or division involving our company, a dissenting
shareholder may require us or the consenting shareholders to purchase the
dissenters' shares at a fair price. Disputes arising from these protective
provisions would likely have to be resolved by arbitration. See "--Holders of H
shares and ADSs are generally required to resolve disputes with us, our senior
management and holders of our domestic shares only through arbitration in Hong
Kong or China".

You may experience difficulties in effecting service of legal process,
enforcing foreign judgments or bringing original actions in the PRC based on
U.S. or other foreign law against us, our management and some of the
underwriters and experts named in the prospectus.

We are a company incorporated under the laws of China, and substantially all
of our assets are located in China. In addition, our directors, supervisors,
executive officers and some of the underwriters and experts named in the
prospectus reside within China, and substantially all of the assets of these
persons are located within China. As a result, it may not be possible to effect
service of process within the United States or elsewhere outside China upon our
directors, supervisors or executive officers or some of the underwriters and
experts named in the prospectus, including with respect to matters arising
under U.S. federal securities laws or applicable state securities laws.
Moreover, our Chinese counsel, King & Wood, has advised us that China does not
have treaties providing for the reciprocal recognition and enforcement of
judgments of courts with the United States, the United Kingdom, Japan or many
other countries. Our Hong Kong legal adviser, Allen & Overy, has also advised
us that Hong Kong has no arrangement for the reciprocal enforcement of
judgments with the United States. As a result, recognition and enforcement in
China or Hong Kong of judgments of a court in the United States and any of the
other jurisdictions mentioned above in relation to any matter may be difficult
or impossible. Furthermore, an original action may be brought in the PRC
against us, our directors, supervisors, executive officers or the underwriters
and experts named in this prospectus only if the actions are not required to be
arbitrated by PRC law and our articles of association, and only if the facts
alleged in the complaint give rise to a cause of action under PRC law. In
connection with any such original action, a PRC court may award civil
liability, including monetary damages. See "Enforceability of Civil
Liabilities".

Holders of H shares may be subject to PRC taxation.

Under the PRC's current tax laws, regulations and rulings, dividends paid by
us to holders of H shares outside the PRC currently are exempted from PRC
income tax. In addition, gains realized by individuals or enterprises upon the
sale or other disposition of H shares currently are exempted from PRC income
tax. If the exemptions are withdrawn in the future, holders of H shares may be
required to pay withholding taxes on dividends, which are currently imposed at
the rate of 20%, or capital gains tax, which currently may be imposed upon
individuals at the rate of 20%. See "Taxation--The People's Republic of China".

Government control of currency conversion and the fluctuation of the Renminbi
may materially and adversely affect our operations and financial results.

We receive substantially all of our revenues in Renminbi, which currently is
not a freely convertible currency. A portion of these revenues must be
converted into other currencies to allow us to make payments on declared
dividends, if any, on our H shares.

Under China's existing foreign exchange regulations, following the
completion of the global offering, we will be able to pay dividends in foreign
currencies without prior approval from the State Administration of Foreign
Exchange by complying with various procedural requirements. The Chinese
government, however, may, at its discretion, restrict access in the future to
foreign currencies for current account transactions. If this were to occur, we
may not be able to pay dividends in foreign currencies to our shareholders,
including holders of our ADSs.

The value of the Renminbi against the U.S. dollar and other currencies
fluctuates and is affected by, among other things, changes in China's political
and economic conditions. Since 1994, the conversion of Renminbi into foreign
currencies, including Hong Kong and U.S. dollars, has been based on rates set
by the People's Bank of China, which are set daily based on the previous day's
interbank foreign exchange market rates and current exchange rates on the world
financial markets. Since 1994, the official exchange rate for the conversion of
Renminbi to U.S. dollars generally has been stable. Any devaluation of the
Renminbi, however, may materially and adversely affect the value of, and any
dividends payable on, our H shares in foreign currency terms, since we will
receive substantially all of our revenues, and express our profits, in
Renminbi. Our financial condition and results of operations also may be
affected by changes in the value of certain currencies other than the Renminbi.

Payment of dividends is subject to restrictions under Chinese law.

Under Chinese law, dividends may be paid only out of distributable profits.
Distributable profits means our after-tax profits as determined under PRC GAAP
or H.K. GAAP, whichever is lower, less any recovery of accumulated losses and
allocations to statutory funds that we are required to make. Any distributable
profits that are not distributed in a given year are retained and available for
distribution in subsequent years. However, ordinarily we will not pay any
dividends in a year in which we do not have any distributable profits.

The calculation of distributable profits for an insurance company under PRC
GAAP differs in many respects from the calculation under H.K. GAAP. As a
result, we may not be able to pay any dividend in a given year if we do not
have distributable profits as determined under PRC GAAP, even if we have
profits for that year as determined under H.K. GAAP. A prospective
strengthening in the statutory reserve requirements applicable to life
insurance companies operating in China, which will come into effect on December
31, 2003, will lead to a one-time adjustment to our PRC GAAP earnings in 2003.
We do not expect to declare dividends in respect of 2003, and our ability to
pay dividends in respect of 2004 is likely to be constrained. Payment of
dividends by us is also regulated by the PRC insurance law. See "Dividend
Policy".

Risks Relating to the Global Offering

Our actual financial performance could vary materially from the prospective
financial information contained in this prospectus.

The financial projections contained in the section entitled "Prospective
Financial Information" are included for the purpose of listing our H shares on
the Hong Kong Stock Exchange. They represent our estimate of our results of
operations for the year ending December 31, 2003. These projections are based
upon a number of assumptions, some of which may not materialize or may change.
In addition, unanticipated events could adversely affect the actual results
that we achieve in 2003. As a result, our actual results may vary materially
from these projections. You should not unduly rely on these projections.
Although we will become a reporting company after the global offering and will
have ongoing disclosure obligations under U.S. federal securities laws, we do
not intend to update or otherwise revise the projections in this prospectus to
reflect events or circumstances after the date of this prospectus or to reflect
the occurrence of unanticipated events.

We have prepared the projections in accordance with customary practice in
securities offerings in Hong Kong, but not in compliance with the published
guidelines of the United States Securities and Exchange Commission and the
American Institute of Certified Public Accountants, which contain more detailed
requirements. The rules of the Hong Kong Stock Exchange relating to financial
projections only require us to disclose the principal assumptions on which we
base the projections.

An active trading market for our H shares or ADSs may not develop, and their
trading prices may fluctuate significantly.

Prior to the global offering, no public market for our H shares or ADSs has
existed. We cannot assure you that a liquid public market for either our H
shares or our ADSs will develop or be sustained after the global offering. If
an active public market for our H shares or ADSs does not develop after the
global offering, the market price and liquidity of our H shares or ADSs may be
materially and adversely affected.

Because the initial public offering price is higher than the net tangible book
value per share, you will incur immediate dilution.

The initial public offering price of our H shares is higher than the net
tangible book value per share of the outstanding shares issued to CLIC.
Therefore, purchasers of our H shares or ADSs in this offering will experience
an immediate dilution in pro forma net tangible book value, after giving effect
to the restructuring and the global offering, of HK$1.81 per H share or US$9.32
per ADS, and CLIC will receive an increase in the pro forma net tangible book
value per share of its shares.

Since there will be a gap of several days between pricing and trading of our H
shares and ADSs offered in this offering, holders of our H shares and holders
of our ADSs are subject to the risk that the trading prices of our H shares and
ADSs could fall during the period before trading of our H shares and ADSs
begins.

The initial prices to the public of our H shares and ADSs sold in the global
offering will be determined on the date of pricing, which is expected to be on
or about Thursday, December 11, 2003. However, our H shares will not commence
trading on the HKSE until they are delivered, which is expected to be five Hong
Kong business days after the pricing date. Trading of our ADSs on the NYSE will
not commence until the business day immediately preceding the commencement of
trading of our H shares on the HKSE. As a result, investors may not be able to
sell or otherwise deal in our H shares or ADSs during that period. Accordingly,
holders of our H shares and holders of our ADSs are subject to the risk that
the trading prices of our H shares and ADSs could fall before trading begins as
a result of adverse market conditions or other adverse developments that could
occur between the time of sale and the time trading begins.

Your investment in our shares is subject to exchange rate risk between U.S.
dollars and Hong Kong dollars.

Our H shares will be quoted and traded in Hong Kong dollars on the Hong Kong
Stock Exchange. However, our ADSs will be quoted and traded in U.S. dollars on
the New York Stock Exchange, and accordingly the value of your investment in
the ADSs is subject to the effect of changes in exchange rates between U.S.
dollars and Hong Kong dollars. Since October 1983, the exchange rate of the
Hong Kong dollar has been linked to the U.S. dollar. See "Exchange Rate
Information". If, however, the Hong Kong dollar depreciates against the U.S.
dollar in the future, the value of your investment in U.S. dollar terms could
decline even if the quoted or trading price of our H shares on the Hong Kong
Stock Exchange were to remain unchanged or appreciate.

FORWARD-LOOKING STATEMENTS

We have included in this prospectus forward-looking statements that state
our intentions, beliefs, expectations or predictions for the future, in
particular under "Operating and Financial Review and Prospects", "Prospective
Financial Information", "Business" and "Annex A--Actuarial Consultants' Report
of Tillinghast-Towers Perrin".

The forward-looking statements include, without limitation, statements
relating to:

. future developments in the insurance industry in China;

. the industry regulatory environment as well as the industry outlook
generally;

. the amount and nature of, and potential for, future development of our
business;

. our business strategy and plan of operation;

. the prospective financial information regarding our business;

. our dividend policy; and

. information regarding our embedded value.

In some cases, we use words such as "believe", "intend", "anticipate",
"estimate", "project", "forecast", "plan", "potential", "will", "may", "should"
and "expect" and similar expressions to identify forward-looking statements.
All statements other than statements of historical facts included in this
prospectus, including statements regarding our future financial position,
strategy, projected costs and plans and objectives of management for future
operations, are forward-looking statements. Although we believe that the
expectations reflected in those forward-looking statements are reasonable, we
can give no assurance that those expectations will prove to have been correct,
and you are cautioned not to place undue reliance on such statements. Important
factors that could cause actual results to differ materially from our
expectations are disclosed under "Risk Factors" and elsewhere in this
prospectus, including in conjunction with the forward-looking statements
included in this prospectus. We undertake no obligation to publicly update or
revise any forward-looking statements contained in this prospectus, whether as
a result of new information, future events or otherwise, except as required by
law. All forward-looking statements contained in this prospectus are qualified
by reference to this cautionary statement.

EXCHANGE RATE INFORMATION

We prepare our financial statements in Renminbi. This prospectus contains
translations of Renminbi amounts into U.S. dollars, and U.S. dollars into
Renminbi, at RMB 8.2776 to US$1.00, the noon buying rate on June 30, 2003 in
the City of New York for cable transfers as certified for customs purposes by
the Federal Reserve Bank of New York. You should not assume that Renminbi
amounts could actually be converted into U.S. dollars at these rates or at all.

The People's Bank of China sets and publishes daily a base exchange rate
with reference primarily to the supply and demand of Renminbi against the U.S.
dollar in the market during the prior day. The People's Bank of China also
takes into account other factors, such as the general conditions existing in
the international foreign exchange markets. Since 1994, the conversion of
Renminbi into foreign currencies, including Hong Kong and U.S. dollars, has
been based on rates set by the People's Bank of China, which are set daily
based on the previous day's interbank foreign exchange market rates and current
exchange rates on the world financial markets. Since 1994, the official
exchange rate for the conversion of Renminbi to U.S. dollars generally has been
stable. Although Chinese governmental policies were introduced in 1996 to
reduce restrictions on the convertibility of Renminbi into foreign currency for
current account items, conversion of Renminbi into foreign exchange for capital
items, such as foreign direct investment, loans or security, requires the
approval of the State Administration for Foreign Exchange and other relevant
authorities.

The Hong Kong dollar is freely convertible into other currencies, including
the U.S. dollar. Since October 17, 1983, the Hong Kong dollar has been linked
to the U.S. dollar at the rate of HK$7.80 to US$1.00. The central element in
the arrangements which give effect to the link is that by agreement between the
Hong Kong government and the three Hong Kong banknote issuing banks, The
Hongkong and Shanghai Banking Corporation Limited, Standard Chartered Bank and
the Bank of China, certificates of indebtedness, which are issued by the Hong
Kong Government Exchange Fund to the banknote issuing banks to be held as cover
for their banknote issues, are issued and redeemed only against payment in U.S.
dollars, at the fixed exchange rate of HK$7.80 to U.S.$1.00. When the banknotes
are withdrawn from circulation, the banknote issuing banks surrender the
certificates of indebtedness to the Hong Kong Government Exchange Fund and are
paid the equivalent U.S. dollars at the fixed rate.

The market exchange rate of the Hong Kong dollar against the U.S. dollar
continues to be determined by the forces of supply and demand in the foreign
exchange market. However, against the background of the fixed rate which
applies to the issue of the Hong Kong currency in the form of banknotes, as
described above, the market exchange rate has not deviated materially from the
level of HK$7.80 to US$1.00 since the link was first established. The Hong Kong
government has stated its intention to maintain the link at that rate, and it,
acting through the Hong Kong Monetary Authority, has a number of means by which
it may act to maintain exchange rate stability. Exchange rates between the Hong
Kong dollar and other currencies are influenced by the linked rate between the
U.S. dollar and the Hong Kong dollar.

The following table sets forth the high and low noon buying rates between
Renminbi and U.S. dollars and between Hong Kong dollars and U.S. dollars for
each of the periods shown:

Noon buying rate
---------------------------
RMB per US$ HK$ per US$
------------- -------------
High Low High Low
------ ------ ------ ------

January 2003...................... 8.2800 8.2766 7.8001 7.7988
February 2003..................... 8.2800 8.2768 7.8000 7.7989
March 2003........................ 8.2776 8.2770 7.7995 7.7987
April 2003........................ 8.2774 8.2769 7.7998 7.7991
May 2003.......................... 8.2771 8.2768 7.7995 7.7985
June 2003......................... 8.2776 8.2768 7.7993 7.7980
July 2003......................... 8.2776 8.2768 7.7998 7.7950
August 2003....................... 8.2775 8.2766 7.7998 7.7920
September 2003.................... 8.2775 8.2768 7.7999 7.7444
October 2003...................... 8.2776 8.2765 7.7684 7.7085
November 2003..................... 8.2772 8.2766 7.7692 7.7475
December 2003 (through December 4) 8.2772 8.2771 7.7670 7.7628

The following table sets forth the period-end noon buying rates and the
average noon buying rates between Renminbi and U.S. dollars and between Hong
Kong dollars and U.S. dollars for each of 1998, 1999, 2000, 2001, 2002 and 2003
(through December 4) (calculated by averaging the noon buying rates on the last
day of each month of the periods shown):

Period-end noon Average noon
buying rate buying rate
--------------- -------------
RMB HK$ RMB HK$
per per per per
US$ US$ US$ US$
------ ------ ------ ------

1998..................... 8.2789 7.7476 8.2969 7.7465
1999..................... 8.2795 7.7740 8.2785 7.7599
2000..................... 8.2774 7.7999 8.2784 7.7936
2001..................... 8.2766 7.7980 8.2772 7.7996
2002..................... 8.2800 7.7988 8.2772 7.7996
2003 (through December 4) 8.2770 7.7670 8.2771 7.7886

USE OF PROCEEDS

We estimate that the net proceeds to us from this offering will be
approximately US$2,374 million (RMB 19,648 million) before exercise of the
over-allotment option, assuming an offering price of US$17.08 (RMB 141.38) per
ADS, the midpoint of the range set forth on the cover page of this prospectus,
after deducting the underwriting discount and estimated offering expenses.

If the over-allotment option is exercised in full, we estimate that the net
proceeds to us from the offering of these additional shares will be
approximately US$356 million (RMB 2,947 million), assuming an offer price of
US$17.08 per ADS, the midpoint of the range set forth on the cover page of this
prospectus, after deducting the underwriting discount and our estimated
offering expenses.

We expect to use the net proceeds from this offering, including the net
proceeds of the offering of any additional shares if the over-allotment option
is exercised, for general corporate purposes and to strengthen our capital base.

All of the net proceeds we receive from the global offering will be applied
to increase our level of paid-in capital and further strengthen our solvency
level. All these proceeds will be invested in accordance with the regulations
of the relevant regulatory authorities and our investment policy.

We estimate that the net proceeds received by CLIC from this offering will
be approximately US$237 million (RMB 1,965 million), or US$273 million (RMB
2,260 million) if the underwriters exercise in full their option to purchase
additional shares, assuming an offering price of US$17.08 (RMB 141.38) per ADS,
the midpoint of the range set forth on the cover page of this prospectus, after
deducting the underwriting discount and estimated offering expenses payable by
CLIC. We will not receive any of the proceeds from the sale of shares by CLIC.
In accordance with PRC regulations, CLIC will be required to contribute the net
proceeds it receives from this offering to the Chinese National Social Security
Fund.

DIVIDEND POLICY

The payment of any dividend by us must be approved by shareholders in a
shareholders' meeting. Our board of directors intends to recommend the
declaration of cash dividends to the shareholders in general meeting. The
decision to make a recommendation for the payment of any dividend and the
amount of the dividend will depend on:

. our results of operations and cash flows;

. our financial position;

. statutory solvency requirements as determined under PRC GAAP with
reference to CIRC rules;

. our shareholders' interests;

. general business conditions;

. our future prospects;

. statutory and regulatory restrictions on the payment of dividends by us;
and

. other factors that our board of directors deems relevant.

We will pay dividends out of our after-tax profits only after we have made
the following allowances and allocations:

. recovery of accumulated losses, if any;

. allocations to the statutory common reserve fund equivalent to 10% of our
after-tax income, as determined under PRC GAAP;

. allocations to the statutory common welfare fund equivalent to between 5%
and 10% of our after-tax income, as determined under PRC GAAP; and

. allocations to a discretionary common reserve fund as approved by the
shareholders in a shareholders' meeting.

The minimum and maximum allocations to the statutory funds are 15% and 20%
of our after-tax income, as determined under PRC GAAP. When the statutory
common reserve fund reaches and is maintained at or above 50% of our registered
capital, no further allocations to this fund will be required.

Payment of dividends by us is also regulated by the PRC insurance law. If we
do not meet the minimum solvency level required by the CIRC, we may be
prohibited from paying dividends. See "Description of Share Capital--Dividends"
and "Regulation--Insurance Company Regulation--Solvency requirements".

Our predecessor, CLIC, did not pay any dividends in any of the three
financial years ended December 31, 2002. A prospective strengthening in the
statutory reserve requirements applicable to life insurance companies

operating in China, which will come into full effect on January 1, 2004, will
lead to a one-time adjustment to our PRC GAAP earnings in 2003. We do not
expect to declare dividends in respect of 2003, and our ability to pay
dividends in respect of 2004 is likely to be constrained. Subject to the
considerations and constraints described above, we expect to begin paying
dividends in 2005, at a payout range of between 10% and 20% of our after-tax
profits, as determined under H.K. GAAP. We expect to continue to pay dividends
in line with our earnings performance thereafter. We will declare dividends, if
any, in Renminbi with respect to the H shares on a per share basis and will pay
such dividends in Hong Kong dollars.

CAPITALIZATION

The following table presents:

. the actual consolidated capitalization of CLIC as of June 30, 2003;

. the actual consolidated capitalization of CLIC as of June 30, 2003, as
adjusted to reflect the restructuring as if it had occurred on that date;
and

. our pro forma consolidated capitalization as of June 30, 2003, as if our
offering of 5,882,353,000 H shares at an offering price of US$17.08 per
ADS, or HK$3.32 per H share, the midpoint of the range set forth on the
cover page of this prospectus, had occurred on that date.

You should read this table in conjunction with "Operating and Financial
Review and Prospects" and the consolidated financial statements and the
accompanying notes included elsewhere in this prospectus.

As of June 30, 2003
--------------------------------------------
Adjusted for Pro forma as
Actual restructuring adjusted
----------------- ------------ ------------
RMB US$ RMB US$ RMB US$
-------- ------- ------ ----- ------ -----
(in millions)

Bank borrowings................................... 311 38 -- -- -- --
(of which RMB 140 million is secured and RMB 171
million is unsecured, actual)
Equity
Ordinary shares, par value RMB 1.00 per share; no
shares issued and outstanding, actual;
20,000,000,000 shares issued and outstanding,
adjusted for restructuring; and 25,882,353,000
shares issued and outstanding, pro forma....... 4,600 556 20,000 2,416 25,882 3,127
Additional paid-in capital....................... 113 14 16,182 1,955 29,969 3,620
Retained earnings and accumulated other
comprehensive income........................... (181,066) (21,874) -- -- -- --

Total equity..................................... (176,353) (21,304) 36,182 4,371 55,851 6,747
Total capitalization......................... (176,042) (21,266) 36,182 4,371 55,851 6,747

DILUTION

Net tangible book value per ADS represents:

. the amount of our tangible assets, meaning total assets less net
intangible assets;

. reduced by our total liabilities and minority interests; and

. divided by the ADS equivalent of the total number of H shares outstanding.

Dilution in net tangible book value per ADS represents the difference
between the amount per ADS paid by purchasers of our ADSs and H shares in this
offering and the net tangible book value per share immediately following this
offering.

Our net tangible book value as of June 30, 2003 was RMB (197,635) million
(US$(23,876) million), which equates to a net tangible book value of US$(47.75)
per ADS. Our net tangible book value as of June 30, 2003, determined on a pro
forma basis after giving effect to the restructuring as if it had occurred on
June 30, 2003, was RMB 21,923 million (US$2,649 million), which equates to a
pro forma net tangible book value of US$5.30 per ADS. After giving effect to
161,764,700 ADSs which we and CLIC are selling in this offering, based on the
midpoint of the price range set forth on the cover page of this prospectus, and
after deducting our underwriting discount and estimated offering expenses and
giving effect to our intended use of proceeds, our pro forma adjusted net
tangible book value as of June 30, 2003 would have been approximately US$5,018
million, or US$7.76 per ADS, or US$8.04 per ADS, if the underwriters exercise
the over-allotment option in full. This represents an immediate increase in pro
forma net tangible book value of US$2.46 per ADS to CLIC, our existing
shareholder, and an immediate dilution of pro forma net tangible book value of
US$9.32 per ADS to new investors purchasing shares in this offering. This
dilution will be US$9.04 per ADS if the underwriters exercise the
over-allotment option in full.

Assuming this offering had occurred on June 30, 2003, the following table
illustrates the dilution per share on the basis that the underwriters do not
exercise the over-allotment option and that they exercise the over-allotment
option in full:

Over-allotment Over-allotment
option not option fully
exercised exercised
-------------- --------------
(US$)

Initial public offering price per ADS........................................ 17.08 17.08
Net tangible book value per ADS before this offering......................... (47.75) (47.75)
Increase per ADS attributable to the restructuring........................... 53.5 53.5
Pro forma net tangible book value per ADS before this offering............... 5.30 5.30
Increase per ADS attributable to investors in this offering.................. 2.46 2.75
Pro forma net tangible book value as adjusted to give effect to this offering 7.76 8.04
Dilution per ADS to investors in this offering............................... 9.32 9.04

Assuming this offering had occurred on June 30, 2003, the following table
summarizes the differences between the total consideration paid and the average
price per share paid by CLIC (based on the pro forma net tangible book value of
RMB 21,923 million (US$2,649 million) for the net assets transferred to us as
of June 30, 2003, as determined under H.K. GAAP) and the investors in this
offering with respect to the number of ADSs purchased from us:

Total
ADSs/(1)/ purchased consideration Average
---------------- ----------------- price
Number Percent Amount Percent per ADS
--------- ------- --------- ------- -------
(in (US$ in
millions) millions) (US$)

CLIC...................... 500 77.3%/(2)/ 2,649 51.3% 5.30
Investors in this offering 147 22.7% 2,511 48.7% 17.08
--- ----- ----- ----- -----
Total..................... 647 100% 5,160 100% 7.98
=== ===== ===== ===== =====

- --------
(1) Each ADS represents 40 H shares.
(2) CLIC is offering an additional 9.1% of the shares to be sold in the global
offering. Upon completion of the global offering, CLIC will own 75.0% of
our total shares or 72.2% if the underwriters' over-allotment option is
exercised in full.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following tables set forth our selected consolidated financial
information. We have derived the consolidated financial information as of and
for the years ended December 31, 2000, 2001 and 2002 and as of and for the
six-month periods ended June 30, 2002 and 2003 from our audited consolidated
financial statements included elsewhere in this prospectus. As described below,
these financial statements present the financial results of our predecessor
company, CLIC. The financial statements are prepared and presented in
accordance with H.K. GAAP. For a reconciliation of our net profit and owners'
equity to U.S. GAAP, see Note 26 of the notes to the financial statements
included elsewhere in this prospectus.

We were formed on June 30, 2003 in connection with CLIC's restructuring. In
connection with the restructuring, CLIC transferred to us (1) all long-term
insurance policies (policies having a term of more than one year from the date
of issuance) issued on or after June 10, 1999, having policy terms approved by
or filed with the CIRC on or after June 10, 1999 and either (i) recorded as a
long-term insurance policy as of June 30, 2003 in a database attached to the
restructuring agreement as an annex or (ii) having policy terms for group
supplemental medical insurance (fund type), (2) stand-alone short-term policies
(policies having a term of one year or less from the date of issuance) issued
on or after June 10, 1999 and (3) all riders supplemental to the policies
described in clauses (1) and (2) above, together with the reinsurance contracts
specified in an annex to the restructuring agreement. See "The Restructuring".
All other insurance policies were retained by CLIC. We assumed all obligations
and liabilities of CLIC under the transferred policies. CLIC continues to be
responsible for its liabilities and obligations under the non-transferred
policies following the restructuring. The restructuring was effected through a
restructuring agreement entered into with CLIC on September 30, 2003, with
retroactive effect to June 30, 2003. Pursuant to PRC law and the restructuring
agreement, the transferred policies were transferred to us as of June 30, 2003;
however, for accounting proposes, the restructuring is treated as having
occurred on September 30, 2003. The business constituted by the policies and
assets transferred to us and the obligations and liabilities assumed by us and
the business constituted by the policies, assets, obligations and liabilities
retained by CLIC were, prior to the restructuring, under common management from
a number of significant aspects. Therefore, our consolidated balance sheet data
as of December 31, 2000, 2001 and 2002 and June 30, 2002 and 2003, and the
profit and loss accounts data for the years ended December 31, 2000, 2001 and
2002 and for the six-month periods ended June 30, 2002 and 2003, present the
financial results of our predecessor company, CLIC, and they will not
necessarily be indicative of our future earnings, cash flows or financial
position as a stand-alone company.

The selected historical consolidated financial information below omits data
related to 1998 and 1999. CLIC developed new systems during 1997, 1998 and 1999
for capturing individual policy details. These systems were completed during
1999. As a result, we are unable to prepare reliable financial information
without unreasonable effort or expense for the years ended December 31, 1998
and 1999 in accordance with H.K. GAAP or U.S. GAAP because we do not have
complete information for policies in force at December 31, 1998 or prior years.
Due to the fact that as of December 31, 1999, a premium deficiency was
determined to exist under both H.K. GAAP and U.S. GAAP relating to certain
insurance contracts that were written prior to such date, all assumptions were
reset at such date. Under H.K. GAAP and U.S. GAAP, these revised assumptions
are used for periods subsequent to December 31, 1999.

For the six months
For the year ended December 31, ended June 30,
--------------------------------- ------------------------
2000 2001 2002 2002 2002 2003 2003
------- ------- ------- ------ ------- ------- ------
RMB RMB RMB US$ RMB RMB US$
(in millions, except per share data)

Consolidated Profit and Loss Accounts Data
H.K. GAAP

Revenues
Gross written premiums and policy fees........ 44,714 56,869 68,769 8,308 34,164 36,091 4,360
Less: premiums ceded to reinsurers............ (1,501) (1,655) (1,869) (226) (765) (690) (83)
------- ------- ------- ------ ------- ------- ------
Net written premiums and policy fees.......... 43,213 55,214 66,900 8,082 33,399 35,401 4,277
Net change in unearned premium reserves....... (314) (248) (476) (58) 306 17 2
------- ------- ------- ------ ------- ------- ------
Net premiums earned and policy fees........... 42,899 54,966 66,424 8,025 33,705 35,418 4,279
------- ------- ------- ------ ------- ------- ------
Net investment income......................... 4,374 6,276 8,347 1,008 3,991 5,070 612
Net realized gains/(losses) on investments.... (23) (6) 266 32 684 691 83
Net unrealized gains/(losses) on investments.. 298 (322) (1,067) (129) (75) 280 34
Other income.................................. 827 293 338 41 121 122 15
------- ------- ------- ------ ------- ------- ------
Total revenues................................ 48,375 61,207 74,308 8,977 38,426 41,581 5,023
------- ------- ------- ------ ------- ------- ------
Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits...... (8,467) (10,099) (7,010) (847) (3,869) (4,580) (553)
Accident and health claims and claim
adjustment expenses........................ (2,767) (3,829) (4,053) (490) (1,959) (2,455) (297)
Increase in future life policyholder benefits (27,738) (33,121) (45,374) (5,482) (22,793) (23,192) (2,802)
Policyholder dividends and participation in
profits..................................... (7) (177) (641) (77) (310) (862) (104)
Amortization of deferred policy acquisition
costs....................................... (1,745) (3,024) (3,832) (463) (2,102) (2,648) (320)
Underwriting and policy acquisition costs..... (3,073) (2,176) (1,661) (201) (822) (708) (86)
Administrative expenses....................... (4,318) (5,100) (6,162) (744) (2,916) (3,005) (363)
Other operating expenses...................... (2,602) (1,110) (634) (77) (316) (704) (85)
Interest expense on bank borrowings........... (29) (5) (7) (1) (4) (5) (1)
Interest credited to policyholder contract
deposits.................................... (4,505) (5,799) (7,095) (857) (3,209) (4,109) (496)
Statutory insurance levy...................... (59) (64) (73) (9) (30) (38) (5)
------- ------- ------- ------ ------- ------- ------
Total benefits, claims and expenses........... (55,310) (64,504) (76,542) (9,247) (38,330) (42,306) (5,111)
------- ------- ------- ------ ------- ------- ------
Profit/(loss) before income tax expense and
minority interests.......................... (6,935) (3,297) (2,234) (270) 96 (725) (88)
Income tax expense............................ (14) (4) (14) (2) (3) (8) (1)
------- ------- ------- ------ ------- ------- ------
Profit/(loss) before minority interests....... (6,949) (3,301) (2,248) (272) 93 (733) (89)
Minority interests............................ (41) 6 (2) (0) (2) 19 2
------- ------- ------- ------ ------- ------- ------
Net profit/(loss)............................. (6,990) (3,295) (2,250) (272) 91 (714) (86)
======= ======= ======= ====== ======= ======= ======
U.S. GAAP
Revenues..................................... 48,375 61,207 74,308 8,977 38,426 41,581 5,023
Net profit/(loss)............................ (7,026) (3,336) (2,317) (280) 61 (556) (67)
Net profit/(loss) per share/(1)/............. (0.35) (0.17) (0.12) (0.01) 0.00 (0.03) (0.00)
Net profit/(loss) per ADS/(1)/............... (14.05) (6.67) (4.63) (0.56) 0.12 (1.11) (0.13)

Consolidated Balance Sheet Data
H.K. GAAP

Assets

Liabilities
Future life policyholder benefits................. 226,868 259,989 305,363 36,890 282,782 328,555 39,692
Policyholder contract deposits and other funds.... 89,373 105,609 156,273 18,879 139,575 210,975 25,487
Unearned premium reserves......................... 4,131 4,441 5,036 608 4,058 4,719 570
Reserves for claims and claim adjustment
expenses......................................... 716 867 879 106 1,010 910 110
Annuity and other insurance balances payable...... 4,029 6,362 8,057 973 8,257 7,987 965
Premiums received in advance...................... 735 1,481 1,767 213 1,231 1,860 225
Policyholder deposits............................. 694 629 592 72 609 570 69
Policyholder dividends payable.................... 2 177 688 83 390 1,599 193
Securities sold under agreements to repurchase.... 90 14,608 3,602 435 4,501 -- --
Bank borrowings................................... 921 379 313 38 325 311 38
Provision......................................... 73 330 445 54 388 460 55
Other liabilities................................. 3,489 4,206 4,716 570 4,967 4,800 580
Statutory insurance fund.......................... 1,132 1,215 1,337 162 1,269 1,399 169
-------- -------- -------- ------- -------- -------- -------
Total liabilities................................... 332,253 400,293 489,068 59,083 449,362 564,145 68,153
-------- -------- -------- ------- -------- -------- -------
Commitments and contingencies....................... -- -- -- -- -- -- --
Minority interests.................................. 169 163 165 20 164 146 18
Owners' equity...................................... (170,045) (172,348) (175,463) (21,197) (171,381) (176,353) (21,305)
-------- -------- -------- ------- -------- -------- -------
Total liabilities and equity........................ 162,377 228,108 313,770 37,906 278,145 387,938 46,866
======== ======== ======== ======= ======== ======== =======
U.S. GAAP
Total assets...................................... 162,307 227,997 313,592 37,884 278,004 387,918 46,864
Total liabilities................................. 332,253 400,293 489,068 59,083 449,362 564,145 68,153
Owners' equity.................................... (170,115) (172,459) (175,641) (21,219) (171,522) (176,373) (21,307)

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA

The unaudited pro forma consolidated financial information for the year
ended December 31, 2002, for the six-month periods ended June 30, 2002 and 2003
and as of June 30, 2003 has been prepared in accordance with H.K. GAAP and
gives effect to the restructuring, as if it had occurred at the start of the
year ended December 31, 2002 or at the start of the six-month periods ended
June 30, 2002 or 2003, for purposes of the pro forma profit and loss data, and
on June 30, 2003, for purposes of the pro forma consolidated balance sheet data.

The unaudited pro forma consolidated financial information is provided for
illustrative purposes only and does not necessarily represent what our
consolidated financial results actually would have been if the transactions had
in fact occurred on those dates and is not necessarily representative of our
financial results for any future periods. The notes to the pro forma
consolidated financial data contain a more detailed discussion of how the
adjustments described above are presented. The unaudited pro forma consolidated
financial information should be read in connection with "Operating and
Financial Review and Prospects" and the historical consolidated financial
statements and accompanying notes of China Life included elsewhere in this
prospectus.

Upon the approval of the State Council and the CIRC, we were formed on June
30, 2003 in connection with the restructuring by CLIC. The restructuring was
effected through a plan of restructuring, which was approved by the CIRC on
August 21, 2003, and a restructuring agreement we entered into with CLIC on
September 30, 2003, with retroactive effect to June 30, 2003. Pursuant to PRC
law and the restructuring agreement, the transferred policies were transferred
to us as of June 30, 2003; however, for accounting purposes the restructuring
is treated as having occurred on September 30, 2003.

Under PRC law and the restructuring agreement, the restructuring was
effective as of June 30, 2003, which we refer to in this prospectus as the
effective date. In connection with the restructuring:

. CLIC transferred to us (1) all long-term insurance policies (policies
having a term of more than one year from the date of issuance) issued on
or after June 10, 1999, having policy terms approved by or filed with the
CIRC on or after June 10, 1999 and either (i) recorded as a long-term
insurance policy as of June 30, 2003 in a database attached to the
restructuring agreement as an annex or (ii) having policy terms for group
supplemental medical insurance (fund type), (2) stand-alone short-term
policies (policies having a term of one year or less from the date of
issuance) issued on or after June 10, 1999 and (3) all riders
supplemental to the policies described in clauses (1) and (2) above,
together with the reinsurance contracts specified in an annex to the
restructuring agreement. We refer to these policies in this prospectus as
the "transferred policies". See "The Restructuring". All other insurance
policies were retained by CLIC. We refer to these policies as the
"non-transferred policies". We assumed all obligations and liabilities of
CLIC under the transferred policies. CLIC continues to be responsible for
its liabilities and obligations under the non-transferred policies
following the effective date. See "The Restructuring--Transfer of
Insurance Policies and Related Assets".

. CLIC's assets as of June 30, 2003 were divided between China Life and
CLIC in accordance with the restructuring agreement entered into between
CLIC and ourselves in connection with the restructuring. Premiums
receivable were allocated to the transferred and non-transferred policies
based on the specific policies to which they relate. Property, plant and
equipment and other operating assets were allocated based on the terms of
the restructuring agreement. Investments in respect of participating
policies were allocated to the transferred policies, since all
participating business has been transferred. Unlisted equity securities
and investment properties were allocated to CLIC. The remaining
investment assets, including term deposits, fixed maturity securities,
equity securities, repurchase agreements and cash and cash equivalents,
were allocated so as to ensure that the book value of China Life as of
June 30, 2003 was RMB 29,608 million, as determined under PRC valuation
regulations. This was equivalent to RMB 36,182 million as determined
under H.K. GAAP, due to differences between PRC GAAP and H.K. GAAP. The
proportions of each of these classes of assets allocated to CLIC and
ourselves were similar.

. CLIC agreed not to, directly or indirectly through its subsidiaries and
affiliates, participate, operate or engage in life, accident or health
insurance businesses and any other business in China which may compete
with our insurance business. CLIC also undertook (1) to refer to us any
corporate business opportunity that falls within our business scope and
which may directly or indirectly compete with our business and (2) to
grant us a right of first refusal, on the same terms and conditions, to
purchase any new business developed by CLIC. See "Relationship with
CLIC--Non-Competition Agreement".

. Substantially all of the management personnel and employees who were
employed by CLIC in connection with the transferred assets and businesses
were transferred to us. Some management and personnel remained with CLIC.
See "The Restructuring--Transfer of Insurance Policies and Related
Assets".

. CLIC retained the trademarks used in our business, including the "China
Life" name and "ball" logo and granted us and our branches a royalty-free
license to use these trademarks. CLIC and its subsidiaries and affiliates
will be entitled to use these trademarks, but CLIC may not license or
transfer these trademarks to other third parties. See "Relationship with
CLIC--Trademark License Agreement".

. CLIC's contracts with its agents and other intermediaries were
transferred to us. See "The Restructuring--Transfer of Insurance Policies
and Related Assets".

. We entered into various agreements under which we provide policy
administration services to CLIC for the non-transferred policies, manage
CLIC's investment assets and lease office space from CLIC for our branch
and field offices. See "Relationship with CLIC".

As a result of the transfer of assets and liabilities to us pursuant to the
restructuring, we would have had a pro forma owners' equity as of June 30, 2003
of RMB 36,182 million (US$4,371 million), as determined under H.K. GAAP. In
consideration of this transfer, we issued 20,000,000,000 domestic state-owned
shares to CLIC as of the effective date.

For the six months ended June 30, 2003
----------------------------------------------
Historical Adjustments Note Pro Forma Pro Forma
---------- ----------- ---- --------- ---------
RMB RMB RMB US$
(in millions)

Pro Forma Consolidated Profit and Loss Accounts Data
H.K. GAAP

Revenues
Gross written premiums and policy fees................... 36,091 (10,688) (a) 25,403 3,069
Less: premiums ceded to reinsurers....................... (690) -- (a) (690) (83)
------- ------- ------- ------
Net written premiums and policy fees..................... 35,401 (10,688) (a) 24,713 2,986
Net change in unearned premium reserves.................. 17 -- (a) 17 2
------- ------- ------- ------
Net premiums earned and policy fees...................... 35,418 (10,688) (a) 24,730 2,988
------- ------- ------- ------
Net investment income.................................... 5,070 (2,032) (b) 3,038 367
Net realized gains/(losses) on investments............... 691 (271) (b) 420 51
Net unrealized gains/(losses) on investments............. 280 (110) (b) 170 21
Other income............................................. 122 842 964 116
(49) (l)
869 (c)
22 (d)
------- ------- ------- ------
Total revenues........................................... 41,581 (12,259) 29,322 3,542
------- ------- ------- ------
Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits................. (4,580) 2,946 (e) (1,634) (197)
Accident and health claims and claim adjustment expenses (2,455) -- (e) (2,455) (297)
Increase in future life policyholder benefits........... (23,192) 10,638 (f) (12,554) (1,517)
Policyholder dividends and participation in profits...... (862) -- (e) (862) (104)
Amortization of deferred policy acquisition costs........ (2,648) -- (2,648) (320)
Underwriting and policy acquisition costs................ (708) 442 (g) (266) (32)
Administrative expenses.................................. (3,005) 175 (2,830) (342)
17 (k)
17 (i)
205 (h)
(64) (j)
Other operating expenses................................. (704) 505 (k) (199) (24)
Interest expense on bank borrowings...................... (5) 5 (k) -- --
Interest credited to policyholder contract deposits...... (4,109) 2,832 (e) (1,277) (154)
Statutory insurance levy................................. (38) -- (38) (5)
------- ------- ------- ------
Total benefits, claims and expenses...................... (42,306) 17,543 (24,763) (2,992)
------- ------- ------- ------
Profit/(loss) before income tax expense and minority
interests.............................................. (725) 5,284 4,559 551
Income tax expense....................................... (8) (1,406) (l) (1,414) (171)
------- ------- ------- ------
Profit/(loss) before minority interests.................. (733) 3,878 3,145 380
Minority interests....................................... 19 (19) (k) -- --
(17) (m) (17) (2)
------- ------- ------- ------
Net profit/(loss)........................................ (714) 3,842 3,128 378
======= ======= ======= ======
U.S. GAAP
Net profit.............................................. 3,128 378

For the six months ended June 30, 2002
------------------------------------
Historical Adjustments Note Pro Forma
---------- ----------- ---- ---------
(RMB in millions)

H.K. GAAP
Revenues
Gross written premiums and policy fees........................ 34,164 (10,860) (a) 23,304
Less: premiums ceded to reinsurers............................ (765) -- (a) (765)
------- ------- -------
Net written premiums and policy fees.......................... 33,399 (10,860) (a) 22,539
Net change in unearned premium reserves....................... 306 -- (a) 306
------- ------- -------
Net premiums earned and policy fees........................... 33,705 (10,860) (a) 22,845
------- ------- -------
Net investment income......................................... 3,991 (1,977) (b) 2,014
Net realized gains/(losses) on investments.................... 684 (337) (b) 347
Net unrealized gains/(losses) on investments.................. (75) 37 (b) (38)
Other income.................................................. 121 851 972
(58) (l)
892 (c)
17 (d)
------- ------- -------
Total revenues................................................ 38,426 (12,286) 26,140
------- ------- -------
Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits...................... (3,869) 2,753 (e) (1,116)
Accident and health claims and claim adjustment expenses..... (1,959) -- (e) (1,959)
Increase in future life policyholder benefits................ (22,793) 9,527 (f) (13,266)
Policyholder dividends and participation in profits........... (310) 2 (e) (308)
Amortization of deferred policy acquisition costs............. (2,102) -- (2,102)
Underwriting and policy acquisition costs..................... (822) 644 (g) (178)
Administrative expenses....................................... (2,916) 156 (2,760)
10 (k)
20 (i)
190 (h)
(64) (j)
Other operating expenses...................................... (316) 160 (k) (156)
Interest expense on bank borrowings........................... (4) 4 (k) --
Interest credited to policyholder contract deposits........... (3,209) 2,524 (e) (685)
Statutory insurance levy...................................... (30) -- (30)
------- ------- -------
Total benefits, claims and expenses........................... (38,330) 15,770 (22,560)
------- ------- -------
Profit/(loss) before income tax expense and minority interests 96 3,484 3,580
Income tax expense............................................ (3) (1,003) (l) (1,006)
------- ------- -------
Profit/(loss) before minority interests....................... 93 2,481 2,574
Minority interests............................................ (2) 2 (k) --
(11) (m) (11)
------- ------- -------
Net profit/(loss)............................................. 91 2,472 2,563
------- ------- -------
U.S. GAAP
Net profit................................................... 2,563

For the year ended December 31, 2002
----------------------------------------------
Historical Adjustments Note Pro Forma Pro Forma
---------- ----------- ---- --------- ---------
RMB RMB RMB US$
(in millions)

H.K. GAAP
Revenues
Gross written premiums and policy fees................... 68,769 (21,692) (a) 47,077 5,687
Less: premiums ceded to reinsurers....................... (1,869) 4 (a) (1,865) (225)
------- ------- ------- ------
Net written premiums and policy fees..................... 66,900 (21,688) (a) 45,212 5,462
Net change in unearned premium reserves.................. (476) 12 (a) (464) (56)
------- ------- ------- ------
Net premiums earned and policy fees...................... 66,424 (21,676) (a) 44,748 5,406
------- ------- ------- ------
Net investment income.................................... 8,347 (4,001) (b) 4,346 525
Net realized gains/(losses) on investments............... 266 (126) (b) 140 17
Net unrealized gains/(losses) on investments............. (1,067) 507 (b) (560) (68)
Other income............................................. 338 1,728 2,066 250
(106) (l)
1,792 (c)
42 (d)
------- ------- ------- ------
Total revenues........................................... 74,308 (23,568) 50,740 6,130
------- ------- ------- ------

Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits................. (7,010) 4,702 (e) (2,308) (279)
Accident and health claims and claim adjustment expenses (4,053) -- (e) (4,053) (490)
Increase in future life policyholder benefits........... (45,374) 20,455 (f) (24,919) (3,010)
Policyholder dividends and participation in profits...... (641) 3 (e) (638) (77)
Amortization of deferred policy acquisition costs........ (3,832) -- (3,832) (463)
Underwriting and policy acquisition costs................ (1,661) 1,106 (g) (555) (67)
Administrative expenses.................................. (6,162) 256 (5,906) (713)
20 (k)
35 (i)
328 (h)
(127) (j)
Other operating expenses................................. (634) 204 (k) (430) (52)
Interest expense on bank borrowings...................... (7) 7 (k) -- --
Interest credited to policyholder contract deposits...... (7,095) 5,527 (e) (1,568) (189)
Statutory insurance levy................................. (73) -- (73) (9)
------- ------- ------- ------
Total benefits, claims and expenses...................... (76,542) 32,260 (44,282) (5,350)
------- ------- ------- ------
Profit/(loss) before income tax expense and minority
interests.............................................. (2,234) 8,692 6,458 780
Income tax expense....................................... (14) (1,890) (l) (1,904) (230)
------- ------- ------- ------
Profit/(loss) before minority interests.................. (2,248) 6,802 4,554 550
Minority interests....................................... (2) 2 (k) -- --
(30) (m) (30) (4)
------- ------- ------- ------
Net profit/(loss)........................................ (2,250) 6,774 4,524 546
======= ======= ======= ======
U.S. GAAP
Net profit.............................................. 4,524 546

As of June 30, 2003
-----------------------------------------------
Historical Adjustments Note Pro Forma Pro Forma
---------- ----------- ---- --------- ---------
RMB RMB RMB US$
(in millions)

Pro Forma Consolidated Balance Sheet Data
H.K. GAAP

Assets

Investments
Fixed maturity securities........................ 82,017 (36,927) (n) 45,090 5,447
Equity securities................................ 14,797 (6,066) (n) 8,731 1,055
Term deposits.................................... 142,043 (44,480) (n) 97,563 11,786
Statutory deposits--restricted................... 992 3,008 (n) 4,000 483
Investments in associated companies.............. 1,993 (1,993) (n) -- --
Policy loans..................................... 136 (87) (n) 49 6
Securities purchased under agreements to resell.. 70,061 (23,724) (n) 46,337 5,598
Other............................................ 209 (209) (n) -- --
Cash and cash equivalents........................ 23,592 (12,910) (n) 10,682 1,290
320 (o) 320 39
-------- -------- ------- ------
Total investments................................. 335,840 (123,068) (n) 212,772 25,705
-------- -------- ------- ------
Other assets
Accrued investment income........................ 4,277 (1,559) (n) 2,718 328
Premiums receivable.............................. 3,282 (540) 2,742 396
Reinsurance assets............................... 971 -- 971 117
Deferred policy acquisition costs................ 21,282 -- 21,282 2,571
Property, plant and equipment, net of accumulated
depreciation................................... 18,610 (6,971) (n) 11,639 1,406
Other............................................ 3,676 (3,041) (n) 635 11
-------- -------- ------- ------
Total other assets................................ 52,098 (12,111) 39,987 4,831
-------- -------- ------- ------
Total assets...................................... 387,938 (135,179) 252,759 30,535
======== ======== ======= ======
Liabilities and equity
Future life policyholder benefits................ 328,555 (260,113) (p) 68,442 8,268
Policyholder contract deposits and other funds... 210,975 (80,551) (p) 130,424 15,756
Unearned premium reserves........................ 4,719 -- 4,719 570
Reserves for claims and claim adjustment expenses 910 -- 910 110
Other liabilities................................ 18,986 (10,463) (q) 8,523 1,030
Deferred tax..................................... -- 3,239 (r) 3,239 391
Commitments and contingencies.................... -- -- -- --
Minority interests............................... 146 (146) (n) -- --
320 (o) 320 39
Owners' equity................................... (176,353) 212,535 36,182 4,371
-------- -------- ------- ------
Total liabilities and equity...................... 387,938 (135,179) 252,759 30,535
======== ======== ======= ======
U.S. GAAP
Total investments................................ 212,772 25,705
Total assets..................................... 252,759 30,535
Total liabilities and equity..................... 252,759 30,535

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA

Pro Forma Consolidated Profit and Loss Accounts Data

(a) Reflects the exclusion of amounts attributable to the non-transferred
policies from the pro forma consolidated profit and loss accounts data.

(b) Income from investment properties and investments in associates retained
by CLIC in the restructuring has been excluded from net investment
income in the pro forma profit and loss accounts data. Other investment
income, including interest income and dividends, realized gains and
losses and unrealized gains and losses from investments held for trading
attributable to investments retained by CLIC in the restructuring, has
also been excluded. Cash and investment assets were divided between CLIC
and China Life based on a mechanism set forth in the restructuring
agreement entered into between CLIC and China Life in connection with
the restructuring. See "Relationship with CLIC". Average cash and
investment assets retained by CLIC for the year ended December 31, 2002
have been determined as if the restructuring had occurred on January 1,
2002. China Life's pro forma owners' equity on January 1, 2002 was
equivalent to the amount agreed to by CLIC and China Life in the
restructuring, and sufficient investments were assumed to be retained by
CLIC to result in pro forma equity of this amount. The adjustment for
investment income on these investments in the pro forma consolidated
profit and loss accounts data has been determined on the basis of the
percentage investment return on all of CLIC's cash and investment assets
for 2002.

(c) Reflects service fees to be paid by CLIC to China Life for the
administration of the non-transferred policies under a policy management
agreement to be entered into between CLIC and China Life in connection
with the restructuring. For each semi-annual period, the service fee is
equal to the sum of:

(i) the number of in force non-transferred policies that were within
their policy term as of the last day of the period, multiplied by RMB
8.0, with the number of policies in force for group insurance
policies being equal to the number of individuals covered by the
policies (excluding those whose policies have lapsed or matured), plus

(ii) 2.50% of the actual premiums and deposits in respect of such policies
collected during the semi-annual period.

See "Relationship with CLIC". The adjustment for the service fees
reflects the fees that would be paid under this agreement, as if the
agreement had been in effect on January 1, 2002.

(d) Reflects asset management fees to be paid by CLIC to the asset
management joint venture for the management of investment assets
retained by CLIC in the restructuring under an asset management
agreement between CLIC and the asset management joint venture in
connection with the restructuring. See "Relationship with CLIC". The
adjustment for the asset management fees reflects the fees that would be
paid under this agreement, as if the agreement had been in effect on
January 1, 2002.

(e) Reflects the exclusion of amounts attributable to the non-transferred
policies.

(f) Reflects the increase in future policyholder benefits attributable to
the non-transferred policies.

(g) Reflects the exclusion of underwriting and acquisition costs.

(h) Reflects the exclusion of depreciation expense for the fixed assets
retained by CLIC in the restructuring.

(i) Reflects the exclusion of staff costs for employees and management
remaining with CLIC in the restructuring.

(j) Reflects rental expenses to be paid by China Life to CLIC for the lease
of certain fixed assets from CLIC under a property leasing agreement to
be entered into between China Life and CLIC in connection with the
restructuring. See "Relationship with CLIC".

(k) Reflects the exclusion of income and expenses attributable to non-core
operations retained by CLIC in the restructuring.

(l) Pro forma income tax has been included in the pro forma profit and loss
accounts data based on the pro forma profit for the year. Since CLIC
will retain the benefit of tax losses carried forward, the tax provision
does not reflect any benefit in respect of those losses. In connection
with the restructuring, China Life has received confirmation from the
Ministry of Finance and the State Tax Bureau that certain expenses not
normally deductible under current PRC tax law can be deducted by China
Life in arriving at its taxable income for 2003. In the past, the
deductibility of these expenses had no impact on its tax charge or net
income because the business was loss-making. Taxation has been provided
for on pro forma income before tax using the statutory rate of 33% and
assuming that these expenses were deductible for the year ended December
31, 2002 and the six-month periods ended June 30, 2002 and 2003.

(m) Reflects CLIC's minority interests in the asset management joint venture.

Pro Forma Consolidated Balance Sheet Data

(n) CLIC's assets as of June 30, 2003 were divided between China Life and
CLIC in accordance with the restructuring agreement entered into between
CLIC and ourselves in connection with the restructuring. Premiums
receivable and deferred policy acquisition costs were allocated to the
transferred and non-transferred policies based on the specific policies
to which they relate. Property, plant and equipment and other operating
assets were allocated based on the terms of the restructuring agreement.
Investments in respect of participating policies were allocated to the
transferred policies, since all participating business has been
transferred. Unlisted equity securities and investment properties were
allocated to CLIC. The remaining investment assets, including term
deposits, fixed maturity securities, equity securities, repurchase
agreements and cash and cash equivalents, were allocated so as to ensure
that the book value of China Life as of June 30, 2003 was RMB 29.6
billion, as determined under PRC valuation regulations. This was
equivalent to RMB 36.2 billion as determined under H.K. GAAP, due to
differences between PRC GAAP and H.K. GAAP. The proportions of each of
these classes of assets allocated to CLIC and ourselves were similar.

(o) Reflects CLIC's minority interests in the asset management joint venture.

(p) Reflects the exclusion of reserves attributable to the non-transferred
policies.

(q) Reflects the exclusion of other liabilities and minority interests in
subsidiaries retained by CLIC in the restructuring.

(r) Deferred tax is provided in respect of the tax effect of differences
between the book and tax bases as of June 30, 2003 arising as a result
of the restructuring.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion and analysis in conjunction with
the audited consolidated financial statements and accompanying notes and the
Unaudited Pro Forma Consolidated Financial Data and accompanying notes included
elsewhere in this prospectus. For purposes of the following discussion,
references to our "predecessor" mean CLIC, as our predecessor company prior to
the restructuring, for the periods in question. In general, the financial
results discussed in this section relate to historical consolidated financial
data, including both the transferred policies and the non-transferred policies.
When financial results discussed in this section relate to the transferred
policies only or to our pro forma financial results, specific reference is made
to that fact.

Overview

Restructuring

We were formed in connection with CLIC's restructuring. The restructuring
was carried out to meet several objectives:

. To establish a modern corporate governance structure and more effective
management system.

. To enable us to capture the opportunities offered by the rapid growth of
China's insurance market and make us more competitive.

. To obtain greater access to the capital markets and enhance our growth
potential.

The restructuring was effected through a restructuring agreement entered
into with CLIC on September 30, 2003, with retroactive effect to June 30, 2003.
Pursuant to PRC law and the restructuring agreement, the transferred policies
were transferred to us as of June 30, 2003; however, for accounting purposes
the restructuring is treated as having occurred on September 30, 2003. As of
June 30, 2003, we assumed all obligations and liabilities of CLIC under the
transferred policies. CLIC continues to be responsible for its liabilities and
obligations under the non-transferred policies following the restructuring. The
business constituted by the policies and assets transferred to us and the
obligations and liabilities assumed by us and the business constituted by the
policies, assets, obligations and liabilities retained by CLIC were, prior to
the restructuring, under common management from a number of significant
aspects. Therefore, our historical financial statements for each of the three
years ended and as of December 31, 2000, 2001 and 2002 and for the six-month
periods ended and as of June 30, 2002 and 2003 present the financial results of
our predecessor company, CLIC.

Immediately following the restructuring, CLIC became our sole shareholder.
We have agreed to provide management and other services to CLIC, including the
administration of the run-off of the non-transferred policies, the management
of the investment assets retained by CLIC (through our asset management joint
venture described below) and various other services for CLIC, for which we will
be paid fees. For a description of the restructuring and the other arrangements
entered into in connection with the restructuring, see "The Restructuring" and
"Relationship with CLIC".

Overview of our business

We are the leading life insurance company in China. We provide a broad range
of insurance products, including individual life insurance, group life
insurance, accident insurance and health insurance products. We had more than
44 million individual and group life insurance policies, annuity contracts and
long-term health insurance policies in force as of June 30, 2003. We also offer
accident and short-term health insurance policies to individuals and groups.

We report our financial results according to the following three principal
business segments:

. Individual life insurance, which offers participating and
non-participating life insurance and annuities to individuals. Our
individual life insurance business comprises long-term products, meaning
products having a term of more than one year at the date of their
issuance.

. Group life insurance, which offers participating and non-participating
life insurance and annuities to companies and institutions. Our group
life insurance business comprises long-term products.

. Accident and health insurance, which offers accident insurance and health
insurance to individuals and groups. Our accident insurance business
comprises short-term products, meaning products having a term of one year
or less at the date of their execution. Our health insurance business
comprises both short-term products and long-term products.

In addition, an asset management joint venture established by us and CLIC,
manages our investment assets and, separately, substantially all of those of
CLIC, pursuant to two asset management agreements, one with us and one with
CLIC. Through this joint venture, we also intend to offer asset management
products and services to other insurance companies. See "Business--Asset
Management Business". We own 60% of the joint venture, with CLIC owning the
remaining 40%.

Financial overview of our business

The historical financial statements included beginning on page F-1 of this
prospectus represent the consolidated results of CLIC and its subsidiaries
(including both the transferred policies and the non-transferred policies).
These results are discussed on pages 73 to 90 of this prospectus.

On a pro forma basis after giving effect to the restructuring, we had total
gross written premiums and policy fees of RMB 47,077 million (US$5,687 million)
and net profit of RMB 4,524 million (US$547 million) in 2002 and total gross
written premiums and policy fees of RMB 25,403 million (US$3,069 million) and
net profit of RMB 3,128 million (US$378 million) for the six months ended June
30, 2003. Our principal business segments had the following pro forma results:

. Individual life insurance had pro forma total gross written premiums and
policy fees of RMB 37,662 million (US$4,550 million) in 2002 and RMB
20,370 million (US$2,461 million) for the six months ended June 30, 2003
and pro forma deposits of RMB 52,340 million (US$6,323 million) in 2002
and RMB 53,271 million (US$6,436 million) in the six months ended June
30, 2003, principally reflecting the continuing strong sales of our
participating products, particularly participating endowment products.

. Group life insurance had pro forma total gross written premiums and
policy fees of RMB 477 million (US$58 million) in 2002 and RMB 267
million (US$32 million) for the six months ended June 30, 2003 and pro
forma deposits of RMB 6,232 million (US$753 million) in 2002 and RMB
5,146 million (US$622 million) in the six months ended June 30, 2003,
principally reflecting a shift in the weighting of group products toward
investment-type products.

. Accident and health insurance had pro forma total gross written premiums
of RMB 8,938 million (US$1,080 million) in 2002 and RMB 4,766 million
(US$576 million) for the six months ended June 30, 2003, principally
reflecting stable premium levels and strong overall financial performance
in our accident insurance business and growth in premiums but weaker
overall results in our health insurance business.

The business of CLIC, our predecessor, was characterized by rapid growth of
premium income over the past several years, particularly due to increased sales
of participating products. Our historical results, which present the historical
results of our predecessor for the periods presented below, also reflect the
continuing performance of policies that were issued prior to June 10, 1999.
Many of these policies paid guaranteed fixed rates of return that, due to
declining interest rates, came to be significantly higher than the rates of
return on investment assets. This created a "negative spread", where the
investment return fell below the rate our predecessor had committed to pay on
those policies. See "Life Insurance Industry in China". The policies issued by
our predecessor on or after June 10, 1999, which have been transferred to us in
the restructuring, were priced at significantly lower guaranteed rates, in line
with the 2.50% cap established by the CIRC. We and CLIC have not incurred
negative spread on these policies, as the average investment returns we and
CLIC have been able to generate have been higher than the guaranteed rates.

Our predecessor did not prepare financial information in accordance with
H.K. GAAP or U.S. GAAP prior to the financial year ended December 31, 2000.
Accordingly, we first prepared financial information in accordance with H.K.
GAAP and U.S. GAAP as of January 1, 2000. As of this date, all assets and
liabilities were measured in accordance with the requirements of H.K. GAAP and
U.S. GAAP except that, as explained in note 3(m) to the consolidated financial
statements included in this prospectus, certain property on hand as of that
date was stated on the basis of a valuation performed as of January 1, 2000.
Hong Kong GAAP does not have specific guidance on the accounting treatment of
insurance contracts and we have adopted U.S. accounting rules in this regard in
the preparation of the financial information. Preparation of H.K. GAAP and U.S.
GAAP financial information as of January 1, 2000 required us to analyze
insurance contracts in force at December 31, 1999 between traditional insurance
contracts accounted for pursuant to the provisions of Statement of Financial
Accounting Standards No. 60 "Accounting and Reporting by Insurance Enterprises"
(SFAS 60), and investment-type contracts accounted for in accordance with the
provisions of Statement of Financial Accounting Standards No. 97 "Accounting
and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and
for the Realized Gains and Losses from the Sale of Investments" (SFAS 97). The
liability for policyholder account balances for contracts accounted for
pursuant to SFAS 97 was equal to the policy account values. Account values
consisted of an accumulation of gross premium payments less loadings for
expenses, mortality and profit plus credited interest. No asset in respect of
deferred policy acquisition costs was recorded for investment contracts issued
prior to June 10, 1999, since these contracts carried guaranteed interest rates
in excess of the investment return obtainable at December 31, 1999 and the
asset was therefore not considered recoverable. Interest continued to be
credited on these contracts at guaranteed rates which mainly ranged from 5.0%
up to 8.8% and up to 11.0% for a small number of policies, whereas CLIC's
investments yielded approximately 3.8% in 2002, 4.1% in 2001 and 3.8% in 2000.
As a result, the negative spread on these policies has continued to negatively
affect results attributable to these policies in the three years ended December
31, 2002 and six months ended June 30, 2003. Reserves in respect of these
policies, all of which were retained by CLIC in connection with the
restructuring, were RMB 80,551 million at June 30, 2003.

The liability for contracts accounted for pursuant to SFAS No. 60 was based
on best-estimate assumptions of investment returns, mortality, lapse and policy
administration expenses. As of the beginning of the year ended December 31,
2000 there was a premium deficiency in respect of our predecessor's aggregate
traditional insurance business in a loss making situation due to negative
spreads between the interest rate guaranteed to policyholders on policies
issued prior to June 10, 1999 and our predecessor's estimate of future
investment returns of 3.8% on this business. Accordingly, for policies issued
prior to June 10, 1999, the best estimate assumptions were based on our
predecessor's best estimate assumptions determined as of December 31, 1999,
with no provision for adverse deviation so as not to create future profits.
Mortality and morbidity rates, which vary by age of the insured, and lapse
rates, which vary by contract type, were based on expected experience at

December 31, 1999. This was based on the results of an analysis of our
predecessor's actual mortality, morbidity and lapse experience incurred in the
years 1999 through 2002. This experience was found to be comparable in all such
years. In setting the mortality assumption, mortality experience was compared
to and expressed as a percentage of the "CL" series of life tables. These
tables were compiled by the People's Insurance Company of China in 1994 and
1995 and issued by the People's Bank of China, which was the principal
regulatory authority of the insurance industry at the time. The tables are
based on policy samples drawn from 43 subsidiaries and branches and the
mortality experience of these sample policies during the period January 1, 1990
to December 31, 1993 were studied. Currently all life insurance companies in
China are required to use these tables for product pricing.

Factors Affecting Our Results of Operations

Revenues, expenses and profitability

We earn our revenues primarily from:

. insurance premiums from the sale of life insurance policies and annuity
contracts, including participating and non-participating policies and
annuity contracts with life contingencies, as well as accident and health
insurance products. Net premiums earned accounted for 82.6% of total
revenues in 2002 and 76.0% of total revenues for the six months ended
June 30, 2003.

. policy fees for investment-type contracts. Policy fees accounted for 6.7%
of total revenues in 2002 and 9.2% of total revenues for the six months
ended June 30, 2003.

. investment income and realized and, in some cases, unrealized gains and
losses from our investment assets. Net investment income and net realized
and unrealized gains and losses accounted for 10.2% of total revenues in
2002 and 14.5% of total revenues for the six months ended June 30, 2003.

In addition, following the restructuring, we receive service fees for policy
management services we provide to CLIC and, prior to incorporation of the asset
management joint venture, we received asset management fees for asset
management services we provided to CLIC. Since incorporation of the asset
management joint venture, CLIC pays asset management fees to the asset
management joint venture, which is a subsidiary of ours. See "Relationship with
CLIC--Policy Management Agreement".

Our operating expenses primarily include:

. insurance benefits provided to our policyholders, accident and health
claims and claim adjustment expenses;

. increases in future policyholder benefits;

. amortization of deferred policy acquisition costs;

. underwriting and policy acquisition costs;

. policyholder dividends and participation in profits;

. interest credited to policyholder contract deposits; and

. administrative and other expenses.

In addition, following the restructuring, we pay rent to CLIC on the
properties we lease from it.

Our profitability depends principally on our ability to price and manage
risk on insurance and annuity products, our ability to maximize the return on
investment assets, our ability to attract and retain customers, and our ability
to manage expenses. In particular, factors affecting our profitability include:

. our ability to design and distribute products and services and to
introduce new products which gain market acceptance on a timely basis;

. our ability to price our insurance and investment products at levels that
enable us to earn a margin over the costs of providing benefits and the
expense of acquiring customers and administering those products;

. our returns on investment assets;

. our mortality and morbidity experience;

. our persistency experience, which affects our ability to recover the cost
of acquiring new business over the lives of the contracts;

. our cost of administering insurance contracts and providing customer
services; and

. our ability to manage liquidity and credit risk in our investment
portfolio and to manage duration risk in our asset and policy portfolios
through asset-liability management.

In addition, other factors, such as competition, taxes, securities market
conditions and general economic conditions, affect our profitability.

We experience some seasonality in our revenues and expenses. We typically
experience lower levels of sales of products in the third quarter than in the
first half of the year, and typically experience higher levels of
administrative expenses in the second half of the year than the first. This is
because there are typically greater sales efforts made in the first half of the
year resulting in more policies being sold during this period. Promotional
expenses and performance-related bonuses based on the results of the first half
of the year are paid during the second half of the year, resulting in higher
administrative expenses. We expect these factors will affect our premiums and
deposits and administrative expenses for the second half of 2003. See
"Prospective Financial Information".

Interest rates

For many of our long-term life insurance and annuity products, we are
obligated to pay a minimum interest or crediting rate to our policyholders or
annuitants. These products expose us to the risk that changes in interest rates
may reduce our "spread", or the difference between the rate of return we are
able to earn on our investments intended to support our insurance obligations
and the amounts that we are required to pay under the policies. The minimum
rate we pay is established when the product is priced, subject to a cap set by
the CIRC and which may be adjusted from time to time. Currently, the CIRC cap
is 2.50%. If the rates of return on our investments fall below the minimum
rates we guarantee, our profitability would be adversely affected. An increase
in guaranteed rates caused by a rise in the CIRC cap may lead to an increase in
surrenders and withdrawals of our existing products which offer rates lower
than the new rates.

Interest rates also affect our returns on investment assets, a large
proportion of which is held in negotiated bank deposits and fixed maturity
securities. In a declining interest rate environment, interest rate changes
expose us to reinvestment risks. In a rising interest rate environment, higher
rates may yield greater interest income but also may generate unrealized
capital losses for fixed maturity securities designated as trading, causing us
to incur realized capital losses for securities we reinvest or requiring us to
take an impairment if the market value of fixed maturity securities declines
for an extended period.

Sustained levels of high or low interest rates also may affect the relative
popularity of our various products. For example, the recent popularity of our
participating products is partially driven by the protracted low interest

rate environment in China and the 2.50% cap set by the CIRC on the guaranteed
rates of return we may apply. The investment nature of the product, including
the enhanced yield by means of dividends, has proven to be attractive to
China's insurance buyers.

Investments

As an insurance company, we are limited by Chinese law and regulations in
the types of assets in which we may invest policyholder funds. As prescribed by
China's insurance law, we are limited to investing insurance premiums, deposits
and other funds we receive primarily in term deposits; fixed maturity
securities, including Chinese treasury bonds, Chinese government agency bonds
and corporate bonds issued by Chinese companies and meeting specified criteria;
and securities investment funds primarily invested in equity securities issued
by Chinese companies and traded on China's securities exchanges. We also may
participate in bond repurchase activities through domestic inter-bank
repurchase markets and repurchase exchange markets. We currently are prohibited
from investing in other securities without the CIRC's approval. However, we
understand that the CIRC is considering easing these restrictions in the
future. If the CIRC does so, this may permit us to invest in additional asset
classes such as mortgage-backed securities, infrastructure project financings,
foreign fixed-income securities and direct investment in China's securities
markets. See "Regulation--Insurance Company Regulation--Regulation of
investments". Our only material concentration risk relates to our investments
in Chinese government securities.

The limitations on the types of investments we are permitted to make affect
the investment returns we are able to generate and subject us to various risks
that we would not be subject to if we were able to invest in a wider array of
investments. In particular, the limited availability of long-duration
investment assets in the markets in which we invest has resulted in the
duration of our assets being shorter than that of our liabilities. We believe
that with the gradual easing of the investment restrictions imposed on
insurance companies in China, our ability to match the duration of our assets
to that of our liabilities will improve. We also seek to reduce the risk of
duration mismatch by focusing on product offerings whose maturity profiles are
in line with the duration of investments available to us in the prevailing
investment environment.

Our results can be materially affected by investment impairments, although
there has been no material impairment charge recorded in our consolidated
profit and loss accounts. The following table sets forth impairment charges,
which are included in net realized gains and losses, for the periods indicated.

For the six
For the year ended months ended
December 31, June 30,
- ----------------- -----------
2000 2001 2002 2002 2003
- ---- ---- ---- ---- ----
(RMB in millions)

Fixed maturity securities (28) -- (59) (36) (7)
Equity securities........ (3) (11) (2) -- --
--- --- --- --- --
Total................. (31) (11) (61) (36) (7)
=== === === === ==

The increase in impairments in 2002 related to a government bond deposited
with a local broker that encountered financial difficulties in 2002, resulting
in an impairment charge of RMB 36 million. This is an isolated case.

Non-trading securities were comprised of the following asset classes as of
June 30, 2003 and December 31, 2002.

As of December 31,
2002 As of June 30, 2003
- -------------------- --------------------
Cost or Cost or
amortized Estimated amortized Estimated
cost fair value cost fair value
- --------- ---------- --------- ----------
(RMB in millions)

Fixed maturity securities
Government bonds........ 49,661 50,979 58,754 59,836
Government agency bonds. 20,615 20,815 17,193 17,182
Corporate bonds......... 3,212 3,323 4,095 4,172
------ ------ ------ ------
Subtotal................ 73,488 75,117 80,042 81,190
------ ------ ------ ------
Equity securities
Common stocks, unlisted. 957 957 899 899
Funds................... 7,523 7,144 8,225 8,126
------ ------ ------ ------
Subtotal................ 8,480 8,101 9,124 9,025
------ ------ ------ ------
Total.................... 81,968 83,218 89,166 90,215
====== ====== ====== ======

CLIC had unrealized losses of RMB 44 million and RMB 228 million as of
December 31, 2001 and 2000, which were less than 1% of total investment assets
at those dates. These unrealized losses related primarily to valuation
adjustments to government bonds.

The following tables set forth the length of time that each class of
securities has continuously been in an unrealized loss position as of June 30,
2003 and December 31, 2002.

As of June 30, 2003 0-6 months 7-12 months 12-24 months Total
- ------------------- ---------- ----------- ------------ ------
(RMB in millions)

Fixed maturity securities
Unrealized losses.................................... (478) -- (19) (497)
Carrying amounts..................................... 33,170 -- 174 33,344
Unrealized losses as a percentage of carrying amounts 1.44% -- 10.92% 1.49%

Equity securities
Unrealized losses.................................... (105) -- -- (105)
Carrying amounts..................................... 5,671 -- -- 5,671
Unrealized losses as a percentage of carrying amounts 1.85% -- -- 1.85%

Total
Total unrealized losses.............................. (583) -- (19) (602)
Total carrying amounts............................... 38,841 -- 174 39,015
Unrealized losses as a percentage of carrying amounts 1.50% -- 10.92% 1.54%

0-6 7-12 12-24
As of December 31, 2002 months months months Total
- ----------------------- ------ ------ ------ ------
(RMB in millions)

Fixed maturity securities
Unrealized losses.................................... (472) (8) (2) (482)
Carrying amounts..................................... 25,078 1,187 13 26,278
Unrealized losses as a percentage of carrying amounts 1.88% 0.67% 15.38% 1.83%

Equity securities
Unrealized losses.................................... (382) -- -- (382)
Carrying amounts..................................... 6,261 -- -- 6,261
Unrealized losses as a percentage of carrying amounts 6.10% 6.10%

Total
Total unrealized losses.............................. (854) (8) (2) (864)
Total carrying amounts............................... 31,339 1,187 13 32,539
Unrealized losses as a percentage of carrying amounts 2.73% 0.67% 15.38% 2.66%

In determining whether a decline in value of a non-trading or
held-to-maturity security is other-than-temporary and an impairment charge
should be recorded in the income statement, our management considers a range of
factors about the security issuer and uses its best judgment in evaluating the
cause of the decline in the estimated fair value of the securities and in
assessing the prospects for near term recovery. Inherent in the evaluation are
assumptions and estimates about the operations of the issuer and its future
earnings potential. The actual results may differ from the assumptions and
estimates. We principally consider the following factors in making an
evaluation about impairment:

. the length of time and the extent to which the market value has been
below amortized cost;

. the potential for impairments of securities when the issuer is
experiencing significant financial difficulties; and

. considerations specific to an industry sector.

Should we conclude that an unrealized loss is other-than-temporary, the loss
is recorded in the income statement but there is no impact on owners' equity as
the securities are accounted for at estimated fair value, with unrealized
losses included in reserves until they are realized or determined to be
other-than-temporary. See "--Critical Accounting Policies".

As of June 30, 2003, CLIC's total investment assets were RMB 335,840 million
(US$40,572 million) and the investment yield for the six months ended June 30,
2003 was 1.7%. The investment yield for this period primarily reflected a shift
away from fixed maturity securities and toward lower-yielding resale
agreements, as well as a decline in prevailing market interest rates. As of
December 31, 2002, CLIC's total investment assets, before giving effect to the
restructuring, were RMB 266,463 million (US$32,191 million) and the investment
yield for the year ended December 31, 2002 was 3.8%. The investment yield for
this period primarily reflected a shift away from resale agreements, which have
a comparatively low yield, as well as poor conditions in the equity markets. As
of December 31, 2001, CLIC's total investment assets, before giving effect to
the restructuring, were RMB 188,869 million and the investment yield for the
year ended December 31, 2001 was 4.1%. The investment yield for this period
primarily reflected a comparatively high investment yield in the Chinese equity
markets that year. As of December 31, 2000, CLIC's total investment assets,
before giving effect to the restructuring, were RMB 129,998 million and the
investment yield for the year ended December 31, 2000 was 3.8%. The investment
yield for this period primarily reflected a relatively higher weighting of and
investment yield on equity securities and fixed maturity securities.

Mix of products

The following table sets forth, on a pro forma basis after giving effect to
the restructuring, premium and deposit information as of or for the years ended
December 31, 2000, 2001 and 2002 by type of product in our individual life
insurance business, group life insurance business and accident and health
insurance business.

Compound
As of or for the year ended annual
December 31, growth rate
------------------------- -----------
2000 2001 2002 2002 (2000-2002)
----- ------ ------ ----- -----------
RMB RMB RMB US$
(in millions)

Individual life insurance business

Whole life and term life insurance:
Gross written premiums............... 6,084 9,111 12,289 1,485 42.1%

Endowment:
Gross written premiums............... 4,351 11,925 18,169 2,195 104.3%
Deposits............................. 4,258 9,839 50,428 6,092 244.1%

Annuities:
Gross written premiums............... 1,481 1,883 3,129 378 45.4%
Deposits............................. 7,050 5,323 1,912 231 (47.9)%

Group life insurance business

Whole life and term life insurance:
Gross written premiums............... -- 985 344 42 --

Annuities:
Gross written premiums............... -- 53 -- -- --
Deposits............................. 3,912 5,698 6,229 753 26.2%

Accident and health insurance business

Accident insurance premiums.......... 6,277 5,097 5,174 625 (9.2)%
Health insurance premiums............ 1,116 2,687 3,764 455 83.7%

Our revenues and profitability are affected by changes in the mix of
products we offer. In recent years the Chinese insurance market has been moving
away from insurance policies offering fixed rates of return in favor of
participating and investment-related products, and we expect these trends to
continue. See "Life Insurance Industry in China--Industry Trends". Consistent
with these trends, participating life insurance and annuity products, which
were introduced by our predecessor in 2000, have been our fastest-growing
individual life insurance products.

Participating products tend to present us with less market risk, since we
have more flexibility to set the level of dividends and because participating
products are subject to guaranteed rates which are lower than those of
non-participating products. In addition, changes in interest rates have less of
an impact on their surrender rates than on those of non-participating policies.
Conversely, participating products tend to be less profitable for us than
non-participating products, largely because the terms of these contracts
effectively commit us to sharing a portion of our earnings from participating
products with our policyholders. Pursuant to guidelines issued by the CIRC, we
are required under participating products to pay to our policyholder dividends
which are no less than 70% of the distributable earnings from participating
products. However, participating products still provide us with attractive
profit contributions given the growing level of sales volume they produce.

Participating and other products classified as investment-type products also
affect our revenues, since only a portion of the payments we receive under them
are recorded in our consolidated profit and loss accounts as

policy fees, while the majority of the payments are recorded as deposit
liabilities on our balance sheet. For the six months ended June 30, 2003, total
deposits were RMB 61,082 million, an increase of 41.1% from RMB 43,289 million
in the same period in 2002. Although deposits are a measure of business volume
and contribute to our profitability, they are not reflected in our revenues.

Another factor affecting our revenue is the fact that a substantial amount
of the premiums we receive on many individual and group life insurance products
are made in single payments, rather than over the course of the policy. For the
six months ended June 30, 2003, 33% of total first-year gross written premiums
were from single premium products and in 2002, 48% of total first-year gross
written premiums were from single premium products. We believe that the
popularity of single premium products is in line with purchasing patterns and
demand in China.

Reinsurance

The amounts presented in the historical consolidated statements of income
for revenues and policyholder benefits are net of amounts ceded to reinsurers.
Under the PRC insurance law and CIRC's regulations, starting in 1996, our
predecessor was required to reinsure 20% of its accident and short-term health
insurance risks with China Reinsurance Company, or China Re, as statutory
reinsurer. Beginning in 2000, the insurance risks subject to statutory
reinsurance also covered long-term health insurance risks. The statutory
reinsurance requirement is now being phased out. At the beginning of 2003, the
percentage of accident and health insurance risks that our predecessor had to
reinsure decreased by 5%, from 20% to 15%, and it is scheduled to decrease by a
further 5% per year until it is phased out completely at the beginning of 2006.
We are also party to various reinsurance agreements with China Re for the
reinsurance of individual risks, group risks and defined blocks of business. As
of December 31, 2002, all of our predecessor's ceded premiums had been ceded to
China Re. We expect to continue to reinsure a portion of our mortality risk
with China Re, as well as with other reinsurers in the future.

Regulation

We operate in a highly regulated industry. Changes in regulation can have a
significant impact on our revenues, expenses and profitability. China's
insurance regulatory regime is undergoing significant changes toward a more
transparent regulatory process and a convergent movement toward international
standards. Among other things, recent changes to solvency requirements may
affect the amount of capital we are required to maintain. See "Regulation".

Critical Accounting Policies

The preparation of financial statements in conformity with H.K. GAAP
requires us to adopt accounting policies and make estimates and assumptions
that affect amounts reported in the consolidated financial statements. In
applying these accounting policies, we make subjective and complex judgments
that frequently require estimates about matters that are inherently uncertain.
Many of these policies, estimates and related judgments are common in the
insurance and financial services industries; others are specific to our
businesses and operations. The following sections discuss the accounting
policies applied in preparing our financial statements that we believe are most
dependent on the application of these judgments and estimates.

Insurance claims and reserves

Reserve for claims and claim adjustment expenses. These represent
liabilities for claims arising under short-term accident and health insurance
policies. Claims and claim adjustment expenses are charged to income as
incurred. Unpaid claims and claim adjustment expense reserves represent the
accumulation of estimates for ultimate claims and include provisions for claims
incurred but not yet reported. The reserves represent estimates of future
payments of reported and unreported claims for losses and related expenses with
respect to insured events that have occurred.

Future life policyholder benefits, policyholder contract deposits and other
funds. These represent liabilities for estimated future policyholder benefits
for traditional life insurance policies and investment contracts which are not
investment-linked. Future life policyholder benefits for traditional life
insurance policies are calculated using a net level premium valuation method
based on actuarial assumptions as to mortality, morbidity, persistency,
expenses and investment return, including a margin for adverse deviation. The
assumptions are established at the time a policy is priced and issued and
remain unchanged, except where premium deficiency occurs. Under policyholder
contract deposits, the policyholders' share of unrealized gains or losses in
respect of assets held by us, which may be paid to participating policyholders
in the future, is included in liabilities for future life policyholder benefits
offsetting the policyholders' share of the change in unrealized gains and
losses during the year.

Reserving is a complex process with inherent uncertainties, requiring the
application of informed estimates and judgments. We establish the liabilities
for obligations for future policy benefits and claims based on assumptions that
are uncertain when made. These amounts may vary from the estimated amounts,
particularly when those payments may not occur until well into the future. We
evaluate our liabilities periodically, based on changes in the assumptions used
to establish the liabilities, as well as our actual policy benefits and claims
results. We charge changes in our liabilities to expenses in the period the
liabilities are established or re-estimated. To the extent that trends in
actual claims results are less favorable than our underlying assumptions used
in establishing these liabilities, we may be required to increase our future
life policyholder benefits. This increase could have a material adverse effect
on our profitability and, if significant, our financial condition. Any
deterioration in our solvency levels could change our customers' and our
business associates' perception of our financial health, which in turn could
affect our sales, earnings and operations.

We establish liabilities for future life policyholder benefits on long
duration contracts in accordance with the provisions of Statement of Financial
Accounting Standards No. 60 "Accounting and Reporting by Insurance
Enterprises". In accordance with the provisions of this standard, the present
value of estimated future policy benefits less the present value of estimated
future net premiums to be collected from policyholders are accrued when premium
revenue is recognized. We base these estimates on the following assumptions:

. We base our assumptions for interest rates on estimates of future yields
on our investments. We use discount rates which increase from 3.8% to
5.0%, with a margin of provision for adverse deviation ranging from 0.25%
to 0.50%. In determining our interest rate assumptions, we consider past
investment experience, the current and future mix of our investment
portfolio and trends in yields. Actual investment yields in the years
ended December 31, 2000, 2001 and 2002 were 3.8%, 4.1% and 3.8%,
respectively. The interest rates we assume for future years reflect
increased investment in higher yielding securities, including corporate
bonds, longer duration securities and equity securities.

. We base our assumptions for mortality and morbidity rates, which vary by
age of the insured, and lapse rates, which vary by contract type, on
expected experience at date of contract issue plus, where applicable, a
margin for adverse deviation. The mortality, morbidity and lapse
assumptions used for 1999 through 2002 are based upon the results of an
analysis of our actual mortality, morbidity and lapse experience incurred
in those years. This mortality, morbidity and lapse experience was found
to be comparable in all years. In setting the mortality assumption,
mortality experience was compared to and expressed as a percentage of the
"CL" series of life tables. These tables were compiled by the People's
Insurance Company of China in 1994 and 1995 and issued by the People's
Bank of China, which was the principal regulatory authority of the
insurance industry at the time. The tables are based on policy samples
drawn from 43 subsidiaries and branches and the mortality experience of
these sample policies during the period January 1, 1990 to December 31,
1993 were studied. Currently all life insurance companies in China are
required to use these tables for product pricing. We experienced a stable
pattern of mortality, morbidity and lapse experience during the period
1999 to 2002. The aggregate number of deaths divided by the number of in
force policies at the beginning of the year was 0.122% in 2000, 0.124% in
2001 and 0.127% in 2002. The aggregate number of lapses and terminations
divided by the number of in force policies at the beginning of the year
was 9.30% in 2000, 9.56% in 2001 and 9.37% in 2002.

. We have based our assumptions for policy administration expenses on
expected unit costs plus, where applicable, a margin for adverse
deviation. We have based our assumptions for unit costs on an analysis of
actual experience. We have estimated the per-policy costs to be 2% of
premiums plus a fixed per-policy expense.

. Contracts in loss recognition use best-estimate assumptions of investment
returns, mortality, lapse and policy administration expenses, without
provision for adverse deviation. Mortality, morbidity, lapse and policy
administration costs assumptions are the same as for policies issued
since June 1999, except that there is no provision for adverse deviation
so as not to create future profits. A level 3.8% interest rate comprised
the best estimate of future investment returns on this business. All
contracts in loss recognition were retained by CLIC pursuant to the
restructuring.

. Policyholder account balances for investment-type contracts are equal to
the policy account values. Account values consist of an accumulation of
gross premium payments less loadings for expenses, mortality and profit
plus credited interest less withdrawals and other exits, in accordance
with the provisions of Statement of Financial Accounting Standards No. 97
"Accounting and Reporting by Insurance Enterprises for Certain
Long-Duration Contracts and for the Realized Gains and Losses from the
Sale of Investments". We determine the amount of policyholder dividends
to be paid annually. Policyholder dividends include life policyholders'
share of net income and unrealized appreciation of investments that are
required to be allocated by the insurance contract or by local insurance
regulations. Experience adjustments relating to future policyholder
benefits and policyholder contract deposits vary according to the type of
contract.

Valuation of investments

Fixed maturity securities which we have the ability and intent to hold to
maturity are classified as held-to-maturity. These investments are carried at
amortized cost. Fixed maturity securities and equity securities which we
purchase with the intention to resell in the near term are classified as
trading. Fixed maturity securities and equity securities other than those
classified as held-to-maturity or trading are classified as non-trading
securities. We regularly review the carrying value of our investments. If there
is objective evidence of other-than-temporary impairment and if the carrying
value of an investment is greater than the recoverable amount, the carrying
value is reduced through a charge to profit and loss accounts. The following
are the policies used:

Held-to-maturity securities. Held-to-maturity securities are stated in the
balance sheet at cost plus any discount or less any premium amortized to date.
The discount or premium is amortized over the period to maturity and included
as interest income or expense in the profit and loss accounts. Provision is
made when there is a diminution in value which is other-than-temporary. The
carrying amounts of individual held-to-maturity securities or holdings of the
same securities are reviewed at the balance sheet date in order to assess the
credit risk and whether the carrying amounts are expected to be recovered.
Provisions are made when carrying amounts are not expected to be recovered and
are recognized in the profit and loss accounts as an expense immediately.

Trading securities. Trading securities are carried at fair value. At each
balance sheet date, the net unrealized gains or losses arising from the changes
in fair value of trading securities are recognized in the profit and loss
accounts. Profits or losses on disposal of trading securities, representing the
difference between the net sales proceeds and the carrying amounts, are
recognized in the profit and loss accounts as they arise.

Non-trading securities. Investments which are held for non-trading
purposes are stated in the balance sheet at fair value at the balance sheet
date. Changes in the fair value of individual securities are credited or
debited to the investment revaluation reserve until the security is sold, or is
determined to be impaired. Upon disposal, the cumulative gains or losses
representing the difference between the net sales proceeds and the carrying
amount of the relevant securities, together with any surplus or deficit
transferred from the investment revaluation reserve, is reflected in the profit
and loss accounts. Where there is objective evidence that individual

investments are impaired, the cumulative losses recorded in the revaluation
reserve are transferred to the profit and loss accounts.

The fair value of our fixed maturity securities and equity securities is
determined as follows:

Fixed maturity securities. For listed securities, fair value is based upon
quoted market prices. For securities traded on the over-the-counter market,
fair value is based on the average prices observed in transactions in the
period 30 days before and 15 days after the period end. We do not currently
hold any unlisted, untraded fixed maturity securities.

Equity securities. Fair value for closed-end funds is based on quoted
market prices. Fair value for open-end funds is based on the net asset value
per unit of these funds as published daily by their fund managers. Unlisted
common stocks are generally carried at cost as a reasonable estimate of their
fair value unless there is evidence that fair value is materially different
from cost.

The assessment of whether other-than-temporary impairments have occurred is
based on management's case-by-case evaluation of the underlying reasons for the
decline in fair value. Management considers a wide range of factors about the
security issuer and uses its best judgment in evaluating the cause of the
decline in the estimated fair value of the security and in assessing the
prospects for near-term recovery. Inherent in management's evaluation of the
security are assumptions and estimates about the operations of the issuer and
its future earnings potential. In particular, the determination of fair values
for securities where there are no quoted market values is based on valuation
methodologies, securities we deem to be comparable and assumptions deemed
appropriate given the circumstances. The use of different methodologies and
assumptions may have a material effect on the estimated fair value amounts.

Valuation of fixed assets

In general, property, plant and equipment is stated at historical cost less
accumulated depreciation and accumulated impairment loss. However, some
property, plant and equipment on hand as of January 1, 1997 was acquired by our
predecessor as a result of the prior restructuring in 1996 of People's
Insurance Company of China, a state-owned enterprise. Our predecessor is unable
to obtain historical cost information for assets which were transferred to it
in that restructuring. As a result, this property, plant and equipment has been
stated at deemed cost based on a valuation performed as of January 1, 2000,
rather than at historical cost less depreciation, which is the method required
by U.S. GAAP. We have not been able to quantify the effect of the difference in
accounting treatment because we do not have available to us sufficiently
detailed historical cost records relating to these assets. The fair market
value recorded in the opening balance sheet as of January 1, 2000 has been
carried forward as the deemed acquisition cost relating to these assets, for
purposes of H.K. GAAP and U.S. GAAP.

Deferred policy acquisition costs

The costs of acquiring new business including commissions, underwriting and
policy issue expenses, which vary with and are directly related to the
production of new business, are deferred and amortized as described below.
Deferred policy acquisition costs are subject to recoverability testing at the
time of policy issue and at the end of each accounting period. Future
investment income is taken into account in assessing recoverability.

Deferred policy acquisition costs for traditional life insurance and annuity
policies are amortized over the expected life of the contracts as a constant
percentage of expected premiums. Expected premiums are estimated at the date of
policy issue and are applied consistently throughout the life of the contract
unless premium deficiency occurs.

Deferred policy acquisition costs for investment-type contracts are
amortized over the expected life of the contracts based on a constant rate of
the present value of estimated gross profits expected to be realized over the

life of the contract. Estimated gross profits include expected amounts to be
assessed for mortality, administration, investment return and surrender less
benefit claims in excess of policyholder balances, administrative expenses and
interest credited. Estimated gross profits are revised regularly and the
interest rate used to compute the present value of revised estimates of
expected gross profits is the latest revised rate applied to the remaining
benefit period. If there is a change in our estimates, the deviations of actual
results from estimated experiences are reflected in the profit and loss
accounts.

Revenue recognition

Recognition of premiums is carried out pursuant to guidelines which require
the use of informed judgments. Premiums from traditional life insurance
contracts, including participating contracts and annuity policies with life
contingencies, are recognized as revenues when due from policyholders. Benefits
and expenses are provided against such revenues to recognize profits over the
estimated life of the policies. Moreover, for single premium and limited pay
policies, premiums are recorded as revenues when due with profit recognized in
income in a constant relationship to the insurance in force or, for annuities,
the amount of expected benefit payments.

Premiums from the sale of accident and health insurance policies are
recorded when written and are recorded to revenues on a pro-rata basis over the
term of the related policy coverage. However, for those contracts for which the
period of risk differs significantly from the policy period, premiums are
recognized over the period of risk in proportion to the amount of insurance
protection provided. The unearned premium reserves represent the portion of the
premiums written relating to the unexpired terms of coverage.

Amounts collected as premiums from investment-type contracts are recorded as
deposits. Revenue from these contracts consists of policy fees charged against
the deposit amount for the cost of insurance, administration fees and gains on
surrenders during the period. Policy benefits and claims that are charged to
expenses include benefit claims incurred in the period in excess of related
policyholder contract deposits and interest credited to policyholder contract
deposits.

Consolidated Results of Operations

We present in this "Operating and Financial Review and Prospects"
information and discussion regarding selected income and expense items from the
consolidated historical profit and loss accounts included in this prospectus
for the periods indicated. This discussion covers the financial results of our
predecessor for the periods in question as well as, for some line items,
financial information attributable to the policies transferred to us in the
restructuring. Amounts attributable to the transferred policies are derived
from these consolidated historical financial statements and reflect amounts
directly attributable to those policies.

Since the consolidated financial statements contained in this prospectus and
the following discussion regarding the financial results of our predecessor
include the financial performance and assets and liabilities associated with
both the operations transferred to us in the restructuring, as well as the
assets, liabilities and operations retained by our predecessor, they will not
necessarily be indicative of our future earnings, cash flows or financial
position as a stand-alone company. Historical performance is not necessarily
representative of our financial results for any future periods.

Revenues
Net written premiums and policy fees.......... 43,213 55,214 66,900 8,082 33,399 35,401 4,277
Net change in unearned premium reserves....... (314) (248) (476) (58) 306 17 2
------- ------- ------- ------ ------- ------- ------
Net premiums earned and policy fees........... 42,899 54,966 66,424 8,025 33,705 35,418 4,279
------- ------- ------- ------ ------- ------- ------
Net investment income......................... 4,374 6,276 8,347 1,008 3,991 5,070 612
Net realized gains/(losses) on investments.... (23) (6) 266 32 684 691 83
Net unrealized gains/(losses) on investments.. 298 (322) (1,067) (129) (75) 280 34
Other income.................................. 827 293 338 41 121 122 15
------- ------- ------- ------ ------- ------- ------
Total revenues................................ 48,375 61,207 74,308 8,977 38,426 41,581 5,023
------- ------- ------- ------ ------- ------- ------

Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits...... (8,467) (10,099) (7,010) (847) (3,869) (4,580) (553)
Accident and health claims and claim
adjustment expenses........................ (2,767) (3,829) (4,053) (490) (1,959) (2,455) (297)
Increase in future life policyholder benefits (27,738) (33,121) (45,374) (5,482) (22,793) (23,192) (2,802)
Policyholder dividends and participation in
profits..................................... (7) (177) (641) (77) (310) (862) (104)
Amortization of deferred policy acquisition
costs....................................... (1,745) (3,024) (3,832) (463) (2,102) (2,648) (320)
Underwriting and policy acquisition costs..... (3,073) (2,176) (1,661) (201) (822) (708) (86)
Administrative expenses....................... (4,318) (5,100) (6,162) (744) (2,916) (3,005) (363)
Other operating expenses...................... (2,602) (1,110) (634) (77) (316) (704) (85)
Interest expense on bank borrowings........... (29) (5) (7) (1) (4) (5) (1)
Interest credited to policyholder contract
deposits.................................... (4,505) (5,799) (7,095) (857) (3,209) (4,109) (496)
Statutory insurance levy...................... (59) (64) (73) (9) (30) (38) (5)
------- ------- ------- ------ ------- ------- ------
Total benefits, claims and expenses........... (55,310) (64,504) (76,542) (9,247) (38,330) (42,306) (5,111)
------- ------- ------- ------ ------- ------- ------
Profit/(loss) before income tax expense and
minority interests.......................... (6,935) (3,297) (2,234) (270) 96 (725) (88)
Income tax expense............................ (14) (4) (14) (2) (3) (8) (1)
------- ------- ------- ------ ------- ------- ------
Profit/(loss) before minority interests....... (6,949) (3,301) (2,248) (272) 93 (733) (89)
Minority interests............................ (41) 6 (2) (0) (2) 19 2
------- ------- ------- ------ ------- ------- ------
Net profit/(loss)............................. (6,990) (3,295) (2,250) (272) 91 (714) (86)
======= ======= ======= ====== ======= ======= ======

The following tables provide a breakdown of the main revenue and expense
items directly attributable to the non-transferred policies and the transferred
policies. Because the CIRC reduced the maximum guaranteed rate payable to
policyholders to 2.50% on June 10, 1999 for policies issued after that date, we
have, since that time, monitored our policy performance by considering the
non-transferred policies and the transferred policies separately. Following the
restructuring only the transferred policies will be part of our company.

For the six months ended June 30, 2003
---------------------------------------
Amounts Amounts
attributable to attributable to
non-transferred transferred
policies policies Total
--------------- --------------- -------
(RMB in millions)

Net premiums earned and policy fees...................... 10,688 24,730 35,418
Deposits................................................. 2,665 58,417 61,082
Insurance benefits and claims
Life insurance death and other benefits................. (2,946) (1,634) (4,580)
Accident and health claims and claim adjustment expenses -- (2,455) (2,455)
Increase in future life policyholder benefits........... (10,638) (12,554) (23,192)
------- ------- -------
Subtotal................................................ (13,584) (16,643) (30,227)

For the six months ended June 30, 2002
---------------------------------------
Amounts Amounts
attributable to attributable to
non-transferred transferred
policies policies Total
--------------- --------------- -------
(RMB in millions)

Net premiums earned and policy fees...................... 10,860 22,845 33,705
Deposits................................................. 2,663 40,626 43,289
Insurance benefits and claims
Life insurance death and other benefits................. (2,753) (1,116) (3,869)
Accident and health claims and claim adjustment expenses -- (1,959) (1,959)
Increase in future life policyholder benefits........... (9,527) (13,266) (22,793)
------- ------- -------
Subtotal................................................ (12,280) (16,341) (28,621)

For the year ended December 31, 2002
---------------------------------------
Amounts Amounts
attributable to attributable to
non-transferred transferred
policies policies Total
--------------- --------------- -------
(RMB in millions)

Net premiums earned and policy fees...................... 21,676 44,748 66,424
Deposits................................................. 6,002 58,572 64,574
Insurance benefits and claims
Life insurance death and other benefits................. (4,702) (2,308) (7,010)
Accident and health claims and claim adjustment expenses -- (4,053) (4,053)
Increase in future life policyholder benefits........... (20,455) (24,919) (45,374)
------- ------- -------
Subtotal................................................ (25,157) (31,280) (56,437)

For the year ended December 31, 2001
---------------------------------------
Amounts Amounts
attributable to attributable to
non-transferred transferred
policies policies Total
--------------- --------------- -------
(RMB in millions)

Net premiums earned and policy fees...................... 23,158 31,808 54,966
Deposits................................................. 6,464 20,868 27,332
Insurance benefits and claims
Life insurance death and other benefits................. (9,047) (1,052) (10,099)
Accident and health claims and claim adjustment expenses -- (3,829) (3,829)
Increase in future life policyholder benefits........... (16,046) (17,075) (33,121)
------- ------- -------
Subtotal................................................ (25,093) (21,956) (47,049)

For the year ended December 31, 2000
---------------------------------------
Amounts Amounts
attributable to attributable to
non-transferred transferred
policies policies Total
--------------- --------------- -------
(RMB in millions)

Net premiums earned and policy fees...................... 23,605 19,294 42,899
Deposits................................................. 7,855 15,220 23,075
Insurance benefits and claims
Life insurance death and other benefits................. (8,069) (398) (8,467)
Accident and health claims and claim adjustment expenses (1) (2,766) (2,767)
Increase in future life policyholder benefits........... (18,252) (9,486) (27,738)
------- ------- -------
Subtotal................................................ (26,322) (12,650) (38,972)

Six Months Ended June 30, 2003 Compared with Six Months Ended June 30, 2002

Net premiums earned and policy fees

Net premiums earned and policy fees increased by RMB 1,713 million, or 5.1%,
to RMB 35,418 million in the six months ended June 30, 2003 from RMB 33,705
million in the six months ended June 30, 2002. This increase was primarily due
to increases in net premiums earned and policy fees in the individual life
insurance business, in particular from sales of whole life products and in
policy fees, and the health insurance business, commensurate with the strong
growth in this market overall in China.

Net premiums earned and policy fees attributable to the transferred policies
increased by RMB 1,885 million, or 8.3%, to RMB 24,730 million in the six
months ended June 30, 2003 from RMB 22,845 million in the six months ended June
30, 2002. This increase was primarily due to the same reasons as for the
business as a whole. Net premiums earned from participating products (all of
which are attributable to the transferred policies) decreased by RMB 1,514
million, or 21.2%, to RMB 5,626 million in the six months ended June 30, 2003
from RMB 7,140 million in the six months ended June 30, 2002. This decrease was
primarily due to a shift toward products which are classified as investment
products. Of total net premiums earned in the six months ended June 30, 2003
and attributable to the transferred policies, RMB 2,123 million was
attributable to single premium products and RMB 15,055 million was attributable
to regular premium products (including both first-year and renewal premiums).
Of total net premiums earned in the six months ended June 30, 2002 and
attributable to the transferred policies, RMB 5,073 million was attributable to
single premium products and RMB 11,819 million was attributable to regular
premium products.

Individual life insurance business

Net premiums earned and policy fees from the individual life insurance
business increased by RMB 929 million, or 3.1%, to RMB 30,956 million in the
six months ended June 30, 2003 from RMB 30,027 million in the six months ended
June 30, 2002. This increase was primarily due to an increase in sales of whole
life products and growth in policy fees. These were offset in part by a
decrease in sales of endowment products due to a shift toward participating
endowment products, which are classified as investment products.

Net premiums earned and policy fees from the individual life insurance
business attributable to the transferred policies increased by RMB 1,020
million, or 5.3%, to RMB 20,370 million in the six months ended June 30, 2003
from RMB 19,350 million in the six months ended June 30, 2002. This increase
was primarily due to the same reasons as for the individual life insurance
business as a whole.

Group life insurance business

Net premiums earned and policy fees from the group life insurance business
decreased by RMB 44 million, or 10.7%, to RMB 369 million in the six months
ended June 30, 2003 from RMB 413 million in the six months ended June 30, 2002.
This decrease was primarily due to a shift away from whole life products and
annuity products in favor of products which are classified as investment
products.

Net premiums earned and policy fees from the group life insurance business
attributable to the transferred policies decreased by RMB 34 million, or 11.0%,
to RMB 267 million in the six months ended June 30, 2003 from RMB 301 million
in the six months ended June 30, 2002. This decrease was primarily due to the
same reason as for the group life insurance business as a whole.

Accident and health insurance business

Net premiums earned from the accident and health insurance business
increased by RMB 828 million, or 25.4%, to RMB 4,093 million in the six months
ended June 30, 2003 from RMB 3,265 million in the six months ended June 30,
2002. Gross written premiums from the accident insurance business decreased by
RMB 89 million, or 3.6%, to RMB 2,359 million in the six months ended June 30,
2003 from RMB 2,448 million in the six months ended June 30, 2002 and gross
written premiums from the health insurance business increased by RMB 1,131
million, or 88.6%, to RMB 2,407 million in the six months ended June 30, 2003
from RMB 1,276 million in the six months ended June 30, 2002. These changes
were primarily due to strong growth in premiums from sales of short-term health
and supplemental medical insurance. Sales of accident insurance have remained
relatively flat in recent years, in line with the market overall.

Net premiums earned from the accident and health insurance business
attributable to the transferred policies increased by RMB 899 million, or
28.1%, to RMB 4,093 million in the six months ended June 30, 2003 from RMB
3,194 million in the six months ended June 30, 2002. Gross written premiums
from the accident insurance business attributable to the transferred policies
decreased by RMB 38 million, or 1.6%, to RMB 2,359 million in the six months
ended June 30, 2003 from RMB 2,397 million in the six months ended June 30,
2002 and gross written premiums from the health insurance business attributable
to the transferred policies increased by RMB 1,151 million, or 91.6%, to RMB
2,407 million in the six months ended June 30, 2003 from RMB 1,256 million in
the six months ended June 30, 2002. These changes were primarily due to the
same reasons as for the accident and health insurance business as a whole.

Net investment income

Net investment income increased by RMB 1,079 million, or 27.0%, to RMB 5,070
million in the six months ended June 30, 2003 from RMB 3,991 million in the six
months ended June 30, 2002. This increase was primarily due to an overall
increase in investment assets.

As of June 30, 2003, total investment assets were RMB 335,840 million and
the investment yield for the six months ended June 30, 2003 was 1.7%.

Net realized gains/losses on investments

Net realized gains on investments increased by RMB 7 million, or 1.0%, to
RMB 691 million in the six months ended June 30, 2003 from RMB 684 million in
the six months ended June 30, 2002. This change was primarily due to higher net
realized gains on debt securities, offset in part by lower net realized gains
on securities investment funds.

Net unrealized gains/losses on investments

We reflect unrealized gains or losses on investments designated as trading
in current period income. Net unrealized gains were RMB 280 million in the six
months ended June 30, 2003, compared to net unrealized losses on investments of
RMB 75 million in the six months ended June 30, 2002. This change reflected
unrealized gains on securities investment funds as of June 30, 2003 resulting
from favorable conditions in the equity markets in the first six months of 2003.

Deposits and policy fees

Deposits are gross additions to policyholder contract deposits. Total
deposits increased by RMB 17,793 million, or 41.1%, to RMB 61,082 million in
the six months ended June 30, 2003 from RMB 43,289 million in the six months
ended June 30, 2002. Policy fees increased by RMB 681 million, or 21.7%, to RMB
3,819 million in the six months ended June 30, 2003 from RMB 3,138 million in
the six months ended June 30, 2002. These increases were primarily due to
increased sales of participating products in both the individual life insurance
business and group life insurance business.

Total deposits attributable to the transferred policies increased by RMB
17,791 million, or 43.8%, to RMB 58,417 million in the six months ended June
30, 2003 from RMB 40,626 million in the six months ended June 30, 2002. Policy
fees attributable to the transferred policies increased by RMB 700 million, or
25.4%, to RMB 3,459 million in the six months ended June 30, 2003 from RMB
2,759 million in the six months ended June 30, 2002. These increases were
primarily due to increased sales of participating products in both the
individual life insurance business and group life insurance business. Total
deposits from participating products (all of which are attributable to the
transferred policies) increased by RMB 17,169 million, or 45.7%, to RMB 54,712
million in the six months ended June 30, 2003 from RMB 37,543 million in the
six months ended June 30, 2002. Total policy fees from participating products
increased by RMB 692 million, or 34.5%, to RMB 2,696 million in the six months
ended June 30, 2003 from RMB 2,004 million in the six months ended June 30,
2002.

Individual life insurance business

Deposits in the individual life insurance business increased by RMB 15,336
million, or 38.3%, to RMB 55,350 million in the six months ended June 30, 2003
from RMB 40,014 million in the six months ended June 30, 2002. Policy fees from
the individual life insurance business increased by RMB 669 million, or 22.5%,
to RMB 3,641 million in the six months ended June 30, 2003 from RMB 2,972
million in the six months ended June 30, 2002. These increases were primarily
due to increased sales of participating endowment products.

Deposits in the individual life insurance business attributable to the
transferred policies increased by RMB 15,907 million, or 42.6%, to RMB 53,271
million in the six months ended June 30, 2003 from RMB 37,364 million in the
six months ended June 30, 2002. Policy fees from the individual life insurance
business attributable to the transferred policies increased by RMB 693 million,
or 25.8%, to RMB 3,378 million in the six months ended June 30, 2003 from RMB
2,685 million in the six months ended June 30, 2002. These increases were
primarily due to increased sales of participating endowment products.

Group life insurance business

Deposits in the group life insurance business increased by RMB 2,457
million, or 75.0%, to RMB 5,732 million in the six months ended June 30, 2003
from RMB 3,275 million in the six months ended June 30, 2002. Policy fees from
the group life insurance business increased by RMB 12 million, or 7.2%, to RMB
178 million in the six months ended June 30, 2003 from RMB 166 million in the
six months ended June 30, 2002. These increases were primarily due to increased
sales of participating annuity products.

Deposits in the group life insurance business attributable to the
transferred policies increased by RMB 1,884 million, or 57.8%, to RMB 5,146
million in the six months ended June 30, 2003 from RMB 3,262 million in the six
months ended June 30, 2002. Policy fees from the group life insurance business
attributable to the transferred policies increased by RMB 7 million, or 11.0%,
to RMB 81 million in the six months ended June 30, 2003 from RMB 74 million in
the six months ended June 30, 2002. These increases were primarily due to
increased sales of participating annuity products.

Accident and health insurance business

There are no deposits in our accident and health insurance business.

Insurance benefits and claims

Insurance benefits and claims, net of amounts ceded through reinsurance,
increased by RMB 1,606 million, or 5.6%, to RMB 30,227 million in the six
months ended June 30, 2003 from RMB 28,621 million in the six months ended June
30, 2002. This increase was primarily due to increases in insurance benefits
and claims in the individual life insurance business and health insurance
business. Life insurance death and other benefits increased by RMB 711 million,
or 18.4%, to RMB 4,580 million in the six months ended June 30, 2003 from RMB
3,869 million in the six months ended June 30, 2002. This increase was
primarily due to an increase in the number of policies in force. Life insurance
death and other benefits as a percentage of gross written premiums and policy
fees were 12.7% in the six months ended June 30, 2003, remaining fairly stable
as compared with 11.3% in the six months ended June 30, 2002.

Insurance benefits and claims, net of amounts ceded through reinsurance,
attributable to the transferred policies increased by RMB 302 million, or 1.8%,
to RMB 16,643 million in the six months ended June 30, 2003 from RMB 16,341
million in the six months ended June 30, 2002. This increase was primarily due
to an increase in insurance benefits and claims in the health insurance
business. Insurance benefits and claims, net of amounts ceded through
reinsurance, attributable to participating products (all of which are
attributable to the transferred policies) decreased by RMB 1,185 million, or
15.7%, to RMB 6,375 million in the six months ended June 30, 2003 from RMB
7,560 million in the six months ended June 30, 2002. Of these insurance
benefits and claims attributable to participating products, life insurance
death and other benefits increased to RMB 162 million in the six months ended
June 30, 2003 from RMB 27 million in the six months ended June 30, 2002 and the
increase in future life policyholder benefits decreased by RMB 1,320 million,
or 17.5%, to RMB 6,213 million in the six months ended June 30, 2003 from
RMB 7,533 million in the six months ended June 30, 2002.

Individual life insurance business

Insurance benefits and claims for the individual life insurance business
increased by RMB 980 million, or 3.7%, to RMB 27,191 million in the six months
ended June 30, 2003 from RMB 26,211 million in the six months ended June 30,
2002. This increase was primarily due to the increase in business volume during
the period. Of these insurance benefits and claims, life insurance death and
other benefits increased by RMB 498 million, or 14.5%, to RMB 3,925 million in
the six months ended June 30, 2003 from RMB 3,427 million in the six months
ended June 30, 2002 and the increase in future life policyholder benefits rose
by RMB 482 million, or 2.1%, to RMB 23,266 million in the six months ended June
30, 2003 from RMB 22,784 million in the six months ended June 30, 2002.

Insurance benefits and claims for the individual life insurance business
attributable to the transferred policies decreased by RMB 167 million, or 1.2%,
to RMB 13,929 million in the six months ended June 30, 2003 from RMB 14,096
million in the six months ended June 30, 2002. This decrease was primarily due
to a shift in product mix away from endowment products and toward whole life
products, which have lower reserve requirements than endowment products. Of
these insurance benefits and claims, life insurance death and other benefits
increased by RMB 414 million, or 45.0%, to RMB 1,335 million in the six months
ended June 30, 2003 from RMB 921 million in the six months ended June 30, 2002
and the increase in future life policyholder benefits decreased by RMB 581
million, or 4.4%, to RMB 12,594 million in the six months ended June 30, 2003
from RMB 13,175 million in the six months ended June 30, 2002.

Group life insurance business

Insurance benefits and claims for the group life insurance business
increased by RMB 140 million, or 31.7%, to RMB 581 million in the six months
ended June 30, 2003 from RMB 441 million in the six months ended June 30, 2002.
This increase was primarily due to the continuing effects of negative spread
among the non-transferred policies and increased surrenders of non-transferred
policies subject to negative spread. Of these insurance benefits and claims,
life insurance death and other benefits increased by RMB 223 million, or 51.6%,
to RMB 655 million in the six months ended June 30, 2003 from RMB 432 million
in the six months ended June 30, 2002 and future life policyholder benefits
decreased by RMB 74 million in the six months ended June 30, 2003, compared
with an increase of RMB 9 million in the six months ended June 30, 2002.

Insurance benefits and claims for the group life insurance business
attributable to the transferred policies decreased by RMB 17 million, or 6.2%,
to RMB 259 million in the six months ended June 30, 2003 from RMB 276 million
in the six months ended June 30, 2002. This decrease was primarily due to the
decrease in business volume during the period. Of these insurance benefits and
claims, life insurance death and other benefits increased by RMB 114 million,
or 61.6%, to RMB 299 million in the six months ended June 30, 2003 from RMB 185
million in the six months ended June 30, 2002 and future life policyholder
benefits decreased by RMB 40 million in the six months ended June 30, 2003,
compared with an increase of RMB 91 million in the six months ended June 30,
2002.

Accident and health insurance business

Insurance benefits and claims for the accident and health insurance business
increased by RMB 486 million, or 24.7%, to RMB 2,455 million in the six months
ended June 30, 2003 from RMB 1,969 million in the six months ended June 30,
2002. All of these amounts were attributable to the transferred policies. This
increase was primarily due to the increase in business volume in the health
insurance business during the period. Of these insurance benefits and claims,
accident and health claims and claim adjustment expenses increased by RMB 496
million, or 25.3%, to RMB 2,455 million in the six months ended June 30, 2003
from RMB 1,959 million in the six months ended June 30, 2002 and life insurance
death and other benefits (comprised of long-term health benefits) were nil in
the six months ended June 30, 2003, compared to RMB 10 million in the six
months ended June 30, 2002.

Policyholder dividends and participation in profits

Policyholder dividends and participation in profits increased by RMB 552
million, or 178.1%, to RMB 862 million in the six months ended June 30, 2003
from RMB 310 million in the six months ended June 30, 2002. Virtually all of
these amounts were attributable to the transferred policies because our
predecessor only began to sell participating products in 2000. This increase
was primarily due to an increase in the overall amount of participating
policies in force.

Amortization of deferred policy acquisition costs

Amortization of deferred policy acquisition costs reflects the amortization
of deferred policy acquisition costs attributable to the transferred policies.
The majority of acquisition costs attributable to the transferred policies are
deferrable. Amortization of deferred policy acquisition costs increased by RMB
546 million, or 26.0%, to RMB 2,648 million in the six months ended June 30,
2003 from RMB 2,102 million in the six months ended June 30, 2002. This
increase was primarily due to the increase in business volume during the period.

Underwriting and policy acquisition costs

Underwriting and policy acquisition costs primarily reflect acquisition
costs attributable to non-transferred policies in the individual life insurance
business and group life insurance business, as well as acquisition costs in the
accident and health insurance business. Underwriting and policy acquisition
costs decreased by RMB 114 million, or 13.9%, to RMB 708 million in the six
months ended June 30, 2003 from RMB 822 million in the six months ended June
30, 2002. Underwriting and policy acquisition costs were 2.0% of net premiums
earned and policy fees in the six months ended June 30, 2003, compared with
2.4% in the six months ended June 30, 2002.

Of this amount, underwriting and policy acquisition costs in the individual
life insurance business and group life insurance business together decreased by
RMB 162 million, or 23.4%, to RMB 530 million in the six months ended June 30,
2003 from RMB 692 million in the six months ended June 30, 2002. This decrease
was primarily due to declining commissions attributable to the non-transferred
policies, since commissions generally decrease as policies are renewed in
successive years. Underwriting and policy acquisition costs in the accident and
health insurance business increased by RMB 48 million, or 36.9%, to RMB 178
million in the six months ended June 30, 2003 from RMB 130 million in the six
months ended June 30, 2002, primarily due to the increase in business volume
during the period.

Administrative expenses

Administrative expenses include the non-deferrable portion of policy
acquisition costs attributable to the transferred policies, as well as
compensation and other administrative expenses. Administrative expenses
increased by RMB 89 million, or 3.1%, to RMB 3,005 million in the six months
ended June 30, 2003 from RMB 2,916 million in the six months ended June 30,
2002. This increase was primarily due to the increase in business volume.

Other operating expenses

Other operating expenses, which primarily consist of employee housing
benefits, expenses of any non-core businesses (which include investments in
property, hotels and other operations through subsidiaries) and legal and
regulatory costs, increased by RMB 388 million, or 122.8%, to RMB 704 million
in the six months ended June 30, 2003 from RMB 316 million in the six months
ended June 30, 2002. This increase was primarily due to a revaluation of
properties and an impairment taken on fixed assets.

Interest credited to policyholder contract deposits

Interest credited to policyholder contract deposits increased by RMB 900
million, or 28.0%, to RMB 4,109 million in the six months ended June 30, 2003
from RMB 3,209 million in the six months ended June 30, 2002. This increase was
primarily due to an increase in the total policyholder account balance.

Interest credited to policyholder contract deposits attributable to the
transferred policies increased by RMB 592 million, or 86.4%, to RMB 1,277
million in the six months ended June 30, 2003 from RMB 685 million in the six
months ended June 30, 2002. This increase was primarily due to an increase in
the total

policyholder account balance. Interest credited to participating policyholder
contract deposits (all of which are attributable to the transferred policies)
increased by RMB 590 million, or 159.5%, to RMB 960 million in the six months
ended June 30, 2003 from RMB 370 million in the six months ended June 30, 2002.

Income tax

Income tax expense was RMB 8 million in the six months ended June 30, 2003,
compared to RMB 3 million in the six months ended June 30, 2002. All of these
amounts were attributable to income taxes incurred by non-core businesses. No
other income tax was incurred in the six months ended June 30, 2003, due to
operating losses. In connection with the restructuring, we have received
confirmation from the Ministry of Finance and the State Tax Bureau that certain
expenses not normally deductible under current PRC tax law can be deducted by
us in arriving at our taxable income for 2003. In the past, the deductibility
of these expenses had no impact on our tax charge or net income because we were
loss-making. The Ministry of Finance and State Tax Bureau will review the
deductibility of these expenses on an annual basis, and will determine the
level of deductibility based on such factors as our profitability and
productivity.

Net profit/loss

For the reasons set forth above, net loss was RMB 714 million in the six
months ended June 30, 2003, compared to a net profit of RMB 91 million in the
six months ended June 30, 2002.

Individual life insurance business

Net loss in the individual life insurance business was RMB 499 million in
the six months ended June 30, 2003, compared to a net loss of RMB 254 million
in the six months ended June 30, 2002. This result was primarily due to the
continuing effects of negative spread among the non-transferred policies.

Group life insurance business

Net loss in the group life insurance business was RMB 1,007 million in the
six months ended June 30, 2003, an increase from a net loss of RMB 493 million
in the six months ended June 30, 2002. This change was primarily due to the
continuing effects of negative spread among the non-transferred policies.

Accident and health insurance business

Net profit in the accident and health insurance business increased by RMB
319 million, or 38.9%, to RMB 1,140 million in the six months ended June 30,
2003 from RMB 821 million in the six months ended June 30, 2002. This change
was primarily due to an increase in business volume.

Year Ended December 31, 2002 Compared with Year Ended December 31, 2001

Net premiums earned and policy fees

Net premiums earned and policy fees increased by RMB 11,458 million, or
20.8%, to RMB 66,424 million in 2002 from RMB 54,966 million in 2001. This
increase was primarily due to increased premiums from individual life insurance
products, particularly endowment products, as well as increased premiums from
accident and health products. This increase was offset in part by a decrease in
net premiums earned and policy fees from group life insurance products.

Net premiums earned and policy fees attributable to the transferred policies
increased by RMB 12,940 million, or 40.7%, to RMB 44,748 million in 2002 from
RMB 31,808 million in 2001. This increase was primarily due to increased
premiums from individual life insurance products, particularly endowment
products,

as well as increased premiums from accident and health products. This increase
was offset in part by a decrease in net premiums earned and policy fees from
group life insurance products. Net premiums earned from participating products
were RMB 14,548 million in 2002, an increase of 112.1% from RMB 6,859 million
in 2001. Of total net premiums earned in 2002 and attributable to the
transferred policies, RMB 8,896 million was attributable to single premium
products and RMB 25,035 million was attributable to regular premium products
(including both first-year and renewal premiums). Of total net premiums earned
in 2001 and attributable to the transferred policies, RMB 5,941 million was
attributable to single premium products and RMB 18,016 million was attributable
to regular premium products.

Individual life insurance business

Net premiums earned and policy fees from the individual life insurance
business increased by RMB 11,331 million, or 23.8%, to RMB 58,902 million in
2002 from RMB 47,571 million in 2001. This increase was primarily due to a
substantial increase in sales of endowment products and growth in policy fees,
particularly those generated by participating endowment products, as well as a
substantial increase in sales of whole life products and the introduction and
rapid growth of products sold through bank channels.

Net premiums earned and policy fees from the individual life insurance
business attributable to the transferred policies increased by RMB 12,856
million, or 51.8%, to RMB 37,662 million in 2002 from RMB 24,806 million in
2001. This increase was primarily due to a substantial increase in sales of
endowment products and growth in policy fees, as well as a substantial increase
in sales of whole life products and the introduction and rapid growth of
products sold through bank channels.

Group life insurance business

Net premiums earned and policy fees from the group life insurance business
decreased by RMB 601 million, or 44.5%, to RMB 749 million in 2002 from RMB
1,350 million in 2001. This decrease was primarily due to a redeployment of the
direct sales force to meet the demand for individual participating products,
which impacted sales of group products, as well as a shift in the weighting of
group products toward investment-type products.

Net premiums earned and policy fees from the group life insurance business
attributable to the transferred policies decreased by RMB 608 million, or
56.0%, to RMB 477 million in 2002 from RMB 1,085 million in 2001. This decrease
was primarily due to a redeployment of the direct sales force to meet the
demand for individual participating products, as well as a shift in the
weighting of group products toward investment-type products.

Accident and health insurance business

Net premiums earned from the accident and health insurance business
increased by RMB 728 million, or 12.0%, to RMB 6,773 million in 2002 from RMB
6,045 million in 2001. Gross written premiums from the accident insurance
business increased by RMB 77 million, or 1.5%, to RMB 5,273 million in 2002
from RMB 5,196 million in 2001 and gross written premiums from the health
insurance business increased by RMB 1,094 million, or 39.8%, to RMB 3,845
million in 2002 from RMB 2,751 million in 2001. These changes were primarily
due to an increase in sales of health insurance products following recent
reforms designed to promote the health insurance system. Sales of accident
insurance products have remained relatively stable in recent years, reflecting
the trend in the overall accident insurance market in China in those periods.

Net premiums earned from the accident and health insurance business
attributable to the transferred policies increased by RMB 692 million, or
11.7%, to RMB 6,609 million in 2002 from RMB 5,917 million in 2001. Gross
written premiums from the accident insurance business attributable to the
transferred policies increased by RMB 77 million, or 1.5%, to RMB 5,174 million
in 2002 from RMB 5,097 million in 2001 and gross written premiums from the
health insurance business attributable to the transferred policies increased by
RMB 1,077

million, or 40.1%, to RMB 3,764 million in 2002 from RMB 2,687 million in 2001.
These increases were primarily due to an increase in sales of health insurance
products following recent reforms designed to promote the health insurance
system. Sales of accident insurance products have remained relatively stable in
recent years, reflecting the trend in the overall accident insurance market in
China in those periods.

Net investment income

Net investment income increased by RMB 2,071 million, or 33.0%, to RMB 8,347
million in 2002 from RMB 6,276 million in 2001. This increase was primarily due
to an overall increase in investment assets, particularly negotiated bank
deposits, fixed maturity securities and securities investment funds, as well as
a shift away from resale agreements, which have a comparatively low investment
yield. These factors were offset in part by poor conditions in the equity
markets, which led to a fall in dividend income from equity investments in
securities investment funds.

As of December 31, 2002, total investment assets were RMB 266,463 million
and the investment yield for the year ended December 31, 2002 was 3.8%. As of
December 31, 2001, total investment assets were RMB 188,869 million and the
investment yield for the year ended December 31, 2001 was 4.1%.

Net realized gains/losses on investments

Net realized gains on investments were RMB 266 million in 2002, compared to
net realized losses on investments of RMB 6 million in 2001. This change was
primarily due to net realized gains in 2002 of RMB 446 million on fixed
maturity securities, offset in part by net realized losses of RMB 180 million
on equity securities in securities investment funds.

Net unrealized gains/losses on investments

We reflect unrealized gains or losses on investments designated as trading
in current period income. Net unrealized losses on investments increased by RMB
745 million, or 231.4%, to RMB 1,067 million in 2002 from RMB 322 million in
2001. The results in both 2002 and 2001 were due to a steep fall in the equity
markets, which adversely impacted the value of equity investments in closed-end
securities funds.

Deposits and policy fees

Deposits are gross additions to policyholder contract deposits. Total
deposits increased by RMB 37,242 million, or 136.3%, to RMB 64,574 million in
2002 from RMB 27,332 million in 2001. Policy fees increased by RMB 2,193
million, or 77.8%, to RMB 5,010 million in 2002 from RMB 2,817 million in 2001.
These increases were primarily due to an increase in deposits in both the
individual life insurance business and the group life insurance business.

Total deposits attributable to the transferred policies increased by RMB
37,704 million, or 180.7%, to RMB 58,572 million in 2002 from RMB 20,868
million in 2001. Policy fees attributable to the transferred policies increased
by RMB 2,274 million, or 117.6%, to RMB 4,208 million in 2002 from RMB 1,934
million in 2001. These increases were primarily due to an increase in deposits
in both the individual life insurance business, and the group life insurance
business. Total deposits from participating products increased by RMB 42,866
million, or 450.1%, to RMB 52,390 million in 2002 from RMB 9,524 million in
2001. Total policy fees from participating products increased to RMB 2,563
million in 2002 from RMB 306 million in 2001.

Individual life insurance business

Deposits in the individual life insurance business increased by RMB 36,794
million, or 171.0%, to RMB 58,308 million in 2002 from RMB 21,514 million in
2001. Policy fees from the individual life insurance business

increased by RMB 2,086 million, or 81.9%, to RMB 4,633 million in 2002 from RMB
2,547 million in 2001. These increases were primarily due to a substantial
increase in sales of participating endowment products, which our predecessor
began selling nationwide in the second half of 2001, as well as increased
policy fees from investment products, particularly new participating endowment
products. Policy fees increased at a lower rate than the growth of deposits
because of a relatively larger increase in participating products, which
generate lower policy fees than other products.

Deposits in the individual life insurance business attributable to the
transferred policies increased by RMB 37,178 million, or 245.2%, to RMB 52,340
million in 2002 from RMB 15,162 million in 2001. Policy fees from the
individual life insurance business attributable to the transferred policies
increased by RMB 2,188 million, or 116.0%, to RMB 4,075 million in 2002 from
RMB 1,887 million in 2001. These increases were primarily due to a substantial
increase in sales of participating endowment products, as well as increased
policy fees from investment products. Policy fees increased at a lower rate
than the growth of deposits because of a relatively larger increase in
participating products.

Group life insurance business

Deposits in the group life insurance business increased by RMB 448 million,
or 7.7%, to RMB 6,266 million in 2002 from RMB 5,818 million in 2001. Policy
fees from the group life insurance business increased by RMB 107 million, or
39.6%, to RMB 377 million in 2002 from RMB 270 million in 2001. These increases
were due to a shift in the weighting of group products toward investment-type
products and an increase in the total outstanding amount of such products.

Deposits in the group life insurance business attributable to the
transferred policies increased by RMB 526 million, or 9.2%, to RMB 6,232
million in 2002 from RMB 5,706 million in 2001. Policy fees from the group life
insurance business attributable to the transferred policies increased by RMB 86
million, or 183.0%, to RMB 133 million in 2002 from RMB 47 million in 2001.
These increases were due to a shift in the weighting of group products toward
investment-type products and an increase in the total outstanding amount of
such products.

Accident and health insurance business

There are no deposits in our accident and health insurance business.

Insurance benefits and claims

Insurance benefits and claims, net of amounts ceded through reinsurance,
increased by RMB 9,388 million, or 20.0%, to RMB 56,437 million in 2002 from
RMB 47,049 million in 2001. This increase was primarily due to an increase in
insurance benefits in the individual life insurance business. Life insurance
death and other benefits decreased by RMB 3,089 million, or 30.6%, to RMB 7,010
million in 2002 from RMB 10,099 million in 2001 and, as a percentage of gross
written premiums and policy fees, decreased to 10.2% in 2002 from 17.8% in
2001. These decreases were principally due to payments made in 2001 in respect
of certain types of products sold in 1998 which require payments to be made
every three years. Fewer of these products were sold in 1999 because CLIC
stopped selling these products in June 1999 when the CIRC capped the maximum
guaranteed rate of return at 2.50%. Payments in respect of the 1998 products
were RMB 3,670 million in 2001, compared with payments of RMB 986 million in
2002 in respect of the 1999 products.

Insurance benefits and claims, net of amounts ceded through reinsurance,
attributable to the transferred policies increased by RMB 9,323 million, or
42.5%, to RMB 31,279 million in 2002 from RMB 21,956 million in 2001. This
increase was primarily due to an increase in insurance benefits in the
individual life insurance business. Insurance benefits and claims, net of
amounts ceded through reinsurance, attributable to participating products
increased by RMB 7,889 million, or 129.6%, to RMB 13,975 million in 2002 from
RMB 6,086 million in 2001. Of these insurance benefits and claims attributable
to participating products, life insurance death and

other benefits increased to RMB 132 million in 2002 from RMB 26 million in 2001
and the increase in future life policyholder benefits increased by RMB 7,783
million, or 128.4%, to RMB 13,843 million in 2002 from RMB 6,060 million in
2001.

Individual life insurance business

Insurance benefits and claims for the individual life insurance business
increased by RMB 9,228 million, or 22.2%, to RMB 50,739 million in 2002 from
RMB 41,511 million in 2001. This increase was primarily due to an increase in
business volume during the period. Of these insurance benefits and claims, life
insurance death and other benefits decreased by RMB 3,488 million, or 39.9%, to
RMB 5,252 million in 2002 from RMB 8,740 million in 2001 and the increase in
future life policyholder benefits rose by RMB 12,716 million, or 38.8%, to RMB
45,487 million in 2002 from RMB 32,771 million in 2001.

Insurance benefits and claims for the individual life insurance business
attributable to the transferred policies increased by RMB 9,609 million, or
55.9%, to RMB 26,797 million in 2002 from RMB 17,188 million in 2001. This
increase was primarily due to an increase in business volume during the period.

Group life insurance business

Insurance benefits and claims for the group life insurance business
decreased by RMB 76 million, or 4.5%, to RMB 1,622 million in 2002 from RMB
1,698 million in 2001. This decrease was smaller in magnitude than the decrease
in premiums, primarily due to the continuing effects of negative spread from
investment-type contracts among the non-transferred policies. Of these
insurance benefits and claims, life insurance death and other benefits
increased by RMB 387 million, or 28.7%, to RMB 1,735 million in 2002 from RMB
1,348 million in 2001 and future life policyholder benefits decreased by RMB
113 million in 2002, compared with an increase of RMB 350 million in 2001.

Insurance benefits and claims for the group life insurance business
attributable to the transferred policies decreased by RMB 520 million, or
56.0%, to RMB 409 million in 2002 from RMB 929 million in 2001. This decrease
was primarily due to the change in business volume during the period.

Accident and health insurance business

Insurance benefits and claims for the accident and health insurance business
increased by RMB 236 million, or 6.1%, to RMB 4,076 million in 2002 from RMB
3,840 million in 2001. Of these amounts, accident and health claims and claim
adjustment expenses increased by RMB 224 million, or 5.9%, to RMB 4,053 million
in 2002 from RMB 3,829 million in 2001 and life insurance death and other
benefits (comprised of long-term health benefits) increased by RMB 12 million,
or 109.1%, to RMB 23 million in 2002 from RMB 11 million in 2001. These changes
were primarily due to more favorable claims experience, which made insurance
benefits and claims increase more slowly than premiums during the period.

Insurance benefits and claims for the accident and health insurance business
attributable to the transferred policies increased by RMB 234 million, or 6.1%,
to RMB 4,073 million in 2002 from RMB 3,839 million in 2001. This increase was
smaller in magnitude than the increase in premiums, primarily due to more
favorable claims experience.

Policyholder dividends and participation in profits

Policyholder dividends and participation in profits increased by RMB 464
million, or 262.1%, to RMB 641 million in 2002 from RMB 177 million in 2001.
Virtually all of these amounts were attributable to the transferred policies
because our predecessor only began to sell participating products in 2000. This
increase was primarily due to an increase in the overall amount of
participating policies in force, offset in part by a decline in dividend rates.

Amortization of deferred policy acquisition costs

Amortization of deferred policy acquisition costs reflects the amortization
of deferred policy acquisition costs attributable to the transferred policies.
The majority of acquisition costs attributable to the transferred policies are
deferrable. Amortization of deferred policy acquisition costs increased by RMB
808 million, or 26.7%, to RMB 3,832 million in 2002 from RMB 3,024 million in
2001. This increase was primarily due to the increase in business volume during
the period.

Underwriting and policy acquisition costs

Underwriting and policy acquisition costs primarily reflect acquisition
costs attributable to non-transferred policies in the individual life insurance
business and group life insurance business, as well as acquisition costs in the
accident and health insurance business. Underwriting and policy acquisition
costs decreased by RMB 515 million, or 23.7%, to RMB 1,661 million in 2002 from
RMB 2,176 million in 2001. Underwriting and policy acquisition costs were 2.5%
of net premiums earned and policy fees in 2002, compared with 4.0% in 2001.

Of this amount, underwriting and policy acquisition costs in the individual
life insurance business and group life insurance business together decreased by
RMB 656 million, or 34.2%, to RMB 1,260 million in 2002 from RMB 1,916 million
in 2001. This decrease was primarily due to declining commissions attributable
to the non- transferred policies, since commissions generally decrease as
policies are renewed in successive years. Underwriting and policy acquisition
costs in the accident and health insurance business increased by RMB 141
million, or 54.2%, to RMB 401 million in 2002 from RMB 260 million in 2001.
This increase was primarily due to the increase in business volume during the
period.

Administrative expenses

Administrative expenses include the non-deferrable portion of policy
acquisition costs attributable to the transferred policies, as well as
compensation and other administrative expenses. Administrative expenses
increased by RMB 1,062 million, or 20.8%, to RMB 6,162 million in 2002 from RMB
5,100 million in 2001. This increase was primarily due to growth in the
business and the use of performance-related salaries, which increased
compensation costs.

Other operating expenses

Other operating expenses, which primarily consist of employee housing
benefits, expenses of any non-core businesses (which includes investments in
property, hotels and other operations through subsidiaries) and legal and
regulatory costs, decreased by RMB 476 million, or 42.9%, to RMB 634 million in
2002 from RMB 1,110 million in 2001. This decrease was primarily due to reduced
losses on sales of employee housing, which has been phased out in accordance
with PRC law, as well as a continuing reduction in the activities of operating
subsidiaries in non-core businesses.

Interest credited to policyholder contract deposits

Interest credited to policyholder contract deposits increased by RMB 1,296
million, or 22.3%, to RMB 7,095 million in 2002 from RMB 5,799 million in 2001.
This increase was primarily due to an increase in the total policyholder
account balance. There is no interest credited to policyholders in the accident
and health insurance business.

Interest credited to policyholder contract deposits attributable to the
transferred policies increased by RMB 918 million, or 141.2%, to RMB 1,568
million in 2002 from RMB 650 million in 2001. This increase was primarily due
to an increase in the total policyholder account balance. Interest credited to
participating policyholder contract deposits increased to RMB 922 million in
2002 from RMB 48 million in 2001.

Income tax

Income tax expense was RMB 14 million in 2002, compared to RMB 4 million in
2001. All of these amounts were attributable to income taxes incurred by
non-core businesses. No other income tax was incurred in 2002 due to operating
losses.

Net profit/loss

For the reasons set forth above, net loss was RMB 2,250 million in 2002, an
improvement from a net loss of RMB 3,295 million in 2001.

Individual life insurance business

Net loss in the individual life insurance business was RMB 1,070 million in
2002, an improvement from a net loss of RMB 2,338 million in 2001. This result
was primarily due to the continuing effects of negative spread from
investment-type contracts among the non-transferred policies, offset by an
increase in business volume.

Group life insurance business

Net loss in the group life insurance business was RMB 2,475 million in 2002,
an increase from a net loss of RMB 1,518 million in 2001. This change was
primarily due to the continuing effects of negative spread from investment-type
contracts among the non-transferred policies.

Accident and health insurance business

Net profit in the accident and health insurance business increased by RMB
700 million, or 142.9%, to RMB 1,190 million in 2002 from RMB 490 million in
2001. This change was primarily due to an increase in business volume, as well
as more favorable claims experience.

Year Ended December 31, 2001 Compared with Year Ended December 31, 2000

Net premiums earned and policy fees

Net premiums earned and policy fees increased by RMB 12,067 million, or
28.1%, to RMB 54,966 million in 2001 from RMB 42,899 million in 2000. This
increase was primarily due to a large increase in premiums from individual life
insurance products, as well as increased premiums from accident and health
products. Our predecessor introduced individual participating products in a
limited number of cities in the first half of 2001 and began selling these
products nationwide in the second half of 2001. The net change in unearned
premium reserves was negative RMB 248 million in 2001, compared with negative
RMB 314 million in 2000. The net change in unearned premium reserves relates
only to policies in the accident and health business with a duration of more
than twelve months. The net change in unearned premium reserves in 2001 was
primarily due to a shift in product mix toward policies with a duration of
twelve months or less.

Net premiums earned and policy fees attributable to the transferred policies
increased by RMB 12,514 million, or 64.9%, to RMB 31,808 million in 2001 from
RMB 19,294 million in 2000. This increase was primarily due to a large increase
in premiums from individual life insurance products, as well as increased
premiums from accident and health products. Net premiums earned from
participating products were RMB 6,859 million in 2001, an increase from RMB 135
million in 2000. Of total net premiums earned in 2001 and attributable to the
transferred policies, RMB 5,941 million was attributable to single premium
products and RMB 18,016 million was attributable to regular premium products
(including both first-year and renewal premiums). Of total net premiums earned
in 2000 and attributable to the transferred policies, RMB 1,923 million was
attributable to single premium products and RMB 9,993 million was attributable
to regular premium products.

Individual life insurance business

Net premiums earned and policy fees from the individual life insurance
business increased by RMB 10,757 million, or 29.2%, to RMB 47,571 million in
2001 from RMB 36,814 million in 2000. This increase was primarily due to an
increase in sales of endowment products and growth in policy fees, as well as
increased premiums from whole life products and annuity products.

Net premiums earned and policy fees from the individual life insurance
business attributable to the transferred policies increased by RMB 11,320
million, or 83.9%, to RMB 24,806 million in 2001 from RMB 13,486 million in
2000. This increase was primarily due to an increase in sales of endowment
products, as well as increased premiums from whole life products and annuity
products.

Group life insurance business

Net premiums earned and policy fees from the group life insurance business
increased by RMB 855 million, or 172.7%, to RMB 1,350 million in 2001 from RMB
495 million in 2000. This change was primarily due to increased premiums from
whole life products, which offset a decline in policy fees from endowment
policies classified as investment-type contracts.

Net premiums earned and policy fees from the group life insurance business
attributable to the transferred policies increased by RMB 857 million, or
375.9%, to RMB 1,085 million in 2001 from RMB 228 million in 2000. This change
was primarily due to increased premiums from whole life products, which offset
a decline in policy fees from endowment policies classified as investment-type
contracts.

Accident and health insurance business

Net premiums earned from the accident and health insurance business
increased by RMB 455 million, or 8.1%, to RMB 6,045 million in 2001 from RMB
5,590 million in 2000. Gross written premiums from the accident insurance
business were RMB 5,196 million in 2001 and gross written premiums from the
health insurance business were RMB 2,751 million in 2001. Both accident
insurance and health insurance experienced increases in premium income.

Net premiums earned from the accident and health insurance business
attributable to the transferred policies increased by RMB 337 million, or 6.0%,
to RMB 5,917 million in 2001 from RMB 5,580 million in 2000. This increase was
primarily due to increased sales of both types of insurance. Gross written
premiums from the accident insurance business attributable to the transferred
policies were RMB 5,097 million in 2001 and gross written premiums from the
health insurance business attributable to the transferred policies were RMB
2,687 million in 2001.

Net investment income

Net investment income increased by RMB 1,902 million, or 43.5%, to RMB 6,276
million in 2001 from RMB 4,374 million in 2000. This increase was primarily due
to an overall increase in investment assets, particularly negotiated bank
deposits, fixed maturity securities and securities investment funds, as well as
the comparatively high investment yield in the Chinese equity markets that year
and improved yield performance following the centralization of management of
the investment portfolio and the establishment of a specialized investments
department.

As of December 31, 2001, total investment assets were RMB 188,869 million
and the investment yield for the year ended December 31, 2001 was 4.1%. As of
December 31, 2000, total investment assets were RMB 129,998 million.

Net realized gains/losses on investments

Net realized losses on investments were RMB 6 million in 2001, compared to
RMB 23 million in 2000. The results in 2001 were primarily due to net realized
gains of RMB 188 million on fixed maturity securities, offset by net realized
losses of RMB 194 million on equity securities, whereas the results in 2000
were primarily due to net realized losses of RMB 129 million on fixed maturity
securities, offset by net realized gains of RMB 106 million on equity
securities.

Net unrealized gains/losses on investments

We reflect unrealized gains or losses on investments designated as trading
in current period income. Net unrealized losses on investments were RMB 322
million in 2001, compared to net unrealized gains on investments of RMB 298
million in 2000. These unrealized gains and losses were primarily due to
declines in the value of equity investments in closed-end securities funds.

Deposits and policy fees

Deposits are gross additions to policyholder contract deposits. Total
deposits increased by RMB 4,257 million, or 18.4%, to RMB 27,332 million in
2001 from RMB 23,075 million in 2000. Policy fees increased by RMB 194 million,
or 7.4%, to RMB 2,817 million in 2001 from RMB 2,623 million in 2000. These
increases were primarily due to an increase in deposits in both the individual
life insurance business and the group life insurance business.

Total deposits attributable to the transferred policies increased by RMB
5,648 million, or 37.1%, to RMB 20,868 million in 2001 from RMB 15,220 million
in 2000. Policy fees attributable to the transferred policies increased by RMB
136 million, or 7.6%, to RMB 1,934 million in 2001 from RMB 1,798 million in
2000. These increases were primarily due to an increase in deposits in both the
individual life insurance business and the group life insurance business. Total
deposits from participating products were RMB 9,524 million in 2001. Total
policy fees from participating products were RMB 306 million in 2001.

Individual life insurance business

Deposits in the individual life insurance business increased by RMB 2,544
million, or 13.4%, to RMB 21,514 million in 2001 from RMB 18,970 million in
2000. Policy fees from the individual life insurance business increased by RMB
381 million, or 17.6%, to RMB 2,547 million in 2001 from RMB 2,166 million in
2000. These increases were primarily due to sales of participating endowment
products, which our predecessor began selling nationwide in the second half of
2001.

Deposits in the individual life insurance business attributable to the
transferred policies increased by RMB 3,854 million, or 34.1%, to RMB 15,162
million in 2001 from RMB 11,308 million in 2000. Policy fees from the
individual life insurance business attributable to the transferred policies
increased by RMB 317 million, or 20.2%, to RMB 1,887 million in 2001 from RMB
1,570 million in 2000. These increases were primarily due to sales of
participating endowment products.

Group life insurance business

Deposits in the group life insurance business increased by RMB 1,713
million, or 41.7%, to RMB 5,818 million in 2001 from RMB 4,105 million in 2000.
Policy fees from the group life insurance business decreased by RMB 187
million, or 40.9%, to RMB 270 million in 2001 from RMB 457 million in 2000.
These changes were primarily due to sales of a new product with annual charges
in 2001, compared with sales of a new product with a front-end load in 2000.

Deposits in the group life insurance business attributable to the
transferred policies increased by RMB 1,794 million, or 45.9%, to RMB 5,706
million in 2001 from RMB 3,912 million in 2000. Policy fees from the group life
insurance business attributable to the transferred policies decreased by RMB
181 million, or 79.4%, to RMB 47 million in 2001 from RMB 228 million in 2000.
These changes were primarily due to the same reason as for the business overall.

Accident and health insurance business

There are no deposits in the accident and health insurance business.

Insurance benefits and claims

Insurance benefits and claims, net of amounts ceded through reinsurance,
increased by RMB 8,077 million, or 20.7%, to RMB 47,049 million in 2001 from
RMB 38,972 million in 2000. This increase was primarily due to the
corresponding growth in business volume during the period. Life insurance death
and other benefits, as a percentage of gross written premiums and policy fees,
were 17.8% in 2001, compared to 18.9% in 2000.

Insurance benefits and claims, net of amounts ceded through reinsurance,
attributable to the transferred policies increased by RMB 9,306 million, or
73.6%, to RMB 21,956 million in 2001 from RMB 12,650 million in 2000. This
increase was primarily due to growth in business volume. Insurance benefits and
claims, net of amounts ceded through reinsurance, attributable to participating
products were RMB 6,086 million in 2001. Of these insurance benefits and claims
attributable to participating products, life insurance death and other benefits
were RMB 26 million in 2001 and the increase in future life policyholder
benefits was RMB 6,060 million.

Individual life insurance business

Insurance benefits and claims for the individual life insurance business
increased by RMB 5,538 million, or 15.4%, to RMB 41,511 million in 2001 from
RMB 35,973 million in 2000. This increase was primarily due to an increase in
business volume during the period. Of these insurance benefits and claims, life
insurance death and other benefits increased by RMB 778 million, or 9.8%, to
RMB 8,740 million in 2001 from RMB 7,962 million in 2000 and the increase in
future life policyholder benefits increased by RMB 4,760 million, or 17.0%,
to RMB 32,771 million in 2001 from RMB 28,011 million in 2000.

Insurance benefits and claims for the individual life insurance business
attributable to the transferred policies increased by RMB 7,472 million, or
76.9%, to RMB 17,188 million in 2001 from RMB 9,716 million in 2000. This
increase was primarily due to an increase in business volume during the period.

Group life insurance business

Insurance benefits and claims for the group life insurance business
increased by RMB 1,472 million, or 651.3%, to RMB 1,698 million in 2001 from
RMB 226 million in 2000. Of this amount, life insurance death and other
benefits increased by RMB 849 million, or 170.1%, to RMB 1,348 million in 2001
from RMB 499 million in 2000 and future life policyholder benefits increased by
RMB 350 million in 2001, compared with a decrease of RMB 273 million in 2000.
These increases were primarily due to the continuing effects of negative spread
from investment-type contracts among the non-transferred policies.

Insurance benefits and claims for the group life insurance business
attributable to the transferred policies increased by RMB 767 million, or
473.5%, to RMB 929 million in 2001 from RMB 162 million in 2000. This increase
was primarily due to an increase in business volume.

Accident and health insurance business

Insurance benefits and claims for the accident and health insurance business
increased by RMB 1,067 million, or 38.5%, to RMB 3,840 million in 2001 from RMB
2,773 million in 2000. Of these amounts, accident and health claims and claim
adjustment expenses increased by RMB 1,062 million, or 38.4%, to RMB 3,829
million in 2001 from RMB 2,767 million in 2000 and life insurance death and
other benefits (comprised of long-term health benefits) increased by RMB 5
million, or 83.3%, to RMB 11 million in 2001 from RMB 6 million in 2000. These
increases were primarily due to a reclassification into this category of health
rider products which, on a stand-alone basis, had a higher claims ratio than
other products, resulting in insurance claims and benefits increasing at a
higher rate than the growth in premiums during the period.

Insurance benefits and claims for the accident and health insurance business
attributable to the transferred policies increased by RMB 1,067 million, or
38.5%, to RMB 3,839 million in 2001 from RMB 2,772 million in 2000. This
increase was primarily due to a reclassification into this category of health
rider products which, on a stand-alone basis, had a higher claims ratio than
other products.

Policyholder dividends and participation in profits

Policyholder dividends and participation in profits were RMB 177 million in
2001, an increase from RMB 7 million in 2000. Virtually all of these amounts
were attributable to the transferred policies. This increase was primarily due
to an increase in the overall amount of participating products, offset by a
small decline in dividend rates.

Amortization of deferred policy acquisition costs

Amortization of deferred policy acquisition costs reflects the amortization
of deferred policy acquisition costs attributable to the transferred policies.
The majority of acquisition costs attributable to the transferred policies are
deferrable. Amortization of deferred policy acquisition costs increased by RMB
1,279 million, or 73.3%, to RMB 3,024 million in 2001 from RMB 1,745 million in
2000. This increase was primarily due to the increase in business volume during
the period.

Underwriting and policy acquisition costs

Underwriting and policy acquisition costs primarily reflect acquisition
costs attributable to non-transferred policies in the individual life insurance
business and group life insurance business, as well as acquisition costs in the
accident and health insurance business. Underwriting and policy acquisition
costs decreased by RMB 897 million, or 29.2%, to RMB 2,176 million in 2001 from
RMB 3,073 million in 2000. Underwriting and policy acquisition costs were 4.0%
of net premiums earned and policy fees in 2001, compared with 7.2% in 2000.

Of this amount, underwriting and policy acquisition costs in the individual
life insurance business and group life insurance business together decreased by
RMB 934 million, or 32.8%, to RMB 1,916 million in 2001 from RMB 2,850 million
in 2000. This decrease was primarily due to declining commissions attributable
to the non-transferred policies, since commissions generally decrease as
policies are renewed in successive years. Underwriting and policy acquisition
costs in the accident and health insurance business increased by RMB 37
million, or 16.6%, to RMB 260 million in 2001 from RMB 223 million in 2000.
This increase was primarily due to the increase in business volume during the
period.

Administrative expenses

increase was primarily due to growth in business and the use of
performance-related salaries, which generated increases in compensation costs.

Other operating expenses

Other operating expenses, which primarily consist of employee housing
benefits, expenses of any non-core businesses (which includes investments in
property, hotels and other operations through subsidiaries) and legal and
regulatory costs, decreased by RMB 1,492 million, or 57.3%, to RMB 1,110
million in 2001 from RMB 2,602 million in 2000. This decrease was primarily due
to reduced losses on sales of employee housing, as well as a reduction in the
activities of operating subsidiaries in non-core businesses.

Interest credited to policyholder contract deposits

Interest credited to policyholder contract deposits increased by RMB 1,294
million, or 28.7%, to RMB 5,799 million in 2001 from RMB 4,505 million in 2000.
This increase was primarily due to an increase in the total policyholder
account balance. There is no interest credited to policyholders in the accident
and health insurance business.

Interest credited to policyholder contract deposits attributable to the
transferred policies increased by RMB 309 million, or 90.6%, to RMB 650 million
in 2001 from RMB 341 million in 2000. This increase was primarily due to an
increase in the total policyholder account balance. Interest credited to
participating policyholder contract deposits was RMB 48 million in 2001.

Income tax

Income tax expense was RMB 4 million in 2001, compared to RMB 14 million in
2000. All of these amounts were attributable to income taxes incurred by
non-core businesses. No other income tax was incurred in 2001 due to operating
losses.

Net profit/loss

For the reasons set forth above, net loss was RMB 3,295 million in 2001, an
improvement from a net loss of RMB 6,990 million in 2000.

Individual life insurance business

Net loss in the individual life insurance business was RMB 2,338 million in
2001, an improvement from a net loss of RMB 6,773 million in 2000. This change
was primarily due to the continuing effects of negative spread from
investment-type contracts among the non-transferred policies, offset by an
increase in business volume and more favorable claims experience.

Group life insurance business

Net loss in the group life insurance business was RMB 1,518 million in 2001,
an increase from a net loss of RMB 769 million in 2000. This change was
primarily due to the continuing effects of negative spread from investment-type
contracts among the non-transferred policies.

Accident and health insurance business

Net profit in the accident and health insurance business decreased by RMB
181 million, or 27.0%, to RMB 490 million in 2001 from RMB 671 million in 2000.
This decrease was primarily due to an increase in business volume, offset by
less favorable claims experience.

Results of Operations--Pro Forma Basis

We set forth below information and discussion regarding the pro forma effect
of our restructuring for the six-month periods ended June 30, 2002 and 2003 and
the year ended December 31, 2002, as if it had occurred at the start of the
six-month periods ended June 30, 2002 or 2003, respectively or at the start of
the year ended December 31, 2002.

The unaudited pro forma consolidated financial information is not
necessarily indicative of the results that could have been achieved had the
restructuring in fact occurred on that date and is not necessarily indicative
of the financial results for any future periods. For an explanation of the pro
forma adjustments set forth below, see "Unaudited Pro Forma Consolidated
Financial Data".

For the six months ended June 30, 2003
-----------------------------------------
Historical Adjustments Pro Forma Pro Forma
---------- ----------- --------- ---------
RMB RMB RMB US$
(in millions)

Revenues
Net written premiums and policy fees..................... 35,401 (10,688) 24,713 2,986
Net change in unearned premium reserves.................. 17 -- 17 2
------- ------- ------- ------
Net premiums earned and policy fees...................... 35,418 (10,688) 24,730 2,988
------- ------- ------- ------
Net investment income.................................... 5,070 (2,032) 3,038 367
Net realized gains/(losses) on investments............... 691 (271) 420 51
Net unrealized gains/(losses) on investments............. 280 (110) 170 21
Other income............................................. 122 842 964 116
------- ------- ------- ------
Total revenues........................................... 41,581 (12,259) 29,322 3,542
------- ------- ------- ------

Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits................. (4,580) 2,946 (1,634) (197)
Accident and health claims and claim adjustment expenses (2,455) -- (2,455) (297)
Increase in future life policyholder benefits........... (23,192) 10,638 (12,554) (1,517)
Policyholder dividends and participation in profits...... (862) -- (862) (104)
Amortization of deferred policy acquisition costs........ (2,648) -- (2,648) (320)
Underwriting and policy acquisition costs................ (708) 442 (266) (32)
Administrative expenses.................................. (3,005) 175 (2,830) (342)
Other operating expenses................................. (704) 505 (199) (24)
Interest expense on bank borrowings...................... (5) 5 -- --
Interest credited to policyholder contract deposits...... (4,109) 2,832 (1,277) (154)
Statutory insurance levy................................. (38) -- (38) (5)
------- ------- ------- ------
Total benefits, claims and expenses...................... (42,306) 17,543 (24,763) (2,992)
------- ------- ------- ------
Profit/(loss) before income tax expense and minority
interests.............................................. (725) 5,284 4,559 551
Income tax expense....................................... (8) (1,406) (1,414) (171)
------- ------- ------- ------
Profit/(loss) before minority interests.................. (733) 3,878 3,145 380
Minority interests....................................... 19 (36) (17) (2)
------- ------- ------- ------
Net profit/(loss)........................................ (714) 3,842 3,128 378
======= ======= ======= ======

For the six months ended June 30, 2002
-------------------------------------
Historical Adjustments Pro Forma
---------- ----------- ---------
(RMB in millions)

Revenues
Net written premiums and policy fees.......................... 33,399 (10,860) 22,539
Net change in unearned premium reserves....................... 306 -- 306
------- ------- -------
Net premiums earned and policy fees........................... 33,705 (10,860) 22,845
------- ------- -------
Net investment income......................................... 3,991 (1,977) 2,014
Net realized gains/(losses) on investments.................... 684 (337) 347
Net unrealized gains/(losses) on investments.................. (75) 37 (38)
Other income.................................................. 121 851 972
------- ------- -------
Total revenues................................................ 38,426 (12,286) 26,140
------- ------- -------

Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits...................... (3,869) 2,753 (1,116)
Accident and health claims and claim adjustment expenses..... (1,959) -- (1,959)
Increase in future life policyholder benefits................ (22,793) 9,527 (13,266)
Policyholder dividends and participation in profits........... (310) 2 (308)
Amortization of deferred policy acquisition costs............. (2,102) -- (2,102)
Underwriting and policy acquisition costs..................... (822) 644 (178)
Administrative expenses....................................... (2,916) 156 (2,760)
Other operating expenses...................................... (316) 160 (156)
Interest expense on bank borrowings........................... (4) 4 --
Interest credited to policyholder contract deposits........... (3,209) 2,524 (685)
Statutory insurance levy...................................... (30) -- (30)
------- ------- -------
Total benefits, claims and expenses........................... (38,330) 15,770 (22,560)
------- ------- -------
Profit/(loss) before income tax expense and minority interests 96 3,484 3,580
Income tax expense............................................ (3) (1,003) (1,006)
------- ------- -------
Profit/(loss) before minority interests....................... 93 2,481 2,574
Minority interests............................................ (2) (9) (11)
------- ------- -------
Net profit/(loss)............................................. 91 2,472 2,563
======= ======= =======

For the year ended December 31, 2002
-----------------------------------------
Historical Adjustments Pro Forma Pro Forma
---------- ----------- --------- ---------
RMB RMB RMB US$
(in millions)

Revenues
Net written premiums and policy fees..................... 66,900 (21,688) 45,212 5,462
Net change in unearned premium reserves.................. (476) 12 (464) (56)
------- ------- ------- ------
Net premiums earned and policy fees...................... 66,424 (21,676) 44,748 5,406
------- ------- ------- ------
Net investment income.................................... 8,347 (4,001) 4,346 525
Net realized gains/(losses) on investments............... 266 (126) 140 17
Net unrealized gains/(losses) on investments............. (1,067) 507 (560) (68)
Other income............................................. 338 1,728 2,066 250
------- ------- ------- ------
Total revenues........................................... 74,308 (23,568) 50,740 6,130
------- ------- ------- ------

Six Months Ended June 30, 2003 Compared with Six Months Ended June 30, 2002

Pro forma net premiums earned and policy fees

Pro forma net premiums earned and policy fees increased by RMB 1,885
million, or 8.3%, to RMB 24,730 million in the six months ended June 30, 2003
from RMB 22,845 million in the six months ended June 30, 2002. This increase
was primarily due to increases in net premiums earned and policy fees in the
individual life insurance business and health insurance business.

Of total pro forma net premiums earned in the six months ended June 30,
2003, RMB 2,123 million was attributable to single premium products and RMB
15,055 million was attributable to regular premium products (including both
first-year and renewal premiums).

Individual life insurance business

Pro forma net premiums earned and policy fees from the individual life
insurance business increased by RMB 1,020 million, or 5.3%, to RMB 20,370
million in the six months ended June 30, 2003 from RMB 19,350 million in the
six months ended June 30, 2002. This increase was primarily due to an increase
in sales of whole life products and growth in policy fees. These were offset in
part by a decrease in sales of endowment products due to a shift toward
participating endowment products, which are classified as investment products.

Group life insurance business

Pro forma net premiums earned and policy fees from the group life insurance
business decreased by RMB 34 million, or 11.0%, to RMB 267 million in the six
months ended June 30, 2003 from RMB 301 million in the six months ended June
30, 2002. This decrease was primarily due to a shift away from whole life
products and annuity products in favor of products which are classified as
investment products.

Accident and health insurance business

Pro forma net premiums earned from the accident and health insurance
business increased by RMB 899 million, or 28.1%, to RMB 4,093 million in the
six months ended June 30, 2003 from RMB 3,194 million in the six months ended
June 30, 2002. Pro forma gross written premiums from the accident insurance
business decreased by RMB 38 million, or 1.6%, to RMB 2,359 million in the six
months ended June 30, 2003 from RMB 2,397 million in the six months ended June
30, 2002 and pro forma gross written premiums from the health insurance
business increased by RMB 1,151 million, or 91.6%, to RMB 2,407 million in the
six months ended June 30, 2003 from RMB 1,256 million in the six months ended
June 30, 2002. These changes were primarily due to strong growth in premiums
from sales of short-term health and supplemental medical insurance. Sales of
accident insurance have remained relatively flat in recent years, in line with
the market overall.

Net investment income

Pro forma net investment income increased by RMB 1,024 million, or 50.8%, to
RMB 3,038 million in the six months ended June 30, 2003 from RMB 2,014 million
in the six months ended June 30, 2002. This increase was primarily due to an
overall increase in investment assets.

Net realized gains/losses on investments

Pro forma net realized gains on investments were RMB 420 million in the six
months ended June 30, 2003, compared to RMB 347 million in the six months ended
June 30, 2002. This change was primarily due to higher net realized gains on
debt securities, offset in part by lower net realized gains on securities
investment funds.

Net unrealized gains/losses on investments

We reflect unrealized gains or losses on investments designated as trading
in current period income. Pro forma net unrealized gains on investments were
RMB 170 million in the six months ended June 30, 2003, compared to net
unrealized losses on investments of RMB 38 million in the six months ended June
30, 2002. This change reflected unrealized capital gains on securities
investment funds due to favorable conditions in the equity markets.

Insurance benefits and claims

Pro forma insurance benefits and claims, net of amounts ceded through
reinsurance, increased by RMB 302 million, or 1.8%, to RMB 16,643 million in
the six months ended June 30, 2003 from RMB 16,341 million in the six months
ended June 30, 2002. This increase was primarily due to an increase in
insurance benefits and claims in the health insurance business. Of this amount,
pro forma life insurance death and other benefits increased by

RMB 518 million, or 46.4%, to RMB 1,634 million in the six months ended June
30, 2003 from RMB 1,116 million in the six months ended June 30, 2002, pro
forma accident and health claims and claim adjustment expenses increased by RMB
496 million, or 25.3%, to RMB 2,455 million in the six months ended June 30,
2003 from RMB 1,959 million in the six months ended June 30, 2002 and the pro
forma increase in future life policyholder benefits decreased by RMB 712
million, or 5.4%, to RMB 12,554 million in the six months ended June 30, 2003
from RMB 13,266 million in the six months ended June 30, 2002. The increase in
pro forma life insurance death and other benefits was primarily due to an
increase in the number of policies in force. Pro forma life insurance death and
other benefits, as a percentage of pro forma gross written premiums and policy
fees, were 6.4% in the six months ended June 30, 2003, a slight increase from
4.8% in the six months ended June 30, 2002.

Individual life insurance business

Pro forma insurance benefits and claims for the individual life insurance
business decreased by RMB 167 million, or 1.2%, to RMB 13,929 million in the
six months ended June 30, 2003 from RMB 14,096 million in the six months ended
June 30, 2002. This decrease was primarily due to a shift in product mix away
from endowment products and toward whole life products, which have lower
reserve requirements than endowment products. Of these pro forma insurance
benefits and claims, pro forma life insurance death and other benefits
increased by RMB 414 million, or 45.0%, to RMB 1,335 million in the six months
ended June 30, 2003 from RMB 921 million in the six months ended June 30, 2002
and the pro forma increase in future life policyholder benefits decreased by
RMB 581 million, or 4.4%, to RMB 12,594 million in the six months ended June
30, 2003 from RMB 13,175 million in the six months ended June 30, 2002.

Group life insurance business

Pro forma insurance benefits and claims for the group life insurance
business decreased by RMB 17 million, or 6.2%, to RMB 259 million in the six
months ended June 30, 2003 from RMB 276 million in the six months ended June
30, 2002. This decrease was primarily due to the decrease in business volume
during the period. Of these pro forma insurance benefits and claims, pro forma
life insurance death and other benefits increased by RMB 114 million, or 61.6%,
to RMB 299 million in the six months ended June 30, 2003 from RMB 185 million
in the six months ended June 30, 2002 and pro forma future life policyholder
benefits decreased by RMB 40 million in the six months ended June 30, 2003,
compared with an increase of RMB 91 million in the six months ended June 30,
2002.

Accident and health insurance business

Pro forma insurance benefits and claims for the accident and health
insurance business increased by RMB 486 million, or 24.7%, to RMB 2,455 million
in the six months ended June 30, 2003 from RMB 1,969 million in the six months
ended June 30, 2002. This increase was primarily due to the increase in
business volume in the health insurance business during the period. Of these
pro forma insurance benefits and claims, pro forma accident and health claims
and claim adjustment expenses increased by RMB 496 million, or 25.3%, to RMB
2,455 million in the six months ended June 30, 2003 from RMB 1,959 million in
the six months ended June 30, 2002 and pro forma life insurance death and other
benefits (comprised of long-term health benefits) were nil in the six months
ended June 30, 2003, compared to RMB 10 million in the six months ended June
30, 2002.

Policyholder dividends and participation in profits

Pro forma policyholder dividends and participation in profits increased by
RMB 554 million, or 179.9%, to RMB 862 million in the six months ended June 30,
2003 from RMB 308 million in the six months ended June 30, 2002. This increase
was primarily due to an increase in the overall amount of participating
policies in force.

Amortization of deferred policy acquisition costs

The majority of acquisition costs are deferrable. Pro forma amortization of
deferred policy acquisition costs increased by RMB 546 million, or 26.0%, to
RMB 2,648 million in the six months ended June 30, 2003 from

RMB 2,102 million in the six months ended June 30, 2002. This increase was
primarily due to the increase in business volume during the period.

Underwriting and policy acquisition costs

Pro forma underwriting and policy acquisition costs primarily reflect
acquisition costs in the accident and health insurance business. Pro forma
underwriting and policy acquisition costs increased by RMB 88 million, or
49.4%, to RMB 266 million in the six months ended June 30, 2003 from RMB 178
million in the six months ended June 30, 2002. This increase was primarily due
to the increase in business volume during the period.

Administrative expenses

Pro forma administrative expenses include the non-deferrable portion of
policy acquisition costs attributable to the insurance policies as well as
compensation and other administrative expenses. Pro forma administrative
expenses increased by RMB 70 million, or 2.5%, to RMB 2,830 million in the six
months ended June 30, 2003 from RMB 2,760 million in the six months ended June
30, 2002. This increase was primarily due to the increase in business volume.

Other operating expenses

Pro forma other operating expenses, which primarily consist of employee
housing benefits and legal and regulatory costs, increased by RMB 43 million,
or 27.6%, to RMB 199 million in the six months ended June 30, 2003 from RMB 156
million in the six months ended June 30, 2002.

Interest credited to policyholder contract deposits

Pro forma interest credited to policyholder contract deposits increased by
RMB 592 million, or 86.4%, to RMB 1,277 million in the six months ended June
30, 2003 from RMB 685 million in the six months ended June 30, 2002. This
increase was primarily due to an increase in the total policyholder account
balance.

Income tax

Pro forma income tax expense was RMB 1,414 million in the six months ended
June 30, 2003, compared to RMB 1,006 million in the six months ended June 30,
2002. This result was primarily attributable to a pro forma profit before tax
and minority interests of RMB 4,559 million. The pro forma effective tax rate
of 31.0% reflects the income tax rate that CLIC would have been subject to in
the six months ended June 30, 2003 assuming the restructuring had occurred as
of January 1, 2002 and assuming no tax losses were carried forward from prior
years.

Net profit/loss

For the reasons set forth above, pro forma net profit increased by RMB 565
million, or 22.0%, to RMB 3,128 million in the six months ended June 30, 2003
from RMB 2,563 million in the six months ended June 30, 2002.

Year Ended December 31, 2002

Net premiums earned and policy fees

Pro forma net premiums earned and policy fees were RMB 44,748 million in
2002. This result was primarily due to sales of our individual life insurance
products, particularly sales of endowment products.

Individual life insurance business

Pro forma net premiums earned and policy fees from the individual life
insurance business were RMB 37,662 million in 2002. This result was primarily
attributable to sales of and policy fees from investment products as well as
the introduction and rapid growth of products sold through bank channels.

Group life insurance business

Pro forma net premiums earned and policy fees from the group life insurance
business were RMB 477 million in 2002. Sales of our group life insurance
products were impacted by our decision to utilize our direct sales force to
sell individual participating products to meet demand, as well as a high ratio
of investment-type products in the overall sales mix of group products.

Accident and health insurance business

Pro forma net premiums earned from the accident and health insurance
business were RMB 6,609 million in 2002. Pro forma gross written premiums from
the accident insurance business were RMB 5,174 million in 2002 and pro forma
gross written premiums from the health insurance business were RMB 3,764
million in 2002. These results were primarily due to strong sales of health
insurance products following recent reforms designed to promote the health
insurance system. Sales of accident insurance products have remained relatively
stable in recent years, reflecting the trend in the overall accident insurance
market in China in those periods.

Net investment income

Pro forma net investment income was RMB 4,346 million in 2002. This result
was primarily due to investments in negotiated bank deposits, fixed maturity
securities and securities investment funds, and a shift away from resale
agreements, which have a comparatively low investment yield. We also
experienced poor conditions in the equity markets, which affected dividend
income from equity investments in securities investment funds.

Net realized gains/losses on investments

Pro forma net realized gains on investments were RMB 140 million in 2002.
This result included net realized gains on investments of RMB 446 million in
our fixed maturity securities.

Net unrealized losses on investments

We reflect unrealized gains or losses on investments designated as trading
in current period income. Pro forma net unrealized losses were RMB 560 million
in 2002. This result primarily reflected a steep fall in the equity markets,
which adversely impacted the value of equity investments in closed-end
securities funds.

Insurance benefits and claims

Pro forma insurance benefits and claims, net of amounts ceded through
reinsurance, were RMB 31,280 million in 2002. Of this amount, pro forma life
insurance death and other benefits were RMB 2,308 million, pro forma accident
and health claims and claim adjustment expenses were RMB 4,053 million and the
pro forma increase in future life policyholder benefits was RMB 24,919 million.

Individual life insurance business

Pro forma insurance benefits and claims for the individual life insurance
business were RMB 26,797 million in 2002. This result was primarily due to the
business volume during the period.

Group life insurance business

Pro forma insurance benefits and claims for the group life insurance
business were RMB 409 million in 2002. This result was primarily due to
unfavorable claims experience during the period.

Accident and health insurance business

Pro forma insurance benefits and claims for the accident and health
insurance business were RMB 4,073 million in 2002. These results were primarily
due to favorable claims experience.

Policyholder dividends and participation in profits

Pro forma policyholder dividends and participation in profits were RMB 638
million in 2002. Our dividends reflected higher overall amounts of
participating policies in force, offset in part by a decline in dividend rates.

Amortization of deferred policy acquisition costs

Pro forma amortization of deferred policy acquisition costs was RMB 3,832
million in 2002.

Underwriting and policy acquisition costs

Pro forma underwriting and policy acquisition costs were RMB 555 million in
2002.

Administrative expenses

Pro forma administrative expenses were RMB 5,906 million in 2002. This
result was primarily due to the growth in business and the use of
performance-related salaries, which impacted compensation costs.

Other operating expenses

Pro forma other operating expenses, which primarily consist of employee
housing benefits and legal and regulatory costs, were RMB 430 million in 2002.

Interest credited to policyholder contract deposits

Pro forma interest credited to policyholder contract deposits was RMB 1,568
million in 2002. This result was primarily due to the policyholder account
balance during the period.

Income tax

Pro forma income tax was RMB 1,904 million in 2002. This result was
primarily attributable to a pro forma profit before tax and minority interests
of RMB 6,458 million. The pro forma effective tax rate of 29.5% reflects the
income tax rate that CLIC would have been subject to in 2002 assuming the
restructuring had occurred as of January 1, 2002 and assuming no tax losses
were carried forward from prior years.

Net profit/loss

For the reasons set forth above, pro forma net profit was RMB 4,524 million
in 2002.

Liquidity and Capital Resources

Liquidity Sources

Our principal cash inflows come from insurance premiums, deposits, policy
fees and annuity considerations. The primary liquidity concern with respect to
these cash inflows is the risk of early contract holder and policyholder
withdrawal. Our principal cash inflows also result from proceeds from sales of
investment assets and investment income. The primary liquidity concerns with
respect to these cash inflows are the risks of default by debtors, interest
rate changes and other market volatilities. We closely monitor and manage these
risks. See "Business--Investments".

Additional sources of liquidity to meet unexpected cash outflows are
available from our portfolio of cash and investment assets. As of June 30, 2003
and without giving effect to the restructuring, the amount of cash and cash
equivalents was RMB 23,592 million. In addition, substantially all of our term
deposits with banks allow us to withdraw funds on deposit, subject to a penalty
interest charge. As of June 30, 2003 and without giving effect to the
restructuring, the amount of term deposits was RMB 142,043 million.

Our portfolio of investment securities also may provide us with a source of
liquidity to meet unexpected cash outflows. As of June 30, 2003 and without
giving effect to the restructuring, investments in fixed maturity securities
had a fair value of RMB 82,072 million. As of June 30, 2003 and without giving
effect to the restructuring, investments in equity securities, primarily
through securities investment funds, had a fair value of RMB 14,797 million.
However, the PRC securities market is still at an early stage of development,
and we are subject to market liquidity risk because the market capitalization
and trading volumes of the public exchanges are much lower than in more
developed financial markets. We also are subject to market liquidity risk due
to the large size of our investments in some of the markets in which we invest.
We believe that some of our positions in fixed maturity securities may be large
enough to have an influence on the market value. These factors may limit our
ability to sell these investments at an adequate price, or at all.

Liquidity Uses

Our principal cash outflows primarily relate to the liabilities associated
with our various life insurance, annuity and accident and health insurance
products, dividend and interest payments on our insurance policies and annuity
contracts, operating expenses, income taxes and dividends that may be declared
and payable to our shareholders. Liabilities arising from our insurance
activities primarily relate to benefit payments under these insurance products,
as well as payments for policy surrenders, withdrawals and loans.

We believe that our sources of liquidity are sufficient to meet our current
cash requirements.

Consolidated Cash Flows

The following sets forth information regarding consolidated cash flows for
the periods indicated.

Net cash provided by operating activities was RMB 19,572 million in the six
months ended June 30, 2003, a decrease from RMB 20,712 million in the six
months ended June 30, 2002. This decrease was primarily due to a change in
working capital which used cash in the six months ended June 30, 2003, compared
with providing cash in the six months ended June 30, 2002. Net cash provided by
operating activities was RMB 44,059 million in 2002, an increase from RMB
33,833 million in 2001. Net cash provided by operating activities was RMB
33,833 million in 2001, an increase from RMB 20,051 million in 2000. The
increase in cash provided by operating activities over both of these periods
was primarily due to the rapid growth in new policies, and the lag time between
receipt of premium income and the payment of claims under those policies.

Net cash used in investing activities was RMB 65,060 million in the six
months ended June 30, 2003, an increase from RMB 54,834 million in the six
months ended June 30, 2002. Net cash used in investing activities was RMB
95,898 million in 2002, an increase from RMB 51,964 million in 2001. Net cash
used in investing

activities was RMB 51,964 million in 2001, an increase from RMB 29,441 million
in 2000. The increase in cash used in investing activities over all of these
periods was primarily due to the growth in premiums and deposits, particularly
those relating to sales of participating products, which are classified as
investment-type products.

Net cash provided by financing activities was RMB 54,551 million in the six
months ended June 30, 2003, an increase from RMB 33,842 million in the six
months ended June 30, 2002. Net cash provided by financing activities was RMB
48,513 million in 2002, an increase from RMB 12,711 million in 2001. Net cash
provided by financing activities was RMB 12,711 million in 2001, an increase
from RMB 12,677 million in 2000. The increase in cash provided by financing
activities over all of these periods was primarily due to the growth in
premiums and deposits, particularly those relating to sales of participating
products, which are classified as investment-type products and are therefore
attributed to financing activities.

Insurance Solvency Requirements

In March 2003, the CIRC introduced a new standard, the solvency ratio, to
measure the financial soundness of life insurance companies to provide better
policyholder protection under a system of corrective regulatory action. The
solvency ratio of an insurance company is a measure of capital adequacy, which
is calculated by dividing the actual solvency level of the company (which is
its net assets determined in accordance with PRC GAAP, less specified excluded
items) by the minimum solvency level it is required to meet. See
"Regulation--Insurance Company Regulation--Solvency requirements". The
following table shows our solvency ratio as of June 30, 2003, on a pro forma
basis after giving effect to the restructuring:

As of
June 30, 2003
-----------------------
(RMB in millions,
except percentage data)

Actual solvency. 29,195
Minimum solvency 10,435
Solvency ratio.. 280%

Insurance companies are required to calculate and report annually to the
CIRC their solvency level and twelve additional financial ratios to assist it
in monitoring the financial condition of insurers. A "usual range" of results
for each of the twelve ratios is used as a benchmark. The departure from the
"usual range" of four or more of the ratios can lead to regulatory action being
taken by the CIRC.

The report is required to be submitted on or prior to April 30 of each year,
based on audited financial information for the prior year. Our first report
will not be due until April 30, 2004. On a pro forma basis after giving effect
to the restructuring, our solvency level as of June 30, 2003 was approximately
2.8 times the minimum regulatory requirement. We have not yet calculated any of
the twelve financial ratios.

100

Contractual Obligations and Commitments

The following tables set out the contractual obligations and commitments of
our predecessor, other than on insurance policies and annuity contracts, as of
June 30, 2003 and December 31, 2002 and 2001.

Not Later than
later 1 year but Later
than not later than
1 year than 5 years 5 years Total
------ ------------ ------- ------
(RMB in millions)

As of June 30, 2003
Securities sold under agreements to repurchase -- -- -- --
Short-term bank borrowings.................... 309 -- -- 309
Long-term bank borrowings..................... 2 -- -- 2
Operating leases.............................. 64 120 12 196
Capital commitments........................... 532 -- -- 532
------ --- -- ------
Total......................................... 907 120 12 1,039
====== === == ======
As of December 31, 2002
Securities sold under agreements to repurchase 3,602 -- -- 3,602
Short-term bank borrowings.................... 311 -- -- 311
Long-term bank borrowings..................... 2 -- -- 2
Operating leases.............................. 63 169 22 254
Capital commitments........................... 752 -- -- 752
------ --- -- ------
Total......................................... 4,730 169 22 4,921
====== === == ======
As of December 31, 2001
Securities sold under agreements to repurchase 14,608 -- -- 14,608
Short-term bank borrowings.................... 370 -- -- 370
Long-term bank borrowings..................... -- 9 -- 9
Operating leases.............................. 17 97 33 147
Capital commitments........................... 238 -- -- 238
------ --- -- ------
Total......................................... 15,233 106 33 15,372
====== === == ======

Note: Capital commitments represent our commitments with respect to the
acquisition of property, plant and equipment.

Market Risk and Risk Management

Market risk

Our exposure to financial market risks relates primarily to changes in
interest rates, equity prices and exchange rates.

Interest rate risk

Our profitability is affected by changes in interest rates. We are currently
experiencing the lowest interest rate environment in several years. If interest
rates were to increase in the future, surrenders and withdrawals of insurance
and annuity policies and contracts may increase as policyholders seek other
investments with higher perceived returns. This process may result in cash
outflows requiring that we sell investment assets at a time when the prices of
those assets are adversely affected by the increase in market interest rates,
which may result in realized investment losses. If interest rates were to
decline, the income we realize from our investments may decline, affecting our
profitability. In addition, as instruments in our investment portfolio mature,
we might have to reinvest the funds we receive in investments bearing a lower
interest rate.

For the six months ended June 30, 2003, the investment yield was 1.7% and
for the years ended December 31, 2002 and 2001, the investment yield was 3.8%
and 4.1%, respectively. Traditional insurance policies with an

101

investment component and investment contracts are generally priced with
guaranteed interest rates, subject to a cap on guaranteed rates set by the
CIRC, which is currently 2.50%. Dividends on participating policies are
required to be at least 70% of distributable earnings attributable to such
policies.

The following tables set forth selected assets and liabilities with exposure
to interest rates as of June 30, 2003 and December 31, 2002.

Expected maturity date
-----------------------------------------------------------
Fair
2003 2004 2005 2006 2007 Thereafter Total value
As of June 30, 2003 ------ ----- ----- ------ ------ ---------- ------- -------
(in millions)

Assets
Other-than-trading

Fixed rate bonds.................. 5,931 912 1,598 8,145 4,550 53,127 74,263 74,318
Average interest rate............. 6.11% 3.13% 3.61% 4.59% 5.49% 3.61% 4.02%

Term deposits

in RMB............................ 2,717 913 8,642 35,083 64,605 29,372 141,332 141,332
Average interest rate............. 2.87% 3.76% 4.35% 4.55% 3.88% 3.63% 4.02%

in US$............................ 402 -- -- -- -- -- 402 402
Average interest rate............. 2.99% 2.99%

in Japanese yen................... 104 -- -- -- -- -- 104 104
Average interest rate............. 4.50% 4.50%

in HK$............................ 106 3 -- -- -- -- 109 109
Average interest rate............. 3.08% 1.50% 3.08%

in other currencies............... 96 -- -- -- -- -- 96 96
Average interest rate............. 2.50% 2.50%

Securities purchased under
agreements to resell............ 70,061 -- -- -- -- -- 70,061 70,061
Average interest rate............. 2.45% 2.45%

Variable rate bonds............... -- -- -- -- 73 7,681 7,754 7,754
Average interest rate............. 2.36% 2.72% 2.72%

Liabilities

Policyholder contract deposits and
other funds..................... 4,620 5,410 6,125 8,067 79,162 107,591 210,975 211,493
Average interest rate............. 6.47% 5.89% 5.64% 4.93% 2.82% 5.13% 4.32%

102

Expected maturity date
-----------------------------------------------------------
Fair
2003 2004 2005 2006 2007 Thereafter Total value
As of December 31, 2002 ------ ----- ----- ------ ------ ---------- ------- -------
(in millions)

Assets
Other-than-trading

Fixed rate bonds.................. 3,619 881 5,615 6,378 5,147 47,540 69,180 70,617
Average interest rate............. 6.36% 3.29% 6.09% 5.20% 5.45% 3.80% 4.36%

Term deposits

in RMB............................ 4,792 552 9,661 35,281 64,406 8,101 122,793 122,793
Average interest rate............. 3.75% 4.22% 4.33% 4.56% 3.88% 3.94% 4.11%

in US$............................ 1,232 -- -- -- -- -- 1,232 1,232
Average interest rate............. 1.49% 1.49%

in Japanese yen................... 111 -- -- -- -- -- 111 111
Average interest rate............. 0.01% 0.01%

in HK$............................ 399 3 -- -- -- -- 402 402
Average interest rate............. 1.25% 1.50% 1.25%

in other currencies............... 127 -- -- -- -- -- 127 127
Average interest rate............. 1.12% 1.12%

Securities purchased under
agreements to resell............ 36,388 -- -- -- -- -- 36,388 36,388
Average interest rate............. 3.16% 3.16%

Variable rate bonds............... -- -- -- -- 673 5,020 5,693 5,773
Average interest rate............. 2.36% 2.99% 2.91%

Liabilities

Policyholder contract deposits and
other funds..................... 4,141 4,624 5,124 6,332 50,031 86,021 156,273 165,727
Average interest rate............. 6.85% 6.41% 6.21% 5.57% 3.08% 5.76% 4.96%

Due to the negative spread which came to exist in respect of investment
contracts issued prior to June 10, 1999, the average interest rate on
investment contract reserves is significantly higher than the guaranteed rates
which apply to policies issued in the three years ended December 31, 2002,
which were at or below 2.50%.

Equity price risk

Our investments in securities investment funds or equity securities expose
us to changes in equity prices. We manage this risk on an integrated basis with
other risks through our asset-liability management strategies. We also manage
equity price risk through industry and issuer diversification and asset
allocation techniques.

103

The following table sets forth our predecessor's exposure to equity
securities as of June 30, 2003 and as of December 31, 2000, 2001 and 2002.

As of December 31, As of June 30,
--------------------------------------------- ---------------
2000 2001 2002 2003
-------------- -------------- --------------- ---------------
Carrying Fair Carrying Fair Carrying Fair Carrying Fair
amount value amount value amount value amount value
-------- ----- -------- ----- -------- ------ -------- ------
(RMB in millions)

Equity securities 6,794 6,794 7,698 7,698 12,171 12,171 14,797 14,797
Trading......... 5,675 5,675 5,696 5,696 4,070 4,070 5,772 5,772
Non-trading..... 1,119 1,119 2,002 2,002 8,101 8,101 9,025 9,025

A hypothetical 10% decline in the December 31, 2002 and June 30, 2003 value
of the equity securities held for non-trading would result in an unrealized
loss of approximately RMB 810 million and RMB 902 million, respectively.

A hypothetical 10% decline in the December 31, 2002 and June 30, 2003 value
of the equity securities held for trading would result in a charge to the
income statement of approximately RMB 407 million and RMB 577 million,
respectively.

The selection of a 10% immediate change in the value of equity securities
should not be construed as a prediction by us of future market events but
rather as an illustration of the potential impact of such an event.

Foreign exchange risk

Our exposure to fluctuations in foreign currency exchange rates against RMB
results primarily from our holdings in non-RMB denominated term deposits. Our
indebtedness and capital expenditures are predominantly in RMB and the
principal currencies which create foreign currency exchange rate risk in our
deposits are the U.S. dollar, Japanese yen and Hong Kong dollar. Future
movements in the exchange rate of RMB against the U.S. dollar and other foreign
currencies may adversely affect our results of operations and financial
condition.

The following tables set forth assets denominated in currencies other than
RMB as of June 30, 2003 and December 31, 2002.

Expected maturity date
-------------------------------------------------
Fair
2003 2004 2005 2006 2007 Thereafter Total value
As of June 30, 2003 ----- ----- ---- ---- ---- ---------- ----- -----
(in millions)

Term deposits
in US$............... 402 -- -- -- -- -- 402 402
Average interest rate 2.99% 2.99% 2.99%

in Japanese yen...... 104 -- -- -- -- -- 104 104
Average interest rate 4.50% 4.50% 4.50%

in HK$............... 106 3 -- -- -- -- 109 109
Average interest rate 3.08% 1.50% 3.08% 3.08%

in other currencies.. 96 -- -- -- -- -- 96 96
Average interest rate 2.50% 2.50% 2.50%

104

Expected maturity date
-------------------------------------------------
Fair
2003 2004 2005 2006 2007 Thereafter Total value
As of December 31, 2002 ----- ----- ---- ---- ---- ---------- ----- -----
(in millions)

Term deposits
in US$................ 1,232 -- -- -- -- -- 1,232 1,232
Average interest rate. 1.49% 1.49% 1.49%

in Japanese yen....... 111 -- -- -- -- -- 111 111
Average interest rate. 0.01% 0.01% 0.01%

in HK$................ 399 3 -- -- -- -- 402 402
Average interest rate. 1.25% 1.50% 1.25% 1.25%

in other currencies... 127 -- -- -- -- -- 127 127
Average interest rate. 1.12% 1.12% 1.12%

First Set of Financial Statements

Our H.K. GAAP financial statements for the year ending December 31, 2003
will be prepared on a consolidated basis and will include the following
financial information:

. The audited results of CLIC for the six months ended June 30, 2003
included in the audited consolidated financial statements beginning on
page F-1 of this prospectus.

. The audited results of CLIC for the period July 1 to September 30, 2003,
the date the restructuring agreement and the other agreements referred to
in "Relationship with CLIC" were entered into and the date on which the
restructuring is treated as having occurred for accounting purposes.

. The audited results of the transferred business for the period October 1
to December 31, 2003.

The audited results for the six months ended June 30, 2003 and for the
period July 1 to September 30, 2003 include the results of the transferred
business and the non-transferred business.

As of June 30, 2003, CLIC had net liabilities of RMB 176,353 million. The
restructuring agreement provides that our owners' equity should be RMB 36,182
million as of that date, as determined in accordance with H.K. GAAP. The
difference of RMB 212,535 million will be recorded in owners' equity, with RMB
20,000 million accounted for as fully paid-up share capital, RMB 16,182 million
as capital surplus and RMB 176,353 million to eliminate the deficit on owners'
equity as of June 30, 2003. In accordance with the restructuring agreement, the
results of the non-transferred business for the period July 1 to September 30,
2003 are for the account of CLIC. Since the restructuring agreement was not
signed until September 30, 2003, H.K. GAAP requires these results to be
included in the consolidated profit and loss accounts for the year ending
December 31, 2003. A capital contribution from, or distribution to, CLIC will
be recorded to offset the losses borne by, or profits attributable to, CLIC for
this period.

Recently Issued Accounting Standards

SFAS No. 143

In June 2001, the U.S. Financial Accounting Standards Board, or FASB, issued
Statement of Financial Accounting Standards, or SFAS, No. 143, "Accounting for
Asset Retirement Obligations". SFAS No. 143 requires us to record the fair
value of an asset retirement obligation as a liability in the period in which
we incur a legal obligation associated with the retirement of tangible
long-lived assets that result from the acquisition, construction, development
and/or normal use of the assets. Our predecessor was required to adopt SFAS No.
143 on January 1, 2003. We have not determined the impact that adoption of SFAS
No. 143 will have on our consolidated financial statements.

105

SFAS No. 146

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities", which applies to costs associated with an
exit activity (including restructuring) or with the disposal of long-lived
assets. SFAS No. 146 requires an entity to record a liability for costs
associated with an exit or disposal activity when that liability is incurred
and can be measured at fair value. Commitment to an exit plan or a plan of
disposal expresses only our intended future actions and does not meet the
requirement for recognizing a liability and the related expense. An entity is
required to disclose information about its exit and disposal activities, the
related costs and changes in those costs in the notes to the interim and annual
financial statements that include the period in which an exit or disposal
activity is initiated and in any subsequent period until the activity is
completed. Our predecessor was required to adopt SFAS No. 146 on January 1,
2003. The provisions of SFAS No. 146 are required to be applied prospectively
after the adoption date to newly exited or disposed activities. Therefore, we
cannot determine the impact that the adoption of SFAS No. 146 will have on our
consolidated financial statements.

SFAS No. 148

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition and Disclosure, an amendment of FASB Statement No.
123", to provide alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirements of
SFAS No. 123, Accounting for Stock-Based Compensation, to require prominent
disclosures in both the annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of
the methods used on reported results.

The amendments to SFAS No. 123 in paragraphs 2(a)-2(e) of the statement will
be effective for financial statements for fiscal years ending after December
15, 2002. The amendment to SFAS No. 123 in paragraph 2(f) of the statement and
the amendment to Opinion 28 in paragraph 3 is effective for financial reports
containing condensed financial statements for interim periods beginning after
December 15, 2002. We do not expect that the adoption of SFAS No. 148 will have
a material impact on our consolidated financial statements.

SFAS No. 149

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". This statement amends and
clarifies the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and hedging activities
under SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities". This statement clarifies when a contract with an initial net
investment meets the characteristic of a derivative and when a derivative
contains a financing component. This statement also amends the definition of an
underlying to conform to the language contained in FASB Interpretation No., or
FIN, 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others". This statement is
effective for contracts entered into or modified after June 30, 2003, and for
hedging relationships designated after June 30, 2003. We are currently
assessing the impact of this statement on our results of operations, financial
position and cash flows upon adoption and have not yet completed that
assessment.

SFAS No. 150

106

guidance in SFAS No. 150 is generally effective for all financial instruments
entered into or modified after May 31, 2003, and is otherwise effective at the
beginning of the first interim period beginning after June 15, 2003. We are
currently assessing the impact of this statement on our results of operations,
financial position and cash flows upon adoption and have not yet completed that
assessment.

FIN 45

In November 2002, the FASB issued FIN 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees". FIN 45 requires a guarantor to
recognize a liability at the inception of certain guarantees for the fair value
of the obligation, including the ongoing obligation to stand ready to perform
over the term of the guarantee. Guarantees, as defined in FIN 45, include
contracts that contingently require us to make payments to a guaranteed party
based on changes in an underlying that is related to an asset, liability or
equity security of the guaranteed party, performance guarantees,
indemnification agreements or indirect guarantees of indebtedness of others.
This new accounting is effective for certain guarantees issued or modified
after December 31, 2002. We do not expect that the adoption of FIN 45 will have
a material impact on our financial position or results of operations.

FIN 46

In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest
Entities", an interpretation of Accounting Research Bulletin No. 51. FIN 46
provides a new framework for identifying variable interest entities, or VIEs,
and determining when a company should include the assets, liabilities,
non-controlling interests and results of activities of VIEs in its consolidated
financial statements. FIN 46 requires VIEs to be consolidated by a company if
that company is subject to a majority of the risk of loss from the VIEs'
activities or is entitled to receive a majority of the entity's residual
returns, or both. FIN 46 is effective immediately for VIEs created after
January 31, 2003 and is effective January 1, 2004 for VIEs created prior to
February 1, 2003. We are currently assessing the impact of FIN 46 on our
financial position and results of operations.

SOP 03-1

In July 2003, the Accounting Standards Executive Committee issued Statement
of Position, or SOP, 03-1, "Accounting and Reporting by Insurance Enterprises
for Certain Non-Traditional Long-Duration Contracts and for Separate Accounts".
SOP 03-1 provides guidance on accounting and reporting by insurance enterprises
for certain non-traditional long-duration contracts and for separate accounts.
SOP 03-1 is effective for financial statements for fiscal years beginning after
December 15, 2003, with earlier adoption encouraged. SOP 03-1 may not be
applied retroactively to prior years' financial statements, and initial
application should be as of the beginning of an entity's fiscal year. We do not
expect that the adoption of SOP 03-1 will have a material impact on our
financial position or results of operations.

Reconciliation of Hong Kong Generally Accepted Accounting Principles (H.K.
GAAP) and United States Generally Accepted Accounting Principles (U.S. GAAP)

The consolidated financial statements contained in this prospectus have been
prepared in accordance with H.K. GAAP, which differs in certain significant
respects from U.S. GAAP. Differences between H.K. GAAP and U.S. GAAP may have a
significant impact on consolidated net profit/(loss) and consolidated owners'
equity.

107

The effect on net profit/(loss) of significant differences between H.K. GAAP
and U.S. GAAP for the six months ended June 30, 2003 and for the years ended 31
December 2000, 2001 and 2002 is as follows:

Six months
ended
Year Ended December 31, June 30,
---------------------- ---------
2000 2001 2002 2002 2003
- ------ ------ ------ ---- ----
(RMB in millions)

Net profit/(loss) under H.K. GAAP............... (6,990) (3,295) (2,250) 91 (714)
U.S. GAAP adjustments
Depreciation of investment properties.......... (36) (41) (67) (30) (23)
Deficit on revaluation of investment properties -- -- -- -- 181
------ ------ ------ --- ----
Net profit/(loss) under U.S. GAAP............... (7,026) (3,336) (2,317) 61 (556)
====== ====== ====== === ====

The effect on owners' equity of significant differences between H.K. GAAP
and U.S. GAAP as of June 30, 2002 and 2003 and December 31, 2000, 2001 and 2002
is as follows:

Six months
Year ended December 31, ended June 30,
- ---------------------------- ------------------
2000 2001 2002 2002 2003
- -------- -------- -------- -------- --------
(RMB in millions)

Owners' equity under H.K. GAAP......... (170,045) (172,348) (175,463) (171,381) (176,353)
U.S. GAAP adjustments
Accumulated depreciation of investment
properties.......................... (70) (111) (178) (141) (201)
Deficit on revaluation of investment
properties.......................... -- -- -- -- 181
-------- -------- -------- -------- --------
Owners' equity under U.S. GAAP......... (170,115) (172,459) (175,641) (171,522) (176,373)
======== ======== ======== ======== ========

Investment properties

Under H.K. GAAP, investment properties are valued on an open market value
basis. Under U.S. GAAP, investment properties are stated at historical cost
less accumulated depreciation and accumulated impairment loss. Cost of
investment properties, less residual value, is depreciated using a straight
line method over its estimated useful life.

108

Accumulated other comprehensive income/(loss)

Accumulated other comprehensive income/(loss) represents the cumulative
gains and losses on items that are not reflected in earnings. The balances and
activities for the six months ended June 30, 2002 and 2003 and for the years
ended December 31, 2000, 2001, and 2002 are as follows:

Six months
Year ended December 31, ended June 30,
---------------------- -------------
2000 2001 2002 2002 2003
------ ----- ---- ---- ----
(RMB in millions)

Changes in net unrealized gains/(losses) on investment securities:
Net unrealized gains/(losses) arising during the period.... (1,048) 1,601 (234) 826 (191)
Reclassification adjustment for gains/(losses) included in
net earnings............................................. 18 (387) (747) 157 (10)
------ ----- ---- ---- ----
Changes in net unrealized gains/(losses) on investment
securities............................................... (1,030) 1,214 (981) 983 (201)
------ ----- ---- ---- ----
Adjustments for:
Deferred acquisition costs................................. 124 (166) 110 (103) 25
------ ----- ---- ---- ----
Total other comprehensive income/(loss).................... (906) 1,048 (871) 880 (176)
====== ===== ==== ==== ====

109

PROSPECTIVE FINANCIAL INFORMATION

In accordance with customary practice in securities offerings in Hong Kong,
we have prepared the following prospective financial information for the year
ending December 31, 2003. Although we will become a reporting company after the
global offering and will have ongoing disclosure obligations under U.S. federal
securities laws, we do not intend to update information prior to the
announcement of our results of operations for the year or to publish this
information in future years.

PricewaterhouseCoopers have not examined, compiled or otherwise applied
procedures to the prospective financial information for the purpose of its
inclusion in this prospectus and, accordingly, do not express any opinion or
any form of assurance on it. The report of PricewaterhouseCoopers included in
this prospectus relates to our historical combined financial statements. It
does not extend to the prospective financial information and should not be read
to do so.

We did not prepare this information with a view towards compliance with
published guidelines of the American Institute of Certified Public Accountants,
or AICPA, regarding forecasts and projections. Accordingly, this information
does not include disclosure of all information required by the AICPA guidelines
on prospective financial information. The prospective financial information was
prepared for use in the Hong Kong offering in accordance with local market
practice in Hong Kong. This information is necessarily based upon a number of
assumptions and estimates that, while presented with numerical specificity and
considered reasonable by us, are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
beyond our control, and upon assumptions with respect to future business
decisions which are subject to change. This information also assumes the
success of our business strategy. The success of this strategy is subject to
uncertainties and contingencies beyond our control, and no assurance can be
given that the strategy will be effective or that the anticipated benefits from
the strategy will be realized in the periods for which forecasts have been
prepared, or at all. Accordingly, we cannot provide any assurance that these
results will be realized. The prospective financial information may vary
materially from our actual results. We make no representation that these
results will be achieved. Prospective investors in the ADSs and H shares are
cautioned not to place undue reliance on this information.

Forecast for the Year Ending December 31, 2003

Forecast loss after taxation and minority interests but before extraordinary
items for the year ending December 31, 2003............................... No more than (RMB 1,985 million)
--------------------------------

Basis and Assumptions

Our management has prepared our forecast consolidated profit after taxation
and minority interests but before extraordinary items for the year ending
December 31, 2003, on the basis of the audited financial statements for the six
months ended June 30, 2003 and a forecast of the results for the remaining six
months ending December 31, 2003, based in part on unaudited financial results
for the three months ended September 30, 2003. The forecast loss for the year
ending December 31, 2003 includes the results of the transferred policies and
the non-transferred policies for the nine months ended September 30, 2003 and
the results of the transferred policies only for the three months ending
December 31, 2003. Our management is not aware of any extraordinary items which
have arisen or are likely to arise in respect of the year ending December 31,
2003. The forecast has been prepared on a basis of the accounting policies
consistent in all material respects with those adopted by us as set out in the
audited consolidated financial statements beginning on page F-1 of this
prospectus, and on the following bases and assumptions:

. There will be no material change in existing political, legal, fiscal,
market or economic conditions in China.

110

. There will be no changes in legislation, regulations or rules in China,
Hong Kong or any other country or territory with which we have
arrangements or agreements, which materially adversely affect our
business.

. There will be no material changes in the bases or rates of taxation in
China.

. There will be no material changes in interest rates or foreign currency
exchange rates from those currently prevailing.

. The actuarial assumptions used to develop the policyholder reserves are
consistent with those used in the audited financial statements as of June
30, 2003.

. Gross written premium and policy fees for the year ending December 31,
2003 will remain at approximately the same level as gross written premium
and policy fees for the year ended December 31, 2002; gross written
premium and policy fees attributable to the transferred policies for the
year ending December 31, 2003 will increase by not less than 10.0% over
gross written premium and policy fees attributable to the transferred
policies for the year ended December 31, 2002 reflecting anticipated
growth in the business; gross written premium and policy fees
attributable to the non-transferred policies will decrease by
approximately 25.0% as a result of the continuing run off of the
non-transferred policies up to September 30, 2003 and exclusion from our
financial statements of the results of this business subsequent to this
date following the restructuring.

. Investments will yield an average return of approximately 3.6% based on
the yield attained in the first half year and forecasted in the six
months ending December 31, 2003. The mix of the portfolio on hand as of
December 31, 2003 is assumed to be similar to that of June 30, 2003,
except for a shift of securities under repurchase agreement to government
bonds, in connection with our strategy to pursue a higher return for our
investments. The portfolio is assumed to reflect the retention of
investment assets by CLIC as a result of the restructuring and additional
investments commensurate with business growth.

. Expected policyholder death and other benefits will be based on
mortality, morbidity and lapse assumptions used in the calculation of the
policyholder reserves as at June 30, 2003.

. Administrative expense will increase by approximately 16.0% over the
administrative expense in 2002 mainly due to the expansion of business
scale.

. Net loss for the three months ended September 30, 2003 was RMB 2,387
million. Revenues were impacted by net realized and unrealized losses on
investments during the three months ended September 30, 2003 of RMB 972
million, compared to gains for the six months ended June 30, 2003,
primarily due to realized losses in fixed maturity securities and
unrealized losses in closed-end funds. Net premiums earned and policy
fees were consistent with premium revenues in the first half of the year,
although sales levels attributable to the transferred policies were
moderately lower than in the first half. We typically experience a lower
level of sales of products in the third quarter than in the first half of
the year. We expect, and our projections assume, that premiums will be
higher in the fourth quarter, as a result of an increased emphasis on
selling risk products. Benefits, claims and expenses were higher during
the three months ended September 30, 2003, principally due to increased
administrative costs. We typically experience higher levels of
administrative expenses in the second half of the year than the first.
The September 30, 2003 unaudited results also reflect a charge for taxes
payable by China Life of RMB 434 million.

The results for the three months ended September 30, 2003 described above
are unaudited and are not indicative of what our results may be for any
future period. The policy reserves and related items at September 30,
2003 were based on the in force business at June 30, 2003 and the
expected experience, including with respect to investment earnings,
mortality, surrenders, morbidity and new business, over the subsequent
three month period. The resulting items were then adjusted, where
appropriate, at an aggregate level to reflect the actual experience, as
reflected in actual cashflows.

111

EMBEDDED VALUE

In order to provide investors with an additional tool to understand our
economic value and business results, we have disclosed information regarding
our embedded value, as discussed below. These measures are based on a
discounted cash flow valuation determined using commonly applied actuarial
methodologies. Standards with respect to the calculation of embedded value are
still evolving, however, and there is no single adopted standard for either the
form, determination or presentation of the embedded value of an insurance
company. Moreover, because of the technical complexity involved in embedded
value calculations and the fact that embedded value estimates vary materially
as key assumptions are changed, you should read the following discussion as
well as "Annex A--Actuarial Consultants' Report of Tillinghast-Towers Perrin"
in their entirety, and you should use special care when interpreting embedded
value results. See also "Forward-Looking Statements".

We report our profits in financial statements that are prepared in
accordance with H.K. GAAP. An alternative method of measuring the value and
profitability of a life insurance company is the embedded value method.
Embedded value is an actuarially determined estimate of the economic value of
the life insurance business of an insurance company based on a particular set
of assumptions as to future experience, excluding any economic value
attributable to any future new business. In addition, the value of one year's
sales represents an actuarially determined estimate of the economic value
arising from new life insurance business issued in one year.

We believe that reporting our embedded value provides useful information to
investors, in that it reports the total amount of distributable earnings, in
present value terms, that is expected to emerge over time, in accordance with
the assumptions used, from business already sold and still in force. In
addition, the value of new business issued in a year provides useful
information as to the value being created for investors by new business
activity and hence the future potential of the business. Since our business
includes policies written only since 1999, we believe that it is appropriate to
disclose such information, as a supplement to H.K. GAAP financials, to more
fully illustrate our potential.

Tillinghast-Towers Perrin, or Tillinghast, consulting actuaries, has
prepared a report providing information as to our embedded value as of June 30,
2003 and the value of one year's sales, in respect of new policies issued for
the 12 months ending June 30, 2003, on a range of assumptions. See "Experts". A
copy of Tillinghast's report is included as Annex A to this prospectus. See
"Annex A--Actuarial Consultants' Report of Tillinghast-Towers Perrin". This
report does not constitute an audit opinion of the financial information used
in the report.

Since the scope of Tillinghast's work was to report on the embedded value of
our existing life insurance business and the value of one year's sales in
respect of our new insurance business, Tillinghast has not considered the
financial effect on us of the policy management agreement, asset management
agreements, property leasing agreement, trademark license agreement and
non-competition agreement we have entered into with CLIC in connection with the
restructuring. See "The Restructuring" and "Relationship with CLIC".

In its calculation of embedded value and the value of one year's sales,
Tillinghast has relied on data and information supplied by us, including the
policy data files, advice as to management's operational plans and other
unaudited financial information. Tillinghast's report provides further
information regarding its use of, and reliance on, the data and information
supplied to it.

In Tillinghast's report, values have been shown under a range of assumptions
given the particular uncertainties associated with the future investment
environment in the PRC and other future operational uncertainties in relation
to our portfolio of policies. We advise you to consider the range of values
contained in Tillinghast's report in order to gain an understanding of the
impact on those values arising from the use of alternative assumptions as to
future investment and operational experience. Moreover, the values shown do not
necessarily encompass the full range of potential outcomes.

112

Since actual market value is determined by investors based on a variety of
information available to them and their own investment criteria, embedded value
should not be construed to be a direct reflection of actual market value. In
particular, embedded value does not include the potential contribution arising
from new business to be issued in the future which will depend on, among other
things, the prospects for the life insurance market in the PRC, our future
position in that market and the profitability of new business issued in the
future.

Further, in the current environment in the PRC and worldwide markets,
material uncertainty exists with respect to asset valuations, a key component
of embedded value.

113

LIFE INSURANCE INDUSTRY IN CHINA

Unless otherwise indicated, the financial and market share information set
forth in this section is based on information reported by insurance companies
to the CIRC. The reported information includes premium and deposit information
that is not determined in accordance with H.K. GAAP or U.S. GAAP. Our market
share information set forth in this prospectus is estimated by computing the
market share of our predecessor company, CLIC, based on premium and deposit
information reported by insurance companies to the CIRC, and adjusting it to
give effect to our restructuring.

History and Background

The modern practice of China's life insurance industry dates back to the
establishment in 1949 of the People's Insurance Company of China, or PICC, by
the People's Republic of China. PICC achieved monopoly status in China's
insurance market by the mid-1950s, by which time all foreign companies had
withdrawn operations from China. The Chinese government suspended virtually all
of PICC's domestic insurance business, however, in 1958, lasting until the
advent of economic reform in 1979, when PICC's domestic property and casualty
insurance business was resuscitated. PICC's life insurance business resumed
operations in 1982, with PICC being the only life insurance provider in China.
Initially, the life insurance market focused principally on the group insurance
sector, and life insurance products lacked diversity. In the late 1980s, more
life insurance companies started to enter the market, with the establishment of
two Chinese companies, Ping An Insurance Company of China and China Pacific
Insurance Company, and the entry of foreign insurance companies. Distribution
channels for individual life insurance products began to emerge and agency
sales forces began to be developed. Meanwhile, China's first insurance law was
introduced in 1995 and the CIRC was established in 1998 to regulate the
insurance industry.

PICC Life, the predecessor of CLIC, was established as a specialized life
insurance subsidiary of the PICC group following its restructuring in 1996. In
1999 the PICC group was further restructured into four independent legal
entities: People's Insurance Company of China, a property insurance company;
China Reinsurance Company, at the time China's only insurance company licensed
to operate reinsurance businesses; China Insurance H.K. (Holdings) Company
Limited, which subsumed all overseas business institutions and operations of
the former PICC group; and CLIC, our predecessor, the only wholly state-owned
insurance company licensed to operate life insurance businesses in China.

Industry Overview

Rapid growth in life insurance industry

The life insurance industry in China has experienced rapid growth in recent
years. According to the CIRC, total life insurance premiums from life
insurance, annuity, accident insurance and health insurance products grew from
RMB 87,210 million in 1999 to RMB 227,464 million (US$27,479 million) in 2002,
representing a compound annual growth rate of 37.7%. During the same period,
total insurance premiums in China grew from RMB 139,322 million to RMB 305,415
million (US$36,897 million), representing a compound annual growth rate of
29.9%. According to the CIRC, for the year ended December 31, 2002, total life
insurance premiums accounted for 74.5% of the total insurance premiums of the
Chinese insurance industry for that year, representing an increase of 59.7%
from the year before.

114

China's "life insurance depth", measured by total life insurance premiums as
a percentage of gross domestic product, and "life insurance density", measured
by total life insurance premiums per capita, have both been rising steadily
during the recent years. The following table sets forth the life insurance
premiums in China, as well as China's life insurance depth and life insurance
density, as of or for the year ended on December 31, 2002.

China's China's China's
Life Year-to- life life life
insurance year insurance insurance insurance
premiums growth depth density density
- ------------ --------- --------- --------- ---------
(RMB
in billions) (Percent) (Percent) (RMB) (US$)

1992 10.6 -- 0.4% 9.00 1.09
1993 10.0 (6)% 0.3% 8.45 1.02
1994 23.7 137% 0.5% 19.80 2.39
1995 25.7 8% 0.4% 21.24 2.57
1996 36.0 40% 0.5% 29.39 3.55
1997 60.9 69% 0.8% 49.29 5.95
1998 74.8 23% 1.0% 59.97 7.24
1999 87.2 17% 1.1% 69.33 8.38
2000 99.7 14% 1.1% 78.70 9.51
2001 142.4 43% 1.5% 111.57 13.48
2002 227.5 60% 2.2% 177.04 21.38

- --------
Sources: China Economic Information Center; China Insurance Yearbook.

Notwithstanding its rapid growth during the past decade, the life insurance
industry in China at present is still in its early stages of development.
China's life insurance depth and life insurance density in 2001 were
significantly lower than average life insurance depth and life insurance
density in Asia and worldwide.

The following table sets forth life insurance depth and life insurance
density information for selected countries, as well as Asia average and world
average in 2001.

Life Life
insurance insurance
depth density
- --------- ---------
(Percent) (US$)

U.K.......... 10.7% 2,568
Japan........ 8.9% 2,806
South Korea.. 8.7% 763
Taiwan....... 6.0% 761
Hong Kong.... 5.1% 1,250
U.S.......... 4.4% 1,602

Asia average. 5.8% 125
World average 4.7% 235

- --------
Source: Swiss Reinsurance Company, Sigma Report.

Life insurance companies

There were a total of 23 insurance companies in China operating life
insurance businesses as of December 31, 2002. We are the leading life insurance
company, with a market share of 45% in 2002, after giving effect to our
restructuring. Ping An Insurance Company of China, Ltd. and China Pacific
Insurance Co. Ltd. had respective market shares of 24% and 11%. The
foreign-invested insurance companies accounted for less than 2% of the
nationwide market share of life insurance products in 2002.

115

The following table sets forth life insurance premiums of major insurance
companies offering life insurance, annuities, accident insurance and health
insurance products in China for the year ended December 31, 2002.

Total Total premium
premiums market share
- ------------ -------------
(RMB (Percent)
in millions)

CLIC/(1)/............................... 128,768 57%
Ping An Insurance Company of China, Ltd. 53,539 24%
China Pacific Life Insurance Co. Ltd.... 24,903 11%
New China Life Insurance Co. Ltd........ 7,983 4%
Tai Kang Life Insurance Co. Ltd......... 6,563 3%
Others/(2)/............................. 5,708 3%
------- ----
Total................................... 227,464 100%
======= ====
China Life/(3)/......................... 101,839 45%

- --------
(1) Information concerning CLIC, our predecessor, does not give effect to the
restructuring.
(2) Others include China United Property Insurance Co., Taiping Life Insurance
Co. Ltd., Tianan Insurance Co. Ltd. of China, American International
Assurance Co., Ltd., Shanghai, Guangzhou, Shenzhen, Beijing and Suzhou
branches, Manulife-Sinochem Life Insurance Co. Ltd., Pacific-Antai Life
Insurance Co. Ltd., Allianz-Dazhong Life Insurance Co., AXA-Minmetals
Assurance Co., Ltd., China Life-CMG Life Insurance Co., Ltd.,
Citic-Prudential Life Insurance Co., Ltd., John Hancock-Tianan Life
Insurance Co. Ltd., Sun Life Everbright Life Insurance Co. Ltd. and
Generali China Life Insurance Co. Ltd.
(3) PRC GAAP premiums; adjusted to give effect to the restructuring.
Source: China Insurance Yearbook 2003.

See "Business--Competition" for market share information for each insurance
segment in which we do business.

Industry Trends

We believe that the future development of the life insurance industry in
China will be characterized by the following trends:

Economic growth leading to growing demand for insurance products

China's economy has grown rapidly in recent years, resulting in an increase
in income per capita, which we believe will foster a growing demand for
insurance products and services. As China's economy develops, the per capita
annual income of rural households and the per capita annual disposable income
of urban households have been rising rapidly. The following table sets forth
key data for China, including gross domestic product, income level and total
life insurance premiums since 2000.

As of or for the year ended Compound annual
December 31, growth rate
--------------------------- ---------------
2000 2001 2002 (2000-2002)
----- ----- ------ ---------------

GDP (RMB in billions)........................................ 8,947 9,731 10,240 7.0%
Real GDP growth (%).......................................... 8.0 7.5 8.0 --
Population (in millions)..................................... 1,267 1,276 1,285 0.7%
GDP per capita (RMB)......................................... 7,086 7,651 7,997 6.2%
Per capita annual net income of rural households (RMB)....... 2,253 2,366 2,476 4.8%
Per capita annual disposable income of urban households (RMB) 6,280 6,860 7,703 10.8%
Total life insurance premiums (RMB in billions)/(1)/......... 100 142 227 51.0%

- --------
(1) Include life, accident and health insurance premiums.
Sources: National Bureau of Statistics of China; China Insurance Yearbook 2001,
2002 and 2003.

116

The following table sets forth premiums of life insurance, accident and
health insurance products in China for the years ended December 31, 2000, 2001
and 2002.

For the year ended
December 31,
----------------------
2000 2001 2002
------ ------- -------
(RMB in millions)

Life insurance products.... 85,118 128,822 207,280
Accident insurance products 8,082 7,447 7,951
Health insurance products.. 6,548 6,091 12,155

We believe that rising income levels in China are likely to foster growing
demand of Chinese consumers for insurance products and services as there is
more demand for the protection and investment features that life insurance
products provide, and greater capacity to pay for premiums. We believe that the
high savings rate of Chinese consumers relative to other countries will make
them particularly receptive to the protection and investment features offered
by life insurance and annuity products.

Continued growth due to the changing demographics of China's large population

We believe China's large population can potentially develop into one of the
largest markets for life insurance products in the world. We believe China's
growing middle class, as they increasingly turn to insurance products and
services for protection and financial security, will continue to be the driving
force in this market. China's population is also ageing at a faster rate than
in many industrialized countries. According to the U.S. Census Bureau, China's
percentage of population aged 65 or above is expected to rise from 7% to 14% of
the total population in 27 years, compared to 69 years for the U.S. We believe
China's ageing population will lead to greater demand for the protection and
savings products offered by insurance companies. The Chinese public has also
become increasingly aware of the need and attractiveness of insurance products,
further fostering demand for insurance products.

Continued growth fostered by social welfare reform

China's social welfare system has undergone rapid change in recent years,
further fueling the demand for insurance products and services. China's social
welfare system since the founding of the People's Republic of China had been
designed to deliver most social welfare, benefits and services through
state-owned enterprises or governmental agencies. Recent reform efforts in
social welfare have focused on shifting the provision of social welfare
benefits to a mix of private and public providers. A social welfare and
security system is gradually being established to provide basic social welfare
protection of pension, medical and unemployment insurance. Insurance companies
are expected to act as private providers of supplemental social welfare
protection by offering group insurance products to groups and individual
insurance products to individuals and groups. Even though the purchase of group
insurance products to supplement the basic protections offered by the social
welfare and security system is not required by law, we believe more businesses,
as they seek to improve the overall welfare and benefits of their employees,
will consider purchasing group annuities and group life and group health
insurance, resulting in further growth in these products. We believe reform
efforts in social welfare will also result in increasing demand for individual
life, annuity and health products and other insurance products and services.

Regulatory reform permitting greater flexibility in product design and
investment options

The Chinese life insurance industry is highly regulated. Historically, the
CIRC focused on establishing product regulations and guidelines that determined
the pricing and terms of the insurance products offered by life insurance
companies. These regulations and guidelines generally regulated market behavior
with the goal of bringing China's insurance practice in line with international
standards. Recently, the CIRC has shifted its

117

regulatory attention toward setting more stringent solvency requirements and
giving more flexibility to insurers to determine the pricing and other terms of
the products they offer. We believe these changes will allow greater freedom
for insurance companies to develop products to meet market needs, and devote
more attention to solvency requirements.

Life insurance companies in China are subject to significant restrictions on
their investments. Recent trends in investment regulations demonstrate a
gradual shift by the CIRC toward diversification of permitted investments. For
instance, prior to June 2003, insurance companies were only allowed to invest
in bonds issued by four types of government-related enterprises. Life insurance
companies are now permitted under the CIRC rules to invest in corporate bonds
that have a rating of AA or higher, as rated by China Chengxin International
Credit Rating Co., Ltd., Dagong Global Credit Rating Agency, China Lianhe
Credit Rating Co., Ltd., Shanghai Far East Credit Rating Co., Ltd. or other
credit rating agencies approved by the CIRC, subject to specified investment
amount restrictions. For further information on these regulations, see
"Regulation--Insurance Company Regulation--Regulation of investments".

Growing demand for participating products

Traditionally, Chinese life insurance companies had very limited choices in
terms of investing insurance premiums. These options typically were limited to
bank savings deposits and government bonds. In order to stimulate domestic
demand, the Chinese government has made several cuts in interest rates since
1996 and, as a result of these rate cuts, many life insurance companies in
China, including CLIC, experienced "negative spreads" on many life insurance
policies issued before the rate cuts. "Negative spread" refers to the scenario
in which the investment yield of an insurance company falls below the rates of
return that it commits to pay under the policies it issues. In response to
these rate cuts and resulting negative spreads, the CIRC required insurance
companies in China to reduce guaranteed rates for new fixed rate return
insurance products, making these less attractive products.

As these trends continue, we expect that the insurance market will continue
to move away from the traditional fixed rate return products in favor of
participating products in which the policyholder is entitled to share in the
distributable earnings of the insurer derived from the participating products
through policy dividends. According to the CIRC, premiums from participating
products were RMB 112,172 million (US$13,551 million) for the year ended
December 31, 2002, representing 49% of total premiums of the life insurance
industry for that year.

The life insurance market in China has also seen in recent years more
sophisticated investment-related insurance products, such as universal life and
variable life products. However, due to the immaturity of the Chinese stock
markets generally, these investment-related insurance products have not made
any significant progress in capturing insurance market share.

Increasing competition in the life insurance market

The Chinese life insurance industry is increasingly competitive, with
competition arising not only from domestic life insurance companies, but also
from non-life insurance companies and foreign-invested life insurers. The
number of life insurance companies licensed in China has been growing steadily,
which we believe will lead to greater competition in the life insurance
industry. There were 14 licensed life insurance companies in China as of
December 31, 2000, 17 as of December 31, 2001, 23 as of December 31, 2002 and
27 as of June 30, 2003. In addition, existing limitations on foreign-invested
insurance companies are gradually being relaxed, which we believe will further
increase competition in China's life insurance market. Recent changes in the
insurance law have allowed property and casualty insurers to sell accident and
short-term health insurance products with regulatory approval starting from
January 2003, which we believe will lead to greater competition in the accident
and health insurance sectors, especially in the group accident and group health
insurance products.

118

We also face potential competition from other financial services providers,
primarily licensed mutual fund companies, trust companies and securities
brokerage companies licensed to manage separate accounts. Recent changes in the
regulatory environment in China's relaxing rules on the formation of mutual
funds and sales of securities has led to greater availability and variety of
financial investment products. These products may prove to be attractive to the
public and thereby adversely affect the sale of some of the products we offer,
including participating life insurance products and annuities.

Continued growth in the health insurance sector

China's health insurance market has been growing steadily over the past
several years. According to the CIRC, health insurance premium income grew from
RMB 6,548 million in 2000 to RMB 12,155 million (US$1,500 million) in 2002,
representing a compound annual growth rate of 36.2%. With governmental health
care providers accounting for approximately 30% and insurance companies
accounting for approximately 1% of China's total health care spending in 1998,
a vast majority of health care spending in China remains uninsured. The Chinese
government has encouraged the growth of health insurance systems for companies
by implementing reforms that shift the provision of social welfare benefits
from state-owned enterprises or governmental agencies to a mix of social
security funds and insurance companies. The Chinese government has also
encouraged the establishment of health insurance as a separate business segment
within life insurance companies and the development of managed care schemes in
order to facilitate growth in the health insurance sector. The Chinese
government has particularly sought to encourage growth in the group health
insurance sector and, as a result, group health insurance, especially group
supplemental health care, has experienced the fastest growth among all health
insurance sectors in 2001 and 2002. Recent government measures may encourage
corporate employers to increase the health care benefits they provide to their
employees. PRC companies are required by law to allocate each year a portion of
their after-tax profits to an employee welfare fund and employee health care
benefits including health insurance premiums are generally paid out of this
fund. The new government measures allow companies to treat the portion of
health insurance premiums that exceeds the amount of the welfare funds
available for the payment of insurance premiums as tax deductible costs,
thereby reducing the employers' cost of providing health benefits. We
anticipate that government policies and measures such as these will continue
and will foster the growth of the health insurance market.

119

BUSINESS

Unless the context otherwise indicates, all company data for periods ending
on or prior to June 30, 2003 provided in this section, including data
concerning premiums, deposits, policy fees, insurance policies, annuity
contracts, agents, personnel, offices, distribution channels and investment
assets, only include data relating to the policies, contracts and investment
assets that were transferred to us in connection with the restructuring and do
not include those that are included in our historical consolidated financial
statements but were retained by CLIC in connection with the restructuring. For
further information on the restructuring, see "The Restructuring". Policies,
contracts and investment assets retained by CLIC are not ours and their results
of operations will not be reflected in our consolidated financial statements
for future periods. Unless otherwise indicated, market share information set
forth in this section is based on premium information as reported by the CIRC,
which is not determined in accordance with H.K. GAAP or U.S. GAAP. Our market
share information set forth in this prospectus is estimated by computing the
market share of our predecessor company, CLIC, and adjusting it to give effect
to our restructuring, based on premiums determined in accordance with PRC GAAP.
The policies, contracts and assets retained by CLIC are not ours and will not
be available to generate revenues for us in the current or future periods.
Therefore, to reflect our business more accurately as it will be operated
following the restructuring, unless we otherwise state, all company data
provided in this section relate only to the policies, contracts and assets
transferred to us in the restructuring.

Overview of Our Business

We are ranked number one in life insurance in China, with a market share of
45% in 2002, determined on a pro forma basis after giving effect to CLIC's
restructuring described below. We are:

. The leading provider of individual life insurance and annuity products,
with a market share of 51% in 2002, nearly three times that of our
nearest competitor.

. The leading accident insurance provider, with a market share of 69% in
2002, and a leading health insurance provider, with a market share of 34%
in 2002 in this fast-growing market.

. One of the largest asset managers and institutional investors, with
investment assets of RMB 212,452 million (US$25,666 million), after
giving effect to the restructuring, and, together with CLIC's investment
assets, of RMB 335,840 million (US$40,572 million) as of June 30, 2003.
Through an asset management joint venture established by us and CLIC,
following the restructuring we are managing our investment assets and
substantially all of those of CLIC. Those assets under management
accounted for more than one-half of all assets under management held by
Chinese life insurance companies in 2002.

We have been able to generate significant revenue growth and, on a pro forma
basis after giving effect to the restructuring, we earned significant net
profit in 2002 and in the six months ended June 30, 2003. Our total gross
premiums and policy fees from the policies transferred in the restructuring
grew from RMB 23,304 million (US$2,815 million) for the six months ended June
30, 2002 to RMB 25,403 million (US$3,069 million) for the six months ended June
30, 2003, representing an increase of 9.0%. Total deposits from the transferred
policies

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grew from RMB 40,626 million (US$4,908 million) for the six months ended June
30, 2002 to RMB 58,417 million (US$7,057 million) for the six months ended June
30, 2003, representing an increase of 43.8%. Total gross premiums and policy
fees from the transferred policies grew from RMB 21,107 million for the year
ended December 31, 2000 to RMB 47,077 million (US$5,687 million) for the year
ended December 31, 2002, representing a compound annual growth rate of 49.3%.
Total deposits from the transferred policies grew from RMB 15,220 million for
the year ended December 31, 2000 to RMB 58,572 million (US$7,076 million) for
the year ended December 31, 2002, representing a compound annual growth rate of
96.2%. On a pro forma basis after giving effect to the restructuring, we had a
net profit of RMB 3,128 million (US$378 million) for the six months ended June
30, 2003 and a net profit of RMB 4,524 million (US$547 million) for the year
ended December 31, 2002.

We provide the following products and services:

Individual Life Insurance. Our individual life insurance business offers
life insurance and annuity products to individuals, primarily through a
distribution force comprised of approximately 650,000 exclusive agents
operating in approximately 8,000 field offices throughout China. We also sell
individual life insurance and annuity products through non-dedicated agencies
located in approximately 78,000 outlets of commercial banks, post offices and
savings cooperatives throughout China. Our individual life insurance gross
written premiums and policy fees from the transferred policies totaled RMB
20,370 million (US$2,461 million) for the six months ended June 30, 2003 and
RMB 37,662 million (US$4,550 million) for the year ended December 31, 2002,
constituting 80.2% and 80.0% of our total gross written premiums and policy
fees for those periods. Our individual life insurance deposits (gross additions
to policyholder contract deposits for the period) from the transferred policies
totaled RMB 53,271 million (US$6,436 million) for the six months ended June 30,
2003 and RMB 52,340 million (US$6,323 million) for the year ended December 31,
2002, constituting 91.2% and 89.4% of our total deposits for those periods. In
connection with the restructuring, CLIC transferred its entire exclusive agency
sales force to us.

Group Life Insurance. Our group life insurance business offers life
insurance and annuity products to companies and institutions, primarily through
approximately 10,000 direct sales representatives operating in more than 4,000
branch offices. We also sell our group life products through dedicated
insurance agencies and insurance brokerage companies. Our group life insurance
gross written premiums and policy fees from the transferred policies totaled
RMB 267 million (US$32 million) for the six months ended June 30, 2003 and RMB
477 million (US$58 million) for the year ended December 31, 2002, constituting
1.1% and 1.0% of our total gross written premiums and policy fees for those
periods. Our group life insurance deposits from the transferred policies
totaled RMB 5,146 million (US$622 million) for the six months ended June 30,
2003 and RMB 6,232 million (US$753 million) for the year ended December 31,
2002, constituting 8.8% and 10.6% of our total deposits for those periods.

Asset Management. An asset management joint venture established by us and
CLIC manages our investment assets and, separately, substantially all of those
of CLIC pursuant to two asset management

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agreements, one with us and one with CLIC. Through this joint venture, we
expect to be able to offer asset management products and services to other
insurance companies. See "Business--Asset Management Business". We own 60% of
the joint venture, with CLIC owning the remaining 40%.

The following table sets forth selected financial data regarding the
transferred policies for the periods indicated.

Compound
For the year annual For the six months
ended December 31, growth rate ended June 30,
-------------------------- ----------- -------------------
2000 2001 2002 2002 (2000-2002) 2002 2003 2003
------ ------ ------ ----- ----------- ------ ------ -----
RMB RMB RMB US$ RMB RMB US$
(in millions, except as otherwise indicated)

Individual life insurance:
Gross written premiums and
policy fees................ 13,486 24,806 37,662 4,550 67.1% 19,350 20,370 2,461
First-year gross written
premiums................... 9,695 14,812 17,973 2,171 36.2% 9,992 5,903 713
Deposits..................... 11,308 15,162 52,340 6,323 115.1% 37,364 53,271 6,436
First-year deposits.......... 10,824 13,396 48,925 5,911 112.6% 36,010 48,502 5,859
Group life insurance:
Gross written premiums and
policy fees................ 228 1,085 477 58 44.6% 301 267 32
First-year gross written
premiums................... 0 1,032 313 38 NA 209 163 20
Deposits..................... 3,912 5,706 6,232 753 26.2% 3,262 5,146 622
First-year deposits.......... 3,912 5,706 6,232 753 26.2% 3,262 5,146 622
Accident and health insurance:
Gross written premiums....... 7,393 7,784 8,938 1,080 10.0% 3,653 4,766 576

Total gross written premiums and
policy fees................... 21,107 33,675 47,077 5,687 49.3% 23,304 25,403 3,069
Total individual and group
deposits...................... 15,220 20,868 58,572 7,076 96.2% 40,626 58,417 7,057

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In connection with the restructuring, CLIC transferred to us a portion of
its cash, specified investment assets and various other assets. CLIC retained
the balance of cash, specified investment assets and various other assets,
including all assets relating to the non-insurance businesses carried out by
CLIC prior to the restructuring.

We have agreed to provide policy management and other services to CLIC, and
CLIC will remain our controlling shareholder.

Competitive Strengths

. Leading position in the life insurance market in China. We are the
leading life insurance company in China, with a market share of 45% in
2002. Among China's 31 provinces, autonomous regions and municipalities
nationwide, we were the market leader in 29 in 2002. In 2002, we were
also the leading individual life insurer with a market share of 51%; a
leading group life insurer with a market share of 18%; the leading
accident insurer with a market share of 69%; and a leading health insurer
with a market share of 34%.

. Largest customer base nationwide. We are the only life insurance company
in China with both a nationwide business license and a nationwide
distribution network. We believe we have the largest customer base among
all life insurance companies in China. We had more than 44 million
individual and group life insurance policies, annuity contracts and
long-term health insurance policies in force as of June 30, 2003. We also
offer accident and short-term health insurance policies to individuals
and groups. We will also service the policies and contracts retained by
CLIC in the restructuring, which numbered over 68 million as of June 30,
2003.

. Most recognized life insurance brand name. Through our predecessors, we
began to offer life insurance products in China more than 50 years ago.
We believe our history as the oldest and largest life insurance business
in China, our leading market share and our nationwide customer base have
given us the highest brand recognition of any life insurance company in
China. We believe that the China Life brand name is the most recognized
life insurance brand name among customers in China.

. Largest, multi-channel distribution network. We believe we have the
largest distribution force with the most extensive geographic reach as
compared to any of our competitors. Our distribution network reaches
almost every county in China. Throughout China, we have approximately
650,000 exclusive agents operating in approximately 8,000 field offices
for our individual products and approximately 10,000 direct sales
representatives in more than 4,000 branch offices for our group products.
We have a multi-channel distribution network, which allows us to take
advantage of fast growing distribution channels, such as bancassurance.
Our distribution network includes non-dedicated agencies located in
approximately 78,000 outlets of commercial banks, post offices and
savings cooperatives, as well as dedicated insurance agencies and
insurance brokerage companies.

. Nationwide customer support. We believe we have the most extensive
customer service network in the Chinese life insurance industry. We
deliver customer services through approximately 3,000 customer service
units operating in our branch and field offices throughout China. We also
deliver customer services through a sophisticated telephone call center
network, complementing the customer services provided by our customer
service units. Our dedicated, nationwide inquiry line "95519" allows
customers to make product and service inquiries, file complaints, report
claims and losses and make appointments on a "24 hours/7 days" basis in
key cities. We believe our customer support services enhance the
attractiveness of our products and the loyalty of our customers.

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. Leading asset manager. Following the restructuring, we are managing our
investment assets and, through our asset management joint venture,
substantially all of those of CLIC. As of June 30, 2003, before giving
effect to the restructuring, CLIC had RMB 335,840 million (US$40,572
million) of investment assets. After giving effect to the restructuring,
we had RMB 212,452 million (US$25,666 million) of investment assets as of
the same date. Based on CIRC data, our assets under management accounted
for more than one-half of all investment assets under management by
Chinese life insurance companies in 2002. We are one of the largest
institutional investors in China in terms of assets under management. We
believe our scale and experience position us well for the expected easing
of restrictions on investments, which would allow Chinese life insurance
companies to invest in a broader range of asset classes in the coming
years.

. Strong financial position. As of June 30, 2003, on a pro forma basis
after giving effect to the restructuring, we had total net assets of RMB
36,182 million (US$4,371 million) and our solvency level was
approximately 2.8 times the minimum regulatory requirement. See
"Regulation--Insurance Company Regulation--Solvency requirements". On a
pro forma basis after giving effect to the restructuring, we had total
gross written premiums and policy fees of RMB 25,403 million (US$3,069
million) and a net profit of RMB 3,128 million (US$378 million) for the
six months ended June 30, 2003 and total gross written premiums and
policy fees of RMB 47,077 million (US$5,687 million) and a net profit of
RMB 4,524 million (US$547 million) in 2002. We believe our strong
financial condition gives us the resources to support our fast-growing
businesses and the flexibility to develop new products and enter into new
markets.

. Experienced management team. Our management team has in-depth industry
knowledge and extensive managerial experience in life insurance, finance
and asset management. The team is focused on formulating innovative
business initiatives and capturing attractive business opportunities,
drawing on expertise in diverse areas. We believe our management team
will be able to develop and execute our business strategies effectively,
while quickly responding to changes in our business environment.

Business Strategy

We intend to pursue the following business strategies:

Capitalize on our market leading position and capture the high growth
opportunities in the Chinese life insurance market

The life insurance market in China has experienced rapid growth, with total
life insurance premiums, as reported to the CIRC, experiencing a compound
annual growth rate of 37.7% from 1999 through 2002. We intend to capitalize on
our market leading position by pursuing the following growth strategies in our
individual, group and accident and health insurance segments:

. Build on our leading market position in the mass market and focus on the
emerging mass affluent market. We will continue actively to serve the
mass market, which currently constitutes our largest market, to meet the
growing demand for financial protection and investment products. We also
seek to capitalize on the market opportunities in the growing mass
affluent segment of China's population, which we believe offers us
attractive opportunities for growing our individual life insurance
business. We seek to accomplish this through a new segment-based sales
approach, implementing a new sales force structure and compensation
scheme, rolling out pilot product initiatives and improving training and
recruiting.

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. Capture opportunities in the fast growing group pension and annuity
businesses. We intend to expand our pension and annuity and other group
businesses through a customer segmentation approach, differentiating
among large state-owned enterprises, large private Chinese companies,
small- and medium-sized enterprises and foreign joint ventures. In
addition, to serve our group customers more effectively, we are in the
process of creating key account managers and building the skills of our
salespeople in marketing to corporate customers.

. Strengthen leadership in accident insurance and improve the financial
performance of health insurance. We intend to continue to grow our
profitable accident insurance business through innovative products and
expanded distribution channels, and pursue stable, long-term growth of
our health business. To improve the financial performance of our health
business, we are strengthening our product development, pricing, sales,
underwriting and claims and risk management practices. We will further
focus our health insurance business on key cities to create regional
scale and lower operating costs.

Capitalize on our existing customer base and provide products and services
tailored to specific customer groups

As the leading provider in China's life insurance market, with over 44
million individual and group life insurance policies, annuity contracts and
long-term health insurance policies in force as of June 30, 2003, as well as
accident and short-term health insurance policies, we have a broader customer
base than any of our competitors. We will also service the policies and
contracts retained by CLIC in the restructuring, which numbered over 68 million
as of June 30, 2003. We believe this customer base provides enormous growth
potential. We intend to capitalize on the relationship with our existing
customers by offering products and services that meet their specific
requirements and providing the highest level of customer support in China.

Enhance the productivity of our core distribution channels and expand our
multi-channel distribution network

We believe we have the largest distribution force with the most extensive
geographic reach of any of our competitors. We intend to implement the
following measures to enhance further the productivity of our core distribution
channels and broaden the reach of our multi-channel distribution network:

. Individual sales agents. We believe we have the largest exclusive agency
distribution system in China, and believe that this will continue to be a
key factor in the success of our business. We will seek to enhance this
competitive advantage by improving our agent recruitment, training,
performance evaluation process and compensation scheme to help us attract
and retain the most productive agents. We intend to continue to build our
professional agency sales force through training programs conducted by
internal staff and external market experts, and have engaged a leading
international consulting firm to help us improve the skills and
efficiency of our agency sales force. We are modifying how we evaluate
and compensate our agents with a view to improving their productivity and
our profitability.

. Direct sales force. We will continue to enhance the skills and
professional expertise of our direct sales force for group insurance to
serve the different customer segments of our group business effectively,
with a particular focus on key accounts. We also intend to realign our
group sales force to cover key urban markets more effectively.

. Bancassurance. We have bancassurance arrangements with major banks and
post offices in China, and currently generate a significant portion of
our total sales through bancassurance. Bancassurance is a fast growing
channel, and we will continue to dedicate substantial resources, through
a stand-alone bancassurance department, to develop our bancassurance
business, with a focus on key cities. We intend to explore strategic
alliances with one or more banks. In the interim, we plan to improve the

125

attractiveness of our products by providing products and services tailored
to each major bank and providing training and integrated systems support
to our bank partners.

. Other distribution channels. We are exploring opportunities to develop
cooperative distribution arrangements with dedicated insurance agencies
and insurance brokerage companies. At the same time, we are monitoring
the feasibility of distributing products through the Internet, as well as
other direct sales distribution channels.

Build on our widely recognized brand name

We believe China Life is the most widely recognized life insurance brand
name in China. The China Life brand name is a significant advantage in an
increasingly crowded life insurance marketplace. We will continue to build on
China Life's reputation as a provider of comprehensive and competitive products
and solutions and of reliable and convenient services, and strengthen this
perception through corporate image building programs.

Build on our competitive product design capabilities to meet changing
customer needs

The products and services offered by the insurance industry in China
continue to evolve as the needs of customers change. We intend to be at the
forefront of the insurance industry in offering innovative and competitive
products to our customers. We offer more than 130 different products, ranging
from traditional protection products and participating life insurance products
to accident and health insurance, to meet the insurance needs throughout a
customer's lifetime. We regularly evaluate our products in order to rationalize
our product design strategy. We seek to develop products and services which
meet the requirements of specific customer groups and generate attractive
margins. In addition, we are focusing on reducing the time it takes us to
develop and introduce new products.

Build on our asset management strength

We view our asset management business as an important value creator. As of
June 30, 2003, before giving effect to the restructuring, CLIC had RMB 335,840
million (US$40,572 million) of investment assets. After giving effect to the
restructuring, we had RMB 212,452 million (US$25,666 million) of investment
assets as of the same date. Based on CIRC data, our assets under management
accounted for more than one-half of all investment assets held by Chinese life
insurance companies in 2002, making us one of the largest institutional
investors in China's capital markets. We expect that as the restrictions on
investments by insurance companies are relaxed, we will be able to invest in a
broader range of asset classes. We will seek to improve our technological and
managerial skills and enhance our ability to match the duration of our assets
and liabilities with a view to reducing risk and improving profitability. We
believe that the asset management company will give us better access to
technology and expertise, greater flexibility to align our compensation with
performance and the ability to attract and retain top asset managers.

Strengthen risk management

Our increasingly broad product range and the expected increase in the range
of investment opportunities available to us present significant challenges, as
well as opportunities. We plan to devote significant resources to enhance our
risk management policies and procedures in light of our rapidly developing
business. Specific steps include:

. Prudent management of pricing, underwriting and claims. We regularly
monitor our mortality, morbidity and lapse experience, as well as our
investment returns, with a view to ensuring that our product pricing is
consistent with our pricing objectives. We are also establishing a
comprehensive training program for underwriting and claims management.
Our senior management includes a position for a chief actuary whom we
intend to appoint. We also plan to increase significantly the size of our
professional actuarial staff.

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. Asset-liability management. We focus on managing our asset and liability
risks and actively monitor these risks through reports to senior
management on a regular basis. We intend to take advantage of the
expected relaxation of investment restrictions to improve our
asset-liability matching. In addition, we seek to reduce the risk of
duration mismatch by focusing on product offerings whose maturity
profiles are in line with the duration of investments available to us in
the prevailing investment environment.

. Monitoring by board of directors. We intend to establish a risk
management committee of our board of directors. We have an internal risk
management department with responsibility to monitor risk and
asset-liability duration mismatch. We are consolidating our risk
management functions to provide more streamlined management of the risks
involved in our overall operations.

Continue to enhance efficiency through active cost control management

As a result of our attention to maintaining low expenses, we believe we have
achieved significant operating efficiencies in our businesses. To enhance our
efficiency further, we are consolidating functions and management layers in our
organizational structure at both the headquarters and local branch levels. We
are also centralizing our policy management, purchasing, financial and
operating management functions, re-engineering our operating processes and
upgrading our information technology systems. We believe these actions will
allow us to increase our efficiency while maintaining high quality services for
our customers.

Implement advanced information technology systems

We have developed our information technology strategy with a view to
increasing our operational and managerial efficiency. Relying on advanced
information technology, we intend to build on our capacity to respond to market
feedback and various contingencies and enhance the quality of our customer
services and our risk management capabilities. As a result, we expect to
improve our overall management skills, achieve sustainable development in our
businesses and enhance our competitiveness.

Our goal is to provide a sophisticated technology platform, advanced
technological solutions and effective service support to all aspects of our
business, including operations, business development, customer service and risk
control. For instance, we are providing our more productive exclusive agents
with personal electronic devices to further enhance their marketing time
management and customer service capabilities. We seek to be a leader in China
in establishing a standardized, efficient, stable and sophisticated information
technology system.

We have retained a leading international consulting firm to assist us in
developing our overall information technology strategy. We plan to execute the
new IT strategy over the next several years, with a focus on database
centralization, core system reconciliation, e-commerce and customer
relationship management, as well as the standardization, consolidation and
rationalization of resources.

Enhance performance-oriented corporate structure and compensation systems

We are dedicated to improving the performance orientation of our
organizational structure and our compensation systems in order to maximize
shareholder value. In connection with our restructuring, we are pursuing the
following measures:

. Create an organizational structure with clear accountability. We have
engaged a leading international consulting firm to design a
customer-oriented corporate structure with clear accountability, which we
believe will provide a better platform for delivering our services more
efficiently, better satisfy market demand and better serve our corporate
development strategy. We believe this will enable us to operate with high
efficiency and strict risk control across our business operations
nationwide.

. Implement performance-based incentive compensation systems. We are
establishing goals and key performance indicators for our management at
every level of the organization intended to ensure that we

127

compensate and promote the best people for each position and deliver the
strongest possible financial results for our shareholders. We have
engaged a leading consulting firm to formulate market-based incentive
programs for our personnel to ensure that compensation reflects
individual performance, market demands and contributions to return on
equity. We have introduced incentives and rewards to align the interests
of our senior management team with those of our shareholders. In
addition, we intend to link the compensation of all employees to
individual and company-wide performance measures.

Continue to enhance training and development

Superior management personnel and employees are key to our future success.
We seek to attract and retain the most talented individuals in the industry and
improve their skills, productivity and career development opportunities through
advanced human resources management. We are building a system in which our
talented employees can grow with us and share in our success. We also plan to
establish a nationwide training program through regional training centers
throughout China. In addition to on-the-job training, we will continue to send
selected employees to leading educational institutions both in the PRC and
abroad for advanced training.

Individual Life Insurance

We are the leading provider of individual life insurance and annuity
products in China. We offer life insurance and annuity products to individuals,
primarily through a distribution force comprised of approximately 650,000
exclusive agents operating in approximately 8,000 field offices throughout
China, as well as other non-dedicated agencies located at branch offices of
banks, post offices and other organizations. Gross written premiums and policy
fees generated by our individual life insurance and annuity products totaled
RMB 20,370 million (US$2,461 million) for the six months ended June 30, 2003
and RMB 37,662 million (US$4,550 million) for the year ended December 31, 2002,
constituting 80.2% and 80.0% of our total gross written premiums and policy
fees for those periods. The figure for 2002 represented a 51.8% increase over
2001. First-year gross written premiums from individual life insurance products
in 2002 were RMB 17,973 million (US$2,171 million), representing a 21.3%
increase over 2001. First-year single gross written premiums for the same
period were RMB 8,590 million (US$1,038 million), representing 47.8% of
first-year individual life insurance gross written premiums. Deposits generated
by our individual life insurance and annuity products totaled RMB 53,271
million (US$6,436 million) for the six months ended June 30, 2003 and RMB
52,340 million (US$6,323 million) for the year ended December 31, 2002,
constituting 91.2% and 89.4% of our total deposits for those periods. The
figure for 2002 represented a 245.2% increase over 2001.

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The following table sets forth selected financial and other data regarding
our individual life insurance business as of the dates or for the periods
indicated.

Compound
As of or for the year ended annual As of or for the six months
December 31, growth rate ended June 30,
-------------------------- ----------- ---------------------------
2000 2001 2002 2002 (2000-2002) 2002 2003 2003
------ ------ ------ ----- ----------- ------ ------- ------
RMB RMB RMB US$ RMB RMB US$
(in millions, except as otherwise indicated)

Individual life gross written premiums
and policy fees..................... 13,486 24,806 37,662 4,550 67.1% 19,350 20,370 2,461

First-year single gross written
premiums............................ 1,923 4,986 8,590 1,038 111.4% 4,867 1,975 239
First-year regular gross written
premiums............................ 7,772 9,826 9,383 1,134 9.9% 5,125 3,928 475
------ ------ ------ ----- ------ ------- ------
First-year gross written
premiums............................ 9,695 14,812 17,973 2,171 36.2% 9,992 5,903 713

Individual life insurance deposits.... 11,308 15,162 52,340 6,323 115.1% 37,364 53,271 6,436

First-year single deposits............ 8,869 10,598 43,679 5,277 121.9% 32,139 45,532 5,501
First-year regular deposits........... 1,955 2,798 5,246 634 63.8% 3,871 2,970 359
------ ------ ------ ----- ------ ------- ------
First-year deposits................... 10,824 13,396 48,925 5,911 112.6% 36,010 48,502 5,859

Future life policyholder benefits..... 13,626 29,839 54,745 6,614 100.4% 43,013 67,338 8,135
Policyholder contract deposits........ 12,988 21,443 65,629 7,929 124.8% 54,449 114,719 13,859

Products

We offer a wide variety of life insurance and annuity products to
individuals, providing a wide range of coverage for the whole length of a
policyholder's life. Our individual life insurance and annuity products consist
of whole life and term life insurance, endowment insurance and annuities.

We offer both non-participating and participating products. There were
approximately 33 million non-participating policies and 11 million
participating policies as of June 30, 2003. Net premiums earned and policy fees
of participating policies represent approximately 34% of total net premiums
earned and policy fees of transferred policies. Non-participating products
provide a fixed rate of return with a guaranteed benefit. We and CLIC have not
incurred negative spread on these and other policies transferred to us in the
restructuring, as the average investment returns we have been able to generate
have been higher than their guaranteed rates. See "Risk Factors-Risks Relating
to Our Business-We are exposed to changes in interest rates". The holder of a
participating product is entitled to share a portion of our distributable
earnings from participating products, as determined by us based on formulas
prescribed by the CIRC. Under guidelines issued by the CIRC, the dividends must
be no less than 70% of the distributable earnings from participating products.
Participating life insurance and annuity products, which were first introduced
in 2000, have become our fastest-growing individual life insurance and annuity
products. We believe that the enhanced return profile of these products will
continue to make them attractive products in the market.

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The following table sets forth selected financial information regarding our
individual life insurance and annuity products for the periods indicated.

For the six months ended
For the year ended December 31, June 30,
------------------------------- ------------------------
2000 2001 2002 2002 2002 2003 2003
----- ------ ------ ----- ------ ------ -----
RMB RMB RMB US$ RMB RMB US$
(in millions)

Whole life and term life insurance:
Gross written premiums............. 6,084 9,111 12,289 1,485 5,888 7,847 948
First-year gross written premiums.. 4,766 4,347 4,491 543 2,266 2,252 272
Total single gross written premiums 501 331 211 25 99 99 12
Endowment:
Gross written premiums............. 4,351 11,925 18,169 2,195 9,291 7,382 892
First-year gross written premiums.. 3,650 9,222 11,431 1,381 6,707 2,803 339
Deposits........................... 4,258 9,839 50,428 6,092 36,405 52,471 6,339
First-year deposits................ 3,880 8,225 47,259 5,709 35,149 47,808 5,776
Annuities:
Gross written premiums............. 1,481 1,883 3,129 378 1,486 1,763 213
First-year gross written premiums.. 1,279 1,243 2,051 248 1,019 848 102
Deposits........................... 7,050 5,323 1,912 231 959 800 97
First-year deposits................ 6,944 5,171 1,666 201 861 694 84

Whole life and term life insurance

Non-participating whole life and term life insurance. We offer
non-participating whole life and term life insurance products.

Non-participating whole life insurance products provide a guaranteed
benefit, pre-determined by the contract, upon the death of the insured, in
return for the periodic payment of fixed premiums over a predetermined period.
Premium payments may be required for the length of the contract period, to a
specified age or for a specified period, and are typically level throughout the
period.

The guaranteed rate of return in China for non-participating whole life
insurance products has been capped at 2.50% by the CIRC since June 1999. We
believe that, if the Chinese economy continues to operate in a low interest
rate environment such as the one we are in today, the insurance market will
continue to move away from non-participating whole life insurance products to
participating whole life insurance products.

Non-participating term life insurance products provide a guaranteed benefit
upon the death of the insured within a specified time period in return for the
periodic payment of fixed premiums. Specified coverage periods range from 5 to
20 years or expire at specified ages. Death benefits may be level over the
period or increasing. Premiums are typically at a level amount for the coverage
period. Term life insurance products are sometimes referred to as pure
protection products, in that there are normally little or no savings or
investment elements. Unlike endowment products, term life insurance policies
expire without value at the end of the coverage period if the insured person is
still alive.

Participating whole life insurance. We also offer participating whole life
insurance products, which are traditional whole life insurance policies that
also provide a participation feature in the form of dividends. The policyholder
is entitled to share a portion of the distributable earnings from participating
products, as determined by us based on formulas prescribed by the CIRC. Under
guidelines issued by the CIRC, the dividends must be no less than 70% of the
distributable earnings from participating products. Policyholders may receive
dividends in cash or apply them to increase death benefits or cash values
available upon surrender.

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Endowment

Non-participating endowment products. Non-participating endowment products
provide to the insured various guaranteed benefits if the insured survives
specified maturity dates or periods stated in the policy, and provide to a
beneficiary designated by the insured guaranteed benefits upon the death of the
insured within the coverage period, in return for the periodic payment of
premiums. Specified coverage periods range from 5 to 20 years or end at
specified ages. Premiums are typically at a level amount for the coverage
period.

Although non-participating endowment products have historically been among
the most popular individual life insurance products in China, we believe that,
if the prevailing permitted guaranteed rate in China remains capped at the
current level of 2.50% as it has been for the past several years, the market is
likely to shift away from these products in favor of participating endowment
products.

Participating endowment products. We also offer participating endowment
products, which are endowment policies that also provide a participation
feature in the form of dividends. Policyholders are entitled to share a portion
of the distributable earnings from participating products, as determined by us
based on formulas prescribed by the CIRC. Under guidelines issued by the CIRC,
the dividends must be no less than 70% of the distributable earnings from
participating products. Policyholders may receive dividends in cash or apply
them to increase death benefits or cash values available upon surrender.

Participating endowment products are among our fastest growing product
lines. Among our participating endowment products, Hong Tai Endowment and Qian
Xi Wealth Management are our most successful products. Hong Tai Endowment had
RMB 45,347 million (US$5,478 million) of deposits in 2002, representing 86.6%
of total deposits of our individual life insurance business. Qian Xi Wealth
Management had RMB 12,070 million (US$1,458 million) of gross written premiums
in 2002, representing 32.0% of total gross written premiums and policy fees of
our individual life insurance business. First-year deposits of Hong Tai
Endowment for the year ended December 31, 2002 were RMB 44,918 million
(US$5,426 million), representing an 803.4% increase over 2001 and 91.8% of
total first-year deposits of our individual life insurance business. First-year
gross written premiums of Qian Xi Wealth Management for the year ended December
31, 2002 were RMB 9,912 million (US$1,197 million) of deposits, representing a
59.7% increase from the year before, or 55.1% of total first-year gross written
premiums of our individual life insurance business.

The following table sets forth selected financial information regarding our
Hong Tai Endowment and Qian Xi Wealth Management Products for the periods
indicated.

As of or for the year ended As of or for the six months
December 31, ended June 30,
--------------------------- ---------------------------
2000 2001 2002 2002 2002 2003 2003
---- ----- ------ ----- ------ ------ -----
RMB RMB RMB US$ RMB RMB US$
(in millions)

Hong Tai Endowment:
Deposits......................... -- 4,972 45,347 5,478 34,047 18,354 2,217
First-year deposits.............. -- 4,972 44,918 5,426 34,047 15,634 1,889
Qian Xi Wealth Management:
Gross written premiums........... 58 6,248 12,070 1,458 6,079 4,011 485
First-year gross written premiums 58 6,205 9,912 1,197 5,761 2,190 265

Annuities

Annuities are used for both asset accumulation and asset distribution needs.
Annuitants make deposits or pay premiums into our accounts, and receive
guaranteed level payments during the payoff period specified in the contracts.
We offer both non-participating and participating annuities. For
non-participating annuity products, risks associated with the investments are
borne entirely by us. A significant portion of our non-participating annuity
products imposes charges or other fees upon an early surrender or withdrawal of
the contract.

131

Participating annuity products are annuities that provide a participation
feature in the form of dividends. The dividends are determined by us in the
same manner as our life insurance policies. Annuitants may receive dividends in
cash or apply them to increase annuity benefits or reduce the premiums or
deposits required to maintain the contract in force. Like non-participating
annuities, a significant portion of our participating annuity products imposes
charges or other fees upon an early surrender or withdrawal of the contract.

Marketing and distribution

We have historically sold most of our individual life insurance and annuity
products to the mass market and will continue to actively serve this market.
However, we believe our core individual customer base will evolve as China's
economy develops. We will seek to capitalize on the market opportunities in the
growing affluent segment of China's population by focusing our marketing
efforts on individuals residing in urban and economically developed coastal
areas of China, where disposable income is relatively higher and, we believe,
demand for life insurance and annuity products is greater. In addition, we are
implementing a new customer segmentation sales approach which targets
individuals of various income and education levels with different products.
Under this sales approach, individuals in different periods of their lives are
marketed with different life insurance and annuity products, with these
products in many cases supplemented by our individual accident and health
products.

We distribute our individual life and annuity products nationwide through
multiple channels. Our primary distribution system is comprised of
approximately 650,000 exclusive agents operating in approximately 8,000 field
offices throughout China. We have implemented our customer-oriented market
segmentation sales initiatives initially through approximately 100,000 of our
more productive exclusive agents. Over time we plan to expand this sales
approach to all exclusive agents nationwide. While continuing to invest in our
exclusive agent force, we have also expanded into other distribution channels,
primarily non-dedicated agencies located in approximately 78,000 outlets of
commercial banks, post offices and savings cooperatives, to diversify our
distribution channels and to achieve higher growth. See "--Distribution
Channels".

Group Life Insurance

We are a leading group life insurance company in China, providing group life
insurance and annuity products to the employees of many of China's largest
companies and institutions, including many of the Fortune Global 500 companies
operating in China. We offer life insurance and annuity products to the
employees of companies and institutions through approximately 10,000 direct
sales representatives operating in more than 4,000 branch offices as well as
insurance agencies and insurance brokerage companies. Gross written premiums
and policy fees generated from our group life insurance and annuity products
totaled RMB 267 million (US$32 million) for the six months ended June 30, 2003
and RMB 477 million (US$58 million) for the year ended December 31, 2002,
constituting 1.1% and 1.0% of our total gross written premiums and policy fees
for those periods. The figure for 2002 represented a 56.0% decrease from 2001.
First-year gross written premiums from group life insurance and annuity
products for 2002 were RMB 313 million (US$38 million), representing a 69.7%
decrease from 2001. First-year single gross written premiums for 2002 were RMB
306 million (US$37 million), representing 97.8% of first-year group life
insurance gross written premiums. Deposits generated by our group life
insurance and annuity products totaled RMB 5,146 million (US$622 million) for
the six months ended June 30, 2003 and RMB 6,232 million (US$753 million) for
the year ended December 31, 2002, constituting 8.8% and 10.6% of our total
deposits for those periods. The figure for 2002 represented a 9.2% increase
from 2001.

132

The following table sets forth selected financial and other data regarding
our group life insurance business as of the dates or for the periods indicated.

Compound
As of or for the year ended annual As of or for the six months
December 31, growth rate ended June 30,
------------------------ ----------- ---------------------------
2000 2001 2002 2002 (2000-2002) 2002 2003 2003//
----- ----- ------ ----- ----------- ----- ------ -----
RMB RMB RMB US$ RMB RMB US$
(in millions, except as otherwise indicated)

Group life gross written premiums and
policy fees........................ 228 1,085 477 58 44.6% 301 267 32

First-year single gross written
premiums........................... -- 955 306 37 NA 206 148 18
First-year regular gross written
premiums........................... -- 77 7 1 NA 3 15 2
----- ----- ------ ----- ----- ------ -----
First-year premiums.................. -- 1032 313 38 NA 209 163 20

Group life insurance deposits........ 3,912 5,706 6,232 753 26.2% 3,262 5,146 622

First-year single deposits........... 3,912 5,676 6,231 753 26.2% 3,260 5,128 620
First-year regular deposits.......... -- 30 1 -- NA 2 18 2
----- ----- ------ ----- ----- ------ -----
First-year deposits.................. 3,912 5,706 6,232 753 26.2% 3,262 5,146 622

Future life policyholder benefits.... 268 1,130 1,143 138 106.5% 1,221 1,104 133
Policyholder contract deposits....... 4,771 8,135 12,369 1,494 61.0% 9,601 15,705 1,897

Products

We offer annuity products and whole life and term life insurance products to
our companies and institutions. We bundle these products to serve as part of
our group customers' overall employee benefit plans. We also market each group
product as an independent product. We believe we are the market leader in the
development of group annuity products. We introduced the first
non-participating group annuity product in China in June 1983. In 1998, we were
the first insurance company to introduce group participating annuity products
in China, at first regionally on a trial basis, and later nationwide in 2001.

The following table sets forth selected financial information regarding our
group life insurance and annuity products for the periods indicated.

For the six months
For the year ended December 31, ended June 30,
------------------------------- ----------------
2000 2001 2002 2002 2002 2003 2003
----- ----- ----- ---- ----- ----- ----
RMB RMB RMB US$ RMB RMB US$
(in millions)

Group annuities:
Premiums................................ -- 53 -- -- -- -- --
Deposits................................ 3,912 5,698 6,229 753 3,262 5,146 622
Group whole life and term life insurance:
Premiums................................ -- 985 344 42 228 186 22

Group annuities. In our non-participating group annuities, interest on an
annuitant's deposits is credited to each participating employee's personal
account, with annuity payments made from the account to the employee. Annuity
payments are either pre-determined in the policy contracts or based on an
interest rate derived from the interest rate on deposits for a fixed two-year
term as adopted by the People's Bank of China.

133

We also offer participating group annuities. In our participating group
annuities, interest on an annuitant's deposits is either credited to the
participating employee's personal account or credited to the participating
employee's personal account as well as the employer's group account, depending
on the source of the deposits, calculated at a guaranteed interest rate set at
the time the product is priced, subject to a cap fixed by the CIRC, which
currently is 2.50%. The annuitant is entitled to share a portion of our
distributable earnings derived from our participating products, as determined
by us based on formulas prescribed by the CIRC, in excess of the rate we
guarantee to participating employees.

Group participating annuity products, including Yong Tai Annuity and Group
Annuity (Retirement Supplement), are among our fastest growing product lines.
For the year ended December 31, 2002, total combined deposits of Yong Tai
Annuity and Group Annuity (Retirement Supplement) were RMB 5,910 million
(US$714 million), constituting 94.8% of total deposits of our group life
insurance business for that year, representing a 33.6% increase from the year
before.

The following table sets forth total combined deposits of our Yong Tai
Annuity and Group Annuity (Retirement Supplement) products for the periods
indicated.

For the year ended For the six months
December 31, ended June 30,
--------------------- ----------------
2000 2001 2002 2002 2002 2003 2003
---- ----- ----- ---- ----- ----- ----
RMB RMB RMB US$ RMB RMB US$
(in millions)

Yong Tai Annuity and Group Annuity (Retirement
Supplement):
Deposits..................................... -- 4,425 5,910 714 3,052 4,482 464

Group whole life and term life insurance. We offer group non-participating
whole life insurance products and group non-participating term life insurance
products. All of our group whole life and term life insurance products insure
against death, while some also insure against injuries due to accidents and
dismemberment or disabilities due to illnesses.

Marketing and distribution

We target our group life insurance and annuity products to large
institutional customers in China, including branches of foreign companies,
which we believe have the greatest awareness of and need for group life
insurance and annuity products. We have long-term customer relationships with
many of China's largest companies and institutions. We provide large group
customers with products having flexible fee and dividend structures, as well as
enhanced real-time customer service. While continuing to focus on large
institutional clients, we also target small- to medium-sized companies in
economically developed regions to supplement our growth and to increase our
profits.

We market our group life insurance and annuity products primarily through
our direct sales representatives. We also market our group life insurance and
annuity products through insurance agency companies and insurance brokerage
companies. We believe our sales network has a geographic reach unparalleled by
any other life insurance company in China, serving almost every county in
China. See "--Distribution Channels".

The revenues attributable to our five largest customers were less than 1% of
our total revenues for the year ended December 31, 2002 and for the six months
ended June 30, 2003.

Accident and Health Insurance

We are the leading accident insurance and a leading health insurance
provider in China.

134

The following table sets forth selected financial and other data regarding
our accident insurance and health insurance businesses as of the dates or for
the periods indicated.

Compound
As of or for the year ended annual As of or for the six
December 31, growth gate months ended June 30,
--------------------------- ----------- ---------------------
2000 2001 2002 2002 (2000-2002) 2002 2003 2003//
----- ----- ----- ---- ----------- ----- ----- -----
RMB RMB RMB US$ RMB RMB US$
(in millions, except as otherwise indicated)

Accident insurance premiums................ 6,277 5,097 5,174 625 (9.2)% 2,403 2,359 285
Health insurance premiums.................. 1,116 2,687 3,764 455 83.7% 1,250 2,407 291
Accident and health reserves for claims and
claim adjustment expenses (gross)........ 716 867 879 106 10.8% 1,010 910 110
Accident and health insurance unearned
premium reserves (net)................... 3,304 3,553 4,028 487 10.4% 3,246 4,011 485

Accident insurance

We are the leading accident insurance provider in China. We offer a broad
array of accident insurance products to both individuals and groups through our
direct sales force and after June 30, 2003, primarily through intermediaries.
Our accident insurance gross written premiums totaled RMB 2,359 million (US$285
million) for the six months ended June 30, 2003 and RMB 5,174 million (US$625
million) for the year ended December 31, 2002, constituting 9.3% and 11.0% of
our total gross written premiums and policy fees for those periods. According
to the CIRC, premium income of accident insurance in China was RMB 7,951
million (US$961 million) in 2002.

Products

We offer a broad array of accident insurance products to both individuals
and groups.

Individual accident insurance. Individual accident insurance products
provide a benefit in the event of death or disability of the insured as a
result of an accident, or a reimbursement of medical expenses to the insured in
connection with an accident. Typically, a death benefit is paid if the insured
dies within 180 days of the accident, and a disability benefit is paid if the
insured is disabled, with the benefit depending on the extent of the
disability. If the insured receives medical treatment at a medical institution
approved by us as a result of an accident, individual accident insurance
products also may provide coverage for medical expenses. We offer a broad array
of individual accident insurance products, such as insurance for students and
infants against death and disability resulting from accidental injury and
comprehensive coverage against accidental injury. We also offer products to
individuals requiring special protection, such as accidental death and
disability insurance for commercial air travel passengers and automobile
passengers and drivers. The terms of individual accident insurance products
range from a few hours to one year.

Group accident insurance. We offer a number of group accident insurance
products and services to businesses, government agencies and other
organizations of various sizes. We also offer products targeted at specific
industry groups, such as construction-related accident insurance to
construction companies, and accident insurance to various law enforcement
agencies.

Marketing and distribution

We market our individual accident insurance products through our direct
sales force and our exclusive agent sales force, as well as intermediaries,
such as non-dedicated agencies located at outlets of commercial banks, post
offices, savings cooperatives, travel agencies, hotels and airline sales
counters and insurance agency and insurance brokerage companies. We market our
group accident insurance products primarily through our direct

135

sales representatives and the same intermediaries we use to sell our individual
accident products. See "--Distribution Channels".

We use our individual and group product distribution channels to market our
accident products either as primary products, as riders or as supplementary
products packaged with our life, annuity or health products. We have entered
into cooperative agreements and memoranda of understanding with airline
companies, international medical, emergency and evacuation assistance companies
and other companies and institutions to promote our accident insurance
products. Our direct sales representatives market our individual health
products to employees of our institutional customers.

Health insurance

We are a leading health insurance provider in China. We offer a broad array
of health insurance products and services to both individuals and groups,
including disease-specific insurance, medical expense insurance and defined
benefit insurance. We sell health insurance products to individuals and groups
through the same distribution channels we use to sell our life insurance
products. Our health insurance gross written premiums totaled RMB 2,407 million
(US$291 million) for the six months ended June 30, 2003 and RMB 3,764 million
(US$455 million) for the year ended December 31, 2002, constituting 9.5% and
8.0% of our total gross written premiums and policy fees for those periods. The
figure for 2002 represented a 40.1% increase from 2001.

Our health insurance business shares our nationwide life insurance sales
force and distribution network of exclusive agents. Our policy review and claim
adjustment processes are facilitated through a team of supporting personnel
with medical training.

Products

We offer health insurance products to both individuals and groups. We
classify our health insurance products as short-term products, having policy
terms of less than or up to one year, and long-term products, having policy
terms longer than one year. We offer both short-term and long-term defined
health benefit plans, medical expense reimbursement plans and disease-specific
plans to individuals and groups.

Defined health benefit plans. These plans provide a fixed payment based on
the number of days of hospitalization or the specific type of medical or
surgical operation. Policyholders either pay premiums in a single payment or on
a periodic basis.

Medical expense reimbursement plans. These plans provide for the
reimbursement of a portion of the participant's outpatient or hospitalization
treatment fees and expenses. Policyholders either pay premiums in a single
payment or on a periodic basis or, for certain group medical expense
reimbursement plans, irregularly as determined by the policyholder.

Disease-specific plans. These plans provide a fixed payment benefit for
various diseases. Premium payments for disease-specific plans are paid either
in a single payment or on a periodic basis.

Marketing and distribution

We offer our health insurance products to both individuals and groups
through the same distribution channels we use to market our life insurance
products. We market our individual health insurance products through our
exclusive agent sales force. We market our group health insurance products
primarily through our direct sales representatives. See "--Distribution
Channels".

We use our individual and group product distribution channels to market our
health products either as primary products, as riders or as supplementary
products packaged with our life, annuity or accident insurance

136

products. We conduct extensive health insurance related training programs for
our direct sales representatives and our exclusive agents.

Distribution Channels

In connection with our restructuring, CLIC transferred its entire
distribution force to us. After giving effect to our restructuring, we believe
we have the largest distribution force with the most extensive geographic reach
compared with any of our competitors. Our distribution network reaches almost
every county in China. Throughout China, we have approximately 650,000
exclusive agents operating in approximately 8,000 field offices for our
individual products and more than 10,000 direct sales representatives in more
than 4,000 branch offices for group products. We have a multi-channel
distribution network selling individual and group insurance products through
intermediaries, primarily non-dedicated agencies located in approximately
78,000 outlets of commercial banks, post offices and savings cooperatives.
Commission rates vary by product, based on such factors as the payment terms
and period over which the premiums are paid for the product, as well as CIRC
regulations. We support our agents and representatives through training
programs, sales materials and information technology systems.

Exclusive agent force

Our exclusive agent force of approximately 650,000 agents is the primary
distribution channel for our individual life and health insurance products.

The following table sets forth information relating to our exclusive agent
force as of the dates indicated.

As of December 31, As of June 30,
----------------------- ---------------
2000 2001 2002 2002 2003
------- ------- ------- ------- -------

Number of exclusive agents (approximately) 300,000 450,000 600,000 580,000 650,000
Number of field offices................... 3,958 4,873 7,295 5,469 7,949

Our exclusive agent force is among our most valuable assets, allowing us to
more effectively control our distribution and build and maintain long-term
relationships with our individual customers. From December 31, 2000 to June 30,
2003, the number of our exclusive agents increased from approximately 300,000
to approximately 650,000. We believe that our customers and prospective
customers prefer the personal approach of our exclusive agents, and, therefore,
we believe our exclusive agent force will continue to serve as our core
distribution channel.

Under the PRC insurance law, an individual agent for an insurance company is
required to obtain a qualification certificate from the CIRC, as well as to
register with, and obtain a business license from, the agent's local bureau of
industry and commerce. See "Regulation--Regulation of Insurance Agencies,
Brokers and Other Intermediaries". Essentially all of the agents in our
exclusive agent sales force do not qualify as "individual agents" within the
meaning of the insurance law because they do not meet the dual requirements of
holding a CIRC qualification certificate and a business license from the local
bureau of industry and commerce. We believe this situation is shared by all
major life insurance companies in China. Approximately 63% of our exclusive
agents hold a CIRC qualification certificate, and essentially none has a
business license. We are working with our agents to obtain the CIRC
qualification. However, it is our understanding that the SAIC does not have
procedures in place to effect the registration and licensing of individual
insurance agents, although some local bureaus of industry and commerce have had
on occasions required our agents to register. To date, this noncompliance has
not had a material adverse effect on us. If these registration and
qualification requirements are enforced, our business may be materially and
adversely affected. See "Risk Factors--Risks Relating to the PRC Life Insurance
Industry--All of our agents are required to be qualified and to be registered
as business entities. If these qualification and registration requirements are
enforced, our business may be materially and adversely affected."

137

We supervise and provide training to our exclusive agents through more than
100,000 field manager agents, more than 6,000 supervisors and more than 1,200
full-time trainers. We set product management and customer service standards
which we require all of our field offices and agents to meet, and conduct field
tests with a view to ensuring quality. We also have an extensive training
program. We compensate our exclusive agent force through a system of
commissions and bonuses to reward performance. Our agents are compensated based
on a commission rate that generally decreases over the premium period. For
short-term insurance products, our exclusive agents are generally compensated
with fixed agent fees. We also motivate our agents by rewarding them with
performance-based bonuses and by organizing sales-related competitions among
different field offices and sales units.

We believe we have the largest exclusive agent sales force in China. We
intend to improve the quality and productivity of our individual exclusive
agent force and reduce the attrition rate of our agents by taking the following
actions:

. improving the overall productivity of our exclusive agents by expanding
our customer-oriented market segmentation sales approach from
high-productivity agents to all agents nationwide;

. improving the efficiency of our exclusive agents by developing a
standardized agent management system, which provides detailed guidance on
matters relating to agent time management, customer relations and agent
supervision;

. improving the quality of our exclusive agent force by expanding our
recruitment program and standardizing our recruitment procedures and
admission requirements;

. building a more professional exclusive agent force by improving our
training programs;

. motivating our exclusive agents with an improved performance-based
compensation scheme; and

. equipping our more productive exclusive agents with personal electronic
devices to further enhance their marketing, time management and customer
service capabilities.

Direct sales force

Our direct sales force is our primary distribution system for our group life
insurance and annuities, group accident insurance and group health insurance
products, as well as our individual accident insurance products.

Our direct sales force of approximately 10,000 direct sales representatives
are our full time employees and operate in more than 4,000 branch offices
across China. We believe our sales network has a geographic reach unparalleled
by any other life insurance company in China, serving almost every county in
China.

We believe our direct sales force allows us to more effectively control our
distribution and build and maintain long-term relationships with our group
customers and, therefore, will continue to serve as our primary distribution
system for our group products. We believe maintaining our leading position in
the group insurance market depends on a professional and qualified direct sales
force, and we have devoted substantial resources to the training and
supervision of our direct sales force in recent years. We set product
management and customer service standards which we require all of our branch
offices and direct sales representatives to meet, and conduct field tests to
centralize quality control and management. We also have an extensive training
program.

As full time employees, our direct sales representatives are compensated
through fixed salaries. We motivate our direct sales representatives by
rewarding them with performance-based bonuses and by organizing sales and
services-related competitions among different branch offices and sales units.

138

Intermediaries

We also offer individual and group products through intermediaries. Our
distribution channels are primarily comprised of non-dedicated agencies located
in approximately 78,000 outlets of commercial banks, post offices and savings
cooperatives, as well as insurance agencies and insurance brokerage companies.

Bancassurance. We have bancassurance arrangements with major banks and post
offices in China, and currently generate a significant portion of our total
sales through bancassurance. Bancassurance is a fast growing channel, and we
will continue to dedicate substantial resources, through a stand-alone
bancassurance department, to develop our bancassurance business, with a focus
on key cities. We intend to explore strategic alliances with one or more banks.
In the interim, we plan to improve the attractiveness of our products by
providing products and services tailored to each major bank and providing
training and integrated systems support to our banking partners.

Other non-dedicated agencies. In addition to bancassurance, we also sell
individual life insurance products through other non-dedicated agencies.
Currently, we have non-dedicated agencies operating at outlets of savings
cooperatives, travel agencies, hotels and airline sales counters. We expect
non-dedicated agencies to become an increasingly important distribution channel
for individual products.

Other intermediaries. We also market group products through dedicated
insurance agencies and insurance brokerage companies. Dedicated insurance
agencies and insurance brokerage companies work with companies to select group
insurance providers and group products and services in return for commission
fees.

Currently, the market of dedicated insurance agencies and insurance
brokerage companies in China remains generally underdeveloped. We expect the
dedicated insurance agencies and insurance brokerage companies to become more
effective distribution channels in the medium term. In the long run, we expect
other channels, such as direct mail, direct telephone and the Internet, to
become valuable distribution channels for our products.

Competition

Our nearest competitors are Ping An and China Pacific.

. In the individual life insurance market, after giving effect to our
restructuring, Ping An, China Pacific and we collectively represented 78%
of total individual life insurance premiums in 2002. We primarily compete
based on the nationwide reach of our sales network and the level of
services we provide, as well as our strong brand name.

. In the group life insurance market, after giving effect to our
restructuring, Ping An, China Pacific and we collectively represented 83%
of total group life insurance premiums in 2002. We primarily compete
based on the nationwide reach of our sales network and the services we
provide, as well as our relationships and reputation among large
companies and institutions in China.

. In the accident insurance market, after giving effect to our
restructuring, Ping An, China Pacific and we collectively represented 93%
of total accident premiums in 2002. We primarily compete based on the
nationwide reach of our sales network and the services we provide and our
strong brand name, as well as our cooperative arrangements with other
companies and institutions.

. In the health insurance market, after giving effect to our restructuring,
Ping An, China Pacific and we collectively represented 79% of total
health premiums in 2002. We primarily compete based on the nationwide
reach of our sales network, the services we provide, our multi-layered
managed care scheme and systems of policy review and claim management, as
well as our strong brand name.

139

The following table sets forth market share information for the year ended
December 31, 2002 in all segments of the life insurance market in which we do
business.

Individual
life Group life Accident Health Total
premiums premiums premiums premiums premiums
market share market share market share market share market share
------------ ------------ ------------ ------------ ------------

CLIC/(1)/............................ 67% 18% 69% 35% 57%
Ping An Insurance Company of China,
Ltd................................ 18% 44% 15% 37% 24%
China Pacific Life Insurance Co. Ltd. 9% 21% 9% 8% 11%
New China Life Insurance Co. Ltd..... 1% 11% 1% 14% 4%
Tai Kang Life Insurance Co. Ltd...... 3% 3% 1% 3% 3%
Others/(2)/.......................... 2% 4% 4% 4% 3%
Total................................ 100% 100% 100% 100% 100%
==== ==== ==== ==== ====

China Life/(3)/...................... 51% 18% 69% 34% 45%

- --------
(1) Information concerning CLIC, our predecessor, does not give effect to the
restructuring.
(2) Others include China United Property Insurance Co., Taiping Life Insurance
Co. Ltd., Tianan Insurance Co. Ltd. of China, American International
Assurance Co., Ltd., Shanghai, Guangzhou, Shenzhen, Beijing and Suzhou
branches, Manulife-Sinochem Life Insurance Co. Ltd., Pacific-Antai Life
Insurance Co. Ltd., Allianz-Dazhong Life Insurance Co., AXA-Minmetals
Assurance Co., Ltd., China Life-CMG Life Insurance Co., Ltd.,
Citic-Prudential Life Insurance Co., Ltd., John Hancock-Tianan Life
Insurance Co. Ltd., Sun Life Everbright Life Insurance Co. Ltd. and
Generali China Life Insurance Co. Ltd.
(3) Adjusted to give effect to the restructuring.
Source: China Insurance Yearbook 2003

We face competition not only from domestic life insurance companies, but
also from non-life insurance companies and foreign-invested life insurers. The
number of life insurance companies licensed in China has been growing steadily,
which we believe will lead to greater competition in the life insurance
industry. There were 14 licensed life insurance companies in China as of
December 31, 2000, 17 as of December 31, 2001, 23 as of December 31, 2002 and
27 as of June 30, 2003. Recent changes in the insurance law have allowed
property and casualty insurers to sell accident and short-term health insurance
products with regulatory approval starting from January 2003, which we believe
will lead to greater competition in the accident and health insurance sectors,
especially in the group accident and group health insurance products. In
addition, existing limitations on foreign-invested insurance companies are
gradually being relaxed, which we believe will further increase competition in
China's life insurance market.

See "Risk Factors--Risks Relating to the PRC Life Insurance Industry--We
expect competition in the Chinese insurance industry to increase, which may
materially and adversely affect the growth of our business".

We face competition from other financial services providers, primarily
licensed mutual fund companies, trust companies and brokerage houses licensed
to manage separate accounts. These financial services providers may be
permitted to manage employer-sponsored defined contribution pension plans,
which we believe will compete directly with our group annuity products. We also
face competition in the sale of our individual participating policies and
annuities from financial institutions which offer investment products to the
public.

Asset Management Business

On November 23, 2003 we established an asset management joint venture with
our predecessor, CLIC, in connection with the restructuring for the purpose of
operating the asset management business more

140

professionally in a separate entity and to better attract and retain qualified
investment management professionals. The joint venture manages our investment
assets and, separately, substantially all of those of CLIC. Through this joint
venture, we also intend to offer asset management products and services to
other insurance companies. For a description of our investment assets, see
"--Investments".

The asset management joint venture is our subsidiary, with us owning 60% and
CLIC owning the remaining 40%. The initial board comprises five members, Wang
Xianzhang, the chairman of our board of directors and president, Miao Fuchun,
our vice president, Wu Yan, one of our directors, and two other members.
Directors of the asset management joint venture are appointed by the
shareholders in general meeting. Accordingly, we, as the controlling
shareholder, effectively control the composition of its board of directors.

Customer Support Management

We seek to provide quality services to our customers and potential customers
and to be responsive to their needs, both before and after a sale, through an
extensive customer support network. Our customer service network is managed by
a specialized customer service department, which is responsible for setting
uniform standards and procedures for providing policy-related services to
customers, handling inquiries and complaints from customers and training
customer services personnel.

We deliver customer services primarily through customer service units
operating in our branch offices and in field offices throughout China and a
sophisticated telephone call center network. We provide customer support to
more remote areas by mail and other means. We also take advantage of
alternative customer services channels, such as wireless telephone networks and
the Internet, complementing the customer services provided by our customer
service units and the call center network.

Customer service units

We provide customer support through approximately 3,000 customer service
units nationwide. We provide more than 40 different types of policy-related
services to our customers, which include collecting regular premiums, renewing
policies, purchasing supplemental policies, amending policy terms, reinstating
lapsed policies, processing surrenders, increasing insured amounts, processing
policy loans, paying benefits and updating information regarding holders and
beneficiaries of policies. We require our customer service units to provide
these policy-related services in accordance with procedures and standards that
we implement on a nationwide basis, helping to ensure the quality of the
services we provide.

Telephone call center network

Our telephone call centers allow customers to make product and service
inquiries, file complaints, report claims and losses and make appointments.
They also provide call-back and greeting message services to customers. We
intend to broaden over time the services we offer through these call centers.
With our dedicated, nationwide inquiry line, "95519", our customers can reach
us by a local telephone connection on a "24 hours/7 days" basis in key cities.
The call centers are supported by our web-based "95519" Support System, which
contains customer and service information.

We believe our call centers are an important marketing tool and that they
have become popular with our customers because of the quality of services they
provide. We seek to ensure that we have a sufficient number of lines and staff
to service the increasing utilization of our call centers.

We have established system-wide standards for our call centers, which we
monitor periodically through test calls to the call centers. We are in the
process of implementing a more technically advanced customer service system
based on Internet protocol technology that is capable of delivering
content-rich customer services. The

141

new system also uses the popular "95519" access number and can be directly
monitored by personnel at our company headquarters. The new system has been
installed and is fully functional at six provincial level branch offices. We
plan to complete the implementation of the new system at most of our branch
offices by the end of 2004.

Wireless telephone services

We utilize wireless telephone services to make instant contact with our
agents and customers. Through two special service codes (95519 for China Unicom
and 895519 for China Mobile), we may send short messages to our customers,
conveying such information as birthday and holiday greetings, premium payment
notices and premium payment confirmations. We have installed this wireless
telephone service system in a number of our branch offices for purposes of
conducting field tests, and plan to complete the implementation of this system
at most of our branch offices by the end of 2004.

Internet-based services

Our customers can also utilize our Internet-based services for inquiries,
complaints and service requests through our website (www.chinalife.com.cn).

Future Policy Benefits and Reserves

For all of our product lines, we establish, and carry as liabilities,
actuarially determined amounts that are calculated to meet our obligations
under our insurance policies and annuity contracts.

Financial statement reserves

In accordance with H.K. GAAP, our reserves for financial reporting purposes
are based on actuarially recognized methods for estimating future policy
benefits and claims. We expect these reserve amounts, along with future
premiums to be received on policies and contracts and investment earnings on
these amounts, to be sufficient to meet our insurance policy and contract
obligations.

We establish the liabilities for obligations for future policy benefits and
claims based on assumptions that are uncertain when made. Our assumptions
include assumptions for mortality, morbidity, persistency, expenses, and
investment returns, as well as macroeconomic factors such as inflation. These
assumptions may deviate from our actual experiences and, as a result, we cannot
determine precisely the amounts which we will ultimately pay to settle these
liabilities or when these payments will need to be made. These amounts may vary
from the estimated amounts, particularly when those payments may not occur
until well into the future. We evaluate our liabilities periodically, based on
changes in the assumptions used to establish the liabilities, as well as our
actual policy benefits and claims experience. We expense changes in our
liabilities in the period the liabilities are established or re-estimated. To
the extent that trends in actual claims results are less favorable than our
underlying assumptions used in establishing these liabilities, and these trends
are expected to continue in the future, we could be required to increase our
liabilities. This increase could have a material adverse effect on our
profitability and, if significant, our financial condition. Any material
impairment in our solvency level could change our customers' or business
partners' perception of our financial health, which in turn could affect our
sales, earnings and operations.

Statutory reserves

We are required under China's insurance law to report policy reserves for
regulatory purpose. The minimum levels of these reserves are based on
methodologies and assumptions mandated by the CIRC. We also maintain assets in
excess of policy reserves to meet the solvency requirements under CIRC
regulations.

142

See "Risk Factors--Risks Relating to Our Business--Differences in future
actual claims results from the assumptions used in pricing and establishing
reserves for our insurance and annuity products may materially and adversely
affect our earnings".

Underwriting and Pricing

Our individual and group insurance underwriting involves the evaluation of
applications for life, accident and health insurance products by a professional
staff of underwriters and actuaries, who determine the type and the amount of
risk that we are willing to accept. We have established qualification
requirements and review procedures for our underwriting professionals. We
employ detailed underwriting policies, guidelines and procedures designed to
assist our underwriters to assess and quantify risks before issuing a policy to
qualified applicants.

Our underwriters generally evaluate the risk characteristics of each
prospective insured. Requests for coverage are reviewed on their merits, and
generally a policy is not issued unless the particular risk or group has been
examined and approved for underwriting.

We have different authorization limits and procedures depending on the
amount of the claim. We also have authorization limits for personnel depending
on their level of qualifications.

In order to maintain high standards of underwriting quality and consistency,
we engage in a multilevel series of ongoing internal underwriting audits, and
are subject to external audits by our reinsurers.

Individual and group product pricing reflects our insurance underwriting
standards. Product pricing on insurance products is based on the expected
payout of benefits, calculated through the use of assumptions for mortality,
morbidity, persistency, expenses and investment returns, as well as certain
macroeconomic factors such as inflation. Those assumptions include a margin for
expected profitability and are based on our own experience and published data
from other Chinese life insurance companies. For more information on regulation
of insurance products, see "Regulation--Insurance Company Regulation".

We primarily offer products denominated in RMB.

Claims Management

We manage the claims we receive from policyholders through our claims
management staff located in our headquarters and branch offices. Typically,
claims are received by our employees or agents, who make a preliminary
examination and forward them to our claims settlement team for further
verification. If the claim is verified, the amount payable is calculated and,
once approved, is distributed to the policyholder.

We manage claims management risk through organizational controls and
computer systems controls. Our organizational controls include specified
authorization limits for various operating levels, periodic and ad hoc
inspections at all levels of our organization, expense mechanisms linking
payout ratios with expenses for short-term life insurance policies and
requirements that each claims examination be performed by two staff members. We
also impose stringent requirements on the qualification and employment of
claims management staff. Our claims management control procedures are supported
by a computer processing system which is used for the verification and
processing of claims.

Reinsurance

Statutory reinsurance

Under China's insurance law and CIRC regulations, our predecessor was
required to reinsure 20% of our insurance risks, other than those arising from
life insurance products, with China Reinsurance Company, or

143

China Re, as statutory reinsurer. The statutory reinsurance requirement is now
being phased out. At the beginning of 2003, the percentage of accident and
health insurance risks that our predecessor had to reinsure decreased by 5%,
from 20% to 15%, and it is scheduled to decrease by a further 5% per year until
it is phased out completely at the beginning of 2006. Although there is no
statutory reinsurance requirement for life insurance, our predecessor also
entered into various reinsurance agreements with China Re for the reinsurance
of individual risks, group risks and defined blocks of business.

Commercial reinsurance

In addition to our statutory reinsurance requirements since 1997 we have
entered into various reinsurance agreements with China Re for the reinsurance
of individual risks, group risks and defined blocks of business. In general,
death risks are primarily reinsured on a surplus basis, in which we are
reinsured for losses above a specified amount. Under our internal reinsurance
policy, we reinsure risks over RMB 1 million per person for life insurance, RMB
1 million per person for accident insurance and RMB 0.3 million per person for
health insurance. In general, our reinsurance agreements with China Re do not
have a definite term, but may be terminated by either party at the end of a
calendar year with advance notice of three to six months.

These reinsurance agreements spread the risk and reduce the effect on us of
potential losses. Under the terms of the reinsurance agreements, the reinsurer
agrees to reimburse us for the insured, or ceded, amount in the event the claim
is paid. However, we remain liable to our policyholders for the ceded amount if
the reinsurer fails to meet the obligations assumed by it.

For the year ended December 31, 2002, the amount of premiums ceded to our
reinsurers, primarily China Re, totaled RMB 1,869 million (US$226 million).

As part of our life insurance business we also reinsure policies issued by
other insurers. We have entered into three reinsurance agreements with three
affiliated branches of a United States life insurance company in China that
cover individual life insurance risks and risks of death and disability from
accidental injuries.

Investments

As of June 30, 2003, before giving effect to the restructuring, CLIC had RMB
335,840 million (US$40,572 million) of investment assets. After giving effect
to the restructuring, we had RMB 212,452 million (US$25,666 million) of
investment assets as of the same date. As required by China's insurance law, we
invest insurance premiums, deposits and other funds we receive primarily in
bank term deposits; fixed maturity securities, including government securities,
bonds issued by the central bank and state-owned policy banks of the Chinese
government and corporate bonds; and policy loans and securities investment
funds primarily invested in equity securities issued by Chinese companies and
traded on China's securities exchanges. We also participate in bond repurchase
activities through inter-bank repurchase markets and repurchase exchange
markets. We are prohibited from investing in other securities without the
CIRC's approval.

We direct and monitor our investment activities through the application of
investment guidelines. Our investment guidelines include: (1) performance goals
for the investment fund; (2) specified asset allocations and investment scope
based on regulatory provisions, level of indebtedness and market forecasts; (3)
specified goals for investment duration and asset-liability matching
requirements based on asset-liability matching strategies; (4) specified
authorization levels required for approval of significant investment projects;
and (5) specified risk management policies and prohibitions. The investment
guidelines are reviewed and approved by the investment committee annually.

Investment proposals typically originate from our investment management
department, which is in charge of all of our investment assets, other than our
investments in real estate properties and other investment projects

144

made prior to the enactment of China's insurance law, which are being retained
by CLIC after our restructuring. Investment proposals are reviewed by our risk
management department for risk assessment and submitted to the investment
committee for final approval. An investment committee approval is typically
required for investments in primary markets. Secondary market trading decisions
are typically made within the investment management department under our
general investment guidelines.

The asset management joint venture established by us and our predecessor,
CLIC, manages our investments following the restructuring and, separately,
substantially all of the investments retained by CLIC. See "--Asset Management
Business". In connection with the restructuring, CLIC transferred to us a
portion of its investment assets and specified other assets, and retained the
remaining investment and other assets. See "The Restructuring" and
"Relationship with CLIC". The information presented in this section sets forth
the investment assets of CLIC, together with the investment assets transferred
to us in connection with the restructuring.

We own 60% of the asset management joint venture, with CLIC owning the
remaining 40%. The initial board comprises five members, including Wang
Xianzhang, the chairman of our board of directors and president, Miao Fuchun,
our vice president, Wu Yan, one of our directors, and two other members.

145

The following table summarizes information concerning CLIC's investment
assets as of the dates or for the periods indicated, as well as investment
assets that were transferred to us in connection with the restructuring, as of
the dates or for the periods indicated.

CLIC investment assets /(1)/ CLIC investment
As of December 31, assets/(1)/ Our investment
-------------------------------------------- As of June 30, assets
2000 2001 2002 2003 As of June 30, 2003/(2)/
-------------- -------------- -------------- -------------- ------------------------
Carrying % of Carrying % of Carrying % of Carrying % of Carrying % of
value total value total value total value total value total
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
(RMB in millions, except as otherwise indicated)

Cash and cash equivalents......... 23,275 17.9% 17,855 9.5% 14,529 5.5% 23,592 7.0% 10,682/(3)/ 5.0%
Term deposits..................... 39,653 30.5% 76,083 40.3% 123,675 46.4% 142,043 42.3% 97,563 45.9%
Statutory deposits--restricted.... 40 0.0% 990 0.5% 991 0.4% 992 0.3% 4,000 1.9%

Fixed maturity securities, held to
maturity......................... 1,598 1.2% 1,388 0.7% 1,220 0.5% 827 0.2% -- --
Fixed maturity securities, non-
trading.......................... 36,086 27.8% 51,896 27.5% 75,117 28.2% 81,190 24.2% 45,090 21.2%
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Fixed maturity securities......... 37,684 29.0% 53,284 28.2% 76,337 28.6% 82,017 24.4% 45,090 21.2%
------- ----- ------- ----- ------- ----- ------- ----- ------- -----

Policy loans...................... 109 0.1% 107 0.1% 106 0.0% 136 0.0% 49 0.0%
Equity securities, non-trading.... 1,119 0.9% 2,002 1.1% 8,101 3.0% 9,025 2.7% 4,588 2.2%
Equity securities, trading........ 5,675 4.4% 5,696 3.0% 4,070 1.5% 5,772 1.7% 4,143 2.0%
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Equity securities................. 6,794 5.2% 7,698 4.1% 12,171 4.5% 14,797 4.4% 8,731 4.2%
------- ----- ------- ----- ------- ----- ------- ----- ------- -----

Repurchase agreements............. 19,840 15.3% 30,480 16.1% 36,388 13.7% 70,061 20.9% 46,337 21.8%
Investments in associates/(4)/.... 2,031 1.6% 2,036 1.1% 2,035 0.8% 1,993 0.6% -- --
Other investments/(4)/............ 572 0.4% 336 0.2% 231 0.1% 209 0.1% -- --
------- ----- ------- ----- ------- ----- ------- ----- ------- -----
Total investment assets........... 129,998 100% 188,869 100% 266,463 100% 335,840 100% 212,452 100%
======= ===== ======= ===== ======= ===== ======= ===== ======= =====
Average cash and investment
assets balance................... -- 159,434 227,666 301,152
Investment properties/(4)(5)/..... 841 2,993 3,011 2,819

- --------
(1) Does not give effect to the restructuring.
(2) Pro forma to give effect to the restructuring.
(3) Does not include CLIC's minority interest in the asset management joint
venture.
(4) Investments made by CLIC pursuant to special approval of the State Council
or by CLIC's predecessor prior to the enactment of the PRC insurance law in
1995 and which CLIC was allowed to retain. These investments are not now
permitted under the PRC insurance law and are being retained by CLIC
following the restructuring.
(5) Under H.K. GAAP, investment properties are not recorded as a part of
investment assets, but as a part of fixed assets. Income derived from
investment properties is recorded as investment income.

Risk management

Our primary investment objective is to pursue optimal investment yields
while considering macroeconomic factors, risk control and regulatory
requirements. We are exposed to four primary sources of investment risk:

. interest rate risk, relating to the market price and cash flow
variability associated with changes in interest rates;

. credit risk, relating to the uncertainty associated with the continued
ability of a given obligor to make timely payments of principal and
interest;

146

. market valuation risk, relating to the changes in market value for our
investments, particularly our securities investment fund holdings; and

. liquidity risk, relating to the lack of liquidity in many of the fixed
maturity securities markets we invest in, due to contractual restrictions
on transfer or the size of our investments in relation to the overall
market.

Our investment assets are principally comprised of term deposits and fixed
income securities, and therefore changes in interest rates have a significant
impact on the rate of our investment return. We manage interest rate risk
through adjustments to our portfolio mix and terms, and by managing, to the
extent possible, the average duration and maturity of our assets and
liabilities. However, because of the general lack of long-term fixed income
securities in the Chinese financial markets and the restrictions on the types
of investments we may make, the duration of some of our assets is lower than
our liabilities. We believe that with the development of China's financial
markets and the gradual easing of our investment restrictions, our ability to
match our assets to our liabilities will improve. Chinese financial markets
currently do not provide an effective means for us to hedge our interest rate
risk.

Because we are limited in the types of investments we may make, we believe
we have relatively low credit risk. We monitor our credit risk through in-house
fundamental analysis of the Chinese economy and the underlying obligors and
transaction structures.

We are subject to market valuation risk, particularly because of the
relative lack of stability of China's bond and stock markets. We manage
valuation risk through industry and issuer diversification and asset allocation.

Since by law we are limited to investments in China, including term deposits
with Chinese banks and securities investment funds, we are exposed to the
effect of changes in the Chinese economy and other factors which affect the
Chinese banking industry and securities markets.

We are also subject to market liquidity risk for many of the fixed maturity
securities investments we make, due to the size of our investments in relation
to the overall market. We manage liquidity risk through selection of liquid
assets and through asset diversification. In addition, we view fundraising
through repurchase agreements as a way of managing our short-term liquidity
risk.

Our ability to manage our investment risks is limited by the investment
restrictions placed on us and the lack of sophisticated investment vehicles in
China's capital markets. We understand that the CIRC is considering opening
other investment channels to insurance companies, including mortgage-backed
securities, infrastructure project financings, foreign fixed-income securities
and direct investment in China's stock markets. We will consider these
alternative ways of investing once they become available to us.

For further information on our management of interest rate risk and market
valuation risk, see "Operating and Financial Review and Prospects--Market Risk
and Risk Management".

Investment results

In the restructuring, CLIC transferred to us investment assets with a book
value of RMB 212,452 million (US$25,666 million) as of June 30, 2003. To the
greatest extent practicable, investment assets were divided in such a manner
that the separated pools of assets and liabilities have the same portfolio
composition and maturity characteristics. See "The Restructuring--Transfer of
Insurance Policies and Related Assets--Investment assets".

The yield on CLIC's investment assets and investment properties, excluding
net realized investment gains and losses, was 1.7% for the six months ended
June 30, 2003, 3.8% for the year ended December 31, 2002 and 4.1% for the year
ended December 31, 2001.

147

The following table sets forth the yields on average assets for each
component of CLIC's investment portfolio, without giving effect to the
restructuring, for the periods indicated.

-----------

-----------
2000
-----------
Yield /(2)/
----------

Cash, cash equivalents and term deposits:
Investment income........................ 3.4%
Ending assets: cash and cash equivalents.
Ending assets: statutory
deposits--restricted....................
Ending assets: term deposits.............

Ending assets............................
Fixed maturity securities:
Investment income........................ 4.8%
Net realized gains/(losses)..............

Total....................................
Ending assets............................
Policy loans:
Investment income........................ 3.0%
Ending assets............................
Equity securities:
Investment income........................ 6.7%
Net realized gains/(losses)..............

Total....................................
Ending assets............................
Resale and repurchase agreements:
Resale agreements:
Investment income........................ 2.8%
Net realized gains/(losses)..............

Total....................................
Ending assets............................
Repurchase agreements:
Total....................................
Ending assets............................
Investments in associates/(4)/:
Investment income/(losses)............... (2.2)%
Ending assets............................
Investment properties/(4)(5)/:
Investment income........................ (0.4)%
Ending assets............................
Other investments/(4)/:
Investment income........................ 1.5%
Ending assets............................
Total investments:
Net investment income/(5)/............... 3.8%
Net realized gains/(losses)..............

CLIC /(1)/
-------------------------------------------------------------------
As of or for the years ended
December 31, As of or for the six
--------------------------------------------- months ended June 30,
2001 2002 2003
------ ----------------- ------------------ --------------------
Amount Yield /(2)/ Amount Yield /(2)/ Amount Yield /(3)/ Amount
------ ---------- ------ ---------- ------- ---------- -------
(RMB in millions, except as otherwise indicated)

Cash, cash equivalents and term deposits:
Investment income........................ 1,910 3.4% 2,714 3.7% 4,310 1.8% 2,732
Ending assets: cash and cash equivalents. 23,275 17,855 14,529 23,592
Ending assets: statutory
deposits--restricted.................... 40 990 991 992
Ending assets: term deposits............. 39,653 76,083 123,675 142,043
------ ------ ------- -------
Ending assets............................ 62,968 94,928 139,195 166,627
Fixed maturity securities:
Investment income........................ 1,776 4.2% 1,918 4.2% 2,723 1.8% 1,431
Net realized gains/(losses).............. (129) 188 446 558
------ ------ ------- -------
Total.................................... 1,647 2,106 3,169 1,989
Ending assets............................ 37,684 53,284 76,337 82,017
Policy loans:
Investment income........................ 4 2.8% 3 6.6% 7 2.5% 3
Ending assets............................ 109 107 106 136
Equity securities:
Investment income........................ 371 12.3% 893 2.4% 240 1.4% 188
Net realized gains/(losses).............. 106 (194) (180) 133
------ ------ ------- -------
Total.................................... 477 699 60 321
Ending assets............................ 6,794 7,698 12,171 14,797
Resale and repurchase agreements:
Resale agreements:
Investment income........................ 342 3.2% 815 3.3% 1,094 1.2% 653
Net realized gains/(losses).............. -- -- --
------ ------ ------- -------
Total.................................... 815 1,094 653
Ending assets............................ 19,840 30,480 36,388 70,061
Repurchase agreements:
Total.................................... -- (56) (71) (2)
Ending assets............................ 90 14,608 3,602 0
Investments in associates/(4)/:
Investment income/(losses)............... (45) (1.6)% (32) (0.3)% (6) 0.8% 16
Ending assets............................ 2,031 2,036 2,035 1,993
Investment properties/(4)(5)/:
Investment income........................ (3) 1.5% 29 2.2% 67 2.0% 58
Ending assets............................ 841 2,993 3,011 2,819
Other investments/(4)/:
Investment income........................ 21 0.9% 4 3.2% 9 3.2% 7
Ending assets............................ 572 336 231 209
Total investments:
Net investment income/(5)/............... 4,374 4.1% 6,276 3.8% 8,347 1.7% 5,070
Net realized gains/(losses).............. (23) (6) 266 691

- --------
(1) Does not give effect to the restructuring.
(2) Yields for a given year are calculated by dividing the investment income
for that year by the average of the ending balances of that year and the
previous year.
(3) Yields for June 30, 2003 are calculated by dividing the investment income
for the six months ended June 30, 2003 by the average of the ending
balances of June 30, 2003 and December 31, 2002.
(4) Investments made by CLIC pursuant to special approval of the State Council
or by CLIC's predecessor prior to the enactment of the PRC insurance law in
1995 and which CLIC was allowed to retain. These investments are not now
permitted under the PRC insurance law and are being retained by CLIC
following the restructuring.
(5) Under H.K. GAAP, investment properties are not booked as a part of
investment assets, but as a part of fixed assets. Income derived from
investment properties is recorded as investment income.

148

Term deposits

Term deposits consist principally of term deposits with Chinese commercial
banking institutions and represented 42.3% of total investment assets as of
June 30, 2003, 46.4% as of December 31, 2002, 40.3% as of December 31, 2001
and, after giving effect to the restructuring, 45.9% as of June 30, 2003.

We generally make term deposits with state-owned commercial banks and large
joint stock commercial banks. The terms of the term deposits vary.
Substantially all of them carry variable interest rates which are linked to
deposit rates set by the People's Bank of China from time to time, thus
providing us with a measure of protection against rising interest rates and,
for a significant portion of them, the variable interest rates also cannot fall
below a fixed guaranteed rate. They typically allow us to renegotiate terms
with the banks upon prepayment, including calculations methods for accrued
interest, if any. Term deposits must be greater than RMB 30 million and have a
deposit period of longer than five years. We make term deposits to obtain
higher yields than can ordinarily be obtained with regular deposits.

The following table sets forth CLIC's term deposits by contractual maturity
dates, without giving effect to the restructuring, as of the dates indicated.

As of
As of December 31, June 30,
------------------- ---------
2001 2002 2003
--------- --------- ---------
Amortized Amortized Amortized
cost cost cost
--------- --------- ---------
(RMB in millions)

Due in one year or less................... 5,929 6,621 4,100
Due after one year and through five years. 48,143 108,953 122,271
Due after five years and through ten years 21,011 7,101 14,670
Due after ten years....................... 1,000 1,000 1,002
------ ------- -------
Total term deposits....................... 76,083 123,675 142,043
====== ======= =======

The following table sets forth CLIC's term deposits outstanding to Chinese
banking institutions, without giving effect to the restructuring, as of the
dates indicated.

Industrial & Commercial Bank of China 9,624 24,027 23,959
Agriculture Bank of China............ 12,147 20,178 20,744
Bank of China........................ 12,140 11,748 10,428
China Construction Bank.............. 4,517 9,139 7,179
Other banks.......................... 37,655 58,583 79,733
------ ------- -------
Total term deposits.................. 76,083 123,675 142,043
====== ======= =======

Fixed maturity securities

Fixed maturity securities consist of Chinese treasury bonds, Chinese
government agency bonds and Chinese corporate bonds, and represented 24.4% of
total investment assets as of June 30, 2003, 28.6% as of December 31, 2002 and
28.2% as of December 31, 2001.

Based on estimated fair value, Chinese treasury bonds, Chinese government
agency bonds and Chinese corporate bonds comprised 73.7%, 21.2% and 5.1% of
total non-trading fixed maturity securities as of June 30,

149

2003, respectively, 67.9%, 27.7% and 4.4% as of December 31, 2002,
respectively, and 75.3%, 20.9% and 3.8% as of December 31, 2001, respectively.
Except for a few series of Chinese treasury bonds, which collectively had an
estimated fair value of RMB 47,112 million (US$5,692 million) as of June 30,
2003, most of our fixed maturity securities are publicly traded in secondary
markets in China.

The treasury bonds are sovereign debt of the Chinese government. The
government agency bonds are backed by the Chinese government and are therefore
sovereign-rated. The corporate bonds we invest in are issued primarily by
state-owned enterprises involved in railway development, the Three Gorges Dam
construction project and the telecommunication and power generation sectors,
and are rated AAA by China Chengxin International Credit Rating Co., Ltd. or
Dagong Global Credit Rating Agency, which provide the credit ratings for the
fixed maturity securities we invest in.

Chengxin International was created by a consortium of companies including
Fitch Ratings and International Finance Company. Chengxin International
provides ratings on both companies and securities, including insurance
companies, securities firms, commercial banks and corporate bonds. AAA is the
highest of ten rating categories. Dagong provides ratings on both companies and
securities, including insurance companies, commercial banks, mutual funds and
long-term and short-term debts. AAA is the highest of nine rating categories.
China has other approved rating agencies, such as China Lianhe and Shanghai Far
East, both of whom have similar rating structures. Ratings given by these
entities are not directly comparable to ratings given by U.S. rating agencies.

The following table sets forth the amortized cost and estimated fair value
of CLIC's fixed maturity securities, without giving effect to the
restructuring, as of the dates indicated.

As of December 31,
-----------------------------------------------------------------
2001 2002 As of June 30, 2003
-------------------------------- -------------------------------- --------------------------------
Amortized % of Estimated % of Amortized % of Estimated % of Amortized % of Estimated % of
cost total fair value total cost total fair value total cost total fair value total
--------- ----- ---------- ----- --------- ----- ---------- ----- --------- ----- ---------- -----
(RMB in millions)

Fixed maturity securities,
non-trading:
Treasury bonds.......... 37,016 72.6% 39,078 73.3% 49,661 66.4% 50,979 66.7% 58,754 72.6% 59,836 73.0%
Government agency
bonds.................. 10,688 20.9% 10,836 20.3% 20,615 27.6% 20,815 27.2% 17,193 21.3% 17,182 20.9%
Corporate bonds......... 1,956 3.8% 1,982 3.7% 3,212 4.3% 3,323 4.4% 4,095 5.1% 4,172 5.1%
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total fixed maturity
securities,
non-trading............ 49,660 97.3% 51,896 97.3% 73,488 98.3% 75,117 98.3% 80,042 99.0% 81,190 99.0%

Fixed maturity securities,
held to maturity:
Treasury bonds.......... 717 1.4% 750 1.4% 584 0.8% 602 0.8% 257 0.3% 267 0.3%
Government agency
bonds.................. -- -- -- -- -- -- -- -- -- -- -- --
Corporate bonds......... 671 1.3% 691 1.3% 636 0.9% 671 0.9% 570 0.7% 615 0.7%
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total fixed maturity
securities, held to
maturity............... 1,388 2.7% 1,441 2.7% 1,220 1.7% 1,273 1.7% 827 1.0% 882 1.0%
------ ----- ------ ----- ------ ----- ------ ----- ------ ----- ------ -----
Total fixed maturity
securities............. 51,048 100% 53,337 100% 74,708 100% 76,390 100% 80,869 100% 82,072 100%
====== ===== ====== ===== ====== ===== ====== ===== ====== ===== ====== =====

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The following table shows the amortized cost and estimated fair value of
CLIC's fixed maturity securities, without giving effect to the restructuring,
by contractual maturity dates, as of the dates indicated.

As of December 31,
----------------------------------------- As of June 30,
2001 2002 2003
-------------------- -------------------- --------------------
Amortized Estimated Amortized Estimated Amortized Estimated
cost fair value cost fair value cost fair value
--------- ---------- --------- ---------- --------- ----------
(RMB in millions)

Due in one year or less................... 1,606 1,641 3,583 3,621 6,187 6,327
Due after one year and through five years. 17,003 18,191 18,547 19,426 15,465 15,980
Due after five years and through ten years 23,443 24,356 33,009 33,767 37,252 37,881
Due after ten years....................... 8,996 9,149 19,569 19,576 21,965 21,884
------ ------ ------ ------ ------ ------
Total fixed maturity securities........... 51,048 53,337 74,708 76,390 80,869 82,072
====== ====== ====== ====== ====== ======

Under the CIRC's regulations, our investments in corporate bonds at any
given time may not exceed 20% of our total assets as of the end of the
preceding month. We diversify our corporate bonds by industry and issuer. Our
corporate bond portfolio does not have significant exposure to a single
industry or issuer.

Problem and restructured fixed maturity securities. We monitor fixed
maturity securities to identify investments that management considers to be
problems. We also monitor investments that have been restructured.

We define problem securities in the fixed maturity securities category as
securities to which principal or interest payments are in default or are to be
restructured pursuant to commenced negotiations, or as securities issued by a
debtor that has subsequently entered liquidation.

We define restructured securities in the fixed maturity securities category
as securities to which we have granted a concession that we would not have
otherwise considered but for the financial difficulties of the obligor or
issuer.

None of our fixed maturity securities is classified either a problem
security or a restructured security.

Policy loans

We offer interest-bearing policy loans to our policyholders, who may borrow
from us at total amounts up to 70% of the cash surrender values of their
policies. In general, the loans are secured by the policyholders' rights under
the policies. As of June 30, 2003, the total amount of CLIC's policy loans,
without giving effect to the restructuring, was RMB 136 million (US$16
million), and represented 0.04% of total investment assets as of that date.

Securities investment funds

Securities investment funds consist of Chinese domestic investment funds
that primarily invest in securities that are issued by Chinese companies and
traded on China's securities exchanges, and represented 4.2% of total
investment assets as of December 31, 2002.

We invest in both "closed-end" securities investment funds, in which the
number of shares is fixed and the share value depends on the trading value, and
"open-end" securities investment funds, in which the number of shares issued by
the fund fluctuates and the share value is set by the value of the assets held
by the fund. Under the CIRC's regulations, investment holdings in securities
investment funds during any given month, based on the cost of investment, may
not exceed 15% of the total assets of an insurance company as of the end of the
proceeding month. In addition, investment holdings in a single securities
investment fund during any given

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month may not exceed 3% of total assets of the company as of the end of the
proceeding month, and no investment in any single "closed-end" securities
investment fund may exceed 10% of that fund. Our holdings in securities
investment funds comply with those restrictions.

The following table presents the carrying values of CLIC's investments in
open-end and closed-end securities investment funds, without giving effect to
the restructuring, as of the dates indicated.

As of December 31,
----------------------------- As of June 30,
2001 2002 2003
-------------- -------------- --------------
Carrying % of Carrying % of Carrying % of
value total value total value total
-------- ----- -------- ----- -------- -----
(RMB in millions, except as otherwise indicated)

Open-end.. 1,130 16.8% 4,139 36.9% 7,783 56.0%
Closed-end 5,605 83.2% 7,075 63.1% 6,115 44.0%
----- ----- ------ ----- ------ -----
Total..... 6,735 100% 11,214 100% 13,898 100%
===== ===== ====== ===== ====== =====

Repurchase agreements

We enter into repurchase agreements, which consist of bond repurchase
activities in repurchase exchange markets. Bonds repurchased under these
agreements represented 20.9% of total cash and investment assets as of June 30,
2003, 13.7% as of December 31, 2002 and 16.1% of total investment assets at
December 31, 2001.

Without giving effect to the restructuring, CLIC had RMB 70,061 million of
exchange market repurchases for the six months ended June 30, 2003, RMB 36,388
million of exchange market repurchases for the year ended December 31, 2002 and
RMB 30,480 million of exchange market repurchases for the year ended December
31, 2001.

Employees

As of December 31, 2000, 2001 and 2002, our predecessor, CLIC, had
approximately 43,800, 49,000 and 61,000 employees, and 49,000, 41,000 and
27,000 temporary employees, respectively. As of June 30, 2003, after giving
effect to the restructuring, we had 66,886 employees and approximately 20,000
temporary employees. We employ temporary employees for discharging internal
routine administrative functions, such as providing secretarial and customer
liaison services. The following table sets forth the number of our employees by
their functions as of June 30, 2003.

Number of % of
employees total
--------- -----

Management and administrative staff....................... 9,339 14.0%
Financial and auditing staff.............................. 5,777 8.6%
Sales and marketing staff /(1)/........................... 27,248 40.7%
Underwriters, claim specialists and customer service staff 17,250 25.8%
Other professional and technical staff /(2)/.............. 1,905 2.8%
Other..................................................... 5,367 8.0%
------ -----
Total..................................................... 66,886 100%
====== =====

- --------
(1) Includes direct sales representatives. / /
(2) Includes actuaries, product development personnel, investment management
personnel and information technology specialists.

As of December 31, 2000, 2001 and 2002, our predecessor, CLIC, had
approximately 300,000, 450,000 and 600,000 exclusive agents, respectively. As
of June 30, 2003, after giving effect to the restructuring, we had
approximately 650,000 exclusive agents. We believe the increases in numbers of
our exclusive agents reflect the growth in our individual business, and have
enabled us to establish and maintain long-term business relationships with our
individual customers.

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None of our employees is subject to collective bargaining agreements
governing employment with us. We believe that our employee relations are
satisfactory.

Information Technology

Our information technology systems provide support to many aspects of our
businesses, including product development, sales and marketing, business
management, cost control and risk control. Our information technology systems
are comprised of an actuarial system, a marketing support system, an instant
policy-processing system, an e-commerce system, a central business processing
system, an agent management information system, a customer service system, an
accounting and financial management system, a risk management system and an
office automation, or OA, system. While we plan to centralize our information
technology systems, we also plan to build back-up systems to reduce the risk of
system failures and the impacts these failures may have on our business.

Our actuarial system automatically generates and analyzes premiums and
policy fees and supports the calculation of reserves, the analysis of business
operations and the development and design of new products.

Our marketing support system provides our agents with real time support for
their daily operations, giving them easy access to information about customers
and insurance products, providing detailed calendar planning and allowing them
to conduct on-site premium calculation and product design.

Our instant policy-processing system provides support for intermediaries,
such as banks and post offices, to sell products on our behalf.

Our e-commerce system currently provides online support for the sales by our
agents. We plan to provide online services to our individual customers
beginning in the first half of 2004.

Our central business processing system, or CBPS, provides comprehensive and
integrated support for various aspects of our business, such as customer
relationship management, contract management and sales agent management. We
believe our customer information database, gathered and processed by CBPS,
collectively contain the largest customer database in the Chinese life
insurance industry.

Our agent management information system maintains files for our branches and
our individual agents and thus allows us to monitor their performance and
assists us in determining agent compensation.

Our China Life accounting and financial management system provides financial
bookkeeping, business accounting, final accounting and other administrative
functions. It gathers and processes financial data for management, marketing
and customer service purposes.

We deliver our customer services through a sophisticated telephone call
center network, complementing the customer services provided by our customer
service units. We are in the process of implementing a more technically
advanced customer service system based on Internet protocol technology that is
capable of delivering content-rich customer services. The new system also uses
the popular "95519" access number and can be directly monitored by personnel at
our company headquarters. The new system has been installed and is fully
functional at six provincial level branch offices. We expect to complete the
implementation of the new system at each of our branch offices at the
provincial level by the end of 2004. See "--Customer Support Management".

Our OA system, which was first implemented in 1997 and is still in
development, facilitates the resource utilization and information exchange
among company personnel. We believe we have the widest computer network in the
Chinese life insurance industry, connecting all branch offices to our network
and allowing our management to obtain precise and comprehensive business
information from local branches and distribute information to the branches.

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Our predecessor invested significantly in information technology systems,
investing RMB 362 million, RMB 630 million and RMB 130 million in 2002, 2001
and 2000. We plan to increase our investments significantly in 2003. We believe
our investments in information technology systems are the largest in the
Chinese life insurance industry. Our information technology systems are
supported by approximately 1,430 experienced engineers, technicians and
specialists, which we believe is the largest professional staff in the Chinese
life insurance industry.

Legal Proceedings

We are involved in litigation involving our insurance operations on an
ongoing basis. In addition, the CIRC makes inquiries and conducts examinations
or investigations from time to time concerning our compliance with insurance
laws. While we cannot predict the outcome of any pending or future litigation,
examination or investigation, based on the amounts sought in pending actions
against us and our history of resolving litigation matters in the past, as well
as the advice of legal counsel, we do not believe that any pending legal matter
will have a material adverse effect on our business, financial condition or
results of operations.

We currently have control procedures in place to monitor our litigation
exposure. We have established a systematic prevention system whereby our
management at each corporate level is responsible for compliance with laws,
regulations and internal codes of conduct within their individual territories
or departments. Our branches at the provincial level are required to report
material litigation matters to our corporate headquarters on a timely basis. We
plan to continue to improve our control and compliance policies in the future.

We may penalize our employees or individual agents who commit misconduct or
fraud, breach the terms of their employment or agency agreements, exceed their
authorization limits or fail to follow prescribed procedures in delivering
insurance policies and premium payments, in each case having regard to the
severity of the offense. Employees or individual agents are required to
reimburse us for any losses suffered by us resulting from their misconduct or
fraud. In serious cases, we may terminate their employment or agency
agreements. We report criminal offenses to the PRC authorities and may also
bring concurrent civil actions against employees or individual agents.

Trademarks

We conduct our business under the "China Life" brand name (in English and
Chinese) and "ball" logos. One of the "ball" logo trademarks has been
registered in the PRC and CLIC has filed applications to register the
trademarks in the "China Life" name (in English and Chinese) and the other
"ball" logo with the Trademark Office under the SAIC. CLIC has entered into a
trademark license agreement with us, under which CLIC has agreed to grant us a
royalty-free license to use these trademarks. See "Relationship with
CLIC--Trademark License Agreement".

Properties

Owned properties

As of September 30, 2003, we owned 3,443 properties, including our
headquarters in Beijing, China. These 3,443 properties comprise a total gross
floor area of approximately 3,997,000 m/2/ and are situated on 2,978 parcels of
land with a total site area of approximately 3,145,000 m/2/. As of September
30, 2003, CLIC held land use right certificates in respect of 2,970 parcels of
land with a total site area of approximately 3,138,000 m/2/ and, for the
remaining 8 parcels of land with a total site area of approximately 6,462 m/2/,
title documents were pending, and CLIC and we are in the process of applying
for the relevant land use right certificates to be registered in our name. In
addition, CLIC held building ownership certificates in respect of 3,368
properties with a total gross floor area of approximately 3,858,000 m/2/ and,
for the remaining 75 properties with a total gross floor area of approximately
139,000 m/2/, title documents were pending and CLIC and we are in the process of

154

applying for the relevant building ownership certificates to be registered in
our name. Due to the large number of properties acquired by us as a result of
the restructuring and the fact that we were only incorporated on June 30, 2003,
we and CLIC are still in the process of applying to register all parcels of
land and buildings owned by us in our name.

372 properties owned by us are leased to independent third parties. The
remaining properties owned by us are mainly occupied by us as office premises.

As part of the restructuring, CLIC has undertaken to us (1) to have the land
use right certificates and building ownership certificates in respect of all
3,443 properties and all 2,978 parcels of land registered under our name as
soon as possible; (2) to be responsible for all costs, expenses, and claims
incurred and (3) to indemnify us against all losses, claims, charges or
expenses arising from any failure to obtain the land use right certificates
and/or building ownership certificates.

Our PRC legal counsel, King & Wood, has advised us that (1) it is not aware
of (a) any material legal impediment to the transfer from CLIC to us of the
land use right certificates relating to the 2,970 parcels of land and the
building ownership certificates of the 3,368 properties or (b) any matter which
may cause any adverse effect or financial burden on the land use rights over
these 2,970 parcels of land or the building ownership rights on these 3,368
properties; and (2) for the remaining 8 parcels of land and 75 properties in
respect of which title documents are pending, CLIC and we are in the process of
applying for the relevant land use right certificates and building ownership
certificates in our name. Upon completion of the transfer of all such land use
right certificates and building ownership certificates to us, we will have
lawful rights to occupy, let, transfer and mortgage all of these parcels of
land and properties.

If we and/or CLIC cannot obtain the relevant land use right certificates
and/or building ownership certificates, our management believes that there will
be no material financial impact on us as CLIC has undertaken to indemnify us
against all losses or expenses arising out of or in connection with a failure
to obtain the relevant land use right certificates and/or building ownership
certificates.

The land was valued at RMB 10,956 million as at September 30, 2003 by
Sallmanns (Far East) Limited as set out in "Annex B -- Valuation Report of
Sallmanns (Far East) Ltd."

Leased properties

We lease office space for various branches and offices located throughout
China. We lease office space located in China under a property leasing
agreement entered into between CLIC and us, under which CLIC agreed to lease to
us (1) 833 properties owned by CLIC, its subsidiaries and affiliates, which we
refer to as the CLIC owned properties, with an aggregate gross floor area of
approximately 637,000 m/2/; and (ii) 1,764 properties which CLIC is entitled to
sublet, which we refer to as the CLIC leased properties, with an aggregate
gross floor area of approximately 1,060,000 m/2/. See "Relationship with
CLIC--Property Leasing Agreement".

As of September 30, 2003, CLIC held building ownership certificates in
respect of 408 CLIC owned properties with a total gross floor area of
approximately 352,000 m/2/ and, for the remaining 425 CLIC owned properties
with a total gross floor area of approximately 285,000 m/2/, CLIC is in the
process of completing the legal procedures in order to obtain the legal title
to such CLIC owned properties. Further, CLIC has undertaken to us (1) to have
the building ownership certificates in respect of these 425 CLIC owned
properties registered under its name as soon as possible; (2) to be responsible
for all costs, expenses and claims incurred and (3) to indemnify us against all
losses, claims, charges or expenses arising from our occupation of these CLIC
owned properties.

For the 1,764 CLIC leased properties which are initially leased by CLIC from
independent third parties and then subletted to us, CLIC has undertaken to
indemnify us against all losses or claims arising from our use of any of these
subletted properties.

155

Properties under construction

As of September 30, 2003, there were 65 properties under construction
situated on the parcels of land and CLIC had obtained all necessary
construction approvals in relation to 57 properties under construction, which
upon completion will have an estimated total gross floor area of approximately
309,000 m/2/. For the remaining 8 properties under construction which upon
completion will have an estimated total gross floor area of approximately
41,000 m/2/, CLIC is in the process of applying for the necessary construction
approvals.

As part of the restructuring, CLIC has undertaken to us (1) to have the
building ownership certificates in respect of all properties under construction
registered under our name upon completion of construction as soon as possible;
(2) to obtain the necessary construction approvals in respect of the remaining
8 properties under construction as soon as possible; (3) to be responsible for
all costs, expenses and claims incurred and (4) to indemnify us against all
losses, claims, charges or expenses arising from any failure to obtain these
construction approvals and/or building ownership certificates.

156

REGULATION

Overview

Development of regulatory framework

The PRC insurance law was enacted in 1995. It provided the initial framework
for regulating the domestic insurance industry. Among the steps taken under the
1995 law were the following:

. Licensing of insurance companies and insurance intermediaries, such as
agents and brokers. The 1995 insurance law established requirements for
minimum registered capital levels, form of organization, qualification of
senior management and the adequacy of the information systems for
insurance companies and insurance agencies and brokers.

. Separation of property and casualty insurance businesses and life
insurance businesses. The 1995 insurance law classified insurance
between property, casualty, liability and credit insurance businesses, on
the one hand, and life, accident and health insurance businesses on the
other, and prohibited companies from engaging in both types of businesses.

. Regulation of market conduct by participants. The 1995 insurance law
prohibited fraudulent and other unlawful conduct by insurance companies,
agencies and brokers.

. Substantive regulation of insurance products. The 1995 insurance law
gave insurance regulators the authority to approve the policy terms and
premium rates for certain insurance products.

. Financial condition and performance of insurance companies. The 1995
insurance law established reserve and solvency standards for insurance
companies, imposed restrictions on investment powers and established
mandatory reinsurance requirements, and put in place a reporting regime
to facilitate monitoring by insurance regulators.

. Supervisory and enforcement powers of the principal regulatory
authority. The principal regulatory authority, then the People's Bank of
China, was given broad powers under the 1995 insurance law to regulate
the insurance industry.

Establishment of the China Insurance Regulatory Commission and 2002
amendments to the insurance law

China's insurance regulatory regime was strengthened further with the
establishment of the CIRC in 1998. The CIRC was given the mandate to implement
reform in the insurance industry, minimize insolvency risk for Chinese insurers
and promote the development of the insurance market. The PRC insurance law was
also significantly amended in 2002.

Since its establishment, the CIRC has promulgated a series of regulations
indicating a gradual shift in the regulatory approach to a more transparent
regulatory process and a convergent movement toward international standards.
Significant changes include:

. more stringent reserve and solvency requirements and their disclosure;

. the increase in the level of disclosures required to be made to the CIRC
by insurance companies;

. greater freedom for insurance companies to develop products to meet
market needs, with a significant reduction in the items which require the
CIRC's approval;

157

. broader investment powers for insurance companies, including allowing
insurers to make equity investments in insurance-related enterprises,
such as asset management companies;

. tightening of market conduct regulation and increased penalties for
violations;

. phasing out of mandatory reinsurance by the beginning of 2006; and

. reduction of barriers to entry, including allowing property and casualty
insurers to enter the accident and short-term health insurance business.

Insurance Company Regulation

The CIRC. The CIRC has extensive supervisory authority over insurance
companies, including:

. promulgation of regulations applicable to the insurance industry;

. examination of insurance companies;

. establishment of investment regulations;

. approving the policy terms and premium rates for certain insurance
products;

. setting of standards for measuring the financial soundness of insurance
companies;

. requiring insurance companies to submit reports concerning their business
operations and condition of assets; and

. ordering the suspension of all or part of an insurance company's business.

Licensing requirements. An insurance company is required to obtain a
license from the CIRC in order to engage in an insurance business. In general,
a license will be granted only if the company can meet prescribed registered
capital requirements and other specified requirements, including requirements
relating to its form of organization, the qualifications of its senior
management and actuarial staff, the adequacy of its information systems and
specifications relating to the insurance products to be offered. Our
headquarters and all of our branch offices have obtained the requisite
insurance licenses.

The CIRC may grant a life insurer a license to offer all or part of the
following products: accident insurance, term life insurance, whole life
insurance, annuities, short-term and long-term health insurance, endowment
insurance (for individuals only) and other personal insurance approved by the
CIRC, as well as reinsurance relating to any of the foregoing.

An insurance company may seek approval for establishing branch offices to
meet its business needs so long as it meets minimum capital and other
requirements. Our headquarters and substantially all of our branch offices have
obtained business licenses. Our PRC legal counsel, King & Wood, has advised us
that there is no legal impediment for the remaining branch offices to obtain
their business licenses.

Minimum capital requirements. The minimum paid-in capital for an insurance
company licensed to conduct business on a nationwide basis is RMB 500 million.
The minimum paid-in capital of a regional insurance company is RMB 200 million.
Additional capital is required if a regional insurer opens more than two branch
offices or if a nationwide insurer opens more than three branch offices. The
minimum incremental capital for each additional branch office beyond the
allotted two or three branches, as described above, is RMB 50 million. In
general, no additional capital will be required when the paid-in capital has
reached RMB 1,500 million for a nationwide insurer or RMB 500 million for a
regional insurer, and the insurer is in good financial condition.

158

The CIRC has published for comment proposed regulations which would reduce
the minimum paid-in capital for nationwide insurance companies.

Restriction of ownership in joint stock insurance companies. Generally, any
transfer of shares in an insurance company requires the approval of the CIRC;
however, this restriction will not apply to publicly traded shares of a listed
insurance company. Notwithstanding the foregoing, any acquisition of shares
which results in the acquirer owning more than 10% of the registered capital of
a joint stock insurance company, whether or not listed, requires the approval
of the CIRC. In addition, except in the context of a public offering of shares
by the joint stock insurance company and except where more than 25% of the
insurance company is owned by foreign entities (in which case the regulations
governing foreign-invested insurance companies will apply), foreign entities
and wholly foreign-owned enterprises may not individually own more than 10%,
nor collectively more than 25%, of the registered capital of a Chinese
insurance company. Except in the context of a public offering or as otherwise
permitted by law or with the prior approval of the State Council in China, no
bank or securities company may invest in an insurance company. The CIRC has
published for comment proposed regulations that would modify these ownership
limitations.

Fundamental changes. Prior approval must be obtained from the CIRC before
specified fundamental changes relating to a Chinese insurance company may
occur. These include:

. a change to the company's name, registered capital, change in capital
structure, operating premises of the company or its branch offices,
business scope or senior management;

. a merger or spin-off;

. an amendment to the company's articles of association;

. a transfer of an equity interest in the company other than through a
public listing of shares; and

. a dissolution or bankruptcy of the company.

Regulation of insurance and annuity products generally. The 1995 insurance
law provided that the basic terms and premiums of the principal commercial
insurance and annuity products offered by an insurance company will be set by a
governmental authority (which today is the CIRC).

The 2002 amendment to the insurance law changed the manner in which
insurance products were regulated, giving insurance companies greater freedom
to develop products to meet market needs. Under the 2002 amendment, the terms,
premiums and policy fees of non-traditional life insurance and annuity
products, insurance products that affect social and public welfare and
insurance products that are mandatorily required by statute, are required to be
submitted to the CIRC for approval. In determining whether or not to approve a
product, the CIRC is required to consider whether the product adequately
provides for the protection of social and public welfare and whether it will
lead to inappropriate competition. Other insurance products are required to be
filed with the CIRC. In general, the CIRC requires insurance companies to price
their products based on mortality rate, interest rate and policy expenses
assumptions. The assumed mortality rates are based on experience tables
applicable to the PRC life insurance industry. The assumed interest rates
represent the insurance company's expectation of its investment returns,
subject to CIRC regulations, and the assumed policy expenses are based on its
assessment of its operating and sales expenses, which is also subject to CIRC
regulations.

Regulation of participating products. A participating product is one which
the policyholder or annuitant is entitled to share in the distributable
earnings of the insurer through "policy dividends". The participation dividend
may be in the form of a cash payment or an increase in the insured amount. Not
less than 70% of the distributable earnings is required to be distributed as
dividends. Participating products may not be sold or modified without the prior
approval of the CIRC. Policyholders and annuitants purchasing participating
products

159

must be given, prior to purchase, an explanatory statement that explains the
nature and special characteristics of the products, any fees due under the
products, the method for allocating dividends under the product policy and the
risks to the policyholder or annuitant from holding the product. Insurance
companies are required to present in their sales promotional materials three
scenarios covering high, medium and low returns for illustration. They are
prohibited from making public announcements about the returns of their
participating products and from making comparisons with participating,
universal or investment-linked products offered by other insurance companies.
If cash dividends are to be paid on participating products, the insurance
company may not use rates of return or like ratios to describe the dividend.

An insurance company that offers participating products is required to have
a computer system that can support these kinds of products, and the agents who
sell these products are required to complete a training course designed
specially for these products. Investment accounts for participating products
are required to be segregated from those of non-participating products as well
as from those of supplemental insurance that is added to the participating
products.

Insurance companies offering participating products are required to file an
annual report with the CIRC. The insurance company is also required to provide
a performance report to the holders of its participating products at least once
a year, setting forth specified financial and other information regarding the
products.

Regulation of investment-linked products. An investment-linked product is
one which insures the policyholder or annuitant against one or more separate
risks and at the same time gives the policyholder or annuitant an interest in
one or more separate investment accounts. Investment-linked products may not be
sold or amended without the prior approval of the CIRC. We do not currently
offer investment-linked products.

Persons purchasing an investment-linked product must be given, prior to
purchase, an explanatory statement that explains the nature and special
characteristics of the policy, the risks to the purchaser of holding the
product, the investment strategy of the separate investment account, the
investment account's performance for the past ten years (or, if shorter, since
the date of inception), the applicable fees payable under the product policy
and how they are determined, the method of valuation of the assets in the
investment account and the future policy or contract value which may accrue
from the investment account. Insurance companies are required to present three
scenarios covering high, medium and low returns for illustration.

The establishment of separate investment accounts is subject to the CIRC's
approval. Transactions between a separate investment account and any other
account of the insurance company, other than a transfer of cash to pay for
operating expenses of the separate investment account, are prohibited.

The insurance law prohibits investment managers of a separate investment
account from engaging in an investment management business similar in nature to
the management of the investment account, enter into transactions with the
investment account or take any action which adversely affects the investment
account. Agents who sell investment-linked products are required to pass a
training course designed specially for these products.

An insurance company offering products with separate investment accounts is
required to evaluate weekly the unit value of each investment account and
publish a semi-annual notice which includes the financial condition of each
investment account, the investment returns in the past five years (or, if
shorter, since the date of inception), the investment portfolio as of the date
of the report, the management fees charged in the report period and any change
in the investment strategy or policy during the period. The insurance company
is required to provide an annual report to the holders setting forth
information regarding the product.

An insurance company offering products with separate investment accounts is
required to submit to the CIRC annual financial reports regarding the
investment accounts. In addition, the insurance company must notify the CIRC if
on any day the net redemptions from an investment account exceed 1% or more of
the total value of

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the account on the previous day. If the cumulative redemptions since the
beginning of a fiscal year exceed 30% of the value of the account at the
beginning of the year, or if there have been sustained losses which the
investment manager believes to be irreversible, the insurance company may seek
the approval of the CIRC to close the investment account.

Foreign exchange denominated insurance. Insurance companies may seek
approval from the CIRC and the State Administration of Foreign Exchange to
engage in foreign exchange denominated insurance and reinsurance businesses.
This will allow life insurance companies to offer products to non-Chinese
policyholders or for non-Chinese beneficiaries, as well as policies covering
accidents and illnesses which occur outside China, together with related
reinsurance.

Reporting and disclosure requirements. Within the prescribed time period
following the end of a fiscal year, an insurance company must submit to the
CIRC, among other disclosures, an annual report with audited financial
statements and an annual report setting forth its solvency level as of the end
of the fiscal year, and other regulatory monitoring items. When the insurance
company's solvency level falls below the minimum solvency requirement, the CIRC
also may require the insurance company to file a corrective plan to bring it
into compliance with the requirement.

Statutory reinsurance. All insurance companies are currently required to
reinsure 15% of the risks insured under insurance policies, other than life
insurance products, underwritten by them. This requirement began to be phased
out beginning in 2003 and is scheduled to be abolished entirely by the
beginning of 2006. Insurance companies are also required to reinsure, for any
single risk, the excess of the maximum potential liability over an amount equal
to 10% of the sum of paid-in capital and capital reserves.

Regulation of investments. The 1995 insurance law requires insurance
companies to invest their funds in a sound and prudent manner with the dual
objective of seeking a return and preservation of capital. It significantly
restricts the investments life insurance companies are allowed to make.
Insurance funds may be invested only in bank deposits, Chinese treasury bonds,
government agency bonds issued by the central bank or quasi-sovereign policy
banks of the Chinese government, as well as other investment vehicles approved
by the State Council, such as bonds of specified large state-owned enterprises.
The 1995 insurance law specifically prohibits insurance companies from
establishing any entity engaged in the securities businesses and from investing
in enterprises.

Since 1999, the CIRC has implemented a gradual but deliberate regulatory
expansion of insurance company investment powers.

Beginning in August 1999, insurance companies which were authorized to
become members of the inter-bank market were permitted to engage in purchases
and sales of Chinese treasury bonds and government agency bonds in that market.
Beginning in October 1999, insurance companies were allowed to invest in
qualified domestic securities investment funds. The amount of investment assets
that may be so invested by an insurance company may not exceed a percentage of
its total assets as of the end of the prior year as prescribed by the CIRC. The
investment in any one fund on a cost basis may not exceed 20% of the maximum
amount that may be invested in securities investment funds, and that investment
may not account for more than 10% of the fund. These quantitative restrictions
were relaxed in January 2003. Since then, the amounts of investment assets that
may be so invested by an insurance company may not exceed 15% of its total
assets as of the end of the prior month. The investment in any one fund on a
cost basis may not exceed 3% of the insurance total assets as of the end of the
prior month. The investment in any one closed-end fund may not account for more
than 10% of the fund. Notwithstanding the foregoing, insurance companies may
invest up to 100% of the assets of one of the investment accounts relating to
investment-linked products, up to 80% of the assets of the investment accounts
relating to universal life products and up to 15% of the investment assets
relating to participating products as of the prior month in qualified domestic
securities investment funds.

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In October 1999, insurance companies were authorized to make deposits in
commercial banks at negotiated rates, provided that the deposits have terms
longer than five years and are in amounts of not less than RMB 30 million. The
"jumbo" deposits generally bear more attractive interest rates than interest
rates on "regular" deposits, which are subject to regulation by the central
bank.

The 2002 amendment of the insurance law allows insurance companies to invest
in insurance companies, asset management companies (restricted to managing
insurance company assets) and other insurance-related enterprises upon receipt
of regulatory approval from the CIRC. The general prohibition against investing
in securities businesses and enterprises other than insurance-related
enterprises remains in effect.

Prior to June 2003, insurance companies were only allowed to invest in
corporate bonds issued by four types of government enterprises: railway
development, the Three Gorges Dam construction project and enterprises in the
telecommunications and power generation sectors. Furthermore, the total amount
of these investments was limited to no more than 10% of an insurer total
assets, and the total investment in any single issue of these four categories
of bonds could not exceed 2% of the total assets of the insurer or 10% of the
issue, whichever is lower. Since June 2003, insurance companies have been
authorized to invest in any corporate bond provided that the bond has a rating
AA or higher from China Chengxin International Credit Rating Co., Ltd., Dagong
Global Credit Rating Agency, China Lianhe Credit Rating Co., Ltd., Shanghai Far
East Credit Rating Co., Ltd. or other credit rating agencies approved by the
CIRC, and its issuance has been authorized by the PRC securities regulators. An
insurer's total investment in these corporate bonds on a cost basis may not
exceed 20% of its total assets as of the end of the prior month. Furthermore,
the total investment in any single issue of corporate bonds may not exceed the
lower of 2% of the total assets of the insurer as of the end of the prior month
and 15% of the issue. Notwithstanding the foregoing, up to 100% of the assets
of one of the investment accounts relating to investment-linked products and up
to 80% of the assets of the investment accounts relating to universal life
products may be invested in approved corporate bonds. Up to 20% of the
investment assets relating to participating and other separately accounted
products as of the end of the prior month may be invested in approved corporate
bonds.

Solvency requirements. In March 2003, the CIRC introduced a new standard,
the solvency ratio, to measure the financial soundness of life insurance
companies to provide better policyholder protection under a system of
corrective regulatory action. The solvency ratio of an insurance company is a
measure of capital adequacy, which is calculated by dividing the actual
solvency of the company (which is its net assets determined in accordance with
PRC GAAP, less specific excluded items) by the minimum solvency it is required
to meet.

The minimum solvency of a life insurance company is the sum of its minimum
solvency for its short-term business (policies having a term of one year or
less from the date of issuance) and the minimum solvency for its long-term
business (policies having a term of more than one year from the date of
issuance).

The minimum solvency for a life insurance company's short-term business is
the higher of:

. 18% of the portion of net premium, deposits and policy fees received in
the most recent fiscal year net of business tax and other surcharges not
in excess of RMB 100 million, plus 16% of the portion in excess of RMB
100 million; and

. 26% of the portion of the average annual claims payments during the most
recent three fiscal years which is not in excess of RMB 70 million, plus
23% of the portion which is in excess of RMB 70 million.

The minimum solvency for its long-term business is the sum of:

. 1% of reserves for its investment-linked insurance business;

. 4% of reserves for its other insurance businesses;

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. 0.1% of the total sums at risk under term life policies, the coverage
period of which expires within three years;

. 0.15% of the total sums at risk under term life policies, the coverage
period of which expires within three to five years;

. 0.3% of the total sums at risk under term life policies, the coverage
period of which will not expire within five years;

. 0.3% of the total sums at risk under whole life policies; and

. 0.3% of the sums at risk of all other insurance and annuity products with
a coverage period longer than one year.

An insurance company with a solvency ratio below 100% may be subject to a
range of regulatory actions by the CIRC. If the solvency ratio is above 70%,
the CIRC will have the right to require the insurance company to submit and
implement a corrective plan. If the insurer fails to come into compliance with
the solvency requirement within the prescribed time period, the CIRC may
require the insurance company, among other things, to raise additional share
capital, to seek reinsurance of its insurance obligations, to stop paying
dividends on its shares or to restrict the acquisition of fixed assets or
business operations or the establishment of branch offices.

If the solvency ratio of an insurance company falls to or below 70% but
stays at or above 30%, in addition to the right to take the above-mentioned
measures, the CIRC may also order the insurance company to sell its
non-performing assets, transfer its insurance business to others, limit the
remuneration and expense accounts of its senior management, restrict its
advertising activities or cease any new business development.

If the solvency ratio falls below 30%, in addition to the right to take the
regulatory actions described above, the CIRC will also have the right to put
the insurer into receivership.

Insurance companies are required to calculate and report annually to the
CIRC their solvency level and twelve additional financial ratios to assist it
in monitoring the financial condition of insurers. A "usual range" of results
for each of the twelve ratios is used as a benchmark. The departure from the
"usual range" on four or more of the ratios can lead to regulatory actions
being taken by the CIRC.

Registered capital deposit. Insurance companies in China are required to
deposit an amount equal to 20% of their registered capital with a bank
designated by the CIRC. These funds may not be used for any purpose other than
to pay off debts during a liquidation proceeding.

Statutory insurance fund. Chinese life insurance companies are required to
contribute to an insurance guarantee fund 1% of their net premiums from
accident and short-term health insurance, including policies assumed through
reinsurance. Contributions are not required for life insurance and long-term
health insurance. Contributions are not required to be provided once the total
amount in the fund reaches 6% of the insurance company's assets.

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Statutory reserves. In addition to the statutory deposit and the statutory
insurance fund, insurance companies are required to provide for the following
statutory reserves in accordance with regulations established by the CIRC:

. reserves for future benefits and claims; and

. reserves for pending payments based on insurance claims already made and
claims not yet made but for which an insured event has occurred.

These reserves are recorded as liabilities for purposes of determining an
insurance company's actual solvency. In May 2003, the CIRC issued a new
regulation which affected the calculation of statutory reserves for certain
insurance products. It has the general effect of increasing the reserves a life
insurance company is required to make, thereby affecting its solvency as well
as its income under PRC GAAP. This regulation has been implemented beginning
July 1, 2003 and will come into full effect on January 1, 2004.

Appointment of actuaries. Insurance companies are required to appoint one
or more actuarial professionals, certified by the CIRC, and must establish a
system for actuarial reporting.

Market conduct. Insurance companies are required to take steps to ensure
that sales promotional materials used by their sales representatives and agents
are objective, true and correct, with no material omissions or misleading
information, contain no forecasts of benefits that are not guaranteed under the
insurance or annuity product and do not exaggerate the benefits provided under
the insurance or annuity product. The sales promotional materials must also
highlight in an appropriate fashion any exclusions of coverage or liability in
their products, as well as terms providing for policy or annuity surrenders and
return of premiums.

Insurance companies are subject to extensive regulation against
anti-competitive behavior. They may not pay insurance agents, the insured or
the beneficiary any rebates or other illegal payments, nor may they pay their
agents commissions over and above the industry norm.

Compliance with regulatory requirements. Our management confirms that,
based on the advice of King & Wood, our PRC legal counsel, except as set out in
the sections entitled "Risk Factors--Risks Relating to the PRC Life Insurance
Industry--All of our agents are required to be qualified and to be registered
as business entities. If these qualifications and registration requirements are
enforced, our business may be materially and adversely affected" and
"Regulation--Insurance Company Regulation--Licensing requirements" above, we
have complied in all material respects with all applicable regulatory
requirements set out above.

Regulation of Foreign-Invested Insurance Companies

China acceded to the WTO on December 11, 2001. As a result of China's
commitments in connection with the accession, the Chinese insurance market is
gradually opening up to foreign insurers and insurance-related service
providers. A foreign life insurer with total assets of not less than US$5,000
million and 30 years of industry experience in any WTO member country, and
which has had a representative office for two years in China, is permitted to
form a life insurance joint venture with a domestic partner of its choice.
Foreign life insurers may own up to one-half of the joint venture. In addition,
the current geographic limitation on foreign life insurers, which are now
permitted to operate only in specified cities, is to be lifted within three
years of China's accession to the WTO. Foreign life insurers, which are
currently not permitted to provide group life insurance, health insurance and
annuity and other pension-like products, will be permitted to provide these
products within three years of accession.

Foreign-invested insurance companies, including Sino-foreign equity joint
ventures, insurance companies that are wholly owned and branches of foreign
insurance companies, are generally regulated in the same manner as domestic
insurance companies. Foreign-invested insurance companies may not, without the
approval of the

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CIRC, engage in transactions with their affiliates, including reinsurance
transactions and purchases and sales of assets. In addition, where the
foreign-invested insurance company is a branch of a foreign insurance company,
it is required to notify the CIRC of fundamental events relating to the foreign
insurance company within ten days following the occurrence of the event.
Reportable events include: (1) a change of name, senior management or
jurisdiction of incorporation of the foreign insurance company, (2) a change in
the foreign insurance company's share capital, (3) a change in any person
beneficially owning 10% or more of the foreign insurance company's shares, (4)
a change in business scope, (5) the imposition of administrative sanctions by
any applicable regulatory authority, (6) a material loss incurred by the
foreign insurance company, (7) a spin-off, merger, dissolution, revocation of
corporate franchise or bankruptcy involving the foreign insurance company and
(8) other events specified by the CIRC. If the foreign insurance company is
dissolved, or its corporate franchise is revoked or it is declared bankrupt,
the Chinese branch of the foreign insurance company will be prohibited from
conducting any new business.

Regulation of Insurance Agencies, Insurance Brokers and Other Intermediaries

Insurance agents are business entities or individuals which or who act on
behalf of an insurance company in respect of insurance matters. An insurance
company is prohibited from using any agent not licensed by the CIRC to market
its insurance products, and is responsible for the acts of its agents when the
acts are within the scope of their agency. Licensed insurance agencies fall
into three groups: dedicated agencies, non-dedicated agencies and individual
agents.

A dedicated agency is a partnership or company organized under the PRC
company law whose principal business is to act as an agent of insurance
companies. Dedicated agencies are subject to minimum capital and other
requirements, and their business is generally limited to insurance-related
activities.

A non-dedicated agency is a business entity whose principal business is
other than as an insurance agency. To receive a license, the agency business
must have a direct relationship with its principal business, which the CIRC has
interpreted as permitting banks and post offices to act as non-dedicated
insurance agencies.

An individual agent is an individual acting as agent for an insurer. To
receive a license from the CIRC, the individual is required to hold a CIRC
qualification certificate issued by the CIRC. An individual agent is also
required to register with and obtain a business license from the agent's local
bureau of industry and commerce. In addition, the individual must not have
committed any criminal offense or violation of any financial or insurance law
or regulation and must be engaged in the insurance agency business full time.
An individual insurance agent is permitted to act on behalf of only one life
insurance company.

Essentially all of our exclusive agents do not qualify as "individual
agents" within the meaning of the insurance law because they do not meet the
dual requirements of holding a CIRC qualification certificate and a business
license from the local bureau of industry and commerce. We believe this
situation is shared by all major life insurance companies in China.
Approximately 63% of our exclusive agents hold a CIRC qualification
certificate, and essentially none has a business license. It is our
understanding that the SAIC does not have procedures in place to effect the
registration and licensing of individual insurance agents. See "Risk
Factors--Risks Relating to the PRC Life Insurance Industry--All of our assets
are required to be qualified and to be registered as business entities. If
these qualification and registration requirements are enforced, our business
may be materially and adversely affected".

All insurance agencies and agents are required to enter into agency
agreements that specify the duration of the agency; the amount of the agency
fee and the method of payment; the scope of the agency, including the insurance
products to be marketed; and other relevant matters. Absent specific CIRC
approval, insurance agents are prohibited from signing insurance and annuity
products on behalf of the insurance companies they represent. None of our
agents is authorized to sign insurance policies or annuity contracts for us.

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Insurance agencies are required to open special accounts for the handling of
funds that they hold or collect for the insurance companies they represent.
They may not engage in the following activities: dealing with unauthorized
insurers or insurance intermediaries, engaging in activities beyond their
authorized business scope or geographical area, causing injury to the rights of
the insurance companies they represent, spreading rumors or otherwise injuring
the reputation of others in the insurance industry, misappropriating the funds
of the insurance companies they represent, defrauding insurance customers
through false or misleading representations or material omissions, using undue
influence to induce insurance customers to purchase insurance, or defrauding
the insurance companies they represent through collusion with the insured or
the insurance beneficiary. In addition, dedicated insurance agencies are
subject to various reporting requirements, including submission of annual
financial reports, and are subject to supervision and examination by the CIRC.

Insurance brokers, who represent individuals and companies purchasing
insurance, and other intermediaries are subject to similar regulatory
requirements regarding their activities. Among other things, they are subject
to supervision and examination by the CIRC, and fundamental corporate changes
must be approved by the CIRC. Only companies organized under the PRC company
law and meeting the requirements set by the CIRC are authorized to act as
insurance brokers.

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MANAGEMENT

Our board of directors consists of five members. They were elected at the
meetings of our shareholders held on June 30, 2003 and August 18, 2003,
respectively. Our directors are elected to serve a term of three years, which
is renewable upon re-election.

The functions and powers of our board of directors include, among other
things:

(a) convening shareholders' meetings and reporting its work to shareholders
at these meetings;

(b) implementing shareholders' resolutions;

(d) formulating our annual financial budget and report;

(e) formulating our profit distribution plans and loss recovery plans;

(f) formulating proposals for the increase or decrease in our registered
capital and the issuance of debentures;

(g) formulating our major acquisitions and disposal plans, and plans for
merger, division or dissolution;

(h) determining our internal management structure;

(i) appointing or removing our vice presidents and other senior officers
based on the recommendation of our president;

(j) formulating our basic management system;

(k) formulating proposals for any amendments to our articles of association;
and

(l) exercising any other powers conferred by shareholders by action at
shareholders' meetings or under our articles of association.

Except for items (f), (g) and (k) above, which require the affirmative vote
of more than two-thirds of all of our directors, resolutions on any of the
remaining items may be approved by the affirmative vote of a majority of our
directors.

In addition to board approval, the entry into profit distribution plans and
loss recovery plans; changes in our registered capital; the issuance of
debentures; amendments of our articles of association; and major corporate
transactions, such as acquisitions, disposals, mergers, divisions or
dissolutions, are required to be approved by our shareholders.

The PRC company law requires a joint stock company with limited liability to
establish a board of supervisors. Our board of supervisors is responsible for
monitoring our financial matters and supervising the actions of our board of
directors and our management personnel. Our board of supervisors consists of
three members. One member of our board of supervisors must be a representative
elected by our employees. The remaining members must be elected by our
shareholders in a general meeting. One member of our board of supervisors is
designated as the chairman. Members of our board of supervisors may not serve
as director, president, vice president or financial controller of our company.
The term of office for our supervisors is three years, which is renewable upon
re-election.

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The functions and powers of our board of supervisors include:

. reviewing financial reports and other financial information which has
been prepared by the board of directors and which are proposed to be
presented at shareholders' meetings; and

. overseeing our directors, president, vice presidents and other senior
officers in order to prevent them from abusing their authority or
infringing upon our interests.

None of the members of our senior management is an appointee or
representative of the Chinese government or currently connected with it in any
stated official capacity. All of our directors and senior officers have been
approved by the CIRC in accordance with relevant CIRC regulations.

Directors and Senior Officers

The following table sets forth information regarding our current directors
and executive officers. Unless otherwise indicated, their business address is
c/o China Life Insurance Company Limited, 16 Chaowai Avenue, Chaoyang District,
Beijing 100020, China.

Name Age Position
---- --- --------

Wang Xianzhang 61 Chairman of the Board and President
Miao Fuchun... 57 Director and Vice President
Wan Feng...... 45 Vice President
Lin Dairen.... 45 Vice President
Li Liangwen... 52 Vice President
Liu Jiade..... 40 Vice President
Wu Yan........ 42 Non-executive director
Long Yongtu... 60 Independent non-executive director
Chau Tak Hay.. 60 Independent non-executive director

Wang Xianzhang has been chairman of our board of directors and president of
our company in charge of our overall management since 2003. He is also chairman
of the Insurance Industry Association of China and vice chairman of the
Insurance Institute of China. Prior to joining China Life in connection with
the restructuring, Mr. Wang served as the president of CLIC since 2000, where
he remains as president. He served as chairman of the board of directors and
president of China Insurance Company Limited from 1998 to 2000. Prior to that
he served as vice chairman of the board of directors and president of China
Insurance H.K. (Holding) Co., Ltd and vice president of People's Insurance
Company of China, or PICC; vice president of PICC (Group); and general manager
of the Liaoning branch of PICC. He graduated in 1965 from Liaoning University
of Finance and Economics (now Northeast University of Finance and Economics)
with a major in foreign economics and trade.

Miao Fuchun has been a director and vice president of our company since
2003. Prior to joining China Life in connection with the restructuring, Mr.
Miao served as a vice president of CLIC from 1999 to 2003 and director of the
Central Finance and Economy Office from 1995 to 1999. Prior to that he served
as director of the Administrative Office of MOFTEC, now the Ministry of
Commerce, and deputy director and department chief of the Administrative Office
of the State Council. Mr. Miao enrolled in Renmin University in 1965 and
graduated from undergraduate studies in economics, in which discipline he also
later received a Master's degree. Mr. Miao is a senior economist and
experienced in macroeconomics and modern enterprise management. Mr. Miao has
worked in the areas of economics and finance for more than 20 years.

Wan Feng has been a vice president of our company since 2003. Prior to
joining China Life in connection with the restructuring, Mr. Wan served as a
vice president of CLIC and general manager of its Shenzhen branch since 1999
and director of China Life-CMG since 1999, where he remains as director. He
served as general manager of the Shenzhen branch of PICC Life from 1997 to
1999. Prior to that, he served as a director and senior vice president of the
Hong Kong branch of Tai Ping Life Insurance Company and as an assistant
president of the

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Hong Kong branch of CLIC and deputy chief of the life insurance division of the
Jilin provincial branch of PICC. Mr. Wan has worked in the life insurance
industry for 22 years. He graduated from Jilin College of Finance and Trade
with a Bachelor of Arts degree in economics; City University of Hong Kong with
a Master of Business Administration degree; and Nankai University in Tianjin
with a doctorate in finance.

Lin Dairen has been a vice president of our company since 2003. Prior to
joining China Life in connection with the restructuring, Mr. Lin served as
general manager of CLIC's Jiangsu branch from 1999 to 2003. He served as a vice
general manager of PICC Life, Jiangsu branch from 1996 to 1999. Prior to that,
he served as a vice division chief and later division chief of the life
insurance division of PICC, Jiangsu Branch. Mr. Lin has 22 years of experience
in operations and management in the insurance industry in China. He graduated
in 1982 from Shandong Province Weifang Medical School with a bachelor's degree
in medicine.

Li Liangwen has been a vice president of our company since 2003. Prior to
joining China Life in connection with the restructuring, Mr. Li served as
general manager of the product development department of CLIC since 2000 and as
vice general manager of the Hebei branch of CLIC from 1996 to 2000. Prior to
that, he served as vice general manager of the Hebei branch of PICC, general
manager of the Qinhuangdao branch of PICC, and vice president of China
Insurance (U.K.) Limited. Mr. Li has 28 years of experience in the insurance
industry, including four years of experience overseas. He graduated in 1975
from Hebei Normal University with a major in English.

Liu Jiade has been a vice president of our company since 2003. Prior to
joining China Life in connection with the restructuring, Mr. Liu served as a
vice director of the Finance Bureau of the Ministry of Finance since 2000, and
department chief in the National Debt Finance Bureau of the Ministry of Finance
from 1998 to 2000. Prior to that, he served as a vice country chief of the
People's Government of Guan Tao County in Hebei Province, and a vice department
chief and then department chief in the Commercial Finance Bureau in the
Ministry of Finance. During Mr. Liu's tenure at the Ministry of Finance, he was
involved in the administration of assets, finance and taxation of insurance
companies, banks, trust companies and securities houses. Mr. Liu graduated in
1984 from Central Finance College (now Central University of Finance and
Economics) with a major in finance and economics.

Wu Yan has been a non-executive director of our company since 2003. Mr. Wu
also serves as a vice president of CLIC. Prior to joining China Life in
connection with the restructuring, he served as party secretary of the Central
Finance league and president of the National Finance Youth Union from 1998 to
2003. Prior to that, he had served as a vice minister of a central Communist
Youth League organization department; party secretary of the Communist Youth
League of Xinjiang Autonomous Region; a member of the standing committee of
Beortalar Autonomous County Communist Party Committee; and party secretary of
the city of Bole. He graduated in 1981 from Xinjiang College of Finance and
Economics with a major in finance. In 2002, he graduated from the China Academy
of Social Sciences with a Ph.D. in National Economics.

Long Yongtu has been an independent non-executive director of our company
since 2003. Mr. Long is General Secretary of Boao Asian Forum. Prior to leaving
government service in early 2003, Mr. Long served as Vice Minister and Chief
Negotiation Representative of MOFTEC, now the Ministry of Commerce, since 1997.
Prior to that, he served as Assistant to the Minister, Director of
International Trade and Economic Affairs and Director of International
Communication in that ministry. From 1980 to 1986, he served as a senior
officer at the regional project department of UNDP, Deputy Representative of
UNDP Korean Delegate Office and Deputy Director of China International Center
for Economic and Technical Exchanges. Mr. Long graduated in 1965 from the
Foreign Language Department of Guizhou University and studied from 1973 to 1974
at the London School of Economics.

Chau Tak Hay has been an independent non-executive director of our company
since 2003. Mr. Chau was appointed in 2002 as a special consultant to MOFTEC,
now the Ministry of Commerce, regarding WTO matters. Previously, he served in a
number of official positions in the Hong Kong Government, including Secretary
for

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Commerce and Industry, Secretary for Broadcasting, Culture and Sport, Director
General of Trade and Secretary for Health and Welfare. Mr. Chau graduated from
the University of Hong Kong in 1967.

We intend to appoint a chief actuary, who will have overall responsibility
over our actuarial work. We currently have approximately 100 employees
performing actuarial functions, 19 of whom hold diplomas, certificates or
degrees in actuarial science.

Board of Supervisors

Supervisors

The following table sets forth information regarding our current supervisors.

Name Age Position
---- --- --------

Liu Yingqi.. 45 Chairman of Board of Supervisors
Wu Weimin... 52 Supervisor
Zhou Xinping 54 Employee Representative Supervisor

Liu Yingqi is the chairman of our board of supervisors. Prior to becoming
chairman of our board of supervisors in connection with the restructuring, Ms.
Liu served as general manager of the group insurance department of CLIC and
vice general manager of the Anhui branch of CLIC since 1998. Prior to that, she
served as division chief of the accident insurance division and deputy division
chief of the life insurance division of the Anhui branch of PICC. She has 17
years of operational and management experience in the life insurance industry
in China. Ms. Liu graduated in 1982 from Anhui University with a Bachelor's
degree in economics.

Wu Weimin is a supervisor of our company. Prior to joining China Life in
connection with the restructuring, Mr. Wu served at CLIC as deputy secretary of
the disciplinary committee, director of the supervision office, deputy general
manager of the organization department and vice general manager of the
personnel education department since 1998. Prior to that, he served at PICC
(Group) as vice general manager of the human resources department and division
chief of the compensation division from 1995 to 1998. Before joining the
insurance industry, he held a position with the labor wages bureau of the
Ministry of Communications. In 2000, he studied insurance in the China
Insurance Management Staff Institute.

Zhou Xinping is an employee representative supervisor of our company. Before
joining China Life in connection with the restructuring, Mr. Zhou served at
CLIC as vice president of the information technology department since 1996.
Prior to that, he served at PICC, as vice president of the information
technology department, vice president of the actuarial department and vice
president of the computer department; and at China Life Electronic Co., Ltd. as
president of the planning department. Mr. Zhou has 18 years of management
experience in the insurance industry. Mr. Zhou graduated in 1978 from Beijing
University of Science and Technology, majoring in applied computer science.

For more information on our board of supervisors, see "Description of Share
Capital--Board of Supervisors."

Board Committees

We have established standing audit, compensation, risk management and
strategy committees.

The primary duties of the audit committee are to review and supervise the
financial reporting process and our internal control systems. Our audit
committee is currently comprised of Wu Yan, Long Yongtu and Chau Tak Hay.

170

The primary duties of the compensation committee are to formulate the
training and compensation policies for our senior management and to manage our
senior management compensation system. Our compensation committee is currently
comprised of Miao Fuchun, Long Yongtu and Chau Tak Hay.

The primary duties of the risk management committee are to assist the
management in managing our internal and external risks. Our risk management
committee is currently comprised of Wang Xianzhang, Miao Fuchun and Wu Yan.

The primary duties of the strategy committee are to formulate our overall
development plans and investment decision-making procedures. Our strategy
committee is currently comprised of Wang Xianzhang, Miao Fuchun and Wu Yan.

Compensation of Directors, Supervisors and Officers

We were incorporated on June 30, 2003. Prior to that, we did not exist as an
independent legal entity and our operations were conducted by CLIC. The
compensation information set forth below for our directors, supervisors and
various other employees, in so far as it relates to periods prior to our
incorporation, is stated at historical amounts as if our current structure had
been in existence throughout the relevant periods.

Our directors, supervisors and executive officers receive compensation in
the form of salaries, bonuses, housing allowances and other benefits-in-kind,
including our contribution to the pension plan on behalf of our directors,
supervisors and executive officers. The aggregate fees or compensation paid to
all our directors, supervisors and executive officers for the years ended
December 31, 2002, 2001 and 2000 were RMB 3,139,152 (US$379,235), RMB 2,040,778
and RMB 1,112,295, respectively. Our directors are not currently entitled to
severance benefits other than benefits provided by law upon termination of
employment. In the event China Life is acquired, including an acquisition of
control by another person, and a director leaves employment or retires
following the acquisition, the director may receive severance and other
payments upon approval by the shareholders in general meeting. As required by
PRC regulations, we participate in various defined contribution retirement
plans organized by provincial and municipal governments for our employees,
including employees who are directors, supervisors and management personnel, to
which we contributed RMB 65,335 for our directors and executive officers for
the year ended December 31, 2002. The aggregate amount of compensation we paid
to our five highest paid individual employees during the year ended December
31, 2002 was approximately RMB 2,079,551 (US$251,226).

Senior Management Compensation System

In order to provide better incentives for our senior management and to
enhance further the alignment between our senior management's performance and
our shareholders' value, our shareholders, upon the recommendation of our board
of directors, have adopted a compensation system for our senior management,
which was designed with the assistance of an independent compensation
consulting firm. The system is designed to link our senior management's
financial interests with our results of operations and the performance of our
shares. Under this system, our senior management's compensation will consist of
three components:

. basic salaries and other fixed allowances;

. short-term incentive compensation (annual performance bonuses); and

. long-term incentive compensation in the form of stock appreciation
rights, which generally entitle recipients to receive cash payments when
the market price of our H shares rises above the exercise price granted
in the stock appreciation rights.

The variable components in our senior management's compensation, which
consist of performance bonuses and stock appreciation rights, account for 30%
to 65% of their total potential compensation. Generally, the more direct impact
the recipient's responsibilities have on our final operating results, the
larger the variable portion of the recipient's compensation package will be.

171

The annual performance bonuses are closely linked with our annual results of
operations and the individual performance of our senior management. We have
established a complete performance management system, under which key
performance indicators are assigned to each position. For example, the key
performance indicators assigned to our chief actuary position include the ratio
of profitable products to all insurance products, as well as the profit ratio
of new insurance products. The key performance indicators assigned to the
general manager of our human resources department include the retention rate of
specified key positions, the degree of satisfaction of other departments in the
general manager's performance and the duration of vacancies of our senior
management.

The issuance of stock appreciation rights does not involve any issuance of
new shares, nor does it have a dilutive effect on our shareholders. Stock
appreciation rights will be granted to approximately 100 senior management
personnel, including members of the board of directors and the board of
supervisors (but excluding independent non-executive directors and independent
supervisors), the president, vice presidents, heads of key departments in our
headquarters, general managers and some deputy general managers of our
principal branches, as well as senior professionals and technicians of key
positions, such as the chief actuary we intend to appoint. Our board of
directors will determine the recipients of stock appreciation rights according
to internal procedures.

Stock appreciation rights will be granted in units, with each unit
representing one share. Among the senior management to whom stock appreciation
rights are granted, the ratio between the highest and the lowest grants will in
general not exceed 18:1, with the number of units of the highest grant not
exceeding 10% of the total units granted to all participants. The total number
of stock appreciation rights that have been granted but not exercised or
cancelled and the total number of stock appreciation rights that have been
exercised may not exceed 0.5% of our issued share capital, including both
domestic shares and H shares. During any fiscal year, the number of stock
appreciation rights granted may not exceed 0.2% of our issued share capital.
The number of stock appreciation rights initially available for grant may not
be more than 0.2% of our issued share capital after the global offering.

According to this plan, all stock appreciation rights will have an exercise
period of five years and will not be exercisable before the fourth anniversary
of the date of grant unless specified performance or other conditions have been
met. Under these performance conditions, the exercise right may be accelerated
if the share price rises by the percentages and within the time periods
indicated below:

. a total of one-third of the stock appreciation rights may be exercised
provided that within 6 to 18 months from the date of grant, the share
price is at least 10% higher than the exercise price for a period of 20
consecutive trading days;

. a total of one-third of the stock appreciation rights may be exercised
provided that within 18 to 30 months from the date of grant, the share
price is 10% to 20% higher than the exercise price for a period of 20
consecutive trading days; and a total of two-thirds of the stock
appreciation rights may be exercised if the share price is more than 20%
higher; and

. a total of one-third of the stock appreciation rights may be exercised
provided that after 30 months from the date of grant, the share price is
10% to 20% higher than the exercise price for a period of 20 consecutive
trading days; a total of two-thirds of the stock appreciation rights may
be exercised if the share price is more than 20% higher; and all of the
stock appreciation rights may be exercised if the share price is more
than 30% higher.

The exercise price of the stock appreciation rights granted at the time of
the global offering will be the initial public offering price. The exercise
price of stock appreciation rights granted after the global offering will be
the average closing price of the shares in the five trading days prior to the
date of the grant. Upon exercise of the stock appreciation rights, the
exercising participant will receive payment in Renminbi, subject to any
withholding tax, equal to the number of stock appreciation rights exercised
times the difference between the exercise price and market price of the H
shares at the time of exercise.

172

PRINCIPAL AND SELLING SHAREHOLDER

The table below sets forth information regarding the ownership of our
domestic shares prior to and immediately after the global offering, by each
person known to us to own beneficially our shares:

Shares beneficially owned Shares beneficially owned
prior to the global offering after the global offering/(1)/
---------------------------- ------------------------------
Shareholder Number Percent Number Percent
- ----------- -------------- ------- -------------- -------

China Life Insurance (Group) Company 20,000,000,000 100.00 19,411,765,000 75.00

- --------
(1) Assumes that the underwriters do not exercise the over-allotment option. If
the underwriters exercise the over-allotment option in full, China Life
Insurance (Group) Company will own 72.2% of our outstanding shares.

Prior to the global offering, we had 20,000,000,000 domestic shares issued
and outstanding, all of which were held by CLIC, our controlling shareholder,
which is a wholly state-owned enterprise. See "The Restructuring".

In accordance with relevant PRC regulations, CLIC is selling 588,235,000 of
our shares, which will equal approximately 9.09% of the total number of shares
offered in the global offering, if the underwriters do not exercise their
over-allotment option in full, or 676,470,000 of our shares, which will equal
approximately 9.09% of the total number of shares offered in the global
offering, if the underwriters exercise their over-allotment option in full.
CLIC will be required to contribute the net proceeds it receives from the
global offering to the Chinese national social security fund.

CLIC does not have voting rights that differ from the voting rights of other
shareholders after the completion of the global offering, except for matters
that may be brought to a class vote. See "Description of Share Capital--Voting
Rights and Shareholders' Meetings".

None of our directors, supervisors or officers is a legal or beneficial
owner of any shares of our share capital. We are not aware of any arrangement
which may at a subsequent date result in a change of control of our company.

173

THE RESTRUCTURING

Our History and Development

On October 20, 1949, PICC was established by the Chinese government as a
nationwide wholly state-owned insurance company offering various types of
insurance services. PICC achieved monopoly status in China's insurance market
by the mid-1950s, by which time all foreign insurance companies had withdrawn
operations from China. The Chinese government suspended virtually all of PICC's
domestic insurance business, however, in 1958, lasting until the advent of
economic reform in 1979, when PICC's domestic property and casualty insurance
business was resuscitated. PICC's life insurance business resumed operations in
1982, with PICC being the only life insurance provider in China. Initially, the
life insurance market focused principally on the group insurance sector, and
life insurance products lacked diversity. In the late 1980s, more life
insurance companies started to enter the market. Distribution channels for
individual life insurance products began to emerge and agency sales forces
began to be developed.

In 1996, PICC carried out an institutional reform with a view to separating
its insurance business into different sectors, and was renamed as China
People's Insurance (Group) Company. The business of PICC was transferred to its
four subsidiary companies: Zhongbao Property Insurance Company Limited, or PICC
Property; Zhongbao Life Insurance Company Limited, or PICC Life; Zhongbao
Reinsurance Company Limited, or PICC Reinsurance; and China Insurance H.K.
(Holdings) Company Limited, or China Insurance H.K.

In January 1999, pursuant to a State Council decision, the holding structure
of the PICC group of companies was dissolved. After this restructuring, the
original PICC Property inherited the PICC brand and was renamed People's
Insurance Company of China; the original PICC Life was renamed China Life
Insurance Company; the original PICC Reinsurance was renamed China Reinsurance
Company; and all overseas business institutions and operations owned by the
former PICC group of companies were allocated to, and administered by, China
Insurance H.K. After 1999 and prior to the restructuring, CLIC was the only
wholly state-owned insurance company licensed to operate life insurance
business in China.

Before the restructuring, CLIC had 30 branch offices at the provincial,
autonomous region and municipality levels, as well as five branch offices at
the municipal level with independent development plans.

CLIC has experienced rapid development in recent years. In 2002, its total
insurance premiums represented 57% of the total life insurance premiums in
China.

We were formed on June 30, 2003 as a joint stock company in connection with
the restructuring. As part of the restructuring, CLIC transferred to us the
transferred policies. All other insurance policies were retained by CLIC. We
assumed all obligations and liabilities of CLIC under the transferred policies.
CLIC continues to be responsible for its liabilities and obligations under the
non-transferred policies.

On November 23, 2003, we established an asset management joint venture with
our predecessor, CLIC, in connection with the restructuring. The asset
management joint venture manages our investment assets and, separately,
substantially all of those of CLIC. Through the asset management joint venture,
we also intend to offer asset management products and services to other
insurance companies.

See "Life Insurance Industry in China--History and Background" and "The
Restructuring--Transfer of Insurance Policies and Related Assets" for further
information about China's life insurance industry and the restructuring.

Restructuring Plan and Governmental Approval

Upon the approval of the State Council and the CIRC, we were formed on June
30, 2003 as a joint stock company in connection with the restructuring by CLIC,
our sole owner. The restructuring was effected through a plan of restructuring,
which was approved by the CIRC on August 21, 2003, and a restructuring
agreement we entered into with CLIC on September 30, 2003, with retroactive
effect to June 30, 2003. Pursuant to PRC law and the restructuring agreement,
we enjoyed the rights and benefits and assumed the obligations and liabilities
arising from the restructuring from and after June 30, 2003.

174

Purpose

The restructuring was carried out in order to meet several objectives:

. To establish a modern corporate governance structure and more effective
management system.

. To enable us to capture the opportunities offered by the rapid growth of
China's insurance market and make us more competitive.

. To obtain greater access to the capital markets and enhance our growth
potential.

Principal Actions Taken in the Restructuring

The restructuring was effective as of June 30, 2003, which we refer to in
this prospectus as the effective date. In connection with the restructuring:

. CLIC transferred to us (1) all long-term insurance policies (policies
having a term of more than one year from the date of issuance) issued on
or after June 10, 1999, having policy terms approved by or filed with the
CIRC on or after June 10, 1999 and either (i) recorded as a long-term
insurance policy as of June 30, 2003 in a database attached to the
restructuring agreement as an annex or (ii) having policy terms for group
supplemental medical insurance (fund type), (2) stand-alone short-term
policies (policies having a term of one year or less from the date of
issuance) issued on or after June 10, 1999 and (3) all riders
supplemental to the policies described in clauses (1) and (2) above,
together with the applicable reinsurance contracts specified in an annex
to the restructuring agreement. We refer to these policies in this
prospectus as the "transferred policies". All other insurance policies
were retained by CLIC. We refer to these policies as the "non-transferred
policies". We assumed all obligations and liabilities of CLIC under the
transferred policies. CLIC continues to be responsible for its
liabilities and obligations under the non-transferred policies following
the effective date. See "--Transfer of Insurance Policies and Related
Assets".

. Cash, specified investment assets and various other assets were
transferred to us. CLIC retained cash, specified investment assets and
various other assets, including all assets relating to the non-insurance
businesses carried out by CLIC prior to the restructuring. See
"--Transfer of Insurance Policies and Related Assets".

. CLIC agreed not to, directly or indirectly through its subsidiaries and
affiliates, participate, operate or engage in life, accident and health
insurance businesses and any other business in China which may compete
with our insurance business. CLIC also undertook (1) to refer to us any
corporate business opportunity that falls within our business scope and
which may directly or indirectly compete with our business and (2) to
grant us a right of first refusal, on the same terms and conditions, to
purchase any new business developed by CLIC. See "Relationship with
CLIC--Non-Competition Agreement".

. Substantially all of the management personnel and employees who were
employed by CLIC in connection with the transferred assets and businesses
were transferred to us. Some management and personnel remained with CLIC.
See "--Transfer of Insurance Policies and Related Assets".

. CLIC retained the trademarks used in our business, including the "China
Life" name in English and Chinese and "ball" logos, and granted us and
our branches a royalty-free license to use these trademarks. CLIC and its
subsidiaries and affiliates will be entitled to use these trademarks, but
CLIC may not license or transfer these trademarks to any other third
parties. See "Relationship with CLIC--Trademark license agreement".

. CLIC's contracts with its agents and other intermediaries were
transferred to us. See "--Transfer of Insurance Policies and Related
Assets".

175

The net assets transferred to us had a carrying value at June 30, 2003 of
RMB 29,608 million, as determined under PRC valuation regulations. This is
equivalent to RMB 36,182 million, as determined under H.K. GAAP. In
consideration of this transfer, and pursuant to an approval issued by the MOF
in 2003, we issued 20,000,000,000 domestic shares comprising the entire
registered and paid-up capital of our company. After the restructuring and
immediately before the global offering, CLIC owned our entire issued share
capital.

CLIC has committed to pay some of its retired employees a pension supplement
through December 31, 2007. The present value of the aggregate estimated future
payments to be made by CLIC, amounting to RMB 180 million, will be recognized
as an expense to CLIC. Payments made to similar former employees during the
three-year period ended December 31, 2002 were expensed as paid. The amounts
paid were RMB 51 million in 2000, RMB 55 million in 2001 and RMB 56 million in
2002. Obligations relating to these retired employees were retained by CLIC.
Accordingly, these payments will be the responsibility of CLIC following the
restructuring under the restructuring agreement entered into between CLIC and
us.

Transfer of Insurance Policies and Related Assets

Under PRC law and the restructuring agreement, the restructuring was
effective as of June 30, 2003, which we refer to in this prospectus as the
effective date. In connection with the restructuring, CLIC transferred to us
the transferred policies. The non-transferred policies were retained by CLIC.
We assumed all obligations and liabilities of CLIC under the transferred
policies. CLIC continues to be responsible for its liabilities and obligations
under the non-transferred policies following the effective date.

We chose June 10, 1999 as the date for the separation between the
transferred policies and the non-transferred policies because CLIC adopted new
pricing policies as an immediate response to an emergency notice issued by the
CIRC on June 10, 1999, as more fully described below:

. The CIRC was established as the industry regulator in 1998. People's Bank
of China was the industry regulator prior to the CIRC's establishment.

. Immediately prior to June 10, 1999, the pre-determined rate of all
policies sold by CLIC was 5.00%. The maximum pre-determined rate which
life insurance companies could commit to pay on policies was 6.50%, as
set by the People's Bank of China, the insurance regulator at the time.

. These events were set against the background of low and declining
investment returns available to life insurance companies in the PRC at
the time. The interest rate on one-year term deposits, a key benchmark
rate, was 2.25% on June 10, 1999.

. To address the systemic risks to the industry arising from the "negative
spread" problem (high pre-determined rates on policies against low
investment return), the CIRC issued an emergency notice on June 10, 1999
whereby the maximum pre-determined rate which life insurance companies
could commit to pay on new policies was reduced to 2.50% per annum.

. To comply with the requirements of the CIRC's emergency notice, CLIC
ceased to sell policies filed with or approved by the People's Bank of
China or the CIRC before June 10, 1999, and from then onwards started to
sell new policies with pre-determined rates which were equal to or below
2.50% in the new industry environment.

176

The change in pricing policy made by CLIC on June 10, 1999 as an immediate
response to the emergency notice issued by CIRC, differentiates the transferred
policies and the non-transferred policies.

In connection with the restructuring, CLIC's assets as at June 30, 2003 were
divided between CLIC and ourselves in accordance with the restructuring
agreement entered into between CLIC and ourselves. Premiums receivable were
allocated to the transferred and non-transferred policies based on the specific
policies to which they relate. Property, plant and equipment and other
operating assets were allocated based on the terms of the restructuring
agreement. Investments in respect of participating policies were allocated to
the transferred policies, since all participating business has been
transferred. Unlisted equity securities and investment properties were
allocated to CLIC. The remaining investment assets, including term deposits,
fixed maturity securities, equity securities, repurchase agreements and cash
and cash equivalents, were allocated so as to ensure that the book value of
China Life as of June 30, 2003 was RMB 29,608 million, as determined under PRC
valuation regulations. This is equivalent to RMB 36,182 million as determined
under H.K. GAAP, due to differences between PRC GAAP and H.K. GAAP. The
proportions of each of these classes of assets allocated to CLIC and ourselves
were similar.

Insurance policies

Under the plan of restructuring, on the effective date, CLIC transferred to
us the transferred policies.

The following table sets forth the number of the transferred and
non-transferred individual and group life insurance policies as of June 30,
2003.

Number of Number of
non-transferred transferred
policies policies
- --------------- -----------

Life insurance business 68,615,097 44,578,227

In accordance with the plan of restructuring, which sets forth the method by
which the transferred policies were transferred from CLIC to us, notice of the
transfer was made in the People's Daily and in the Financial News, both daily
newspapers with nationwide circulation in the PRC. In the notice, any holder of
a policy to be transferred to us that objected to the transfer was given the
opportunity to contact CLIC within 30 days of the first date of publication of
the notice. Fewer than ten policyholders raised any objections following the
publication of the notice and the issues raised by these policyholders have
been resolved. We have been advised by our PRC legal counsel, King & Wood,
that: (1) the transferred policies have been legally and validly transferred to
us and (2) following the restructuring we will not have any continuing
obligations to holders of the non-transferred policies and that there is no
legal basis on which holders of the non-transferred policies can make a claim
against China Life. See "Risk Factors--Risks Relating to the Restructuring".

Investment and other business assets

In the restructuring, CLIC transferred to us cash and investment assets,
various intellectual property rights and various other business assets,
including the software system for operating our business. CLIC retained cash
and specified investment assets, as well as assets relating to the non-core,
non-insurance business carried out by CLIC prior to the restructuring.

For information about CLIC's investment assets and the investment assets
that were transferred to us in connection with the restructuring, see
"Business--Investments".

Investment assets

All investment assets in respect of participating policies were transferred
to us, since all participating business has been transferred to us. The
remaining investment assets, including term deposits, fixed maturity

177

securities, equity securities, repurchase agreements and cash and cash
equivalents, but excluding unlisted equity securities and investment properties
which were retained by CLIC, were allocated between CLIC and ourselves so as to
ensure that the book value of China Life as of June 30, 2003 was RMB 29,608
million, as determined under PRC valuation regulations. The proportions of each
of these classes of assets allocated to CLIC and ourselves were similar.

Real properties

In connection with the restructuring, land use rights relating to 2,978
parcels of land with an aggregate site area of approximately 3,145,000 m/2/
were transferred to us.

In addition, 3,443 completed buildings and various ancillary structures,
with an aggregate total gross floor area of approximately 3,997,000 m/2/, and
65 buildings and structures which were under construction, with an aggregate
total gross floor area of approximately 350,000 m/2/ upon completion, were
transferred to us. Of the 3,443 buildings, 372 properties with an aggregate
gross floor area of approximately 66,800 m/2/ were leased to independent third
parties.

Receivables, chattels, etc.

Accounts receivable associated with the transferred policies and other
accounts receivable which accrued on or after June 30, 1999 and which remained
on the books as of June 30, 2002, as well as specified deferred assets, prepaid
expenses, low cost consumables and other assets as of the same date, were
transferred to us.

Intellectual property and business assets

The following intellectual property and business assets were transferred to
us:

. All original and duplicate policies, business records, financial and
accounting records, business data, statistical information, training
manuals, technical records, information, data, know-how and manuals and
research and development information relating to the businesses
constituted by the transferred policies.

. All of CLIC's rights and licenses relating to software used in its
insurance businesses, including its core business processing system,
customer service center system, comprehensive inquiry system, individual
agency management system, customer support system, accounting and
financial management system, participating policy monitoring system,
analysis system, business file imaging system and individual agency
marketing support system.

. All permits, licenses, approvals, certificates, authorizations and other
like instruments related to the operation of the assets transferred to us.

. All claims, rights to setoff, cause of action and similar rights held by
CLIC against third parties arising from the transferred assets and
policies.

Insurance agency contracts

As of June 30, 2003, CLIC had agency contracts with approximately 650,000
individual agents and other insurance agencies. CLIC has transferred to us all
of its rights and obligations under these contracts. The restructuring
agreement provides that commissions due under these contracts in connection
with the transferred polices, the accrued amount of which was RMB 1,098 million
as of June 30, 2003, will be borne by us, and commissions due in connection
with non-transferred policies, the accrued amount of which was RMB 40 million
as of June 30, 2003, will be borne by CLIC.

178

Assumed liabilities

We assumed the future benefit liabilities relating to the transferred
policies.

In addition, the accounts payable and other accounts payable incurred on or
after June 30, 1999 associated with the transferred policies were transferred
to us, and those associated with the non-transferred policies were retained by
CLIC.

CLIC previously entered into securities repurchase agreements in connection
with the management of its investment assets. See "Business--Investments". We
assumed a portion of CLIC's obligations to repurchase securities sold to third
parties under these repurchase agreements.

Management personnel and employees

CLIC transferred approximately 67,000 employees to us, including
approximately 9,000 management personnel.

We did not assume any obligations for the welfare benefits of the employees
retained by CLIC and of the transferred employees for any period while they
were employed by CLIC. These obligations, including obligations in respect of
some employees whose employment contracts were terminated or who were asked to
retire prior to the restructuring in exchange for these benefits, will be borne
by CLIC and are not our obligations.

Assets retained by CLIC

CLIC retained the remaining assets it held at the time of the restructuring.
These include:

. Specified fixed assets and intangible assets, including real properties
with associated land use rights and the trademarks in the "China Life"
name (in English and Chinese) and "ball" logos.

. Accounts receivable and other receivables accrued before June 30, 1999 or
accrued after June 30, 1999 and associated with the non-transferred
policies or other businesses retained by CLIC. CLIC also retained a
portion of the assets associated with construction-in-progress projects.

. Assets relating to CLIC's non-core, non-insurance businesses (principally
investments in property, hotels and other operations through
subsidiaries).

Insurance policies retained by CLIC

In connection with the restructuring, CLIC transferred to us the transferred
policies and retained the non-transferred policies. See "--Principal Actions
Taken in the Restructuring". CLIC has incurred substantial losses on these
non-transferred policies, primarily because the pre-determined rates built into
these policies and hence the implied rates at which CLIC was obligated to pay
or accrue reserves on these policies are higher than the investment return it
was able to generate on its investment assets. See "Regulation--Insurance
Company Regulation--Regulation of insurance and annuity products generally".
This outcome, which has been experienced by other major life insurers in China,
is called a "negative spread". From 1996 to 1999, the central bank of China
made several cuts in interest rates, reducing the income CLIC was able to
generate on its investment assets to below the guaranteed rate it was required
to pay on its policies. In 1999, the CIRC reduced the maximum guaranteed rate
insurers were allowed to pay and, as a result, CLIC has not experienced a
"negative spread" on policies issued thereafter.

Owners' equity of our predecessor, CLIC, was a deficit of RMB 176,353
million (US$21,305 million) as of June 30, 2003 and a deficit of RMB 175,463
million (US$21,197 million) as of December 31, 2002. The net

179

losses incurred by our predecessor were RMB 714 million (US$86 million) for the
six months ended June 30, 2003 and RMB 6,990 million, RMB 3,295 million and RMB
2,250 million (US$272 million) for 2000, 2001 and 2002, respectively. These
losses were attributable to losses incurred by our predecessor on policies
retained by CLIC in the restructuring, which has offset the profitability of
the policies transferred to us. On a pro forma basis after giving effect to the
restructuring, our net profit was RMB 3,128 million (US$378 million) for the
six months ended June 30, 2003 and RMB 4,524 million (US$547 million) in 2002.

In connection with the restructuring, CLIC has established, together with
the MOF, a special purpose fund for the purpose of paying claims under the
non-transferred policies. The special purpose fund will be funded by investment
assets retained by CLIC; renewal premiums paid on the non-transferred policies
over time; a portion of the tax payments made by China Life under the tax
rebate mechanism described below; profits from the investments of the special
purpose fund; shareholder dividends paid in cash to CLIC by China Life;
proceeds from the disposition of China Life shares by CLIC over time; and funds
injected by the MOF in the event of a deficiency in the special purpose fund,
as described below. The special purpose fund will be co-administered by CLIC
and the MOF. The special purpose fund will be available to satisfy CLIC's
operating expenses, including the payment of benefits and claims obligations
arising from the non-transferred policies, as well as expenses incurred in
operating the special purpose fund, including third-party management fees and
professional fees, and such other purposes as the management committee of the
fund may agree. A management committee comprised of two to three
representatives from the Ministry of Finance and two to three representatives
from CLIC will oversee the management of the fund, with specified material
items subject to the approval of the MOF. The special purpose fund will be
dissolved when all claims and benefits under the non-transferred policies have
been paid, or sooner if the management committee so agrees.

In accordance with generally applicable tax laws and regulations, CLIC,
ourselves and the asset management joint venture formed with CLIC will file
income tax returns and pay our respective income taxes as separate and
independent taxpayers. Under a tax rebate mechanism expected to be approved by
the MOF and the State Tax Administration, a hypothetical income tax based on
consolidating the operations of CLIC with those of our own, as if the two of us
were a single taxpayer, will be calculated and, if the hypothetical tax is less
than the sum of the income taxes actually paid by CLIC and ourselves, the
excess of the actual tax payments over the hypothetical tax will be rebated to
CLIC. CLIC has a substantial tax loss carry forward. In addition, we expect
CLIC to continue to incur losses at least for several years. Under current PRC
tax law, the loss in any one year can, for tax purposes, be carried forward for
five years, at which time it will expire. Accordingly, it is expected that the
actual tax payments will exceed the hypothetical tax for a number of years. We
are discussing with the MOF including the asset management company in this
arrangement.

The MOF's approval of the special purpose fund issued to CLIC provides that
in the event there is any deficiency in the special purpose fund for so long as
the fund is in existence as described above to meet any payment obligation
arising out of the non-transferred policies, the MOF will provide support
through the injection of funds to ensure the payments of benefits and claims to
the policyholders of the non-transferred policies. We have been advised by our
PRC legal counsel, King & Wood, that (1) the MOF has the authority to issue
this approval regarding the special purpose fund, (2) the approval is valid and
effective and (3) it has no reason to believe that the MOF will revoke the
approval.

CLIC does not meet the minimum solvency requirements under CIRC solvency
regulations. The CIRC has broad powers under these regulations and the
insurance law in the event an insurance company fails to meet its minimum
solvency requirements. These may include ordering the sale of the assets or
transfer of the insurance business of an insurance company in default of these
requirements to a third party and appointing a receiver to take over the
management of the insurance company. See "Regulation--Insurance Company
Regulation--Solvency requirements". We believe that, in light of the MOF
approval described above, it is unlikely that the CIRC will take these actions.
However, we cannot assure you that the CIRC will not take actions against CLIC,
which could have a material adverse effect on us.

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We have been advised by our PRC legal counsel, King & Wood, that following
the restructuring we will not have any continuing obligations to holders of the
non-transferred policies and that there is no legal basis on which holders of
the non-transferred policies can make a claim against China Life. King & Wood
based its conclusion on, among other things, the following factors: (1) after
the restructuring, China Life was established as a separate legal entity and
China Life's assets and liabilities should be regarded as distinct and separate
from those of CLIC; (2) there is no contractual relationship, direct or
indirect, between the holders of the non-transferred policies and China Life;
(3) the restructuring (including the transfer of the transferred policies to
China Life) has been approved by the CIRC and has been conducted without
infringing upon the rights of the holders of non-transferred policies; (4) the
arrangements made under the restructuring agreement, in particular the MOF's
support as described above, are expected to enable CLIC to satisfy its
obligations under the non-transferred policies; and (5) PRC regulatory
authorities have no legal power to direct China Life to assume CLIC's
obligations under the non-transferred policies or to indemnify the holders of
the non-transferred policies.

See "Risk Factors--Risks Relating to the Restructuring".

Status of Implementation of the Restructuring

General

The separation of assets, liabilities and accounting functions between CLIC
and us in connection with the restructuring, including completing the
associated legal procedures, implementing internal control and management
functions, making required governmental registrations and obtaining third-party
consents, has been completed, except to the limited extent described below
(namely, the registration of some of our branches, the transfer of some
liabilities to us and the opening of segregated bank accounts at some of our
branches). All required governmental approvals have been obtained. The
restructuring agreement entered into on September 30, 2003 identified detailed
arrangements for the separation and transfer of insurance policies, assets and
liabilities, business divisions and personnel. Under the restructuring
agreement, CLIC transferred the transferred policies to us. The non-transferred
policies were retained by CLIC. The restructuring agreement provides that where
consents and approvals have not yet been obtained, CLIC will provide the
benefit of the related assets and contractual obligations to us until the
transfer of those assets and contractual obligations is made. Information
regarding the separation of assets, liabilities and accounting functions
between CLIC and us in connection with the restructuring is set forth below.

. As of the date of this prospectus, we had obtained the necessary
insurance business licenses for our headquarters and all of our branches.
In addition, we had completed the registration of our headquarters and
all of our provincial level branches with the local administrations for
industry and commerce. Substantially all of our branches below the
provincial level had completed their registrations with the local
administrations for industry and commerce. We anticipate that those
branches that have not yet completed their registrations will
substantially complete the registration process prior to the completion
of the global offering. We are not aware of any impediment to the
completion of the registration process.

. The transfers of reinsurance contracts have all been completed. The
transfers of exclusive agent agreements and bancassurance arrangements
with banks and post offices have also been completed.

. The internal operations and management of CLIC and us have been fully
separated as follows:

-- We and CLIC have separate business and administrative units and
conduct business at separate premises.

-- Our financial and business systems have been separated from those of
CLIC. The transferred policies and the non-transferred policies are
being processed by separate systems. Financial and

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business data are being separately recorded into a database for
transferred policies and a database for non-transferred policies.

-- Separate books of accounts have been created and are maintained for
our investment assets and those of CLIC. These books of accounts in
turn are integrated within our and CLIC's respective financial
reporting and management systems.

-- Our management and staff have been fully separated from CLIC's.
Except for Mr. Wang Xianzhang, who is our president and also the
president of CLIC, and Mr. Wu Yan, who is one of our directors and
also a vice-president of CLIC, our directors and senior management
are separate from CLIC's.

Segregation of assets and liabilities

The transfer into accounts in our name of all premiums receivable and
investment assets, including treasury bonds and government agency bonds in the
inter-bank market, open-end funds, negotiated and term deposits and current
accounts has been completed.

The transfer of liabilities from CLIC to us has been completed.

The liabilities transferred as of June 30, 2003 pursuant to the
restructuring agreement were included in our audited financial statements.
These liabilities consisted primarily of policyholder reserves and deposits,
with the rest consisting of account payables and other payables. Liabilities
retained by CLIC were also included in our audited financial statements.

Claims management

Under the policy management agreement between CLIC and us, we have no
obligation to and will not at any time settle any claims under the
non-transferred policies on behalf of CLIC using our own funds.

With regard to payment arrangements for claims under the non-transferred
policies, we have implemented the following measures with CLIC:

. We have, at our headquarters and all provincial branch offices, opened
and are using segregated bank accounts to manage funds and payments in
relation to claims under the non-transferred policies. Substantially all
of our branches below the provincial level already have opened segregated
bank accounts, and the remaining branches will also open segregated bank
accounts as necessary. These account openings are expected to be
completed prior to the completion of the global offering. These bank
accounts are used solely for the purposes of the non-transferred policies.

. We will, based on actuarially determined forecasts and supporting data,
issue a monthly funding request to CLIC and the special purpose fund
established in connection with the restructuring for amounts to be paid
to holders of non-transferred policies. Within five business days of the
request, CLIC and the special purpose fund will transfer sufficient funds
to the segregated bank accounts to cover insurance benefits and claims
payable under the non-transferred policies for that calendar month. We
use available funds from the segregated bank accounts for CLIC to settle
claims by holders of non-transferred policies.

. We are entitled to request emergency funding from CLIC in the event we
believe there will be a deficiency in the account balance in the
following ten business days. CLIC is required to make up for the expected
deficiency within five business days of receiving our emergency funding
request.

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. Commencing October 2003, we have been issuing separate accounting reports
on the non-transferred policies to CLIC on a monthly basis.

. In any event, we have no obligation to make any advances on behalf of
CLIC in relation to the payment of claims under the non-transferred
policies. Our policy management agreement with CLIC states that we manage
the non-transferred policies on behalf of CLIC and that all liabilities
arising from such polices will be borne by CLIC. See "Relationship with
CLIC--Policy Management Agreement".

. We have separate IT support systems for processing claims under the
transferred policies and the non-transferred policies.

As we have separate bank accounts and segregated accounting systems from
CLIC, the inter-company balances between CLIC and us will consist primarily of
service fees under the agreements as described in "Relationship with CLIC", and
do not reflect sums paid in settlement of claims under the non-transferred
policies as our own funds will not be used or applied for this purpose.

In connection with the restructuring, CLIC has established, together with
the MOF, a special purpose fund for the purpose of paying claims under the
non-transferred policies. The sources of funding for the special purpose fund
are set forth in "The Restructuring--Transfer of Insurance Policies and Related
Assets--Insurance policies retained by CLIC". The following arrangements have
been made in connection with the special purpose fund:

. The special purpose fund is managed by a management committee consisting
of representatives of CLIC and the MOF, which will determine at its
annual meeting the annual amount expected to be required for the payment
by CLIC of benefits and claims under the non-transferred policies.

. If the annual amount as determined above turns out not to be sufficient,
the management committee will convene a special meeting to determine the
additional amount necessary to make up the shortfall by the MOF.

. An operating center for the special purpose fund will be established to
support the funding activities and to implement the decisions of the
management committee. The operating center will prepare reports on
expected funding requirements and make recommendations to the management
committee.

Accounting functions

Our financial and business systems have been separated from CLIC's and
separate books of accounts have been created and are maintained for our
investment assets and those of CLIC.

At the headquarters level, we have separate and independent finance
departments and personnel from CLIC. Separate books and records (including
general ledger, subledgers and vouchers) are maintained by separate finance
departments.

At branch level, CLIC does not have its own finance personnel, as the
accounting function has been subcontracted to us under the policy management
agreement. Separate books and records (including general ledger, subledgers and
vouchers) are maintained by our finance department with regard to our
operations and those of CLIC.

The recording of transactions in the respective books and records of us and
CLIC are governed by written accounting manuals and instructions issued by us
and enabled by the separated financial, business and IT systems. Fixed asset
registers and subledgers are maintained separately by us and CLIC, and
depreciation is calculated and recorded accordingly. Operating and
administrative expenses (including salaries and benefits) are also accounted
for and recorded separately.

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RELATIONSHIP WITH CLIC

Immediately following the completion of this offering, CLIC will own
approximately 75.0% of our issued share capital, or 72.2% if the underwriters'
over-allotment option is exercised in full. In connection with the
restructuring, we entered into several agreements with CLIC that document our
relationship following the restructuring. In addition, the asset management
joint venture established by us and CLIC entered into two asset management
agreements, one with us and one with CLIC. The transactions contemplated under
these agreements will constitute connected transactions for us under the HKSE
Listing Rules following our listing on the HKSE.

Set forth below are details of the various connected transaction agreements.

Restructuring Agreement

We have entered into a restructuring agreement with CLIC under which CLIC
agreed to transfer to us a portion of its insurance business and various
investment and operating assets, management personnel and employees, and we
assumed various obligations and liabilities, as described under "The
Restructuring--Transfer of Insurance Policies and Related Assets". The
transferred policies consist of (1) all long-term insurance policies (policies
having a term of more than one year from the date of issuance) issued on or
after June 10, 1999, having policy terms approved by or filed with the CIRC on
or after June 10, 1999 and either (i) recorded as a long-term insurance policy
as of June 30, 2003 in a database attached to the restructuring agreement as an
annex or (ii) having policy terms for group supplemental medical insurance
(fund type), (2) stand-alone short-term policies (policies having a term of one
year or less from the date of issuance) issued on or after June 10, 1999 and
(3) all riders supplemental to the policies described in clauses (1) and (2)
above, together with the reinsurance contracts specified in an annex to the
restructuring agreement. We received the benefits of all of the rights and
interests, and assumed all the liabilities and obligations, associated with the
transferred assets and policies, commencing as of June 30, 2003, the effective
date of the restructuring. The remaining business of CLIC primarily comprises
the non-transferred policies and non-core businesses which are not
insurance-related, including investments in property, hotels and other
operations through subsidiaries. As a result of the restructuring, CLIC's
management and personnel are different from ours and we work independently of
CLIC.

Under the restructuring agreement, CLIC made various representations and
warranties in relation to the business, assets and liabilities transferred to
us in the restructuring.

In addition, under the restructuring agreement, CLIC indemnified us against
all claims, losses, damages, payments or other expenses incurred by us in
connection with or arising from, among others:

(1) all taxes, fees, surcharges, penalties and interest payable by CLIC as
determined under the restructuring agreement;

(2) the negligence or fault of CLIC in acting on our behalf while holding
any assets, interests or liabilities that were to be transferred to us,
but for which third-party consents had not been obtained by the
effective date;

(3) any dispute regarding our status as the insurer of the insurance
policies issued by CLIC on or after June 30, 2003 until the date when we
begin to write polices on our own behalf;

(4) all claims by policyholders under long-term insurance policies issued on
or after June 10, 1999, having policy terms approved by or filed with
the CIRC on or after June 10, 1999, but which for whatever reason failed
to be recorded as long-term insurance policies as of June 30, 2003 in
the database attached to the restructuring agreement as an annex;

184

(5) the failure of CLIC to transfer the assets, interests and liabilities to
us in accordance with the restructuring agreement and other
restructuring documents;

(6) the assets, interests and liabilities retained by CLIC after the
restructuring;

(7) the transfer of the assets, interests and liabilities to us under the
restructuring;

(8) a breach of any provision of the restructuring agreement on the part of
CLIC; and

(9) any actual, pending or threatened arbitration or litigation affecting
any asset transferred to us.

The restructuring agreement provides, among other things, that any profits
or losses incurred on the transferred assets and policies from June 30, 2002 to
June 30, 2003 are for the benefit of or to be borne by CLIC.

We agreed to indemnify CLIC against any claims or losses arising from our
breach of the restructuring agreement.

Policy Management Agreement

General

As part of the restructuring, CLIC transferred its entire branch services
network to us. In order to capitalize on the large customer base of CLIC,
increase the utilization of our customer service network and increase our
revenue sources, CLIC engaged us to provide policy administration services
relating to the non-transferred policies.

We and CLIC entered into a policy management agreement on September 30, 2003
which sets out our responsibilities and duties to CLIC under these policy
administration arrangements. In order to better implement this agency
arrangement, we, in consultation with CLIC, are in the process of formulating a
detailed manual of procedures for our front and back offices which sets out the
procedures to be followed when handling claims and benefit payments and
collecting premiums in relation to non-transferred policies, as well as rules
for the day-to-day monitoring of the policy servicing operations.

Terms of the policy management agreement

Pursuant to the policy management agreement, we agreed to provide policy
administration services to CLIC relating to the non-transferred policies,
including day-to-day insurance administration services, customer services,
statistics and file management, invoice and receipt management, reinstatement
of non-transferred policies, applications for and renewal of riders to the
non-transferred policies, reinsurance, and handling of disputes relating to the
non-transferred policies. We act as a service provider under the agreement and
do not acquire any rights or assume any obligations as an insurer under the
non-transferred policies.

Under the policy management agreement, we will issue a monthly funding
request to CLIC, based on actuarially determined forecasts and supporting data,
for amounts to be payable to CLIC policyholders. CLIC will transfer, within
five business days prior to each calendar month, to an account under our
control, funds sufficient to pay insurance benefits and commissions to be paid
under the non-transferred policies, as well as estimated third-party costs and
expenses, for that calendar month. We may also request emergency funding from
CLIC, if we reasonably believe that the account balance will become
insufficient in ten business days to make those payments. We are not required
to make any advances on behalf of CLIC to cover any shortfall of funds.

In consideration of our services provided under the agreement, CLIC will pay
us a service fee based on our estimated cost of providing the services, to
which a profit margin is added. The service fee is equal to, for each

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semi-annual payment period, the sum of (1) the number of non-transferred
policies in force that were within their policy term as of the last day of the
period, multiplied by RMB 8.0; and (2) 2.50% of the actual premiums and
deposits in respect of such policies collected during the period. For these
purposes, the number of policies in-force for group insurance policies is equal
to the number of individuals covered by the policies (excluding those whose
policies have lapsed or matured).

The agreement is for an initial term expiring on December 31, 2005, and,
subject to the HKSE Listing Rules, will be automatically renewed for successive
one year terms, unless terminated by either party by giving to the other party
not less than 180 days' prior written notice to terminate the agreement at the
expiration of the then current term. We are also permitted to terminate the
agreement, upon giving 30 days' prior written notice, if (1) CLIC fails to pay
us the service fee in accordance with the agreement in an aggregate amount of
at least RMB 100 million; or (2) we are unable to make timely payment of
insurance benefits, commissions and/or third-party costs in an aggregate amount
of at least RMB 300 million as a result of CLIC failing to transfer sufficient
funds to the account controlled by us in accordance with the agreement.

Measures taken to prevent the commingling of premiums received from, and
payments made to, CLIC's policyholders and our policyholders

The following is a description of the measures that we currently have in
place to prevent the commingling of premiums received from, and payments made
to, CLIC's policyholders and our policyholders.

At each of our branches, the staff who handle the collection of premiums and
the payment of claims and benefits for the transferred and the non-transferred
policies are located in the same room and share the use of front office
operation desks. However, we have designated personnel in our larger branches,
as well as in designated divisions at various operating levels, who process
these collections and payments relating to the non-transferred policies.
Different IT systems are used and separate processes are involved when handling
premium collection and making claims and benefit payments for the transferred
and non-transferred policies. If a policyholder has premiums or claims and
benefits relating to both transferred and non-transferred policies, the
processing for these policies goes through the different channels designated
for those policies. We have implemented internal control measures which we
believe are sufficiently robust to prevent errors in handling premiums and
claims and benefit payments, including different IT processing systems,
different accounting and bookkeeping systems, separate processing streams and
segregated bank accounts at different branch levels which are operated by us on
behalf of CLIC. See "The Restructuring--Status of Implementation of the
Restructuring--Claims management".

In order to identify and prevent potential errors that may occur while
handling the transferred and non-transferred policies, we have implemented
additional internal controls, including different product types, names, codes,
serial numbers and dates of issue for products sold under the transferred
policies and the non-transferred policies. As we have separate IT processing
systems for claims and benefit payments under the transferred and
non-transferred policies, the difference in serial numbers allows our IT system
to verify automatically whether policy information has been entered into the
correct system. Information and serial numbers relating to an incorrectly
attributed policy will be rejected and cannot be processed further by that
system.

Our systems have the ability to distinguish premium, claims and benefit
information by product code. Each product code can be directly linked to either
the transferred policies or the non-transferred policies, which enables us to
prepare separate premium, claims and benefit information relating to these
policies. This segregated financial information has been included in our
audited consolidated financial statements beginning on page F-1 of this
prospectus. Our systems will continue to allow us to distinguish premiums,
claims and benefits arising from the transferred policies and non-transferred
policies in the future.

Each claim or benefit payment goes through a process which involves
double-checking by different categories of personnel. It is first processed by
handling personnel, then checked by another set of personnel and finally is
approved by a third set of personnel. For claims or benefit payments involving
a large amount, the payment is elevated to a higher branch level for approval.
In addition, we periodically check the bank accounts relating to the
non-transferred policies to ensure that claims and benefit payments are
processed correctly.

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Measures taken to ensure that we have sufficient cash to settle claims
relating to non-transferred policies

The following is a description of the measures that we currently have in
place to ensure that we have sufficient cash to settle claims relating to
non-transferred policies.

Under the policy management agreement, the operations relating to the
transferred policies and the non-transferred policies must be separately
managed, settled (including daily and monthly settlement) and checked, and we
are not required to make any advances on behalf of CLIC to cover deficiencies
in the payment of claims under the non-transferred policies. In order to ensure
that there is sufficient cash to pay claims under the non-transferred policies
on a day-to-day basis, we and CLIC have implemented the following procedures:

. Our headquarters and all provincial offices have opened and are using
segregated bank accounts to manage funds and payments in relation to
claims and benefits under the non-transferred policies. Substantially all
of our branches below the provincial level have already opened segregated
bank accounts, and the remaining branches will also open segregated bank
accounts as necessary.

. We will, based on actuarially determined forecasts and supporting data
relating to the non-transferred policies, maintain a minimum daily
balance for each segregated account. The segregated accounts will be
brought up to this minimum daily balance should they fall below the
required level on any given day.

. In the event of an unexpectedly large claim or benefit payment, or a
claim or benefit payment which exceeds the minimum daily balance, a
request for funds will be made to the branch at the next higher level. If
a provincial-level branch does not have sufficient funds to make a
payment, it will make a request for funding to our headquarters. If there
is a deficiency at the headquarters level, we will make a payment request
to CLIC or to the special purpose fund established by the MOF and CLIC.
See "The Restructuring--Status of Implementation of the
Restructuring--Claims management".

Asset Management Agreements

The asset management joint venture established by us and CLIC, China Life
Insurance Asset Management Company Limited, has entered into two asset
management agreements, effective on November 30, 2003, one with us and one with
CLIC. The terms of these two asset management agreements are the same. The
material terms of the asset management agreement between CLIC and the asset
management joint venture are set forth below.

Under the asset management agreement between the asset management joint
venture and CLIC, the asset management joint venture agreed to invest and
manage assets entrusted to it by CLIC on a discretionary basis, subject to the
investment guidelines and instructions given by CLIC.

In accordance with the agreement, CLIC retains the title of the entrusted
assets and the asset management joint venture is authorized to operate the
accounts associated with the entrusted assets for and on behalf of CLIC. CLIC
may add to or withdraw from the assets managed by the asset management joint
venture pursuant to the agreement. All investment losses relating to the assets
managed by the asset management joint venture pursuant to the agreement will be
borne by CLIC, except for losses and liabilities arising from the asset
management joint venture's misconduct. CLIC has the right to establish, and
amend from time to time, the investment guidelines which set forth the general
investment principles regarding the assets under the asset management joint
venture's management and, for specific periods, requirements relating to
liquidity, portfolio, asset-liability matching, risk control and dispositions.
CLIC also has the right to give instructions for the liquidation of assets to
meet its cash needs and the right to monitor the investment management
activities of the asset management joint venture. CLIC may not, however,
directly conduct any transactions with regard to the entrusted assets. CLIC
will agree with the asset management joint venture annually on a benchmark
investment rate of return.

In addition to acting as CLIC's investment manager, the asset management
joint venture is permitted to invest its own assets and provide investment
management services to third-party insurance companies. The asset management
joint venture agreed to inform CLIC in the event that it, in its professional
judgment, believes that there is a conflict of interest in the activities on
behalf of itself and others. The asset management joint venture

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has absolute discretion to take such actions and measures which in its
professional judgment are fair, reasonable and necessary to resolve any such
conflict.

In consideration of its services provided under the agreement, CLIC agreed
to pay the asset management joint venture a monthly service fee. The monthly
service fee payable is composed of two parts: (1) the aggregate of the monthly
service fee for each specified category of assets and (2) the aggregate of the
additional service fee for specific transactions made during that month. The
monthly service fee is calculated on a monthly basis, by multiplying the
average of net asset value of the assets in each such category under management
at the end of any given month and the end of the previous month by the
applicable annual rate for that month set forth in the table below (by
reference to basis points), divided by twelve. The asset management joint
venture and CLIC may, within the first month of each year, agree to change the
annual rate for that year, but if there is no new agreement, the existing
annual rate for the prior year will remain in force. In relation to any new
type of investment product (not included in the categories below) which may be
permitted by applicable law or the CIRC in the future, the agreement provides
that the asset management joint venture and CLIC will agree on a fair and
reasonable annual rate to be applicable to that type of investment product.

The following table sets forth the applicable annual rates in relation to
the total net asset value of the assets managed by the asset management joint
venture.

Total net asset value of managed assets at the end of relevant month
--------------------------------------------------------------------
More than More than More than
RMB 10 RMB 30 RMB 50
billion billion billion
and less and less and less
RMB 10 than or than or than or More than
billion equal to equal to equal to RMB 100
Item or below 30 billion 50 billion 100 billion billion
- ---- -------- ---------- ---------- ----------- ---------
(bps) (bps) (bps) (bps) (bps)

Bank balances and cash......................... 0 0 0 0 0
Existing term deposits......................... 0.400 0.400 0.400 0.400 0.400
Securities purchased under agreements to resell 1.500 1.425 1.350 1.275 1.200
Fixed maturity securities...................... 11.240 10.390 9.540 8.690 7.840
Equity investments............................. 38.500 35.575 32.650 29.725 26.800

The monthly additional service fee comprises service fees for (1) additional
term deposits and (2) additional securities purchased in primary markets made
during that month, and is calculated by multiplying the net additional asset
value of the assets in such category at the end of that particular transaction
month by the applicable rate set forth below.

Applicable rates
----------------------------------------------------
More than More than More than
RMB 10 RMB 30 RMB 50
billion billion billion
and less and less and less
RMB 10 than or than or than or More than
billion equal to equal to equal to RMB 100
Item or below 30 billion 50 billion 100 billion billion
- ---- -------- ---------- ---------- ----------- ---------
(bps) (bps) (bps) (bps) (bps)

Additional term deposits.................. 1.100 1.025 0.950 0.875 0.800
Additional securities purchased in primary
markets................................. 2.600 2.350 2.100 1.850 1.600

The asset management joint venture will produce an annual report, within 90
days of the conclusion of each fiscal year, setting out the average investment
rate of return of the assets managed by it. If the average investment rate of
return for the assets managed for a particular year exceeds the investment rate
of return, as previously agreed between CLIC and the asset management joint
venture for those assets for that year, by at least ten basis

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points, the asset management joint venture will be entitled to an annual
performance bonus fee, the amount of which will be agreed between CLIC and the
asset management joint venture but shall not exceed 50% of the annual service
fees for that year. If the average investment rate of return is less than the
investment rate of return as agreed between CLIC and the asset management joint
venture by at least ten basis points, the asset management joint venture will
be required to rebate a portion of its fee, the amount of which shall not
exceed 25% of the annual service fees for that year.

The service fee under the asset management agreement was determined by CLIC
and the asset management joint venture based on an analysis of the cost of
providing the service, market practice and the size and composition of the
asset pool to be managed.

The agreement is for an initial term expiring on December 31, 2005, and,
subject to the HKSE Listing Rules, will be automatically renewed for successive
three years terms, unless terminated by either party by giving to the other
party not less than 90 days' prior written notice to terminate the agreement at
the expiration of the then current term.

Property Leasing Agreement

We have entered into a property leasing agreement with CLIC on September 30,
2003, pursuant to which CLIC agreed to lease to us (1) 833 buildings owned by
CLIC, its subsidiaries and affiliates, which we refer to as the CLIC owned
properties, and (2) 1,764 buildings that CLIC is entitled to sublet, which we
refer to as the CLIC leased properties, for an aggregate initial annual rent
(payable quarterly) of approximately RMB 335 million. The properties occupied
by us are mainly used as our office premises. The annual rent payable by us to
CLIC in relation to the CLIC owned properties is determined by reference to
market rent or, where there is no available comparison, by reference to the
costs incurred by CLIC in holding and maintaining the properties, plus a margin
of approximately 5%. The annual rent payable by us to CLIC in relation to the
CLIC leased properties will be determined by reference to the rent payable
under the head lease plus the actual costs incurred by CLIC arising in
connection with the subletting of the properties.

Each party may, by giving notice to the other party no later than November
30 of each year, reduce or increase the number of properties under the lease
and make adjustments accordingly to the rent payable for the next year. The
parties will also revise the annual rent payable at the year end to reflect, in
addition to any decrease or increase to the number of properties to be leased,
any change of the market rates.

Sallmanns (Far East) Limited, our independent property valuer, has reviewed
the property leasing agreement and has confirmed that the contemplated rental
payments by us to CLIC are currently in line with market rates.

CLIC agreed to indemnify us, among other things, against all claims and
losses incurred by us arising in connection with (1) the CLIC owned properties
which CLIC does not have full legal title; and (2) the subletting of the CLIC
leased properties to us.

The agreement also contains rights of first refusal allowing us to purchase
the underlying property if CLIC wishes to sell the property. In this regard, we
will comply with the provisions of Chapter 14 of the HKSE Listing Rules if we
exercise the right of first refusal to acquire the properties from CLIC unless
we apply for, and obtain, a separate waiver from the HKSE.

The agreement is for a fixed term expiring on December 31, 2005, unless
otherwise required by the HKSE Listing Rules. In relation to the CLIC leased
properties, the term of such properties will expire at the expiration of the
respective head leases, and in any event, will expire no later than December
31, 2005.

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Trademark License Agreement

We conduct our business under the "China Life" brand name (in English and
Chinese) and "ball" logos. We entered into a trademark license agreement with
CLIC on September 30, 2003, pursuant to which CLIC granted to us and our
branches a royalty-free license to use these trademarks in the PRC and other
countries and territories in which CLIC has registered these trademarks. CLIC
has registered one of the "ball" logo trademarks in the PRC and has filed
applications to register the trademarks in the "China Life" name (in English
and Chinese) and the other ball logo with the Trademark Office of the SAIC.
CLIC undertook in the trademark license agreement to maintain and renew, at its
own expense, the registration of the licensed trademarks. If requested by us,
CLIC will procure, at its own expense, registration of the trademarks in
additional products and service classifications and/or additional countries or
territories. CLIC will retain ownership of these trademarks.

We may also license a third party to use the trademarks with the written
consent of CLIC. CLIC and its subsidiaries and affiliates are entitled to use
these trademarks. CLIC may not license or transfer these trademarks to any
other third party or allow any other third party to use the trademarks.

The trademark license agreement permits us to use the trademarks until such
time as either the trademark license agreement is terminated either by
agreement between CLIC and ourselves, or pursuant to relevant laws, regulations
or consent orders, or at the expiration of the registration of the trademarks,
which is currently November 6, 2007 and is renewable at our option.

Application for Waiver from the HKSE

Following completion of this offering, we will continue to enter into or
carry out the transactions described in this section. These transactions would
constitute connected transactions for us under the HKSE Listing Rules once our
H shares are listed on the HKSE.

Our directors (including the independent non-executive directors) and
supervisors are of the opinion that the transactions described in this section
have been conducted, and will be carried out, in our ordinary and usual course
of business and on normal commercial terms which are fair and reasonable so far
as our independent shareholders are concerned.

Pursuant to the HKSE Listing Rules, each such transaction which is not
exempt under the HKSE Listing Rules would normally require full disclosure
and/or prior approval by independent shareholders on each occasion it arises,
depending on the nature and value of the transaction. We believe that such
disclosure and/or approval of each such transaction in full compliance with the
HKSE Listing Rules would be impracticable and increase our administrative
costs. Accordingly, we have applied to the HKSE for a waiver from strict
compliance with the disclosure and shareholders' approval requirements under
Rule 14.26 of the HKSE Listing Rules in respect of the transactions
contemplated under the policy management agreement for a period of three
financial years ending December 31, 2005, and the disclosure requirement under
Rule 14.25(1) of the HKSE Listing Rules in respect of the asset management
agreement to be entered into between CLIC and the asset management company, the
asset management agreement to be entered into between the asset management
company and us, and the property leasing agreement, subject to the following
conditions:

(a) the transactions shall be:

(1) entered into in the ordinary and usual course of our business; and

(2) conducted either on normal commercial terms or on terms that are fair
and reasonable so far as our independent shareholders are concerned;
and

(3) entered into either (A) in accordance with the agreements governing
those transactions or (B) where there are no such agreements, on
terms no less favorable than those available to or from independent
third parties;

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(b) if applicable, the annual aggregate value for each financial year in
each category of connected transactions shall not exceed the relevant
annual caps set out below:

Transaction Proposed annual cap
- ----------- --------------------------------------------

Policy management agreement.................................. 2003 RMB 1,937 million

2004 RMB 1,817 million

2005 RMB 1,728 million

Asset management agreement (between CLIC and asset management not exceeding the higher of either
company)................................................... HK$10,000,000 or 3% of the book value
of the latest audited net tangible assets of
the China Life

Asset management agreement (between asset management company not exceeding the higher of either
and us).................................................... HK$10,000,000 or 3% of the book value
of the latest audited net tangible assets of
the China Life

Property leasing agreement................................... not exceeding the higher of either
HK$10,000,000 or 3% of the book value
of the latest audited net tangible assets of
the China Life

(c) our independent non-executive directors shall review the transactions
annually and confirm in our annual report and accounts for the relevant
year that such transactions have been conducted in the manner stated in
conditions (a) and (b) above;

(d) our auditors shall review the transactions annually and confirm to our
directors in writing (with a copy provided to the Listing Division of
the HKSE) whether:

(1) the transactions have received the approval of our directors;

(2) the transactions have been entered into in accordance with the
pricing policies as stated in the relevant agreements;

(3) the transactions have been entered into in accordance with the
relevant agreements governing the transactions; and

(4) the values of the transactions have not exceeded the relevant annual
caps referred to in condition (b) above;

where, for whatever reason, the auditors decline to accept the
engagement, or are unable to provide the auditors' letter, our directors
shall contact the Listing Division of the HKSE immediately,

(e) brief details of the transactions in each financial year shall be
disclosed as required by Rule 14.25(1)(A) to (D) of the HKSE Listing
Rules in our annual report and accounts for the relevant year together
with a statement of opinion of our independent non-executive directors
referred to in condition (c) above; and

(f) CLIC shall have undertaken to us to provide our auditors with access to
CLIC's accounting records, as well as (where possible) those of its
subsidiaries and associates, for the purposes of the above review by our
auditors.

191

We have undertaken to the HKSE that if any of the annual caps applicable to
the relevant transaction is exceeded or if any of the material terms of the
agreements which govern the transactions referred to above are altered (unless
such is provided for under the terms of the relevant agreements or
arrangements), we will comply with the provisions of Chapter 14 of the HKSE
Listing Rules relating to connected transactions unless we apply for, and
obtain, a separate waiver from the HKSE.

In the event of any future amendments to the HKSE Listing Rules imposing
more stringent requirements than as of the date of this prospectus on
transactions of the kind to which the connected transactions referred to in
this section belong, including, but not limited to, a requirement that these
transactions be made conditional on approval by our independent shareholders,
we must take immediate steps to ensure compliance with such requirements within
a reasonable time.

Non-Competition Agreement

We entered into a non-competition agreement with CLIC on September 30, 2003
pursuant to which CLIC undertook that during the term of the agreement, unless
we otherwise consent in writing in advance, it will not, and it will use its
best efforts to procure its subsidiaries and affiliates not to, directly or
indirectly, participate, operate or engage in any life, accident or health
insurance or other businesses in China which may compete with our insurance
businesses. CLIC also undertook (1) to refer to us any corporate business
opportunity that falls within our business scope and which may directly or
indirectly compete with our business and (2) to grant us a right of first
refusal, on the same terms and conditions, to purchase any new business
developed by CLIC. The non-competition agreement allows CLIC to continue its
business under the non-transferred policies.

In addition, CLIC currently holds 51% interest in China Life-CMG Life
Assurance Company Ltd., a Sino-foreign joint venture with CMG, an Australian
insurance company. The joint venture is registered in Shanghai, China and
engaged in the business of life insurance and related reinsurance in Shanghai.
CLIC agreed to dispose of all of its interests in this joint venture to third
parties or eliminate any competition between China Life-CMG Life Assurance
Company Ltd. and us within three years of our listing on the HKSE.

CLIC also agreed with us in the non-competition agreement that we will have
a right of first refusal in respect of the transfer of the non-transferred
policies retained by CLIC.

The non-competition agreement will remain valid and in full force until the
earlier of (1) CLIC beneficially holding, directly or indirectly, less than 30%
of our issued share capital and ceasing to control the majority of our board of
directors; and (2) our H shares or ADSs no longer being listed on the HKSE or
any other stock exchange.

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DESCRIPTION OF SHARE CAPITAL

We are organized under the PRC company law as a joint stock company. We are
registered with the State Administration of Industry and Commerce in Beijing,
China and our business license carries the registration number 1000001002372.

Our business scope, set forth in article 10 of our articles of association,
is to engage in life, accident and health insurance businesses; reinsurance
business relating to the foregoing; fund investment businesses authorized by
laws, regulations or the State Council; and agency business, consulting
business and provision of services, in each case relating to insurance of the
person.

The following is a summary of information relating to our share capital,
based upon provisions of our articles of association and the PRC company law.
You should refer to the text of our articles of association and to the texts of
applicable laws and regulations for further information. Certificates
representing the shares are and will be issued in registered form.

Our share capital consists of domestic shares and H shares, including the H
shares represented by ADSs. They are all ordinary shares in our share capital.
The par value of both our domestic shares and H shares is RMB 1.00 per share.
Domestic shares may only be subscribed for by, and traded among, legal or
natural persons of the PRC and certain qualified foreign institutional
investors, and must be subscribed for and traded in Renminbi. We must pay all
dividends on domestic shares in Renminbi. H shares are "overseas listed
foreign-invested shares" that have been admitted for listing on the Hong Kong
Stock Exchange, the par value of which is denominated in Renminbi, and that are
subscribed for and traded in Hong Kong dollars by and among investors of Hong
Kong, Macau, Taiwan and any country other than the PRC. H shares may also be
listed on a stock exchange in the United States in the form of American
depositary shares evidenced by American depositary receipts.

Holders of domestic shares and H shares are deemed to be shareholders of
different classes for various matters which affect their respective interests.
For instance, if we propose an increase in domestic shares, holders of H shares
will be entitled to vote on that proposal as a separate class. See "--Voting
Rights and Shareholders' Meetings".

Prior to the consummation of the global offering, our registered capital was
20 billion domestic shares. Immediately after the global offering, without
giving effect to the exercise of the over-allotment option, our total share
capital will consist of 6,470,588,000 H shares and 19,411,765,000 domestic
shares. Since the issuance of our domestic shares to CLIC in connection with
our restructuring, we have not issued any further shares.

The global offering consists solely of an offering of H shares and ADSs
representing H shares. Consequently, the following discussion primarily
concerns H shares and the rights of holders of H shares. The holders of ADSs
will not be treated as our shareholders and will be required to surrender their
ADSs for cancellation and withdrawal from the depositary facility in which the
H shares are held in order to exercise rights as holders of H shares. The
depositary will agree, so far as it is practical, to vote or cause to be voted
the amount of H shares represented by ADSs in accordance with the
non-discretionary written instructions of the holders of such ADSs. See
"Description of American Depositary Receipts--Voting Rights".

Sources of Shareholders' Rights

The primary sources of shareholders' rights are the PRC company law, our
articles of association, Special Rules applicable to overseas listed joint
stock companies promulgated by the State Council, or Special Rules, and the
Hong Kong Stock Exchange Listing Rules that, among other things, impose certain
standards of conduct, fairness and disclosure on us, our directors and CLIC,
our controlling shareholder. The PRC company law was enacted in December 1993
and serves as the primary body of law regulating corporate action of companies
organized in the PRC and its directors and shareholders.

193

Our articles of association have incorporated the provisions set forth in
the Mandatory Provisions for the Articles of Association of Companies Listed
Overseas, or the Mandatory Provisions, adopted in 1994, pursuant to the
requirements of the China Securities Regulatory Commission. Any amendment to
those provisions will only become effective after approval by the relevant
governmental department authorized by the State Council and the China
Securities Regulatory Commission. The Hong Kong Stock Exchange Listing Rules
require a number of provisions in addition to the Mandatory Provisions to be
included in our articles of association.

The listing agreement between us and the Hong Kong Stock Exchange, or the
Listing Agreement, provides that we may not amend certain provisions of our
articles of association that have been mandated by the Hong Kong Stock
Exchange. These provisions include, among others:

. varying the rights of existing classes of shares;

. voting rights;

. our power to purchase our own shares;

. rights of minority shareholders; and

. liquidation procedures.

In addition, upon the listing of the H shares and for so long as the H
shares are listed on the Hong Kong Stock Exchange, we will be subject to the
relevant ordinances, rules and regulations applicable to companies listed on
the Hong Kong Stock Exchange, including, among other things, the Hong Kong
Stock Exchange Listing Rules, the Securities and Futures Ordinance and the Hong
Kong Codes on Takeovers and Mergers and Share Repurchases.

Unless otherwise specified, all rights, obligations and protections
discussed below are derived from our articles of association and the PRC
company law.

Enforceability of Shareholders' Rights

Enforceability of our shareholders' rights may be limited.

In accordance with the rules applicable to Chinese overseas listed
companies, our articles of association provide that, with certain limited
exceptions, all disputes or claims based on our articles of association, the
PRC company law or other relevant laws or administrative rules, and concerning
matters between holders of H shares and holders of domestic shares, us, or our
directors, supervisors, president, vice presidents or other senior officers,
must be submitted for arbitration at either the China International Economic
and Trade Arbitration Commission or the Hong Kong International Arbitration
Centre. If an applicant chooses to have the dispute arbitrated at the Hong Kong
International Arbitration Centre, either party may request that venue be
changed to Shenzhen, a city in mainland China near Hong Kong. The governing law
for the above-mentioned disputes or claims is Chinese law unless otherwise
provided by Chinese law. Our articles of association provide that any such
arbitration will be final and conclusive.

In June 1999, an arrangement was made between the People's Courts of the PRC
and the courts of Hong Kong for mutual enforcement of arbitration rewards
rendered in the PRC and Hong Kong according to their respective laws. This
arrangement was approved by the Supreme Court of the PRC and the Hong Kong
Legislative Council and became effective on February 1, 2000.

There has not been any published report of judicial enforcement in the PRC
by H shareholders of their rights under charter documents of PRC joint stock
companies or the PRC company law or in the application or interpretation of the
PRC or Hong Kong regulatory provisions applicable to PRC joint stock companies.

194

In most states of the United States, shareholders may sue a corporation in a
"derivative" action. A derivative suit involves the commencement by a
shareholder of a cause of action, on behalf of the corporation, against
persons, including corporate officers, directors or controlling shareholders,
who have allegedly wronged the corporation, where the corporation itself has
failed to enforce such claim against such persons directly. Derivative actions
are not available in China, nor are class action lawsuits based on violations
of securities laws generally available.

We will be subject to the Hong Kong Exchange Listing Rules, the Hong Kong
Securities and Futures Ordinance, or Securities and Futures Ordinance, and the
Hong Kong Codes on Takeovers and Mergers and Share Repurchases upon the listing
of our H shares on the Hong Kong Stock Exchange. However, holders of H shares
will not be able to bring actions on the basis of violations of the Hong Kong
Stock Exchange Listing Rules and must instead rely on the Hong Kong Stock
Exchange to enforce its rules. The Hong Kong Codes on Takeovers and Mergers and
Share Repurchases do not have the force of law and are only standards of
commercial conduct considered acceptable for takeover and merger transactions
and share repurchases in Hong Kong as established by the Securities and Futures
Commission of Hong Kong and the securities and futures industry in Hong Kong.
The Securities and Futures Ordinance establishes various obligations in
relation to disclosure of shareholders' interests in Hong Kong listed
companies, the violation of which is subject to prosecution by the Securities
and Futures Commission of Hong Kong.

See "Risk Factors--Risks Relating to the People's Republic of China--The
laws in China differ from the laws in the United States and may afford less
protection to our minority shareholders", "Risk Factors--Risks Relating to the
People's Republic of China--You may experience difficulties in effecting
service of legal process, enforcing foreign judgments or bringing original
actions in the PRC based on U.S. or other foreign law against us, our
management and some of the underwriters and experts named on this prospectus",
and "Enforceability of Civil Liabilities".

Dividends

Our board of directors may propose dividend distributions at any time. A
distribution of dividends for any fiscal year is subject to shareholders'
approval. Dividends may be distributed in the form of cash or shares. The H
shares will rank equally with domestic shares with regard to dividend rights. A
distribution of shares must be approved by special resolution of the
shareholders.

We may only distribute dividends after allowance has been made for:

. recovery of accumulated losses, if any;

. allocations to the statutory common reserve fund equivalent to 10% of our
after-tax income, as determined under PRC GAAP;

. allocations to the statutory common welfare fund (the minimum and maximum
aggregate allocations to the statutory common welfare fund being
equivalent to 5% and 10%, respectively, of our after-tax income, as
determined under PRC GAAP); and

. allocations to a discretionary common reserve fund as approved by the
shareholders in a shareholders' meeting.

Under Chinese law, dividends may be paid only out of distributable profits.
Distributable profits means our after-tax profits as determined under PRC GAAP
or Hong Kong GAAP, whichever is lower, less any recovery of accumulated losses
and allocations to statutory funds that we are required to make. Any
distributable profits that are not distributed in a given year are retained and
available for distribution in subsequent years. However, we will ordinarily not
pay any dividends in a year when we do not have any distributable profits.

195

Payment of dividends by us is also regulated by the PRC insurance law. If we
do not meet the minimum solvency level required by the CIRC, we will be
prohibited from paying dividends. See "Regulation--Insurance Company
Regulation--Solvency requirements".

Our articles of association require us to appoint, on behalf of the holders
of H shares, a receiving agent that is registered as a trust corporation under
the Trustee Ordinance of Hong Kong to receive dividends declared by us in
respect of the H shares on behalf of such shareholders. Our articles of
association require that cash dividends in respect of H shares be declared in
Renminbi and paid by us in Hong Kong dollars. The depositary will convert these
proceeds into U.S. dollars and will remit the converted proceeds to holders of
our ADSs. See "Description of American Depositary Receipts--Share Dividends and
Other Distributions".

We anticipate that our controlling shareholder, CLIC, may incur future
operating losses arising in part from the runoff of policies retained by it in
connection with the restructuring. Dividends received from us may become one of
CLIC's principal means of funding these losses. Although we believe that the
reserves held by CLIC and other financial resources available to it will fund
substantially all of any future operating shortfalls arising out of these
policies, which should reduce CLIC's reliance on dividends from us, subject to
the relevant provisions of the PRC company law and our articles of association
as described above and in "Dividend Policy", CLIC may seek to increase the
amount of dividends we pay in order to satisfy its cash flow requirements. See
"Risk Factors--Risks Relating to the Restructuring".

Dividend payments may be subject to Chinese withholding tax. See
"Taxation--People's Republic of China--Taxation of Dividends".

Voting Rights and Shareholders' Meetings

Our board of directors will convene a shareholders' annual general meeting
once every year within six months from the end of the preceding fiscal year.
Our board of directors must convene an extraordinary general meeting within two
months of the occurrence of any of the following events:

. where the number of directors is less than the number stipulated in the
PRC company law or two-thirds of the number specified in our articles of
association;

. where our unrecovered losses reach one-third of the total amount of our
share capital;

. where shareholders holding 10% or more of our issued and outstanding
voting shares so request in writing; or

. whenever our board of directors deems necessary or our board of
supervisors so requests.

All shareholders' meetings must be convened by our board of directors by
written notice given to shareholders not less than 45 days before the meeting.
Shareholders holding at least one-half of our total voting shares will
constitute a quorum for a shareholders' meeting. If a quorum is not reached, we
are required to notify our shareholders within five days by public announcement
of the agenda, the date and venue of the adjourned meeting. After the notice,
the board of directors may conduct the shareholders' meeting. The accidental
omission by us to give notice of a meeting to, or the non-receipt of notice of
a meeting by, a shareholder will not invalidate the proceedings at that
shareholders' meeting.

Shareholders at meetings have the power, among other matters, to approve or
reject our profit distribution plans, annual budget, financial statements,
increases or decreases in share capital, issuances of debentures, mergers,
liquidation and any amendment to our articles of association. In addition, the
rights of a class of shareholders may not be modified or abrogated, unless
approved by a special resolution of shareholders at a general shareholders'
meeting and by a special resolution of shareholders of that class of shares at
a separate

196

meeting. Our articles of association enumerate various amendments which would
be deemed to be a modification or abrogation of the rights of a class of
shareholders, including, among others, increasing or decreasing the number of
shares of a class disproportionate to increases or decreases of other classes
of shares, removing or reducing rights to receive dividends in a particular
currency or creating shares with voting or equity rights superior to those of
shares of that class. There are no restrictions under PRC law or our articles
of association on the ability of investors that are not Chinese residents to
hold H shares and exercise voting rights, except that the prior approval of the
CIRC is required in respect of any acquisition which results in the acquirer
holding more than 10% of the outstanding share capital of our company.

Each of our ordinary shares, whether it be a domestic share or an H share,
is entitled to one vote on all matters submitted for vote at all shareholders'
meetings, except for meetings of a special class of shareholders where only
holders of shares of the affected class are entitled to vote on the basis of
one vote per share of the affected class.

Shareholders are entitled to attend and vote at meetings either in person or
by proxy. Proxies must be in writing and deposited at our legal address or such
other place as is specified in the meeting notice, not less than 24 hours
before the time for holding the meeting at which the proxy proposes to vote or
the time appointed for the passing of the relevant resolution.

Resolutions on any of the following matters must be approved by more than
two-thirds of the voting rights held by shareholders who are present in person
or by proxy:

. an increase or decrease in our share capital or the issuance of shares,
warrants, debentures and other similar securities;

. our division, merger, dissolution or liquidation (shareholders who object
to a proposed merger are entitled to demand that either we or the
shareholders who approved the merger purchase their shares at a fair
price);

. amendments to our articles of association;

. amendment of shareholders' rights of any class of shares; and

. any other matters determined by a majority of shareholders at a general
meeting to have a material impact on us and should be approved by
two-thirds of the voting rights.

All other actions taken by the shareholders will be approved by a majority
of the voting rights held by shareholders who are present in person or by proxy
at the shareholders' meeting.

Any shareholder resolution that is in violation of any laws or regulations
of China or the articles of association will be null and void.

Liquidation Rights

We are organized as a joint stock company with limited liability of
indefinite duration, but must renew our business license annually with the
SAIC. In the event of our liquidation, the H shares will rank equally with the
domestic shares, and payment of debts out of our remaining assets shall be made
in the order of priority prescribed by applicable laws and regulations or, if
no such standards exist, in accordance with such procedures as the liquidation
committee that has been appointed either by us or the People's Courts of China
may consider to be fair and reasonable. After payment of debts, we shall
distribute the remaining property to shareholders in proportion to the number
of shares they hold.

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Information Rights

Our shareholders may, without charge, inspect copies of the minutes of the
shareholders' general meetings during our business hours. Shareholders may also
request copies of such minutes from us, and we must deliver those copies to the
relevant shareholders within seven days of receipt of such reasonable fees as
we may require.

Our fiscal year is the calendar year ending December 31. We must send to
holders of H shares, not less than 21 days before the date of the shareholders'
annual general meeting, our audited financial statements for each fiscal year,
together with the auditor's report as required by the Hong Kong Stock Exchange
Listing Rules relating to that fiscal year. These and any interim financial
statements must be prepared in accordance with PRC accounting standards and,
for so long as our H shares are listed on the Hong Kong Stock Exchange, in
accordance with either Hong Kong accounting standards or H.K. GAAP. The
financial statements must be approved by a majority of our shareholders who are
present in person or by proxy at the annual general meeting.

The Hong Kong Stock Exchange Listing Rules also require us to prepare for
the first six months of each fiscal year an interim report no later than sixty
days after the end of such period. Further, a preliminary announcement of such
interim report is required to be published in the newspapers on the next
business day after such report is approved by our board of directors. A copy of
such interim report is also required to be sent to every shareholder as soon as
reasonably practicable after such publication.

Under the Listing Agreement, we are required to keep the Hong Kong Stock
Exchange, our shareholders and other holders of our listed securities informed
as soon as reasonably practicable of any information relating to us and our
subsidiaries, including information on any major new developments that is not
public information, which:

. is necessary to enable them and the public to appraise the position of us
and our subsidiaries;

. is necessary to avoid the establishment of a false market in our
securities; and

. might reasonably be expected to affect materially market activity in, and
the price of, our securities.

We are also required under the Hong Kong Stock Exchange Listing Rules to
disclose to our shareholders details of various acquisitions or disposals of
assets and other transactions (including transactions with controlling
shareholders).

Restrictions on Transferability and the Share Register

H shares may be traded only among investors who are legal or natural persons
resident outside of China, and may not be sold to investors resident within the
PRC. Under our articles of association, any proposed sale by a PRC shareholder
of its domestic shares to persons resident outside China who will receive H
shares upon the sale must be approved by two-thirds of our domestic
shareholders and H shareholders at duly convened meetings of domestic
shareholders and H shareholders held separately and at a duly convened joint
meeting of domestic shareholders and H shareholders. Any sale is also subject
to approval by the Ministry of Finance, the China Securities Regulatory
Commission and other relevant governmental authorities. There are no
restrictions under PRC law or our articles of association on the ability of
investors who are not PRC residents to hold H shares.

In general, under PRC company law, our domestic shares held by CLIC may not
be transferred within three years from our establishment on June 30, 2003.
However, a special waiver was granted by the State Council, pursuant to the PRC
company law to exempt from this sales prohibition the sale of our H shares by
CLIC in connection with this offering. See "Principal and Selling Shareholders".

We are required to keep a register of our shareholders, which shall be
comprised of various parts, including one part which is to be maintained in
Hong Kong in relation to holders of H shares. Shareholders have the right

198

to inspect and, for a reasonable charge, to copy the share register. No
transfers of ordinary shares will be recorded in our share register within
thirty days prior to the date of a shareholders' general meeting or within five
days prior to the record date established for the purpose of distributing a
dividend.

We have appointed Computershare Hong Kong Investor Services Limited to act
as the registrar of our H shares. This registrar maintains our register of
holders of H shares at our offices in Hong Kong and enters transfers of H
shares in such register upon the presentation of the documents described above.

Increases in Share Capital

Under our articles of association, issuance of new securities, including
ordinary shares, securities convertible into ordinary shares, options, warrants
or similar rights to subscribe for any ordinary shares or convertible
securities, must be approved by two-thirds of all shareholders. In addition,
the issuance of domestic shares or H shares must be approved by two-thirds of
the class of domestic shares or H shares, as the case may be, unless:

. the number of shares to be issued shall not exceed 20% of the number of
shares of the same class then outstanding in any 12-month period; or

. our plans for issuing H shares in the offering are implemented within 15
months of November 3, 2003, the date of approval by the China Securities
Regulatory Commission.

Shareholders are not liable to make any further contribution to the share
capital other than according to the terms that were agreed upon by the
subscriber of the relevant shares at the time of subscription. New issues of
shares must also be approved by relevant Chinese authorities.

Decreases in Share Capital and Repurchases

We may reduce our registered share capital only upon obtaining the approval
of at least two-thirds of our shareholders and, in certain circumstances, of
relevant Chinese authorities. The number of H shares that may be repurchased is
subject to the Hong Kong Codes on Takeovers and Mergers and Share Repurchases.

Restrictions on Ownership

You may not individually or with your nominees or other persons acting in
concert own more than 10% of our share capital without the prior approval of
the CIRC. Other restrictions on ownership of our shares apply. See
"Regulation--Insurance Company Regulation--Restriction of ownership in joint
stock insurance companies".

Restrictions on Large or Controlling Shareholders

Our articles of association define a controlling shareholder as any person
who acting alone or in concert with others:

. is in a position to elect more than one-half of the board of directors;

. has the power to exercise, or to control the exercise of, 30% or more of
our voting rights;

. holds 30% or more of our issued and outstanding shares; or

. has de facto control of us in any other way.

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As of the date of this prospectus and immediately following the global
offering (including the exercise of the underwriters' over-allotment option),
CLIC, a wholly state-owned enterprise, is and will be our only controlling
shareholder.

Our articles of association provide that, in addition to any obligation
imposed by laws and administrative regulations or required by the Hong Kong
Stock Exchange Listing Rules, a controlling shareholder shall not exercise its
voting rights in a manner prejudicial to the interests of other shareholders:

. to relieve a director or supervisor from his or her duty to act honestly
in our best interests;

. to approve the appropriation by a director or supervisor, for his or her
own benefit or for the benefit of any other person, of our assets in any
way, including without limitation opportunities which may be advantageous
to us; or

. to approve the appropriation by a director or supervisor, for his or her
own benefit or for the benefit of another person, of the individual
rights of other shareholders, including without limitation rights to
distributions and voting rights (except in accordance with a
restructuring of our company which has been submitted for approval by the
shareholders at a general meeting in accordance with our articles of
association).

Board of Directors

Our directors are elected by our shareholders at shareholders' general
meetings. Because the domestic shares and H shares do not have cumulative
voting rights, a holder of a majority of our ordinary shares is able to elect
all of the directors. Directors are elected for a term of three years and may
serve consecutive terms if re-elected.

Article 23 of Special Regulations on the Overseas Offering and Listing of
Shares by Joint Stock Limited Companies provides that directors, supervisors,
and senior officers of a company owe duties of honesty, care and diligence to
their company.

Our articles of association provide that, in exercising their duties and
powers, our directors, supervisors and senior officers will act with the care,
diligence and skills that are expected of a reasonable person under similar
circumstances, observe fiduciary principles and not place themselves in a
situation where their interests conflict with the duties they are charged with
performing. In addition to these fiduciary duties to our company, each
director, supervisor and officer is obligated to each shareholder:

. to act honestly in our company's best interests;

. not to exploit corporate assets for personal gains; and

. not to expropriate the rights of our shareholders.

If directors, supervisors or officers are found to have misappropriated our
company's assets or misused their position for personal gain, the PRC company
law provides that any misappropriated or misused property be returned and any
illegal proceeds received by the supervisor be confiscated, and allows us to
impose punishment on them. Criminal liability may also be imposed. Our
shareholders cannot bring a derivative suit against any director, supervisor or
officer who has breached his fiduciary duties, and most disputes between H
shareholders and directors, supervisors and officers are required to be
resolved by final and binding arbitration. See "Enforceability of Shareholders'
Rights" and "--Certain Differences between PRC Company Law and Delaware
Corporate Law--Shareholders' Lawsuits".

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Moreover, our articles of association provide that our directors,
supervisors and senior officers must not enter into transactions or contracts
with us or agree to make corporate loans to any persons or provide guarantees
for loans of any shareholder or any other person with corporate assets. In
particular, our directors, supervisors and senior officers have obligations to
disclose to the board of directors any direct or indirect material interest
they may have in any contracts or transactions with us. They may not vote on
any contracts, transactions or arrangements in which they have any material
interest. Further, we may not make loans or provide guarantees to directors,
supervisors or senior officers, unless such loans or guarantees are approved at
a shareholders' meeting or made in the ordinary course of business. All
decisions relating to the compensation of directors are made at shareholders'
meetings.

There are no provisions under our articles of association or PRC law which
relate to:

. the retirement or non-retirement of directors under any age limit
requirement;

. directors' borrowing power; or

. number of shares required for directors' qualification.

Subject to all relevant laws and administrative regulations, the
shareholders may remove any director before the expiration of his or her term
of office by a majority vote of the shareholders present in person or by proxy
at shareholders' general meetings. A director, supervisor, chief executive
officer, chief financial officer, president, vice president or other senior
officer may be relieved of liability for a specific breach of his or her duties
by the consent of shareholders so long as specified conditions are met.

Board of Supervisors

Our board of supervisors consists of three supervisors. One member of our
board of supervisors must be an employee representative elected by our
employees. The remaining members must be elected by our shareholders in a
general meeting. One member of our board of supervisors is designated as the
chairman. Members of the board of supervisors may not serve as director,
president, vice president or financial controller of our company. The term of
office for our supervisors is three years, which is renewable upon re-election.

The primary duty of the board of supervisors is to monitor our financial
matters and management. The board of supervisors' powers are generally limited
to carrying out investigations and reporting to shareholders, the China
Securities Regulatory Commission and other relevant governmental authorities
having jurisdiction over our affairs and to convening shareholders'
extraordinary general meetings. Reasonable expenses incurred by the board of
supervisors in carrying out its duties will be paid by us.

Our supervisors owe fiduciary duties to our company and our shareholders.
Please see the discussion of the duties and the nature of recourse our
shareholders may have against supervisors in breach of these duties in the
subsection entitled "--Board of Directors".

The board of supervisors is accountable, and will report, to the
shareholders at the shareholders' general meetings.

Certain Differences Between PRC Company Law and Delaware Corporate Law

The PRC company law and other laws applicable to us differ in a number of
respects from laws generally applicable to United States corporations and their
shareholders. The description set forth below includes a summary of certain
provisions of the PRC company law, Special Rules and Mandatory Provisions
applicable to overseas listed companies, such as us, which differ from
provisions of the corporate law of the State of Delaware.

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General

We are a PRC joint stock company, which is a corporate entity organized
under the PRC company law. Under the PRC company law, the registered capital of
a joint stock company is divided into shares of equal par value. These shares
are commonly called domestic ordinary shares. Each share of a joint stock
company ranks equally with all other shares in its class as to voting rights
and rights to dividends and other distributions. Upon receiving approval from
the relevant authorities, a joint stock company may offer its shares for sale
to the public and seek to be listed on a stock exchange. The State Council may
formulate separate regulations for the issuance of other classes of shares,
including H shares. All of our issued shares will be fully paid and
nonassessable. Shareholders of a joint stock company may transfer their shares
without the approval of other shareholders. Among other things, a joint stock
company must have (1) not fewer than five shareholders, (2) minimum paid-in
capital of not less than RMB 10 million, (3) a board of directors of not fewer
than five and not more than 19 members and (4) a board of supervisors of not
fewer than three members.

The shareholders' meeting of a joint stock company is the highest authority
of the company and exercises the powers of the company with respect to
significant matters, subject to applicable law and the articles of association
of the company. The business of a joint stock company is under the overall
management of a board of directors, subject to the PRC company law, other
applicable laws and regulations (which in our case include the PRC insurance
law and regulations), the company's articles of association and duly adopted
resolutions of its shareholders. The day-to-day operations of a joint stock
company are under the direction of its general manager or president, subject to
the applicable laws and regulations, the company's articles of association and
duly adopted resolutions of the directors and shareholders. In addition, the
PRC company law provides for the establishment of a board of supervisors for
each joint stock company. The supervisors perform and exercise the functions
and powers described below, including examination of the joint stock company's
affairs and monitoring the actions of the directors and officers of the
company. The directors, supervisors and officers are not required to hold any
qualifying shares in the joint stock company.

A joint stock company may be liquidated involuntarily due to insolvency or
voluntarily in accordance with the terms of its articles of association or duly
adopted shareholders' resolutions. The property of a joint stock company
remaining after full payment of its liquidation expenses, wages and labor
insurance premiums of its employees, outstanding taxes and debts, is
distributed in proportion to the holdings of its shareholders.

Meetings of shareholders

Under PRC law, shareholders are given the power to approve specified
matters. See "Voting Rights and Shareholders' Meetings". In addition, the
Mandatory Provisions provide that at shareholders' meetings shareholders are
entitled consider any proposals made by shareholders holding in the aggregate
at least 5% of voting power over the company's shares.

Under Delaware law, the business and affairs of a Delaware corporation are,
in general, managed by or under the direction of its board of directors. Only
certain fundamental matters regarding the corporation are reserved by statute
to be exercised by the shareholders. These matters include, in general, the
election and removal of directors, the retention and dismissal of the
corporation's independent auditors, mergers and other business combinations
involving the corporation, the amendment of the corporation's certificate of
incorporation and a liquidation and dissolution of the corporation.

Shareholders' approval by written consent

PRC law does not provide shareholders of overseas joint stock listed
companies with rights to approve corporate matters by written consent. Under
Delaware law, unless otherwise provided in the certificate of incorporation,
any action which is required or permitted to be taken at any shareholders'
meeting may be taken without a meeting, subject to various conditions.

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Amendments of articles of association

Under PRC law, an amendment of the articles of association must be approved
by an affirmative vote of two-thirds of shareholders attending a shareholders'
meeting. Under the Mandatory Provisions, the proposal to amend the articles is
required to be approved by the board of directors, as well as the shareholders.
Amendments only become effective after approval by the relevant governmental
department authorized by the State Council and the China Securities Regulatory
Commission.

Under Delaware law, board as well as shareholder approval are required for
any amendment to the certificate of incorporation, but no governmental approval
is generally required.

Powers and responsibilities of directors

Under PRC law, the board of directors is responsible for specified actions,
including the following functions and powers of a joint stock company:

. convening shareholders' meetings and reporting its work to shareholders
at these meetings;

. implementing shareholders' resolutions;

. determining the company's business plans and investment proposals;

. formulating the company's annual financial budgets and final accounts;

. formulating the company's profit distribution plans and loss recovery
plans;

. formulating proposals for the increase or decrease in the company's
registered capital and the issue of debentures;

. formulating major acquisition and disposal plans and plans for the
merger, division or dissolution of the company;

. deciding on the company's internal management structure and formulating
its basic management system; and

. appointing or removing the company's principal executive officers;
appointing and removing other senior officers based on the recommendation
of the principal executive officer and deciding on the remuneration of
the senior officers.

In addition, the Mandatory Provisions provide that the board has the
authority to formulate any proposal to amend the articles of association and to
exercise any other power conferred by a decision of the shareholders' meeting.

Under Delaware law, the business and affairs of a Delaware corporation are
managed by or under the direction of its board of directors. Their powers
include fixing the remuneration of directors, except as otherwise provided by
statute or in the certificate of incorporation or by-laws of the corporation.

Powers and responsibilities of supervisors

Under PRC law, a PRC joint stock company must have a board of supervisors
consisting of shareholder representatives and one or more employee
representatives. Supervisors attend board meetings as non-voting

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observers. Directors, officers and company personnel in charge of financial
matters may not serve as supervisors. The supervisors perform and exercise the
following functions and powers:

. examining the company's financial affairs;

. monitoring compliance with laws, regulations and the articles of
association of the company by the directors and officers of the company;

. requiring corrective action from directors and officers whose actions are
contrary to the interests of the company;

. proposing the holding of a shareholders' meetings; and

. exercising and performing other powers and functions provided for in the
company's articles of association.

In addition, the Mandatory Provisions provide that supervisors of overseas
listed joint stock companies are entitled to retain auditors in the name of the
company to examine any the financial or business reports or profit distribution
proposals to be submitted by the directors to a meeting of the shareholders
which the supervisors consider questionable, and negotiate or take legal action
against any director or the directors in the name of the company. The fees and
expenses of attorneys and other professionals incurred by the supervisors in
connection with the discharge of their duties are to be paid by the company.

Delaware law makes no provision for a comparable corporate institution.

Duties of directors, supervisors and officers

Under PRC law, directors, supervisors and officers of a joint stock company
are required to comply with relevant laws and regulations and the company's
articles of association. A director, supervisor or officer who contravenes any
law, regulation or the company's articles of association in the performance of
his duties shall be personally liable to the company for any loss incurred by
the company. Directors, supervisors and officers are required to carry out
their duties honestly and protect the interests of the company. They are also
under a duty of confidentiality to the company and prohibited from divulging
confidential information concerning the company, except as permitted by
relevant laws and regulations or by a decision of a shareholders' meeting. They
may not use their position and authority in the company to seek personal gain.
Directors and officers may not directly or indirectly engage in the same
business as the company or in any other business detrimental to the interests
of the company, and they are required to forfeit any profits from these
activities to the company.

Under Delaware law, the business and affairs of a corporation are managed by
or under the direction of its board of directors. In exercising their powers,
directors are charged with a fiduciary duty of care to protect the interests of
the corporation and a fiduciary duty of loyalty to act in the best interests of
its shareholders.

Limitations on transactions with interested directors, supervisors and
officers

Under PRC law, directors and officers of a joint stock company may not enter
into any contracts or transactions with the company unless permitted by the
articles of association or approved by the shareholders. Under the Mandatory
Provisions, a director, supervisor or officer is required to disclose to the
board any transaction with the company in which he has a direct or indirect
interest or in which there is a material conflict of interest between the
company and himself. A director is not entitled to vote or be counted for
quorum purposes in any board decision on any such transaction. The company may
set aside any interested transaction which did not comply with these
requirements, unless the offending director, supervisor or officer was honestly
unaware of

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his obligations. The company may not loan or provide any guarantees to
directors, supervisors or officers (including persons related to them), except
for the loans made in accordance with employment contracts approved by the
shareholders, or unless the company's business scope allows for the provision
of loans and guarantees and such loans or guarantees are made under regular
commercial terms.

Under Delaware law, an interested transaction is not voidable if (1) the
material facts as to such interested director's relationship or interests are
disclosed or are known to the board of directors and the board in good faith
authorizes the transaction by the affirmative vote of a majority of the
disinterested directors, (2) such material facts are disclosed or are known to
the shareholders entitled to vote on such transaction and the transaction is
specifically approved in good faith by vote of the majority of shares entitled
to vote thereon or (3) the transaction is fair as to the corporation as of the
time it is authorized, approved or ratified. Under Delaware law, the interested
director could be held liable for a transaction in which such a director
derived an improper personal benefit.

Election and removal of directors

Under PRC law, the term of office of directors of a joint stock company must
be specified in the articles of association, but may not exceed three years.
Directors may be re-elected. No director may be removed from office without
cause by shareholders prior to the expiration of the director's term. PRC law
does not contemplate a classified board of directors or cumulative voting in
the election of directors for PRC joint stock companies.

Under Delaware law, directors of a Delaware corporation can be removed from
office with or without cause by the holders of a majority of shares then
entitled to vote at an election of directors, provided that except where the
certificate of incorporation of the Delaware corporation otherwise provides, a
member of a classified board may be removed by shareholders only for cause, and
in a corporation with cumulative voting, if less than all of the directors are
removed, no director may be removed if the votes cast against the director's
removal is sufficient to elect the director if cumulatively voted at an
election of directors.

Dividend payments

Under PRC law, proposals for distribution of profits are formulated by the
board of directors and submitted for shareholder approval at a shareholders'
meeting. Dividends may be distributed in the form of cash or shares.

Under Delaware law, the board of directors of a Delaware corporation may
declare dividends out of distributable earnings and profits without the
approval of the shareholders.

Amalgamations and business combinations; appraisal rights

Under PRC law, amalgamations and divisions involving joint stock companies
are required to be approved by shareholders voting at a shareholders' meeting.
The Mandatory Provisions require an amalgamation or division involving the
company to be approved by an affirmative vote of two-thirds of the votes
present at the shareholders' meeting called to consider the transaction. Any
shareholder opposing such an amalgamation or business combination may request
the company or the consenting shareholders to purchase its shares at a fair
price. In addition, a sale of fixed assets having a value exceeding one-third
of the total fixed assets of the company requires the approval of the directors
and shareholders.

Under Delaware law, with certain exceptions, a merger, consolidation or sale
of all or substantially all the assets of a corporation must be approved by the
board of directors and holders of a majority of the outstanding shares entitled
to vote. A shareholder objecting to the merger is entitled to appraisal rights
pursuant to which the shareholder may receive cash in the amount of the fair
value of the shares held by such shareholder (as determined by a court) in lieu
of the consideration the shareholder would otherwise receive in the transaction.

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Transactions with significant shareholders

Under Delaware law, a business combination between a Delaware corporation
and an interested shareholder which takes place at any time during a period of
three years commencing with the date the interested shareholder became an
interested shareholder would need prior approval from the board of directors or
a supermajority of the shareholders of the corporation, unless the corporation
opted out of the relevant Delaware business combination statute. Under Delaware
law, an interested shareholder of a corporation is someone who, together with
its affiliates and associates, owns more than 15% of the outstanding common
shares of the corporation. No such business combination statute or regulation
applies to PRC joint stock companies.

Shareholders' lawsuits

The PRC law provides that most disputes involving an H shareholder are to be
resolved by final and binding arbitration. See "Enforceability of Shareholders'
Rights".

Class actions and derivative actions generally are available to shareholders
under Delaware law for, among other things, breach of fiduciary duty, corporate
waste and actions not taken in accordance with applicable law.

Limitations on liability and indemnification of directors and officers

PRC law does not provide for any specific limitations on liability or
indemnification of directors and officers.

Under Delaware law, a corporation may indemnify a director or officer of the
corporation against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in defense of an
action, suit or proceeding by reason of such position if (1) the director or
officer acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and (2) with respect to
any criminal action or proceeding, the director or officer had no reasonable
cause to believe his conduct was unlawful.

Shareholders' rights of inspection of corporate records

Under PRC law, shareholders are entitled to inspect the articles of
association, minutes of shareholders' meetings and reports of the financial
accounts of the company. In addition, the Mandatory Provisions provide that,
after paying reasonable fees, shareholders are entitled to inspect the
company's shareholder list, certain personal information on the directors,
supervisors and officers, the company's capital position and certain
information regarding share repurchases conducted by the company during the
most recent fiscal year.

Delaware law permits any shareholder of a Delaware corporation to inspect or
obtain copies of or extracts from the corporation's shareholder list and its
other books and records for any purpose reasonably related to such person's
interest as a shareholder.

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DESCRIPTION OF AMERICAN DEPOSITARY RECEIPTS

JPMorgan Chase Bank, as depositary, will issue the ADSs which you may
receive in this offering. Each ADS will represent an ownership interest in 40 H
shares, which we will deposit with the custodian, as agent of the depositary
under the deposit agreement among ourselves, the depositary, yourself as an ADR
holder and the other holders of ADRs. In the future, each ADS will also
represent any securities, cash or other property deposited with the depositary
but which it has not distributed directly to you. Unless specifically requested
by you, all ADSs will be issued on the books of our depositary in book-entry
form and a statement will be mailed to you which reflects your ownership
interest in such ADSs. In our description, references to American Depositary
Receipts, or ADRs, include the statements you will receive which reflect your
ownership of ADSs.

The depositary's office is located at 4 New York Plaza, New York, New York
10004.

You may hold ADSs either directly or indirectly through your broker or other
financial institution. If you hold ADSs directly, by having an ADS registered
in your name on the books of the depositary, you are an ADR holder. This
description assumes you hold your ADSs directly. If you hold the ADSs through
your broker or financial institution nominee, you must rely on the procedures
of the broker or financial institution to assert the rights of an ADR holder
described in this section. You should consult with your broker or financial
institution to find out what those procedures are.

Because the depositary's nominee will actually be the registered owner of
the shares, you must rely on it to exercise the rights as a shareholder on your
behalf. Your rights as an ADR holder as well as the rights and obligations of
the depositary and its agents are set out in the deposit agreement. By holding
an ADR, you become party to the deposit agreement. The deposit agreement and
the ADSs are governed by New York law. However, our obligations to the holders
of our H shares will continue to be governed by the laws of the PRC, which may
be different from laws in the United States.

The following is a summary of the material terms of the deposit agreement.
For more complete information, you should read the entire deposit agreement and
the form of ADR which contains the terms of your ADSs. You can read a copy of
the deposit agreement which is filed as an exhibit to the registration
statement of which this prospectus forms a part. See "Where You Can Find More
Information".

Share Dividends and Other Distributions

How will you receive dividends and other distributions on the H shares
underlying your ADSs?

We may make various types of distributions with respect to our securities.
The depositary has agreed to pay to you the cash dividends or other
distributions it or the custodian receives on H shares or other deposited
securities, after deducting its expenses. You will receive these distributions
in proportion to the number of underlying H shares that your ADSs represent.

Except as stated below, to the extent the depositary is legally permitted it
will deliver distributions to ADR holders in proportion to their interests in
the following manner:

Cash. The depositary will distribute any U.S. dollars available to it
resulting from a cash dividend or other cash distribution or the net proceeds
of sales of any other distribution or portion thereof (to the extent
applicable), on an averaged or other practicable basis, subject to (i)
appropriate adjustments for taxes withheld, (ii) the distribution being
impermissible or impracticable with respect to certain registered holders, and
(iii) deduction of the depositary's expenses in (1) converting any foreign
currency to U.S. dollars to the extent that it determines that the conversion
may be made on a reasonable basis, (2) transferring foreign currency or U.S.
dollars to the United State by such means as the depositary may determine to
the extent that it determines that the transfer may be made on a reasonable
basis, (3) obtaining any approval or license of any governmental authority
required for the conversion or transfer, which is obtainable at a reasonable
cost and within a reasonable time, and (4) making any sale by public or private
means in any commercially reasonable manner.

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H shares. In the case of a distribution in H shares, the depositary will
issue additional ADRs to evidence the number of ADSs representing these H
shares. Only whole ADSs will be issued. Any H shares which would result in
fractional ADSs will be sold, and the net proceeds will be distributed to the
ADR holders entitled thereto.

Rights to receive additional H shares. In the case of a distribution of
rights to subscribe for additional H shares or other rights, if we provide
satisfactory evidence that the depositary may lawfully distribute these rights,
the depositary may arrange for ADR holders to instruct the depositary as to the
exercise of these rights. However, if we do not furnish this evidence or if the
depositary determines it is not practical to distribute these rights, the
depositary may:

. sell these rights if practicable and distribute the net proceeds as cash;
or

. allow these rights to lapse, in which case ADR holders will receive
nothing.

We have no obligation to file a registration statement under the Securities
Act in order to make any rights available to ADR holders.

Other distributions. In the case of a distribution of securities or
property other than those described above, the depositary may either:

. distribute the securities or property in any manner it deems equitable
and practicable; or

. to the extent the depositary deems distribution of the securities or
property not to be equitable and practicable, sell the securities or
property and distribute any net proceeds in the same way it distributes
cash.

Any U.S. dollars will be distributed by checks drawn on a bank in the United
States for whole dollars and cents. Fractional cents will be withheld without
liability and dealt with by the depositary in accordance with its then current
practices.

If none of the above described distribution methods is available with
respect to any ADR holder, the depositary may choose any practical method of
distribution, including the distribution of foreign currency, securities or
property, or it may retain these items, without paying interest on or investing
them, on behalf of the ADR holder as deposited securities.

The depositary is not responsible if it decides that it is unlawful or
impractical to make a distribution available to any ADR holders.

There can be no assurance that the depositary will be able to convert any
currency at a specified exchange rate or sell any property, rights, H shares or
other securities at a specified price, or that any of these transactions can be
completed within a specified time period.

Deposit, Withdrawal and Cancellation

How does the depositary issue ADSs?

The depositary will issue ADSs if you or your broker deposits H shares or
evidence of rights to receive H shares with the custodian. In the case of the
ADSs to be issued under this prospectus, we will arrange with the underwriters
named in this prospectus to deposit those H shares.

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H shares deposited in the future with the custodian must be accompanied by
specified documents, including instruments showing that the H shares have been
properly transferred or endorsed to the person on whose behalf the deposit is
being made.

The custodian will hold all deposited H shares, including those being
deposited by or on our behalf in connection with the offering to which this
prospectus relates, for the account of the depositary. ADR holders thus have no
direct ownership interest in the H shares and only have such rights as are
contained in the deposit agreement. The custodian will also hold any additional
securities, property and cash received on or in substitution for the deposited
H shares. We refer to the deposited H shares and any such additional items as
"deposited securities".

Upon each deposit of H shares, receipt of related delivery documentation and
compliance with the other provisions of the deposit agreement, including the
payment of the fees and charges of the depositary and any taxes or other fees
or charges owing, the depositary will issue an ADR or ADRs in the name of the
person entitled to the ADR evidencing the number of ADSs to which the person is
entitled.

All of the ADSs issued will, unless specifically requested to the contrary,
be part of the depositary's direct registration system, and a registered holder
will receive periodic statements from the depositary which will show the number
of ADSs registered in the holder's name. An ADR holder can request that the
ADSs not be held through the depositary's direct registration system and that
certificated ADRs be issued.

How do ADR holders cancel an ADS and obtain deposited securities?

When you turn in your ADS at the depositary's office, the depositary will,
upon payment of certain applicable fees, charges and taxes and upon receipt of
proper instructions, deliver the deposited securities at the custodian's
office. At your risk, expense and request, the depositary may deliver deposited
securities at such other place as you may request.

The depositary may only restrict the withdrawal of deposited securities in
connection with:

. temporary delays caused by closing our transfer books or those of the
depositary, or the deposit of H shares in connection with voting at a
shareholders' meeting, or the payment of dividends;

. the payment of fees, taxes and similar charges; or

. compliance with any U.S. or foreign laws or governmental regulations
relating to the ADRs or to the withdrawal of deposited securities.

This right of withdrawal may not be limited by any other provision of the
deposit agreement.

Voting Rights

How do you vote?

If you are an ADR holder and the depositary asks you to provide it with
voting instructions, you may instruct the depositary how to exercise the voting
rights for the H shares that underlie your ADSs. After receiving voting
materials from us, the depositary will notify the ADR holders of any
shareholders' meeting or solicitation of consents or proxies. This notice will
describe how you may instruct the depositary to exercise the voting rights for
the H shares which underlie your ADSs. For instructions to be valid, the
depositary must receive them on or before the date specified. The depositary
will try, as far as is practical, subject to the provisions of the underlying H
shares or other deposited securities, to vote or to have its agents vote the H
shares or other deposited securities

209

as you instruct. The depositary will only vote or attempt to vote as you
instruct. The depositary itself will not exercise any voting discretion.
Furthermore, neither the depositary nor its agents are responsible for any
failure to carry out any voting instructions, for the manner in which any vote
is cast or for the effect of any vote.

There is no guarantee that you will receive voting materials in time to
instruct the depositary to vote and it is possible that you, or persons who
hold their ADSs through brokers, dealers or other third parties, will not have
the opportunity to exercise a right to vote.

Record Dates

The depositary may fix record dates for the determination of the ADR holders
who will be entitled:

. to receive a dividend, distribution or rights; or

. to give instructions for the exercise of voting rights at a meeting of
holders of H shares or other deposited securities,

all subject to the provisions of the deposit agreement.

Reports and Other Communications

Will you be able to view our reports?

The depositary will make available for inspection by holders of the ADSs at
the depositary's office any written communications received from us, which are
both (1) received by the custodian or its nominee as a holder of the deposited
securities and (2) made generally available to the holders of the deposited
securities. We will furnish these communications in English when so required by
any rules or regulations of the U.S. Securities and Exchange Commission, or the
SEC. The depositary will distribute copies of such communications, or English
translations or summary thereof, to ADR holders when furnished by us.

Fees and Expenses

What fees and expenses will you be responsible for paying?

ADR holders will be charged a fee for each issuance of ADSs, including
issuances resulting from distributions of shares, rights and other property,
and for each surrender of ADSs in exchange for deposited securities. The fee in
each case is US$5.00 for each 100 ADSs, or any portion thereof, issued or
surrendered.

The following additional charges will be incurred by the ADR holders, by any
party depositing or withdrawing shares or by any party surrendering ADRs or to
whom ADRs are issued (including, without limitation, issuance pursuant to a
share dividend or share split declared by us or an exchange of shares regarding
the ADRs or the deposited securities or a distribution of ADRs), whichever is
applicable:

. to the extent not prohibited by the rules of any stock exchange or
interdealer quotation system upon which the ADSs are traded, a fee of
$1.50 per ADR or ADRs for transfers of certificated ADRs made;

. to the extent not prohibited by the rules of any stock exchange or
interdealer quotation shares system upon which the ADSs are traded, a fee
of $.02 or less per ADS (or portion thereof) for any cash distribution
made pursuant to the deposit agreement;

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. a fee for the distribution of securities, such fee being in an amount
equal to the fee for the execution and delivery of ADSs which would have
been charged as a result of the deposit of those securities (treating all
such securities as if they were shares) but which securities or the net
cash proceeds from the sale thereof are instead distributed by the
depositary to those entitled thereto;

. stock transfer or other taxes and other governmental charges;

. cable, telex and facsimile transmission and delivery charges;

. transfer or registration fees for the registration of transfer of
deposited securities on any applicable register in connection with the
deposit or withdrawal of deposited securities;

. expenses of the depositary in connection with the conversion of foreign
currency into U.S. dollars; and

. such fees and expenses as are incurred by the depositary, including
without limitation expenses incurred in connection with compliance with
foreign exchange control regulations or any law or regulation relating to
foreign investment, in delivery of deposited securities or otherwise in
connection with the depositary's or its custodian's compliance with
applicable law, rule or regulation.

We will pay all other charges and expenses of the depositary and any agent
of the depositary, except the custodian, under agreements from time to time
between us and the depositary. The fees described above may be amended from
time to time.

Payment of Taxes

ADR holders must pay any tax or other governmental charge payable by the
custodian or the depositary on any ADS or ADR, deposited security or
distribution. If an ADR holder owes any tax or other governmental charge, the
depositary may (1) deduct the amount of the tax or charge from any cash
distributions, or (2) sell deposited securities and deduct the amount owing
from the net proceeds of the sale. In either case the ADR holder remains liable
for any shortfall. Additionally, if any tax or governmental charge is unpaid,
the depositary may also refuse to effect any registration, registration of
transfer, split-up or combination of deposited securities or withdrawal of
deposited securities, except under limited circumstances mandated by securities
regulations. If any tax or governmental charge is required to be withheld on
any non-cash distribution, the depositary may sell the distributed property or
securities to pay those taxes and distribute any remaining net proceeds to the
ADR holders who are entitled to them.

Reclassifications, Recapitalizations and Mergers

If we take specified actions that affect the deposited securities, including
(1) any change in par value, split-up, consolidation, cancellation or other
reclassification of deposited securities, or (2) any recapitalization,
reorganization, merger, consolidation, liquidation, receivership, bankruptcy or
sale of all or substantially all of our assets, then the depositary may choose
to:

. amend the form of ADR;

. distribute additional or amended ADRs;

. distribute cash, securities or other property it has received in
connection with these actions;

. sell any securities or property received and distribute the proceeds as
cash; or

. none of the above.

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If the depositary does not choose any of the above options, any of the cash,
securities or other property it receives will constitute part of the deposited
securities, and each ADS will then represent a proportionate interest in that
property.

Amendment and Termination

How may the deposit agreement be amended?

We may agree with the depositary to amend the deposit agreement and the
terms of the ADSs without your consent for any reason. ADR holders must be
given notice at least 30 days in advance of any amendment that imposes or
increases any fees or charges (other than share transfer or other taxes and
other governmental charges, transfer or registration fees, cable, telex or
facsimile transmission costs, delivery costs or other such expenses), or
affects any substantial existing right of ADR holders. If an ADR holder
continues to hold ADRs being so notified, the ADR holder is deemed to agree to
the amendment. Notwithstanding the foregoing, an amendment can become effective
before notice is given if this is necessary to ensure compliance with a new
law, rule or regulation.

No amendment will impair your right to surrender your ADSs and receive the
underlying securities. If a governmental body adopts new laws or rules which
require the deposit agreement or the ADSs to be amended, we and the depositary
may make the necessary amendments, which could take effect before you receive
notice of the amendment.

How may the deposit agreement be terminated?

The depositary may terminate the deposit agreement by giving the ADR holders
at least 30 days' prior notice, and it must do so at our request. The deposit
agreement will be terminated on the removal of the depositary for any reason.
After termination, the depositary's only responsibility will be (1) to deliver
deposited securities to ADR holders who surrender their ADRs, and (2) to hold
or sell distributions received on deposited securities. As soon as practicable
after the expiration of six months from the termination date, the depositary
will sell the deposited securities which remain and hold the net proceeds of
such sales, without liability for interest, in trust for the ADR holders who
have not yet surrendered their ADRs. After making the sale, the depositary will
have no obligations except to account for the proceeds and other cash. The
depositary will not be required to invest the proceeds or pay interest on them.

Limitations on Obligations and Liability to ADR Holders

Limits on our obligations and the obligations of the depositary; limits on
liability to ADR holders and holders of ADSs

Prior to the issue, registration, registration of transfer, split-up,
combination, or cancellation of any ADRs or the delivery of any distribution in
respect of the ADRs, the depositary and its custodian may require you to pay,
provide or deliver:

. payment of (i) any stock transfer or other tax or other governmental
charge, (ii) any stock transfer or registration fees in effect for the
registration of transfers of shares or other deposited securities upon
any applicable register and (iii) any applicable fees and expenses
described in the ADR;

. the production of proof satisfactory to it of (i) the identity and
genuineness of any signature and (ii) such other information, including
without limitation, information as to citizenship, residence, exchange
control approval, beneficial ownership of any securities, payment of
applicable taxes or governmental charges, or legal or beneficial
ownership and the nature of such interest, information relating to the
registration of the shares on the books maintained by or on our behalf
for the transfer and registration of shares, and compliance with
applicable law, regulations, provisions of or governing deposited
securities and terms of the deposit agreement and the ADR, as it may deem
necessary or proper; and

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. compliance with such regulations as the depositary may establish
consistent with the deposit agreement.

The deposit agreement expressly limits the obligations and liabilities of
the depositary, ourselves and our respective agents. Neither we nor the
depositary nor any such agent will be liable if:

. any present or future law, regulation of the United States, Hong Kong,
the People's Republic of China or any other country, or of any
governmental or regulatory authority or stock exchange, the provisions of
or governing any deposited securities, act of God, war or other
circumstance beyond its control shall prevent, delay or subject to any
civil or criminal penalty any act which the deposit agreement or any ADR
provides shall be done or performed by it;

. it exercises or fails to exercise discretion authorized under the deposit
agreement;

. it performs its obligations without gross negligence or bad faith;

. it takes any action or fails to take any action in reliance upon the
advice of or information from legal counsel, accountants, any person
presenting shares for deposit, any registered holder of ADRs or any other
person believed by it to be competent to give such advice or information;
or

. it relies upon on any documents we believe in good faith to be genuine
and to have been properly executed.

Neither the depositary nor its agents have any obligation to appear in,
prosecute or defend any action, suit or other proceeding in respect of any
deposited securities or the ADRs. We and our agents shall only be obligated to
appear in, prosecute or defend any action, suit or other proceeding in respect
of any deposited securities or the ADRs, which in our opinion may involve us in
expense or liability, if indemnity satisfactory to us against all expense,
including fees and disbursements of counsel, and liability is furnished as
often as we require. The depositary and its agents may fully respond to any and
all demands or requests for information maintained by or on its behalf in
connection with the deposit agreement, any registered holder or holders of
ADRs, any ADSs or otherwise to the extent such information is requested or
required by or pursuant to any lawful authority, including without limitation
laws, rules, regulations, administrative or judicial process of, banking,
securities or other regulators.

The depositary will not be responsible for failing to carry out instructions
to vote the deposited securities or for the manner in which the deposited
securities are voted or the effect of the vote. In no event shall the
depositary or any of its agents be liable for any indirect, special, punitive
or consequential damages.

The depositary may own and deal in deposited securities and in ADSs.

Disclosure of interests in ADSs

We may from time to time request you and other holders and beneficial owners
of ADSs to provide information as to:

. the capacity in which you and other holders and beneficial owners own or
owned ADSs;

. the identity of any other persons then or previously interested in those
ADSs; and

. the nature of that interest and various other matters.

You may not individually or with your nominees or other persons acting in
concert own more than 10% of our share capital without the prior approval of
the CIRC. You and other holders and beneficial owners will be

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subject to the provisions of the Securities and Futures Ordinance and any other
legislation or regulations of Hong Kong from time to time in effect regarding
the disclosure of interests in shares. For this purpose, "interest" has the
meaning provided in the Securities and Futures Ordinance. Under the Securities
and Futures Ordinance, you may have a duty to notify us and the Hong Kong Stock
Exchange if you become aware that your interest in H shares, including your
interest in H shares represented by ADSs and/or deemed or attributable
interests specified in the Securities and Futures Ordinance (including but not
limited to equity derivatives), equals or exceeds 5% of long positions in our
issued H share capital. If you have long positions which in aggregate equal to
or exceed 5% of the issued H share capital, then you must also notify both us
and the Hong Kong Stock Exchange if your aggregate short positions equal or
exceed 1% of our issued H share capital. You are also further required to
notify us and the Hong Kong Stock Exchange of certain changes in your interest
in the shares, or if you cease to have such interest or acquired more of our
issued share capital. Under the Securities and Futures Ordinance, we have
certain rights and duties to make inquiries of persons whom we know or have
reasonable cause to believe to be interested in our H shares, including those
represented by ADSs, concerning such persons' interests in our H shares. In the
event that any person to whom we have made such inquiries fails to respond, or
provides false information in response, such person may be subject to sanctions
and criminal penalties.

The depositary has agreed that it will use reasonable efforts to comply with
our written instructions requesting that it forward any such requests for
information relating to your interests to you. By holding an ADS or an interest
in an ADS, you will be agreeing to comply with these requests.

Requirements for Depositary Actions

We, the depositary or the custodian may refuse to:

. issue, register or transfer an ADR or ADRs;

. effect a split-up or combination of ADRs;

. deliver distributions on any such ADRs; or

. permit the withdrawal of deposited securities, unless the deposit
agreement provides otherwise,

until the following conditions have been met:

. the holder has paid all taxes, governmental charges and fees and expenses
as required in the deposit agreement;

. the holder has provided the depositary with any information it may deem
necessary or proper, including, without limitation, proof of identity and
the genuineness of any signature; and

. the holder has complied with such regulations as the depositary may
establish under the deposit agreement.

The depositary may also suspend the issuance of ADSs, the deposit of H
shares, the registration, transfer, split-up or combination of ADRs, or the
withdrawal of deposited securities (unless the deposit agreement provides
otherwise), if the register for ADRs or any deposited securities is closed or
if we or the depositary decides it is advisable to do so.

Books of Depositary

The depositary or its agent will maintain a register for the registration,
registration of transfer, combination and split-up of ADSs. You may inspect
these records at our office during regular business hours, but solely for the
purpose of communicating with other holders in the interest of business matters
relating to the deposit agreement.

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The depositary will maintain facilities to record and process the issuance,
cancellation, combination, split-up and transfer of ADRs. These facilities may
be closed from time to time, to the extent not prohibited by law.

Pre-release of ADSs

The depositary may issue ADSs prior to the deposit with the custodian of H
shares or rights to receive H shares. This is called a pre-release of the ADS.
A pre-release is closed out as soon as the underlying H shares or other ADSs
are delivered to the depositary. The depositary may pre-release ADSs only if:

. the depositary has received collateral for the full market value of the
pre-released ADSs; and

. each recipient of pre-released ADSs agrees in writing that he or she:

. owns the underlying H shares;

. assigns all rights in those H shares to the depositary;

. holds those H shares for the account of the depositary; and

. will deliver those H shares to the custodian as soon as practicable,
and promptly if the depositary so demands.

In general, the number of pre-released ADSs will not evidence more than 30%
of all ADSs outstanding at any given time, excluding those evidenced by
pre-released ADSs. However, the depositary may change or disregard this limit
from time to time as it deems appropriate. The depositary may retain for its
own account any earnings on collateral for pre-released ADSs and its charges
for their issuance.

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SHARES ELIGIBLE FOR FUTURE SALE

Before this offering, there has been no market for our H shares, and we
cannot assure you that a significant public market for our H shares will
develop or be substantial after this offering. Future sales of substantial
amounts of our H shares, including shares issued upon the exercise of
outstanding options, in the public market following this offering could
adversely affect market prices prevailing from time to time and could impair
our ability to raise capital through the sale of our equity securities. Sales
of our H shares in the public market after applicable restrictions lapse, or
the perception that such sales may occur, could adversely affect the prevailing
market price.

Upon completion of this offering, we will have outstanding 6,470,588,000 H
shares, or 7,441,175,000 H shares if the underwriters exercise in full their
over-allotment option. The H shares being sold in this offering will be freely
tradable, without restriction or registration under the Securities Act of 1933,
unless held by an "affiliate" of our company as that term is defined in Rule
144 under the Securities Act. The 19,411,765,000 shares held by CLIC, which
must first be converted into H shares if sold outside China, may be sold only
after required Chinese governmental approvals have been obtained. See
"Description of Share Capital--Restrictions on Transferability and the Share
Register". These shares may be sold in the United States or to U.S. persons
only if registered or sold under an exemption from registration under the
Securities Act, including the exemption provided by Rule 144. CLIC may seek to
sell shares in the future in order to meet its cash requirements, which may
adversely affect the market prices of our H shares and ADSs. See "Risk
Factors--Risks Relating to the Restructuring".

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TAXATION

The taxation of income and capital gains of holders of H shares or ADSs is
subject to the laws and practices of China and of jurisdictions in which
holders of H shares or ADSs are resident or otherwise subject to tax. The
following summary of certain relevant taxation provisions is based on current
law and practice, is subject to change and does not constitute legal or tax
advice. The discussion does not deal with all possible tax consequences
relating to an investment in the H shares or ADSs. In particular, the
discussion does not address the tax consequences under state, local and other
laws, such as non-U.S. federal laws. Accordingly, you should consult your own
tax adviser regarding the tax consequences of an investment in the H shares and
ADSs. The discussion is based upon laws and relevant interpretations in effect
as of the date of this prospectus, all of which are subject to change.

The People's Republic of China

In the opinion of King & Wood, special PRC tax counsel to China Life, the
following is a discussion of the material Chinese tax provisions relating to
the ownership and disposition of H shares or ADSs purchased in connection with
the global offering and held by the investors as capital assets. This
discussion does not address all of the tax considerations that may be relevant
to specific investors in light of their particular circumstances or to other
investors subject to special treatment under the tax laws of the PRC. This
discussion is based on the tax laws of China as in effect on the date of this
prospectus, as well as on the Agreement between the United States of America
and the People's Republic of China for the Avoidance of Double Taxation, or the
Treaty, all of which are subject to change (or changes in interpretation),
possibly with retroactive effect.

This discussion does not address any aspects of Chinese taxation other than
income taxation, capital taxation, stamp taxation and estate taxation.
Prospective investors are urged to consult their tax advisers regarding Chinese
and other tax consequences of owning and disposing of H shares.

Taxation of dividends

Individual investors. According to the Provisional Regulations of China
Concerning Questions of Taxation on Enterprises Experimenting with the Share
System, or the Provisional Regulations, and the Individual Income Tax Law of
China, as amended on October 31, 1993 and effective January 1, 1994, and
further amended and effective on August 30, 1999, dividends paid by Chinese
companies are ordinarily subject to a Chinese withholding tax levied at a flat
rate of 20%. For a foreign individual who is not a resident of China, the
receipt of dividends from a company in China is normally subject to a
withholding tax of 20% unless reduced by an applicable tax treaty. However, the
Chinese State Administration of Taxation, or the SAT, the Chinese central
government tax authority which succeeded the State Tax Bureau, issued, on July
21, 1993, a Notice of the Chinese State Administration of Taxation Concerning
the Taxation of Gains on Transfer and Dividends from Share (Equities) Received
by Foreign Investment Enterprises, Foreign Enterprises and Foreign Individuals,
or the Tax Notice, which states that dividends paid by a Chinese company to
individuals with respect to shares listed on an overseas stock exchange, or
overseas shares, such as H shares, are not subject to Chinese withholding tax.
The relevant tax authority has not collected withholding tax on dividend
payments on overseas shares, including H shares and ADSs.

The Amendments to the Individual Income Tax Law of China, or the Amendments,
were promulgated on October 31, 1993 and became effective on January 1, 1994.
The Amendments state that they shall supersede the provisions of any
contradictory prior administrative regulations concerning individual income
tax. Under the requirements of the Amendments and the amended Individual Income
Tax Law, foreign individuals are subject to withholding tax on dividends paid
by a Chinese company at a rate of 20% unless specifically exempted by the tax
authority of the State Council. However, in a letter dated July 26, 1994 to the
former State Commission for Restructuring the Economic System, the former State
Council Securities Commission and the China Securities Regulatory Commission,
the SAT reiterated the temporary tax exemption stated in the Tax Notice for
dividends received from a Chinese company listed overseas. In the event that
this letter is withdrawn, a 20% tax may be

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withheld on dividends in accordance with the Provisional Regulations, the
Amendments and the Individual Income Tax Law. The withholding tax may be
reduced under an applicable double taxation treaty. To date, the relevant tax
authorities have not collected withholding tax from dividend payments on the
shares exempted under the Tax Notice.

Enterprises. According to the Income Tax Law of China Concerning Foreign
Investment Enterprises and Foreign Enterprises, dividends paid by Chinese
companies to enterprises are ordinarily subject to a Chinese withholding tax
levied at a flat rate of 20%. However, according to the Tax Notice, a foreign
enterprise with no permanent establishment in China receiving dividends paid
with respect to a Chinese company's Overseas Shares will temporarily not be
subject to the 20% withholding tax. If the withholding tax becomes applicable
in the future, the rate could be reduced under an applicable double-taxation
treaty.

Tax treaties. Investors who do not reside in China and reside in countries
that have entered into treaties for the avoidance of double-taxation with China
may be entitled to a reduction of the withholding tax imposed on the payment of
dividends to investors of the Company who do not reside in China. China
currently has treaties for the avoidance of double-taxation with a number of
other countries, which include Australia, Canada, France, Germany, Japan,
Malaysia, the Netherlands, Singapore, the United Kingdom and the United States.

Under the treaty between China and the United States, the China-US Treaty,
China may tax a dividend paid by us to an Eligible U.S. Holder up to a maximum
of 10% of the gross amount of the dividend. It is arguable that under the
China-US Treaty, China may only tax gains from the sale or disposition by an
Eligible U.S. Holder of H shares representing an interest in the Company of 25%
or more, but this position is uncertain and the Chinese authorities may take a
different position. For the purposes of this discussion, an "Eligible U.S.
Holder" is a U.S. holder that (i) is a resident of the United States for the
purposes of the China-US Treaty, (ii) does not maintain a permanent
establishment or fixed base in China to which H shares are attributable and
through which the beneficial owner carries on or has carried on business (or,
in the case of an individual, performs or has performed independent personal
services) and (iii) is not otherwise ineligible for benefits under the China-US
Treaty with respect to income and gains derived in connection with the H shares.

Taxation of capital gains

The Tax Notice provides that gains realized by enterprises that are holders
of Overseas Shares would, temporarily, not be subject to capital gains taxes.
With respect to individual holders of H shares, the Provisions for
Implementation of Individual Income Tax Law of China, or the Provisions, issued
on January 28, 1994, stipulated that gains realized on the sale of equity
shares would be subject to income tax at a rate of 20% on the gains, and
empowered the Ministry of Finance to draft detailed tax rules on the mechanism
for collecting such tax, as per the official publication "China Securities
News" of April 13, 1994. However, no income tax on gains realized on the sale
of equity shares has been collected. Gains on the sale of shares by individuals
were temporarily exempted from individual income tax pursuant to notices issued
by the SAT dated February 9, 1996 and March 30, 1998. In the event this
temporary exemption is withdrawn or ceases to be effective, individual holders
of H shares may be subject to capital gains tax at the rate of 20% unless such
tax is reduced or eliminated by an applicable double taxation treaty. If tax on
capital gains from the sale of H shares become applicable, it is arguable that
under the China-US Treaty, China may only tax gains from the sale or
disposition by an Eligible U.S. Holder of H shares representing an interest in
the Company of 25% or more, but this position is uncertain and the Chinese
authorities may take a different position.

On November 18, 2000, the State Council issued a notice entitled "State
Council Notice on the Income Tax Reduction for Interest and Other Income that
Foreign Enterprises Derive in China", or the Tax Reduction Notice. Under the
Tax Reduction Notice, beginning January 1, 2001, enterprise income tax at a
reduced 10% rate will apply to interest, rental, license fees and other income
obtained in China by foreign enterprises without agencies or establishment in
China, or by foreign enterprises without any substantive relationship with
their agency or establishment in China. Therefore, if the exemption as
described in the preceding paragraph does not apply or is

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not renewed, and the Tax Reduction Notice is found not to apply, a foreign
enterprise shareholder may be subject to a 20% tax on capital gains, unless
reduced by an applicable double-taxation treaty.

Additional Chinese tax considerations

Chinese stamp duty. Chinese stamp duty imposed on the transfer of shares of
Chinese publicly traded companies under the Provisional Regulations should not
apply to the acquisition and disposal by non-Chinese investors of H shares or
ADSs outside of China by virtue of the Provisional Regulations of China
Concerning Stamp Duty, which became effective on October 1, 1988 and which
provide that Chinese stamp duty is imposed only on documents executed or
received within China that are legally binding in China and are protected under
Chinese law.

Estate tax. No liability for estate tax under Chinese law will arise from
non-Chinese nationals holding H shares.

Hong Kong

In the opinion of Allen & Overy, special Hong Kong tax counsel to China
Life, the following is a discussion of the material Hong Kong tax provisions
relating to the ownership and disposition of H shares or ADSs purchased in
connection with the global offering and held by the investors as capital
assets. This discussion does not address all of the tax considerations that may
be relevant to specific investors in light of their particular circumstances or
to investors subject to special treatment under the tax laws of Hong Kong. This
discussion is based on the tax laws of Hong Kong as in effect on the date of
this prospectus, which are subject to change (or changes in interpretation),
possibly with retroactive effect. This discussion does not address any aspects
of Hong Kong taxation other than income taxation, capital taxation, stamp
taxation and estate taxation. Prospective investors are urged to consult their
tax advisers regarding Hong Kong and other tax consequences of owning and
disposing of H shares.

Tax treaties

There is no relevant tax treaty in effect between Hong Kong and the United
States.

Tax on dividends

Under current practice, no tax is payable in Hong Kong in respect of
dividends paid by us.

Tax on gains from sale

No tax is imposed in Hong Kong in respect of capital gains. However, trading
gains from the sale of property by persons carrying on a trade, profession or
business in Hong Kong where the gains are derived from or arise in Hong Kong
from the trade, profession or business will be chargeable to Hong Kong profits
tax, which is currently imposed at the rate of 17.5% on corporations and at a
maximum rate of 15.5% on individuals (to be increased to 16% effective April 1,
2004). Certain categories of taxpayers are likely to be regarded as deriving
trading gains rather than capital gains (for example, financial institutions,
insurance companies and securities dealers) unless these taxpayers could prove
that the investment securities are held for long-term investment purpose.

Trading gains from sales of H shares effected on the Hong Kong Stock
Exchange will be considered to be derived from or arise in Hong Kong. Liability
for Hong Kong profits tax would thus arise in respect of trading gains from
sales of H shares effected on the Hong Kong Stock Exchange realized by persons
carrying on a business of trading or dealing in securities in Hong Kong.

There will be no liability for Hong Kong profits tax in respect of profits
from the sale of ADSs, where purchases and sales of ADSs are effected outside
Hong Kong, for example, on the New York Stock Exchange.

Stamp duty

Hong Kong stamp duty, currently charged at the ad valorem rate of 0.1% on
the higher of the consideration for or the market value of the H shares, will
be payable by the purchaser on every purchase and by the seller on every sale
of H shares (in other words, a total of 0.2% is currently payable on a typical
sale and purchase transaction involving H shares). In addition, a fixed duty of
HK$5.00 is currently payable on any instrument of transfer of H shares. Where
one of the parties is resident outside Hong Kong and does not pay the ad valorem

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duty due by it, the duty not paid will be assessed on the instrument of
transfer (if any) and will be payable by the transferee. If stamp duty is not
paid on or before the due date, a penalty of up to ten times the duty payable
may be imposed.

The withdrawal of H shares upon the surrender of ADRs, and the issuance of
ADRs upon the deposit of H shares, will also attract stamp duty at the rate
described above for sale and purchase transactions unless such withdrawal or
deposit does not result in a passing of the beneficial interest in the H shares
under Hong Kong law, in which case only a fixed duty of HK$5.00 is payable on
the transfer. The issuance of the ADRs upon the deposit of H shares issued
directly to the depositary of the ADSs, or for the account of the depositary,
will not be subject to any stamp duty. No Hong Kong stamp duty is payable upon
the transfer of ADSs outside Hong Kong.

Estate duty

Estate duty is imposed upon the principal value of property situated in Hong
Kong which passes upon the death of a person. H shares are regarded as property
situated in Hong Kong for estate duty purposes by virtue of being entered in a
register in Hong Kong. We cannot assure you that the Hong Kong Inland Revenue
Department will not treat the ADSs as Hong Kong property that may be subject to
estate duty on the death of the beneficial owner of the ADSs even if the ADRs
evidencing such ADSs are located outside Hong Kong at the date of such death.
Hong Kong estate duty is imposed on a progressive scale from 5% to 15%. The
rate of and the threshold for estate duty have, in the past, been adjusted on a
fairly regular basis. No estate duty is payable when the aggregate value of the
dutiable estate does not exceed HK$7.5 million, and the maximum rate of duty of
15% applies when the aggregate value of the dutiable estate exceeds HK$10.5
million.

United States of America

In the opinion of Debevoise & Plimpton, special United States tax counsel to
China Life, the following is a discussion of the material United States federal
income tax consequences relating to the purchase, ownership and disposition of
H shares or ADSs by U.S. Holders (as defined below) that purchase H shares or
ADSs in the international offering and hold the shares or ADSs as capital
assets. This discussion is based on the Internal Revenue Code of 1986, as
amended or, the Code, Treasury regulations promulgated thereunder, and
administrative and judicial interpretations thereof, all as in effect on the
date hereof and all of which are subject to change, possibly with retroactive
effect. This discussion does not address all of the tax considerations that may
be relevant to specific U.S. Holders in light of their particular circumstances
or to U.S. Holders subject to special treatment under U.S. federal income tax
law (such as banks, insurance companies, tax-exempt entities, retirement plans,
regulated investment companies, partnerships, dealers in securities, brokers,
U.S. expatriates, persons who have acquired our H shares or ADSs as part of a
straddle, hedge, conversion, or other integrated investment, persons who own,
directly or by attribution, 10% or more of the combined voting power of all
classes of stock of China Life or persons that have a "functional currency"
other than the U.S. dollar). This discussion does not address any U.S. state or
local or any U.S. federal estate, gift or alternative minimum tax
considerations.

As used in this discussion, the term "U.S. Holder" means a beneficial owner
of H shares or ADSs that is, for U.S. federal income tax purposes, (i) an
individual who is a citizen or resident of the United States, (ii) a
corporation created or organized in or under the laws of the United States or
of any state or political subdivision thereof or therein, including the
District of Columbia or (iii) an estate or trust the income of which is subject
to U.S. federal income tax regardless of the source thereof.

Prospective investors are urged to consult their own tax advisers as to the
particular tax considerations applicable to them relating to the purchase,
ownership and disposition of H shares or ADSs in their individual
circumstances, including the applicability of U.S. federal, state and local tax
laws, any changes in applicable tax laws and any pending or proposed
legislation or regulations.

220

Taxation of dividends

Subject to the discussion below under "--Special Rules", cash distributions
with respect to the H shares or ADSs will, upon receipt, be includible in the
gross income of a U.S. Holder as ordinary dividend income to the extent of our
current and accumulated earnings and profits, as determined under U.S. federal
income tax principles. To the extent that the amount of any such cash
distribution exceeds our current and accumulated earnings and profits as so
computed, it will be treated first as a non-taxable return of capital to the
extent of the U.S. Holder's adjusted tax basis in such H shares or ADSs and, to
the extent the amount of such cash distribution exceeds adjusted tax basis,
will be treated as gain from the sale of such H shares or ADSs. Dividends paid
by us generally will constitute income from sources outside the United States
for foreign tax credit limitation purposes and will not be eligible for the
"dividends received" deduction.

Recently enacted legislation (the "2003 Tax Act") reduces to 15% the maximum
tax rate applicable to certain dividends received by individuals during taxable
years beginning on or before December 31, 2008, so long as certain holding
period requirements are met. Dividends received from "qualified foreign
corporations" generally qualify for the reduced rate. A non-U.S. corporation
(other than a foreign personal holding company, foreign investment company, or
passive foreign investment company) generally will be considered to be a
qualified foreign corporation (i) if it is eligible for the benefits of a
comprehensive income tax treaty with the United States which the Secretary of
the Treasury determines is satisfactory for purposes of this provision and
which includes an exchange of information program or (ii) with respect to any
dividend it pays on stock which is readily tradable on an established
securities market in the United States. The Treasury Department has determined
that the U.S.-China income tax treaty as currently in effect meets the
requirements described in clause (i) above. In addition, the ADSs are expected
to be readily tradable on the New York Stock Exchange, an established
securities market in the United States. Each U.S. Holder that is an individual
is urged to consult his tax adviser regarding the possible applicability of the
reduced rate under the 2003 Tax Act and the related restrictions and special
rules.

The U.S. dollar value of any distribution made by us in Renminbi (or other
currency that is not the U.S. dollar, or a foreign currency), should be
calculated by reference to the exchange rate in effect on the date of receipt
of such distribution by JPMorgan Chase Bank, as depositary, in the case of
ADSs, or by the U.S. Holder, in the case of H shares held directly by such U.S.
Holder regardless of whether the Hong Kong dollars (or such other foreign
currency) so received are converted into U.S. dollars on the date of receipt.
If the Hong Kong dollars (or such other foreign currency) so received are
converted into U.S. dollars on the date of receipt, such U.S. Holder generally
should not recognize foreign currency gain or loss on such conversion. If the
Hong Kong dollars (or such other foreign currency) are not converted into U.S.
dollars on the date of receipt, such U.S. Holder will have a basis in the Hong
Kong dollars (or such other foreign currency) equal to their U.S. dollar value
on the date of receipt. Any gain or loss on a subsequent conversion or other
disposition of the Hong Kong dollars (or such other foreign currency) generally
will be treated as ordinary income or loss from sources within the United
States for foreign tax credit limitation purposes.

As described above under "--The People's Republic of China--Taxation of
Dividends", under current practice, Chinese withholding tax will not be
collected from dividends paid with respect to overseas shares such as H shares
and ADSs. If, in the future, Chinese withholding tax were to be collected from
dividends paid on H shares or ADSs, a U.S. Holder should be entitled, at its
option, to either a deduction or a tax credit for the amount paid or withheld.
There are significant and complex limitations that apply to foreign tax
credits. The availability of the foreign tax credit and the application of the
limitations on the credit are fact specific and U.S. Holders are urged to
consult their own U.S. tax advisers with respect to foreign tax credit
considerations in their individual circumstances.

Sale or other disposition of H shares or ADSs

Subject to the discussion below under "--Special Rules", a U.S. Holder
generally will recognize gain or loss for U.S. federal income tax purposes upon
a sale or other disposition of our H shares or ADSs in an amount equal

221

to the difference between the amount realized from the sale or disposition and
the U.S. Holder's adjusted tax basis in the shares or ADSs. The gain or loss
generally will be a capital gain or loss and will be long-term capital gain
(taxable at a reduced rate for individuals) or loss if, on the date of sale or
disposition, the H shares or ADSs were held by the U.S. Holder for more than
one year and will generally be U.S. source gain or loss. The claim of a
deduction in respect of a capital loss may be subject to limitations.

A U.S. Holder that receives Hong Kong dollars (or other foreign currency)
from the sale or disposition generally will realize an amount equal to the U.S.
dollar value of the Hong Kong dollars (or the other foreign currency) on the
settlement date of the sale or disposition if (i) the U.S. Holder is a cash
basis or electing accrual basis taxpayer and our H shares or ADSs, as the case
may be, are treated as being "traded on an established securities market" for
this purpose or (ii) the settlement date is the date of the sale or
disposition. If the Hong Kong dollars (or the other foreign currency) so
received are converted into U.S. dollars on the settlement date, the U.S.
Holder should not recognize foreign currency gain or loss on the conversion. If
the Hong Kong dollars (or the other foreign currency) so received are not
converted into U.S. dollars on the settlement date, the U.S. Holder will have a
basis in the Hong Kong dollars (or the other foreign currency) equal to the
U.S. dollar value on the settlement date. Any gain or loss on a subsequent
conversion or other disposition of the Hong Kong dollars (or the other foreign
currency) generally will be treated as ordinary income or loss to the U.S.
Holder and generally will be income or loss from sources within the United
States for foreign tax credit limitation purposes. A U.S. Holder should consult
its own tax adviser regarding the U.S. federal income tax consequences of
receiving Hong Kong dollars (or other currency) from a sale or disposition of
the H shares or ADSs in cases not described in this paragraph.

Special rules

Related Person Insurance Income. Certain adverse U.S. income and tax
reporting rules may apply to U.S. holders who, directly or indirectly, own
stock of a non-U.S. corporation that earns "related person insurance income"
("RPII"), if 25% or more of the non-U.S. corporation's direct or indirect
shareholders are U.S. persons. If applicable, these rules would require U.S.
Holders to include in taxable income each year their pro rata share of any RPII
for the year, regardless of whether such income is distributed, and also to
file I.R.S. Form 5471, disclosing certain information regarding their direct or
indirect ownership of the non-U.S. corporation. For organizations that are
otherwise exempt from U.S. federal income tax under section 501(a) of the Code,
any such income would constitute "unrelated business taxable income." These
rules could also apply to convert some or all of the gain recognized from the
sale or disposition of H shares or ADSs from capital gain to ordinary income
and to report such gain on I.R.S. Form 5471.

Under a statutory exception, these rules do not apply if less than 20% of
the non-U.S. corporation's insurance income is derived from the insurance (or
reinsurance) of insureds who are also U.S. Holders (or related to a U.S.
Holder). Because, upon completion of the global offering, CLIC will hold an
aggregate of no less than 75% of our share capital (or approximately 72.2% if
the over-allotment is exercised in full), and we do not offer or intend to
offer our products and services in the United States, it is highly unlikely
that the Related Person Insurance Income rules will apply at the time of the
global offering. If more of our shares are sold to the public in the future, it
is possible that such rules could apply at a later date.

Passive Foreign Investment Company. In general, a non-U.S. corporation will
be a passive foreign investment company, or a PFIC, if 75% or more of its gross
income constitutes "passive income" or 50% or more of its assets produce
"passive income" or are held for the production of "passive income".

For the purpose of determining whether a non-U.S. corporation is a PFIC,
"passive income" is defined to include income of the kind which would be
foreign personal holding company income under section 954(c) of the Code, and
generally includes interest, dividends, annuities and other investment income.
Passive income does not include interest income or dividends received from
controlled subsidiaries or certain other related persons, to the extent
properly allocable to income of such related person that is not passive income.
In addition, the PFIC

222

provisions specifically exclude from the definition of "passive income" any
income "derived in the active conduct of an insurance business by a corporation
which is predominantly engaged in an insurance business and which would be
subject to tax under subchapter L if it were a domestic corporation". This
exception is intended to ensure that income derived by a bona fide insurance
company is not treated as passive income. Thus, to the extent that income is
attributable to financial reserves in excess of the reasonable needs of the
insurance business, it may be treated as passive income.

We believe that we are, and we anticipate that we will continue to be,
predominantly engaged in an insurance business and that we do not, and will
not, have financial reserves in excess of the reasonable needs of our insurance
business. Accordingly, our income and assets should not be passive income and
passive assets. As a result, we do not expect to be classified as a PFIC for
any tax year. However, an actual determination of PFIC status is inherently
factual in nature and cannot be made until the close of each applicable tax
year and, accordingly, no assurances can be given that we will not become a
PFIC at some point in the future.

In general, a U.S. Holder of a PFIC is subject to a special tax and an
interest charge at the time of the sale of (or receipt of an "excess
distribution" with respect to) its shares in the PFIC. We do not intend to
comply with the requirements necessary to permit a holder to make a "qualified
electing fund" election under section 1295 of the Code. In general, a
shareholder is treated as having received an "excess distribution" if the
amount of the distribution was more than 125% of the average distribution with
respect to its shares during the three preceding taxable years (or shorter
period during which the taxpayer held the shares). The special tax is computed
by assuming that the excess distribution or, in the case of a sale, the gain
with respect to the shares was earned in equal portions throughout the holder's
period of ownership. The portion allocable to each year prior to the year of
sale is taxed at the maximum marginal tax rate applicable for each such period.
The interest charge is determined based on the applicable rate imposed on
underpayments of U.S. federal income tax for the period.

The above results may be eliminated if a "mark-to-market" election is
available and a U.S. Holder validly makes such an election. If the election is
made, such U.S. Holder generally will be required to take into account the
difference, if any, between the fair market value and its adjusted tax basis in
H shares or ADSs at the end of each taxable year as ordinary income or ordinary
loss (to the extent of any net mark-to-market gain previously included in
income). In addition, any gain from a sale or other disposition of H shares or
ADSs will be treated as ordinary income, and any loss will be treated as
ordinary loss (to the extent of any net mark-to-market gain previously included
in income). A mark-to-market election is available to a U.S. Holder only if our
H shares or ADSs are considered "marketable stock" for these purposes.
Generally, stock will be considered marketable stock if it is "regularly
traded" on a "qualified exchange" within the meaning of applicable U.S.
Treasury regulations. A class of stock is regularly traded during any calendar
year during which such class of stock is traded, other than in de minimis
quantities, on at least 15 days during each calendar quarter. A non-U.S.
securities exchange will constitute a qualified exchange if it is regulated or
supervised by a governmental authority of the country in which the market is
located and meets certain trading, listing, financial disclosure and other
requirements set forth in the Treasury Regulations. We do not know whether our
H shares or ADSs will be treated as marketable stock for these purposes.

223

ENFORCEABILITY OF CIVIL LIABILITIES

We are a joint stock company with limited liability incorporated under the
laws of China, and substantially all of our assets are located outside the
United States. We have appointed CT Corporation System, located at 111 Eighth
Avenue, New York, New York 10019, as our agent to receive service of process
with respect to any action brought against us in the United States District
Court for the Southern District of New York under the federal securities laws
of the United States or of any State of the United States or under the deposit
agreement or the ADRs referred to under "Description of American Depositary
Receipts", or any action brought against us in the Supreme Court of the State
of New York in the County of New York under the securities laws of the State of
New York. However, it may be difficult for investors to enforce outside the
United States judgments against us obtained in the United States in any such
actions, including actions predicated upon the civil liability provisions of
the federal securities laws of the United States or of the securities laws of
any State of the United States. In addition, our directors, supervisors and
executive officers and certain of the underwriters and experts named in this
prospectus are resident outside the United States, and all or a substantial
portion of the assets of these persons are or may be located outside the United
States. Therefore, it may not be possible for investors to effect service of
process within the United States upon them, or to enforce against them or us
judgments obtained in United States courts, including judgments predicated upon
the civil liability provisions of the federal securities laws of the United
States or of the securities laws of any State of the United States. The
difficulty of enforcing a judgment of a U.S. court in China stems from the lack
of any official arrangement providing for judicial assistance to the
enforcement of judgments of courts of the United States in the PRC. China does
not have treaties providing for the reciprocal recognition and enforcement of
judgments of courts within the United States, the United Kingdom, Japan or many
other members of the Organization for Economic Cooperation and Development. In
the absence of such a treaty, judgments of U.S. courts will not be enforced in
the PRC without review of the merits of the claims and the claims brought in
the original action in the United States court will have to be relitigated on
their merits.

Likewise, administrative actions brought by regulatory authorities, such as
the SEC, and other actions, which result in foreign court judgments, could
(assuming such actions are not required by Chinese law or our articles of
association to be arbitrated) only be enforced in China if such judgments or
rulings do not violate the basic principles of the law of China or the
sovereignty, security and public interest of the society of China, as
determined by a People's Court of China that has jurisdiction for recognition
and enforcement of judgments. We have been advised by our Chinese counsel, King
& Wood, that there is doubt:

. as to the enforceability in China of any actions to enforce judgments of
United States courts arising out of or based on the ownership of the H
shares or ADSs, including judgments arising out of or based on the civil
liability provisions of United States federal or state securities laws;
and

. whether Chinese courts would enforce, in original actions, judgments
against our directors and officers predicated solely upon the federal
securities laws of the United States.

Furthermore, an original action may be brought in the PRC against us, our
directors, supervisors or executive officers or the underwriters and experts
named in this prospectus only if the actions are not required to be arbitrated
by PRC law and our articles of association, and only if the facts alleged in
the complaint give rise to a cause of action under PRC law. In connection with
such an original action, a PRC court may award civil liability, including
monetary damages.

Our Hong Kong legal adviser, Allen & Overy, has advised us that Hong Kong
has no arrangement for the reciprocal enforcement of judgments with the United
States. However, under Hong Kong common law, a foreign judgment (including one
from a court in the United States predicated on federal or state securities
laws of the United States) may be enforced in Hong Kong by bringing an action
in a Hong Kong court, and then seeking summary or default judgment on the
strength of the foreign judgment, provided that the foreign judgment is for a
debt or definite sum of money and is final and conclusive on the merits.

224

In addition, the Hong Kong courts may refuse to recognize or enforce a
foreign judgment if:

. the judgment was obtained by fraud;

. the foreign court lacked the appropriate jurisdiction at the time;

. it is contrary to public policy or natural justice;

. the judgment is for multiple damages; or

. it was based on foreign penal, revenue, or other public law.

225

UNDERWRITERS

General

The global offering consists of a U.S. offering, an international offering
and a public offering in Hong Kong.

China International Capital Corporation Limited, Citigroup Global Markets
Asia Limited, Credit Suisse First Boston (Hong Kong) Limited and Deutsche Bank
AG, Hong Kong Branch (in alphabetical order) are acting as joint global
coordinators and joint global bookrunners for the global offering.

On the terms and subject to the conditions contained in a U.S. and
international underwriting agreement, dated the date of this prospectus, among
us, CLIC, who is the selling shareholder, the U.S. underwriters named below,
for whom China International Capital Corporation Limited, Citigroup Global
Markets Inc., Credit Suisse First Boston LLC and Deutsche Bank Securities Inc.
(in alphabetical order) are acting as U.S. representatives, and the
international underwriters named below, for whom China International Capital
Corporation Limited, Citigroup Global Markets Limited, Credit Suisse First
Boston (Hong Kong) Limited and Deutsche Bank AG, Hong Kong Branch (in
alphabetical order) are acting as international representatives, the U.S. and
international underwriters have severally agreed to purchase, and we and the
selling shareholder have agreed to sell to them, severally, the number of ADSs
indicated below:

Number of
Name ADSs
---- -----------

U.S. underwriters:
China International Capital Corporation Limited...
Citigroup Global Markets Inc......................
Credit Suisse First Boston LLC....................
Deutsche Bank Securities Inc......................
BNP Paribas Securities Corp.......................
Canadian Imperial Bank of Commerce................
Cazenove Asia Limited.............................
Fox-Pitt, Kelton N. V.............................
ING Bank N.V......................................
Lehman Brothers Inc...............................
Merrill Lynch, Pierce, Fenner & Smith Incorporated
UBS AG............................................
Subtotal........................................ 76,838,250
-----------
International underwriters:
China International Capital Corporation Limited...
Citigroup Global Markets Limited..................
Credit Suisse First Boston (Hong Kong) Limited....
Deutsche Bank AG, Hong Kong Branch................
BNP Paribas Peregrine Capital Limited.............
Canadian Imperial Bank of Commerce................
Cazenove Asia Limited.............................
China Everbright Capital Limited..................
Daiwa Securities SMBC Hong Kong Limited...........
First Shanghai Securities Limited.................
Fox-Pitt, Kelton N.V..............................
ICEA Capital Limited..............................
ING Bank N.V......................................
Lehman Brothers International (Europe)............
Merrill Lynch Far East Limited....................
Nomura International plc..........................
Samsung Securities Co. Ltd........................
UBS AG............................................
Subtotal........................................ 76,838,225
-----------
Total.............................................. 153,676,475
===========

226

We and the selling shareholder also entered into a Hong Kong underwriting
agreement with the underwriters participating in the Hong Kong public offering,
including China International Capital Corporation (Hong Kong) Limited,
Citigroup Global Markets Asia Limited, Credit Suisse First Boston (Hong Kong)
Limited and Deutsche Bank AG, Hong Kong Branch (in alphabetical order), for the
public offer of 323,529,000 H shares for subscription in Hong Kong. The Hong
Kong public offering is conditional upon, among other things, the Listing
Committee of the Hong Kong Stock Exchange granting the listing of, and
permission to deal in, our H shares offered in the global offering on the Hong
Kong Stock Exchange.

The closing of the sale of ADSs or H shares under each underwriting
agreement described above is conditional on the closings of the sales of ADSs
or H shares under the other two underwriting agreements described above.

The U.S. underwriters and the international underwriters are referred to
collectively as the underwriters, and the U.S. representatives and the
international representatives are referred to collectively as the
representatives in this section, in each case where the context requires.

To provide for coordination among the different underwriting syndicates, the
U.S. underwriters, the international underwriters and the Hong Kong
underwriters have entered into an intersyndicate agreement. It is contemplated
in the intersyndicate agreement that sales may be made among the U.S.
underwriters, international underwriters and Hong Kong underwriters of any
number of ADSs or H shares as may be agreed mutually. The price of any ADSs
sold by the underwriters shall be the public offering price listed on the cover
page of this prospectus, in U.S. dollars, less an amount not greater than the
amount of the concession to dealers described below. The initial public
offering price per ADS and price per H share in the U.S. and international
offerings include a Securities and Futures Commission transaction levy, an
investor compensation levy and a Hong Kong Stock Exchange trading fee, which
will be paid to the relevant authorities by us and the selling shareholder.

The underwriters propose to offer ADSs at the initial public offering price
set forth on the cover page of this prospectus. They may sell ADSs to certain
dealers at the initial public offering price less a concession not in excess of
US$ per ADS. The underwriters may allow, and such dealers may reallow, a
discount not in excess of US$ per ADS on sales to certain other dealers.
After the initial public offering, the public offering prices and the
concessions and discounts may be changed. H shares may be delivered instead of
ADSs at the option of purchasers in the U.S. offering and the international
offering and such initial purchases of H shares will be settled in Hong Kong
dollars based on an exchange rate of HK$ to US$1.00, the noon buying rate
on , 2003, and adjusted for the ratio of 40 H shares per ADS.

The following table summarizes the compensation we and the selling
shareholders each will pay, assuming no exercise of the underwriters'
over-allotment option and assuming full exercise of the underwriters'
over-allotment option:

Per ADS Total
------------------- -------------------
Without With Without With
over- over- over- over-
allotment allotment allotment allotment
--------- --------- --------- ---------

Underwriting discounts and commissions payable by us......... US$ US$ US$ US$
Underwriting discounts and commissions payable by the selling
shareholder................................................ US$ US$ US$ US$

The information in the above table excludes H shares offered in the Hong
Kong public offering.

The underwriting discount consists of the difference between the amount paid
by the underwriters to purchase the ADSs from us and the selling shareholder
and the offering price of the ADSs to the public. The underwriting discounts
and commissions are % of the total amount of the U.S. offering and the
international offering. The initial public offering prices and underwriting
discounts and commissions per ADS are the same for each of the U.S. offering
and the international offering.

227

The U.S. underwriters, international underwriters and Hong Kong underwriters
have agreed that, if the number of H shares validly applied for in the Hong
Kong public offering represents a multiple of:

(1) 15 times or more but less than 50 times,

(2) 50 times or more but less than 100 times, or

(3) 100 times or more than 100 times

the number of H shares initially available in such offering, then an additional
161,765,000 H shares, 323,530,000 H shares or 970,589,000 H shares,
respectively, will be reallocated to the Hong Kong public offering, such that
the additional H shares, when aggregated with the H shares initially available
in the Hong Kong public offering, will represent approximately 7.5% in the case
of (1) above, 10% in the case of (2) above and 20% in the case of (3) above, of
the total number of H shares initially available under the global offering,
without giving effect to the underwriters' over-allotment option. In such case,
the number of ADSs allocated to the U.S. offering and the international
offering will be reduced correspondingly, in such manner as the joint global
coordinators deem appropriate. Any unsold H shares in the Hong Kong public
offering may be reallocated to the U.S. offering and the international
offering. The joint global coordinators also have discretion to reallocate
additional H shares to the Hong Kong public offering from the U.S. offering and
international offering.

H shares offered in the Hong Kong public offering will be offered initially
at a maximum price to be determined immediately prior to commencement of the
Hong Kong public offering. If the initial public offering price per ADS in the
U.S. offering and the international offering is less than the equivalent
maximum public offering price per H share in the Hong Kong public offering, the
purchasers of H shares in the Hong Kong public offering will receive a refund
such that their effective price per H share (including a 1.0% brokerage fee, a
0.005% Hong Kong Securities and Futures Commission transaction levy, a 0.002%
investor compensation levy and a 0.005% Hong Kong Stock Exchange trading fee
payable in respect of offerings of securities listed on the Hong Kong Stock
Exchange and adjusted for the ratio of 40 H shares per ADS) will be equivalent
to the initial public offering price per ADS in the U.S. offering and the
international offering based on an exchange rate of HK$7.7660 to US$1.00, the
noon buying rate on November 28, 2003.

The offer and sale as part of the initial distribution in the global
offering of the ADSs and H shares subject to the international offering and the
Hong Kong public offering have not been registered under the U.S. Securities
Act of 1933. These ADSs and H shares have, however, been registered under the
Securities Act solely for purposes of their resale in the United States in
transactions that require registration under the Securities Act. These ADSs and
H shares initially will be offered outside the United States in compliance with
Regulation S under the Securities Act. This prospectus may be used in
connection with resales of such ADSs and H shares in the United States to the
extent such transactions would not be exempt from registration under the
Securities Act.

We have, as part of the international offering, entered into corporate
placing agreements with four corporate investors for the subscription at the
offering price for the international offering of an aggregate of US$500 million
worth (rounded down to the nearest whole number) of H shares or ADSs. The
corporate investors are independent third parties of us. Assuming an
international IPO price of HK$3.315 per H share, being the midpoint of the
proposed international IPO price range of HK$2.98 to HK$3.65 and using the
exchange rate of HK$7.7660 to US$1.00, the total number of H shares subscribed
by the corporate investors would be 1,171,342,383, which is approximately 4.53%
of our issued share capital or 18.10% of the H shares outstanding after the
global offering, assuming the over-allotment option is not exercised.

228

The number of H shares subscribed by each of the corporate investors will be
as follows:

. Mitcham Resources Limited (an indirect wholly-owned subsidiary of Cheung
Kong (Holdings) Limited) has agreed to subscribe, at the international
IPO price, for a number of H shares (rounded down to the nearest whole
number), or ADSs, of not more than US$100 million divided by the
international IPO price. Assuming an international IPO price of HK$3.315,
the total number of H shares subscribed by Mitcham Resources Limited
would be 234,268,476, which is approximately 0.91% of our issued share
capital or 3.62% of the H Shares outstanding after the global offering,
assuming the over-allotment option is not exercised.

Cheung Kong (Holdings) Limited, a company listed on the Hong Kong Stock
Exchange, and its consolidated subsidiaries are engaged principally in
property development and investment in Hong Kong and in different regions
of the world, including the PRC, the United Kingdom and Singapore, and
develop high quality and large-scale properties for sale and investment
in the residential, retail, office, hotel and industrial sectors.

. Hutchison International Limited (a wholly-owned subsidiary of Hutchison
Whampoa Limited) has agreed to subscribe, at the international IPO price,
for a number of H shares (rounded down to the nearest whole number), or
ADSs, of not more than US$100 million divided by the international IPO
price. Assuming an international IPO price of HK$3.315, the total number
of H Shares subscribed by Hutchison International Limited would be
234,268,476, which is approximately 0.91% of our issued share capital or
3.62% of the H shares outstanding after the global offering, assuming the
over-allotment option is not exercised.

Hutchison Whampoa Limited is a Hong Kong-based multinational conglomerate
whose securities are listed on the Hong Kong Stock Exchange. Hutchison
Whampoa Limited and its consolidated subsidiaries operate five core
business divisions in 39 countries, including ports and related services,
telecommunications, property and hotels, retail and manufacturing,
energy, infrastructure and finance and investments.

. Richbo Investment Limited (an indirect wholly-owned subsidiary of
Henderson Development Limited) has agreed to subscribe, at the
international IPO price, for a number of H shares (rounded down to the
nearest whole number), or ADSs, of not more than US$200 million divided
by the international IPO price. Assuming an international IPO price of
HK$3.315, the total number of H shares subscribed by Richbo Investment
Limited would be 468,536,953, which is approximately 1.81% of our issued
share capital or 7.24% of the H shares outstanding after the global
offering, assuming the over-allotment option is not exercised.

Henderson Development Limited is a private company owned by a unit trust.
The issued share capital of the trustee of the unit trust is owned by Dr.
Lee Shau Kee.

. Chow Tai Fook Nominee Limited (a company indirectly controlled by Chow
Tai Fook Enterprises Limited) has agreed to subscribe, at the
international IPO price, for a number of H shares (rounded down to the
nearest whole number), or ADSs, of not more than US$100 million divided
by the international IPO price. Assuming an international IPO price of
HK$3.315, the total number of H shares subscribed by Chow Tai Fook
Nominee Limited would be 234,268,476, which is approximately 0.91% of our
issued share capital or 3.62% of the H shares outstanding after the
global offering, assuming the over-allotment option is not exercised.

Chow Tai Fook Enterprises Limited is the controlling shareholder of New
World Development Co. Ltd.

229

The H shares or ADSs to be sold to the corporate investors will not be
affected by any reallocation of the H shares between the international offering
and the Hong Kong public offering in the event of over subscription under the
Hong Kong public offering. Settlement of the subscription for the H shares or
ADSs will take place contemporaneously with the settlement of the international
offering.

The subscription obligation of each of the corporate investors is
conditional upon the Hong Kong and the international underwriting agreements
being entered into and having become unconditional.

Each of the corporate investors has agreed that, without our prior written
consent and the consent of the joint global coordinators, it will not during
the period of 12 months following the date of listing (which we refer to as the
lock-up period) dispose of any of the H shares and any shares or other
securities which are derived from the H shares subscribed by it pursuant to the
corporate placing (which we refer to as the relevant shares).

Notwithstanding the above, each of the corporate investors may freely
transfer all or part of the relevant shares to a direct or indirect
wholly-owned subsidiary of the corporate investor during the lock-up period,
provided that (a) the subsidiary must first give a written undertaking in our
favor and the joint global coordinators agreeing to be bound by the corporate
investor's obligations under the relevant corporate placing agreement prior to
the transfer, and (b) if the subsidiary is about to or will cease to be
qualified as a direct or indirect wholly-owned subsidiary of the corporate
investor, the subsidiary will (and the corporate investor will cause the
subsidiary), before ceasing to be so qualified, ensure that its entire interest
in the relevant shares is fully and effectively transferred to the corporate
investor or a direct or indirect wholly-owned subsidiary of the corporate
investor.

Each of the corporate investors has warranted to us that the corporate
placing agreement entered into by the corporate investor does not constitute a
"connected transaction" from the corporate investor's perspective under the
HKSE Listing Rules.

We and the selling shareholder have granted an option to the underwriters,
exercisable in whole or in part at the discretion of the joint global
coordinators, at any time or from time to time, during the 30-day period from
the day on which dealings commence on the New York Stock Exchange or the Hong
Kong Stock Exchange, whichever is earlier, to purchase up to an additional
22,058,800 ADSs and 2,205,875 ADSs from us and the selling shareholder,
respectively, at the initial public offering price per ADS less the
underwriting discount. The joint global coordinators may exercise the option on
behalf of the underwriters solely for the purpose of covering over-allotments,
if any, in connection with the global offering. To the extent that the joint
global coordinators exercise the option on behalf of the underwriters, each
underwriter will be obligated, subject to certain conditions, to purchase a
number of additional ADSs approximately proportionate to such underwriter's
initial purchase commitment.

The ADSs have been approved for listing on the New York Stock Exchange,
subject to official notification of issuance, under the symbol "LFC". To meet
the distribution standards of the New York Stock Exchange for the U.S.
offering, the U.S. underwriters have undertaken to distribute the ADSs in a
manner so as to:

. Create a minimum of 2,000 round lots of ADSs; and

. offer a minimum public float of 1.1 million ADSs in the United States
with an offering value in excess of US$60.0 million.

The Hong Kong Stock Exchange has granted approval in principle for the
listing of the H shares on the Hong Kong Stock Exchange under the stock code
"2628".

230

Each of us and the selling shareholder has agreed that, without the prior
written consent of the joint global coordinators on behalf of the underwriters,
it will not, during the period ending 180 days after the date of this
prospectus:

. offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant or agree to
grant any option, right or warrant to purchase, lend or otherwise
transfer or dispose of, directly or indirectly, any ADSs, H shares
directly or in the form of depositary receipts, our shares or any
securities convertible into or exercisable or exchangeable for, or that
represent the right to receive, ADSs, H shares or our shares;

. enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the
ADSs, H shares or our shares; or

. publicly disclose that it will or may enter into any transaction
described above,

whether any transaction described above is to be settled by delivery of ADSs, H
shares or such other securities, in cash or otherwise.

We have undertaken to the Hong Kong Stock Exchange that, except to the
extent permitted under the global offering or the over-allotment option:

(i) in the first six months after the date on which dealings in the H shares
commence on the Hong Kong Stock Exchange, or the First Six-month Period,
we will not allot or issue or agree to allot or issue any H shares or
other securities (including warrants or other convertible securities) or
grant or agree to grant options or rights over any H shares or other
securities or enter into swap or other arrangements that transfer, in
whole or in part, any part of the economic consequence of ownership of
any H shares or offer or agree to do any of the foregoing or announce
any intention to do so, without the prior consent of the Hong Kong Stock
Exchange and unless in compliance with the requirements of the Hong Kong
Stock Exchange Listing Rules; and

(ii) in the period of six months commencing from the expiry of the First
Six-month Period, or the Second Six-month Period, we will not allot or
issue or agree to allot or issue any H shares or other securities
(including warrants or other convertible securities) or grant or agree
to grant options or rights over any H shares or other securities or
enter into swap or other arrangements that transfer, in whole or in
part, any part of the economic consequence of ownership of any H shares
or offer or agree to do any of the foregoing or announce any intention
to do so, if such action would result in CLIC ceasing to be our
controlling shareholder (as defined in the Hong Kong Stock Exchange
Listing Rules).

The selling shareholder has undertaken to the Hong Kong Stock Exchange that,
except to the extent permitted under the global offering or the over-allotment
option:

(i) in the First Six-month Period, it will not, and will procure that the
registered holder does not, without our prior written consent and that
of the Hong Kong Stock Exchange and unless in compliance with the
requirements of the Hong Kong Stock Exchange Listing Rules, dispose of
any of our shares in respect of which it is shown by this prospectus to
be the beneficial owner, or the CLIC shares;

(ii) in the Second Six-month Period, it will not, without our prior written
consent and that of the Hong Kong Stock Exchange, dispose of or permit
the registered holder to dispose of any of the CLIC shares if,
immediately following such disposal, it would cease to be our
controlling shareholder (as defined in the Hong Kong Stock Exchange
Listing Rules); and

231

(iii) it will on any disposal of any of the CLIC shares during the Second
Six-month Period, take all reasonable steps to ensure that any such
disposal will not create a disorderly or false market.

The selling shareholder has undertaken to us and the Hong Kong Stock
Exchange that it will, at any time after the date of this prospectus up to and
including the date falling 12 months after the date on which dealings in the H
shares on the Hong Kong Stock Exchange commence immediately inform us of:

(i) any pledges or charges of any of our shares or our other share capital
beneficially owned by it and the number of such shares or other
securities so pledged or charged; and

(ii) any indication received by it, either verbal or written, from any
pledgee or chargee of any of our shares or our other share capital
pledged or charged that such shares or our other share capital will be
disposed of.

We will inform the Hong Kong Stock Exchange as soon as we have been informed
of the above matter (if any) by the selling shareholder and disclose such
matters by way of a press notice which is published in the newspapers as soon
as possible after being so informed by the selling shareholder.

Purchasers of the ADSs or H shares offered by this prospectus may be
required to pay stamp taxes and other charges in accordance with the laws and
practices of the country of purchase in addition to the initial public offering
price set forth on the front cover page of this prospectus.

The underwriters do not expect any account to subscribe for more than 5% of
the global offering.

China International Capital Corporation Limited is not a U.S. registered
broker-dealer and, therefore, intends to effect any offers and sales of ADSs in
the United States only through one or more U.S. registered broker-dealers as
permitted by U.S. securities laws and by NASD regulations.

China International Capital Corporation Limited and Lehman Brothers Asia
Limited have acted as financial advisers to us in connection with the global
offering and will receive US$ million from us in compensation for such
services. China International Capital Corporation Limited is a joint global
coordinator, a U.S. underwriter and an international underwriter, and is an
affiliate of China International Capital Corporation (Hong Kong) Limited, a
Hong Kong underwriter.

Some of the underwriters may have in the past provided, and may in the
future provide, investment banking, underwriting or financial services to us or
our affiliates for which they would have received customary compensation.

In connection with the offering of the ADSs and the H shares, the
underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the ADSs and the H shares. Specifically, the underwriters
may sell more ADSs or H shares than they are obligated to purchase under the
underwriting agreement, creating a covered short position. A short sale is
covered if the short position is no greater than the number of ADSs or H shares
available for purchase by the underwriters under the over-allotment option. The
underwriters can close out a covered short sale by exercising the
over-allotment option or purchasing ADSs or H shares in the open market. In
determining the source of ADSs or H shares to close out a covered short sale,
the underwriters will consider, among other things, the open market price of
ADSs or H shares compared to the price available under the over-allotment
option. As an additional means of facilitating the offering, China Life will
appoint one of the joint global coordinators (the "stabilization manager") who,
acting directly or through one or more agents, may bid for, and purchase, ADSs
or H shares in the open market to stabilize the price of the ADSs or H shares.
The underwriters also may impose a penalty bid, which occurs when a particular
underwriter repays to the other underwriters a portion of the underwriting
discount received by it because the stabilization manager or its agent

232

has repurchased ADSs or H shares sold by or for the account of such underwriter
in stabilizing or short covering transactions. These activities may raise or
maintain the market price of the ADSs or H shares above independent market
levels or prevent or retard a decline in the market price of the ADSs or H
shares. The underwriters are not under any obligation to engage in these
activities. Any such activities may be discontinued at any time, and must be
brought to an end after a limited period.

We and the selling shareholder have agreed to indemnify the several
underwriters against certain liabilities, including liabilities under the
Securities Act, or contribute to payments which the underwriters may be
required to make in respect of any of these liabilities.

A prospectus in electronic format may be made available on the websites
maintained by one or more underwriters. The underwriters may agree to allocate
a number of shares to underwriters for sale to their online brokerage account
holders. Internet distributions will be allocated by the lead managers to
underwriters that may make Internet distributions on the same basis as other
allocations.

It is expected that delivery of our ADSs and H shares will be made against
payment for such ADSs and H shares on or about the date specified on the cover
page of this prospectus. In compliance with Rule 15c6-1 under the Exchange Act,
trades in the secondary market are generally required to settle in three
business days, unless the parties to any such trade expressly agree otherwise.
Accordingly, purchasers who wish to trade the ADSs or H shares on the date of
this prospectus should specify an alternate settlement cycle at the time of any
such trade to prevent a failed settlement and should consult their own advisers.

Selling Restrictions

No action has been taken in any jurisdiction (except in the United States,
Hong Kong and Japan) that would permit a public offering of the ADSs or H
shares, or the possession, circulation or distribution of this prospectus or
any other material relating to us, the selling shareholders or the ADSs or H
shares in any jurisdiction where action for that purpose is required.
Accordingly, neither the ADSs nor the H shares may be offered or sold, directly
or indirectly, and neither this prospectus nor any other offering material or
advertisements in connection with the ADSs or H shares may be distributed or
published, in or from any country or jurisdiction except in compliance with any
applicable rules and regulations of any such country or jurisdiction.

To provide for the coordination of the global offering, the U.S.
underwriters, the international underwriters and the Hong Kong underwriters
have entered into the intersyndicate agreement.

Under the intersyndicate agreement, (i) each U.S. underwriter has
represented and agreed that, with certain exceptions, (a) it is not purchasing
any ADSs or H shares for the account of anyone other than a United States or
Canadian Person (as defined below); and (b) it has not offered or sold, and
will not offer or sell, directly or indirectly, any ADSs or H shares or
distribute any prospectus relating to the ADSs or H shares outside the United
States or Canada or to anyone other than a United States or Canadian Person;
(ii) each international underwriter has represented and agreed that, with
certain exceptions, (a) it is not purchasing any ADSs or H shares for the
account of any United States or Canadian Person; and (b) it has not offered or
sold, and will not offer or sell, directly or indirectly, any such ADSs or H
shares or distribute any prospectus relating to the ADSs or H shares in the
United States or Canada or to any United States Person or Canadian Person.

With respect to any underwriter that is simultaneously a U.S. underwriter
and an international underwriter, the foregoing representations and agreements
(i) made by it in its capacity as a U.S. underwriter apply only to it in its
capacity as a U.S. underwriter, and (ii) made by it in its capacity as an
international underwriter apply only to it in its capacity as an international
underwriter.

The foregoing restrictions do not apply to stabilization transactions or to
certain other transactions specified in the intersyndicate agreement.

233

Under the intersyndicate agreement, each Hong Kong underwriter has
represented and agreed that, with certain exceptions, it has not offered or
sold, and will not offer or sell, directly or indirectly, any H shares or
distribute any prospectus relating to any of the H shares in the United States
or Canada or to any United States Person or Canadian Person or to any person
who it believes intends to reoffer, resell or deliver any of the H shares in
the United States or Canada or to any United States Person or Canadian Person.

"United States Person or Canadian Person" means any national or resident of
the United States or Canada, or any corporation, person, profit-sharing or
other trust or other entity organized under the laws of the United States or
Canada or of any political subdivision thereof (other than a branch located
outside the United States and Canada of any United States Person or Canadian
Person), and includes any United States or Canadian branch of a person who is
otherwise not a United States or Canadian Person.

Canada. Under the intersyndicate agreement, each U.S. underwriter has
represented and agreed that (i) it has not offered or sold, and will not offer
or sell, any ADSs or H shares, directly or indirectly, in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and has
represented that any offer or sale of ADSs or H shares in Canada will be made
only (a) in accordance with an exemption from the requirement to file a
prospectus in the province or territory of Canada in which such offer or sale
is made, and (b) by a dealer duly registered under the applicable securities
laws of that province or territory or in circumstances where an exemption from
the applicable registered dealer requirements is available; and (ii) it will
send to any dealer who purchases from it any of the ADSs or H shares a notice
stating in substance that, by purchasing such ADSs or H shares, such dealer
represents and agrees that it has not offered or sold, and will not offer or
sell, directly or indirectly, any of such ADSs or H shares in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and that
any offer or sale of ADSs or H shares in Canada will be made only (a) in
accordance with an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer or sale is made, and (b) by
a dealer duly registered under the applicable securities laws of that province
or territory or in circumstances where an exemption from the applicable
registered dealer requirements is available, and that such dealer will deliver
to any other dealer to whom it sells any of such ADSs or H shares a notice
containing substantially the same statement as is contained in this sentence.

United Kingdom. Under the intersyndicate agreement, each international
underwriter has represented and agreed that (i) it has not offered or sold and,
prior to the expiry of a period of six months from the completion of the global
offering, will not offer or sell any ADSs or H shares to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses, or otherwise in circumstances which do not
constitute an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services and Markets Act
2000 (the "FSMA") with respect to anything done by it in relation to any ADSs
or H shares in, from or otherwise involving the United Kingdom; and (iii) it
only has communicated or caused to be communicated and only will communicate or
cause to be communicated any invitation or inducement to engage in investment
activity (within the meaning of section 21 of the FSMA) received by it in
connection with the issue or sale of any ADSs or H shares in circumstances in
which section 21(1) of the FSMA does not apply to us.

France. Under the intersyndicate agreement, each international underwriter
has represented and agreed that (i) neither this prospectus nor any offering
material relating to ADSs or H shares has been or will be submitted to the
"Commission des Operations de Bourse" for approval ("Visa") in France; and (ii)
it has not offered or sold and will not offer or sell any ADSs or H shares or
distribute or cause to be distributed any copies of this prospectus or any
offering material relating to the ADSs or H shares, directly or indirectly, in
France, except to qualified investors ("investisseurs qualifies") and/or a
restricted group of investors ("cercle restreint d'investisseurs"), in each
case acting for their account, all as defined in, and in accordance with,
Article L. 411-1 and L. 411-2 of the Monetary and Financial Code and "Decret"
no. 98-880 dated October 1, 1998.

234

Germany. Under the intersyndicate agreement, each international
underwriter has represented and agreed that (i) this prospectus is not a
Securities Selling Prospectus (Verkaufsprospekt) within the meaning of the
German Securities Prospectus Act (Verkaufsprospektgesetz) of September 9, 1998,
as amended, and has not been filed with and approved by the German Federal
Supervisory Authority (Bundesanstalt fur Finanzdienstleistungsaufsicht) or any
other German governmental authority; and (ii) it has not offered or sold and
will not offer or sell any ADSs or H shares or distribute copies of this
prospectus or any document relating to the ADSs, directly or indirectly, in
Germany except to persons falling within the scope of paragraph 2 numbers 1, 2
and 3 of the German Securities Prospectus Act and by doing so has not taken,
and will not take, any steps which would constitute a public offering of the
ADSs or H shares in Germany.

Italy. The offering of the ADSs or H shares has not been registered with
the Commissione Nazionale per le Societa e la Borsa or "CONSOB", in accordance
with Italian securities legislation. Accordingly, under the intersyndicate
agreement, each international underwriter has represented and agreed that the
ADSs or H shares may not be offered, sold or delivered, and copies of this
prospectus or any other document relating to the ADSs or H shares may not be
distributed in Italy except to Professional Investors, as defined in Art. 31.2
of CONSOB Regulation no. 11522 of 1st July, 1998, as amended, pursuant to Art.
30.2 and Art. 100 of Legislative Decree no. 58 of 24th February, 1998 (or the
Finance Law) or in any other circumstance where an express exemption to comply
with the solicitation restrictions provided by the Finance Law or CONSOB
Regulation no. 11971 of 14th May, 1999, as amended (or the Issuers Regulation)
applies, including those provided for under Art. 100 of the Finance Law and
Art. 33 of the Issuers Regulation, and provided, however, that any such offer,
sale, or delivery of the ADSs or H shares or distribution of copies of this
prospectus or any other document relating to the ADSs or H shares in Italy must
(i) be made in accordance with all applicable Italian laws and regulations,
(ii) be made in compliance with Article 129 of Legislative Decree no. 385 of 1
September 1993, as amended (the "Banking Law Consolidated Act") and the
implementing guidelines of the Bank of Italy (Istruzioni di Vigilanza per le
banche) pursuant to which the issue, trading or placement of securities in the
Republic of Italy is subject to prior notification to the Bank of Italy, unless
an exemption applies depending, inter alia, on the amount of the issue and the
characteristics of the securities, (iii) be conducted in accordance with any
relevant limitations or procedural requirements the Bank of Italy or CONSOB may
impose upon the offer or sale of the securities, and (iv) be made only by (a)
banks, investment firms or financial companies enrolled in the special register
provided for in Article 107 of the Banking Law Consolidated Act, to the extent
duly authorized to engage in the placement and/or underwriting of financial
instruments in Italy in accordance with the Financial Laws Consolidated Act and
the relevant implementing regulations; or by (b) foreign banks or financial
institutions (the controlling shareholding of which is owned by one or more
banks located in the same EU Member State) authorized to place and distribute
securities in the Republic of Italy pursuant to Articles 15, 16 and 18 of the
Banking Law Consolidated Act, in each case acting in compliance with every
applicable law and regulation.

The Netherlands. Under the intersyndicate agreement, each international
underwriter has represented and agreed that it has not offered, distributed,
sold, transferred or delivered, and will not offer, distribute, sell, transfer
or deliver, any ADSs or H shares, directly or indirectly, in the Netherlands,
as part of their initial distribution or at any time thereafter, to any person
other than individuals who or legal entities which trade or invest in
securities in the conduct of their profession or business within the meaning of
article 2 of the Exemption Regulation issued under the Securities Transactions
Supervision Act 1995 ("Vrijstellingsregeling Wet toezicht effectenverkeer
1995"), which includes banks, brokers, pension funds, insurance companies,
securities institutions, investment institutions and other institutional
investors, including, among others, treasuries of large enterprises, who or
which regularly trade or invest in securities in a professional capacity.

Denmark. This prospectus has not been filed with or approved by the Danish
Securities Council or any other regulatory authority in the Kingdom of Denmark.
Accordingly, under the intersyndicate agreement, each international underwriter
has represented and agreed that the securities have not been offered or sold
and may not be offered, sold or delivered directly or indirectly in Denmark,
unless in compliance with Chapter 12 of the Danish Act on Trading in Securities
and the Danish Executive Order No. 166 of 13 March 2003 on the First Public
Offer of Certain Securities issued pursuant hereto as amended from time to time.

235

Norway. This prospectus has not been approved by or registered with the
Oslo Stock Exchange under Chapter 5 of the Norwegian Securities Trading Act
1997. Accordingly, under the intersyndicate agreement, each international
underwriter has represented and agreed that it has not offered or sold, and
will not offer or sell, any ADSs or H shares to any persons in Norway in any
way that would constitute an offer to the public other than to persons who
invest in securities as part of their professional activity and who are
registered with the Oslo Stock Exchange in this capacity, or otherwise only in
circumstances where an exemption from the duty to publish a prospectus under
the Norwegian Securities Trading Act 1997 shall be applicable.

Sweden. This prospectus has not been approved by or registered with the
Swedish Financial Supervisory Authority (Finansinspektionen). Accordingly,
under the intersyndicate agreement, each international underwriter has
represented and agreed that it has not offered or sold, and will not offer or
sell, any ADSs or H shares to persons in Sweden, except to a "closed circle" of
not more than 200 pre-selected, non-substitutable investors, under the Swedish
Financial Instruments Trading Act ("Lag (1991:980) om handel med finansiella
instrument").

Belgium. Neither this prospectus nor any offering material relating to the
ADSs or H shares has been or will be submitted to the "Commission Bancaire et
Financiere/Commissie voor het Bank- en Financiewezen" for approval. Therefore,
this prospectus will not constitute a prospectus under Belgium law.
Accordingly, under the intersyndicate agreement, each international underwriter
has represented and agreed that neither this prospectus nor any offering
material relating to the ADSs or H shares may be distributed or caused to be
distributed, directly or indirectly, to the public in Belgium, except to:

. "qualified investors", as defined in article 3, 2(degrees) of the Royal
Decree of 7 July 1999 on the public character of financial transactions
and acting for their own account, and

. a restricted group of potential investors (without the intervention of
any intermediaries other than those permitted under Belgian law), defined
as a group of less than 51 persons, or, without restrictions, if the
consideration to be paid by each investor amounts to at least Euro
250,000.

Ireland. Under the intersyndicate agreement, each international
underwriter has represented and agreed that (i) otherwise than in circumstances
which are not deemed to be an offer to the public or any section of the public
by virtue of the provisions of the Irish Companies Acts, 1963 to 2001, it has
not offered or sold, and will not offer or sell, in Ireland, by means of any
document, any ADSs or H shares, unless such offer or sale has been or is made
to persons whose ordinary business it is to buy or sell shares or debentures,
whether as principal or agent, and it has not issued, and will not issue, in
Ireland any form of application for ADSs or H shares; and (ii) it has not made
and will not make any offer of ADSs or H shares to the public in Ireland to
which the European Communities (Transferable Securities and Stock Exchange)
Regulations, 1992 of Ireland would apply, except in accordance with the
provisions of those regulations; and (iii) it has complied, and will comply,
with all applicable provisions of the Investment Intermediaries Act 1995 of
Ireland, with respect to anything done by it in relation to the offer, sale or
delivery of the ADSs or H shares in or involving Ireland.

Switzerland. Under the intersyndicate agreement, each international
underwriter has represented and agreed that (i) it has not offered or sold, and
will not offer or sell, the ADSs and H shares to any investors in Switzerland
other than on a non-public basis; (ii) this prospectus does not constitute a
prospectus within the meaning of Article 652a and Art. 1156 of the Swiss Code
of Obligations (Schweizerisches Obligationenrecht); and (iii) none of this
offering, the ADSs and H shares has been or will be approved by any Swiss
regulatory authority.

Luxembourg. Under the intersyndicate agreement, each international
underwriter has represented and agreed that the ADS or H shares are not being
offered to the public in the Grand Duchy of Luxembourg and each of the
international underwriters represents, warrants and agrees that it will not
offer the ADS or H shares or cause the offering of the ADS or H shares or
contribute to the offering of the ADS or H shares to the public in

236

Luxembourg, unless all the relevant legal and regulatory requirements have been
complied with. In particular, this offer has not been and may not be announced
to the public in Luxembourg and offering material may not be made available to
the public in Luxembourg.

Australia. This prospectus is not a disclosure document under Chapter 6D of
the Corporations Act 2001 (Cth) (the "Australian Corporations Act"), has not
been lodged with the Australian Securities and Investments Commission and does
not purport to include the information required of a disclosure document under
Chapter 6D of the Australian Corporations Act. Accordingly, under the
intersyndicate agreement, each international underwriter has represented and
agreed that (i) the offer of ADSs and H shares under this prospectus is only
made to persons to whom it is lawful to offer ADSs and H shares without
disclosure under Chapter 6D of the Australian Corporations Act under one or
more exemptions set out in section 708 of the Australian Corporations Act, (ii)
this prospectus is made available in Australia to only those persons as set
forth in clause (i) above and (iii) such international underwriter must send
the offeree a notice stating in substance that by accepting this offer, the
offeree represents that the offeree is such a person as set forth in clause (i)
above and unless permitted under the Australian Corporations Act agrees not to
sell or offer for sale within Australia any ADS or H share sold to the offeree
within 12 months after their transfer to the offeree under this prospectus.

New Zealand. This prospectus has not been prepared or registered in
accordance with the Securities Act 1978 of New Zealand. Accordingly, under the
intersyndicate agreement, each international underwriter has represented and
agreed that it (i) has not offered or sold, and will not offer or sell,
directly or indirectly, any ADSs or H shares and (ii) has not distributed and
will not distribute, directly or indirectly, any offer materials or
advertisements in relation to any offer of ADSs or H shares, in each case in
New Zealand other than (a) to persons whose principal business is the
investment of money or who, in the course of and for the purpose of their
business, habitually invest money or (b) in other circumstances where there is
no contravention of the Securities Act 1978 of New Zealand (or any statutory
modification or re-enactment, or statutory substitution for, the securities
legislation of New Zealand)."

Hong Kong. Under the intersyndicate agreement, each international
underwriter has represented and agreed that (i) it has not offered or sold, and
will not offer or sell, in Hong Kong, by means of any document, any ADSs or H
shares other than to persons whose ordinary business is to buy or sell shares
or debentures, whether as principal or agent, to professional investors within
the meaning of the Securities and Futures Ordinance (CAP571) of Hong Kong or
otherwise in circumstances which do not constitute an offer to the public
within the meaning of the Companies Ordinance (CAP32) of Hong Kong; and (ii)
except as permitted under the securities laws of Hong Kong, it has not issued,
and will not issue, in Hong Kong any document, invitation or advertisement
relating to the ADSs or H shares other than with respect to ADSs or H shares
which are intended to be disposed of to persons outside Hong Kong or only to
persons whose business involves the acquisition, disposal or holding of
securities, whether as principal or agent.

Japan. It is expected that a public offering without a listing of the H
shares will be made in Japan. Under the intersyndicate agreement, each
international underwriter has represented and agreed that (i) it has not
offered or sold, and will not offer or sell, directly or indirectly, in Japan
or to or for the account of any resident of Japan, any of the H shares acquired
in connection with the distribution contemplated in the intersyndicate
agreement, except in accordance with the terms and conditions of the public
offering without a listing of the H shares in Japan, as stated in the
securities registration statement filed on November 25, 2003, with the Japanese
authority under, or pursuant to any exemption from the registration
requirements of, the Securities and Exchange Law of Japan and otherwise in
compliance with applicable provisions of Japanese law; and (ii) it will send
any dealer who purchases from it any H shares a notice stating in substance
that, by purchasing such H shares, the dealer represents and agrees that it has
not offered or sold, and will not offer or sell, any of the H shares, directly
or indirectly, in Japan or to or for the account of any resident thereof,
except in accordance with the terms and conditions of the public offering
without a listing of the H shares in Japan, as stated in the securities
registration statement filed on November 25, 2003, with the Japanese authority
under, or pursuant to any exemption from the

237

registration requirements of, the Securities and Exchange Law of Japan and
otherwise in compliance with applicable provisions of Japanese law, and that
such dealer will send to any other dealer to whom it sells any of such H shares
a notice containing substantially the same statement as is contained in this
sentence. As used in this paragraph, "resident of Japan" means any person
residing in Japan, including any corporations or other entities organized under
the laws of Japan.

Singapore. This prospectus has not been registered as a prospectus with the
Monetary Authority of Singapore. Accordingly, under the intersyndicate
agreement, each international underwriter has represented and agreed that it
will not offer or sell ADSs or H shares, nor will it make ADSs or H shares the
subject of an invitation for subscription or purchase, nor will it circulate or
distribute this prospectus or any other document or material in connection with
the offer or sale, or invitation for subscription or purchase, of ADSs or H
shares, whether directly or indirectly, to the public or any member of the
public in Singapore other than:

. to an institutional investor or other person specified in Section 274 of
the Securities and Futures Act 2001, Chapter 289, of Singapore (the
Securities and Futures Act),

. to a sophisticated investor, and in accordance with the conditions,
specified in Section 275 of the Securities and Futures Act, or

. otherwise pursuant to, and in accordance with the conditions of, any
other applicable provision of the Securities and Futures Act.

Korea. The ADSs or H shares offered in this Offering have not been
registered under the Korean Securities and Exchange Law, and, under the
intersyndicate agreement, each international underwriter has represented and
agreed that it has not offered or sold, and will not offer or sell, directly or
indirectly, in Korea or to or for the account of any resident of Korea, any of
the ADSs or H shares acquired in connection with the distribution contemplated
by the intersyndicate agreement, except otherwise permitted by applicable
provisions of Korean laws and regulations, including, without limitation, the
Korean Securities and Exchange Law and Foreign Exchange Transaction Law.

United Arab Emirates. Under the intersyndicate agreement, each
international underwriter has represented and agreed that it has not offered or
sold, and will not offer or sell, directly or indirectly, any ADSs or H shares
in the United Arab Emirates, except:

. in compliance with all applicable laws and regulations of the United Arab
Emirates, and

. through persons or corporate entities authorized and licensed to provide
investment advice and/or engage in brokerage activity and/or trade in
respect of foreign securities in the United Arab Emirates.

People's Republic of China. Under the intersyndicate agreement, each
international underwriter has represented and agreed that it has not offered or
sold, and will not offer or sell, directly or indirectly, any ADSs or H shares
in the People's Republic of China (excluding Hong Kong for the purposes of this
paragraph).

Pricing of the Offering

Prior to the global offering, there has been no public market for the ADSs
and the H shares. The initial public offering price of the ADSs will be
determined by negotiations between the joint global coordinators, us and the
selling shareholder. Among the factors considered in such negotiations will be
prevailing market conditions, current market valuations of publicly traded
companies that we and the underwriters believe to be reasonably comparable to
us, an assessment of our results of operations in recent periods, estimates of
our business potential and earnings prospects, the current state of our
development and the current state of our

238

industry and the economy as a whole. The estimated initial public offering
price range set forth on the cover page of this preliminary prospectus is
subject to change as a result of market conditions and other factors.

The address of China International Capital Corporation Limited is 28th
Floor, China World Tower 2, No.1, Jian Guo Men Wai Avenue, Beijing 100004,
China. The address of Citigroup Global Markets Inc. is 388 Greenwich Street,
New York, NY 10013. The address of Citigroup Global Markets Limited is
Citigroup Centre, 33 Canada Square, Canary Wharf, London, England E14 5LB. The
address of Citigroup Global Markets Asia Limited is 20th Floor, Three Exchange
Square, Central, Hong Kong. The address of Credit Suisse First Boston LLC is
Eleven Madison Avenue, New York, NY 10010-3629. The address of Credit Suisse
First Boston (Hong Kong) Limited is 45/F, Two Exchange Square, 8 Connaught
Place, Central, Hong Kong. The address of Deutsche Bank Securities Inc. is 60
Wall Street, New York, NY 10005. The address of Deutsche Bank AG, Hong Kong
Branch is 55th Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong.

In purchasing H shares under the global offering, you are deemed by your
making a purchase, to have represented to us and the underwriters that you are
not an "associate" (as such term is defined in the Hong Kong Stock Exchange
Listing Rules) of any of our directors or existing shareholder or a nominee of
any of the foregoing.

LEGAL MATTERS

The validity of H shares under Chinese law will be passed upon for us and
CLIC by King & Wood, Beijing, PRC, and for the underwriters by Haiwen &
Partners, Beijing, PRC. Certain legal matters of United States and New York law
will be passed upon for us and CLIC by Debevoise & Plimpton, New York, New
York, and for the underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New
York, New York. Certain legal matters of Hong Kong law will be passed upon for
us and CLIC by Allen & Overy, Hong Kong, SAR, and for the underwriters by Baker
& McKenzie, Hong Kong, SAR.

239

EXPERTS

The consolidated financial statements of China Life as of December 31, 2000,
2001 and 2002 and as of June 30, 2002 and 2003 and for each of the three years
ended December 31, 2000, 2001 and 2002 and the six months ended June 30, 2002
and 2003 included in this prospectus have been so included in reliance upon the
report of PricewaterhouseCoopers, independent accountants, given upon the
authority said firm as experts in auditing and accounting.
PricewaterhouseCoopers was retained to audit our consolidated financial
statements in September 2002. The address of the auditors is 22/F, Prince's
Building, Central, Hong Kong.

Tillinghast-Towers Perrin, consulting actuaries, located at Suite 3001
Central Plaza, 18 Harbour Road, Wanchai, Hong Kong, has rendered an opinion,
dated November 20, 2003, to us with respect to our embedded value and value of
one year's sales as of June 30, 2003. See "Embedded Value". A copy of
Tillinghast-Towers Perrin's summary report containing their opinion is included
as Annex A to this prospectus, and has been so included with the consent and in
reliance upon the authority of that firm as experts in the actuarial matters
set out in their summary report.

The valuation report included in this prospectus in Annex B has been
prepared by Sallmanns (Far East) Ltd., located at 15/F, Lucky Centre, 165-171
Wanchai Road, Hong Kong, and has been included with the consent and in reliance
of the valuations given upon the authority of that firm as experts in valuing
property interests in buildings and real property.

240

EXPENSES RELATING TO THIS OFFERING

The following table sets forth the main estimated expenses in connection
with this offering, other than the underwriting discounts and commissions,
which we and the selling shareholder will be required to pay:

U.S. Securities and Exchange Commission registration fee US$283,689
National Association of Securities Dealers filing fee... US$ 30,500
New York Stock Exchange listing fee..................... US$
Hong Kong Stock Exchange listing fee.................... US$
Legal fees and expenses................................. US$
Accounting fees and expenses............................ US$
Printing fees........................................... US$
Financial advisory fees and expenses.................... US$
Other fees and expenses................................. US$
----------
Total................................................... US$
==========

All amounts are estimated, except the U.S. Securities and Exchange
Commission registration fee, the New York Exchange listing fee and the NASD
filing fee. Expenses will be borne in proportion to the number of shares sold
in the offering by us and CLIC respectively.

241

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form F-1 (No.
333-110615) under the Securities Act of 1993, with respect to the H shares, and
a registration statement on Form F-6 (No. 333-110622) under the Securities Act
of 1993 with respect to the ADSs. This prospectus does not contain all of the
information in the registration statements and their exhibits. We have omitted
certain portions of these registration statements from this prospectus in
accordance with the rules and regulations of the SEC.

You may read and copy this information at the SEC's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. You can also request copies of
the documents we file with the SEC, upon payment of a duplicating fee, by
writing to the Public Reference Section of the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the Public Reference
Room. You may also inspect these reports and other information at the offices
of the New York Stock Exchange, 11 Wall Street, New York, New York 10005.

Upon completion of the global offering, we will become subject to the
periodic reporting and other informational requirements of the Securities
Exchange Act of 1934, or the Exchange Act, applicable to a foreign private
issuer. In accordance with these requirements, we will file annual reports on
Form 20-F within six months of our fiscal year end and we will submit other
reports and information under cover of Form 6-K with the SEC. These reports and
other information can be inspected at the public reference room at the SEC. You
can also obtain copies, upon payment of a prescribed fee, of such material from
the public reference room and the regional offices, or by calling or writing to
the SEC. That material may also be accessed electronically by means of the
SEC's home page on the Internet (http://www.sec.gov). As a foreign private
issuer, we are exempt under the Exchange Act from, among other things, the
rules prescribing the furnishing and content of proxy statements and annual
reports to shareholders and requiring reporting of insider purchases and sales.

We will furnish the depositary with our annual reports in English. Our
annual reports will include a review of operations and annual audited financial
statements prepared in conformity with H.K. GAAP, together with a
reconciliation to U.S. GAAP of certain financial information. We will also
furnish the depositary with our semi-annual reports in English, which will
include unaudited interim financial information prepared in conformity with
H.K. GAAP. Once the depositary receives these information and reports, it will
promptly, upon our written request, mail such reports to all holders of record
of ADSs. We also will furnish to the depositary in English all notices of
shareholders' meetings and other reports and communications that are made
generally available to our shareholders. The depositary will make such notices,
reports and communications available to holders of ADSs and, upon our written
request, will mail to all record holders of ADSs the information contained in
any notice of a shareholders' meeting received by the depositary from us.

242

GLOSSARY

The following glossary includes definitions of certain insurance terms. Each
term defined in this glossary is printed in boldface type the first time it
appears in this prospectus.

Annuity..................... A contract that provides for periodic payments to
an annuitant for a specified period of time,
often until the annuitant's death.

Bancassurance............... The distribution of insurance products through
bank branches and joint ventures with banks.

Cash value.................. The amount of cash available to a policyholder on
the surrender of or withdrawal from a life
insurance policy or annuity contract.

Cede, ceded or ceding....... The reinsurance of all or a portion of an
insurer's risk with another insurer.

Deposits.................... Gross additions to policyholder contract deposits
for a specified period collected from
investment-type insurance contracts. Deposits are
not accounted for as revenue under H.K. GAAP or
U.S. GAAP.

Endowment insurance......... Insurance policies which provide to the insured
various guaranteed benefits if the insured
survives specified maturity dates or periods
stated in the policy, and provide to a
beneficiary designated by the insured guaranteed
benefits upon the death of the insured within the
coverage period, in return for the periodic
payment of premiums.

First-year premiums......... The amount of premiums recognized in a specified
year in respect of insurance policies sold during
that year, excluding premiums in respect of
policies that lapse in their first year.

Investment-linked products.. Insurance policies which insure the policyholder
against one or more separate risks and at the
same time give the policyholder an interest in
one or more separate investment accounts.

In force.................... A policy or contract reflected on our records
that has not expired or been terminated as of a
given date.

Lapse....................... An insurance policy for which the policyholder
has not paid the premiums as required under the
policy.

Morbidity................... Incidence rates and duration of disability used
in pricing and computing liabilities for
disability insurance. Morbidity varies by such
parameters as age, gender and duration since
disability.

Mortality................... Rates of death, varying by such parameters as
age, gender and health, used in pricing and
computing liabilities for future policyholder
benefits for life and annuity products which
contain significant mortality risk.

G-1

Participating policy or Policies or annuity contracts under which the
annuity................... owner is eligible to share in a portion of the
distributable earnings from participating
products of the insurer through policyholder
dividends, whether or not such dividends are
currently payable.

Persistency................. The percentage of insurance policies remaining in
force from year to year, as measured by premiums.

Policy fee.................. A small annual charge (sometimes a one-time
charge) to the policyholder, in addition to the
premium, to cover the costs of policy
administration (premium collection and tax
payment).

Premiums.................... Payments and consideration received in respect of
insurance policies issued or reinsured by an
insurer. Under H.K. GAAP and U.S. GAAP, premiums
on investment-type contracts are not accounted
for as revenues.

Reinstate................... The reinstatement of a life insurance policy that
has lapsed, through the payment by the
policyholder of unpaid premiums and interests.

Reinsurance................. The acceptance by one or more insurers of a
portion of risk underwritten by another insurer
that has directly written the coverage in return
for a portion of the premium related to a policy
or annuity contract. The legal rights of the
insured generally are not affected by the
reinsurance transaction, and the insurer issuing
the insurance contract remains liable to the
insured for payment of policy benefits.

Rider....................... An insurance policy supplementary to an existing
main insurance contract entered into between the
policyholder and the insurer. A rider is not an
independent insurance contract.

Separate accounts........... Investment accounts maintained by an insurer to
which funds have been allocated for certain
policies under provisions of the PRC insurance
laws. The investments in each separate account
are maintained separately from those in other
separate accounts and an insurer's general
account and generally are not subject to the
general liabilities of the insurer. The
investment results of the separate account assets
generally pass through to the separate account
policyholders and contractholders, less
management fees, so that an insurer bears limited
or no investment risk on such assets.

Solvency.................... The ability of an insurance company to satisfy
its policyholder benefits and claims obligations.
As required by the PRC insurance law, insurance
companies must meet minimum solvency requirements.

Statutory reserves.......... Monetary amounts established by the PRC insurance
law that an insurer must have available to
provide for future policyholder benefits and
obligations.

Supplementary products...... Insurance products that are additional to the
insurance products originally offered and which
constitute separate, independent insurance
products.

G-2

Surrender................... The act by a policyholder to terminate the policy
prior to the expiration of the policy.

Term life product........... Life insurance products which provide a
guaranteed benefit upon the death of the insured
within a specified time period.

Underwriting................ The process of examining, accepting or rejecting
insurance risks, and classifying those accepted,
in order to charge an appropriate premium for
each accepted risk.

Universal life products..... Life insurance products in which premiums, less
expense charges, are credited to a policy account
from which periodic charges for life insurance
are deducted and to which interest and investment
income are credited. Typically, the policyholder
can vary the amount and timing of premium
payments and change the amount of insurance
coverage.

Variable life products...... Life insurance products for which the reserves
and/or benefits may vary in amount with the
market value of a specified group of assets held
in a segregated fund.

Whole life products......... Life insurance products which provide a
guaranteed benefit, predetermined by the
contract, upon the death of the insured, in
return for the periodic payment of a fixed
premium over a predetermined period.

G-3

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Historical Consolidated Financial Statements
Report of Independent Auditors...................................................................... F-2
Consolidated Profit and Loss Accounts for the years ended December 31, 2000, 2001 and 2002 and the
six-month periods ended June 30, 2002 and 2003.................................................... F-3
Consolidated Balance Sheets as of December 31, 2000, 2001 and 2002 and June 30, 2002 and 2003....... F-4
Consolidated Cash Flow Statements for the years ended December 31, 2000, 2001, and 2002 and the six-
month periods ended June 30, 2002 and 2003........................................................ F-6
Consolidated Statements of Changes in Owners' Equity for the years ended December 31, 2000, 2001 and
2002 and the six-month periods ended June 30, 2002 and 2003....................................... F-8
Notes to the Consolidated Financial Statements...................................................... F-10

F-1

Report of Independent Auditors

To the Board of Directors and Owner of
China Life Insurance Company Limited and Subsidiaries:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated profit and loss accounts, cash flow statements, and statements of
changes in owners' equity present fairly, in all material respects, the
financial position of China Life Insurance Company Limited and its subsidiaries
(collectively referred to as the "Group") at December 31, 2002, 2001, 2000,
June 30, 2003 and 2002 and the results of their operations and their cash flows
for each of the years in the three year periods ended December 31, 2002, 2001,
2000 and the six months ended June 30, 2003 and 2002 in conformity with
generally accepted accounting principles in Hong Kong. These financial
statements are the responsibility of the Group's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America and Hong Kong, which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

Generally accepted accounting principles in Hong Kong vary in certain
significant respects from accounting principles generally accepted in the
United States of America ("U.S. GAAP"). The application of the latter would
have affected the determination of consolidated net income for each of the
years in the three year periods ended December 31, 2002, 2001, 2000 and
six-month periods ended June 30, 2003 and 2002 and the determination of
consolidated owners' equity at December 31, 2002 and 2001 and June 30, 2003, to
the extent summarized in Note 26 to the consolidated financial statements,
except that property, plant and equipment on hand as of January 1, 1997 has
been valued on the basis of a valuation performed as of January 1, 2000 rather
than at historical cost less depreciation, which is required by U.S. GAAP. As
explained in Note 3(m) to the consolidated financial statements, the Group
acquired these assets from a predecessor company in 1997 and is unable to
obtain historical cost information in respect of such assets from this
predecessor.

PricewaterhouseCoopers, Hong Kong
October 8, 2003

F-2

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED DECEMBER 31, 2002
AND SIX-MONTH PERIODS ENDED JUNE 30, 2002 AND 2003

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED PROFIT AND LOSS ACCOUNTS

For the year ended For the six months ended
December 31, June 30,
------------------------- -----------------------
Note 2000 2001 2002 2002 2003
---- ------- ------- ------- ------- -------
(RMB in millions)

REVENUES
Gross written premiums and policy fees............. 44,714 56,869 68,769 34,164 36,091
Less: premiums ceded to reinsurers................. (1,501) (1,655) (1,869) (765) (690)
------- ------- ------- ------- -------
Net written premiums and policy fees............... 43,213 55,214 66,900 33,399 35,401
Net change in unearned premium reserves............ (314) (248) (476) 306 17
------- ------- ------- ------- -------
Net premiums earned and policy fees................ 42,899 54,966 66,424 33,705 35,418
------- ------- ------- ------- -------
Net investment income.............................. 5.1 4,374 6,276 8,347 3,991 5,070
Net realized gains/(losses) on investments......... 5.1 (23) (6) 266 684 691
Net unrealized gains/(losses) on investments....... 5.1 298 (322) (1,067) (75) 280
Other income....................................... 827 293 338 121 122
------- ------- ------- ------- -------
Total revenues..................................... 48,375 61,207 74,308 38,426 41,581
------- ------- ------- ------- -------

BENEFITS, CLAIMS AND EXPENSES
Insurance benefits and claims
Life insurance death and other benefits.......... 13 (8,467) (10,099) (7,010) (3,869) (4,580)
Accident and health claims and claim adjustment
expenses........................................ 13 (2,767) (3,829) (4,053) (1,959) (2,455)
Increase in future life policyholder benefits.... 13 (27,738) (33,121) (45,374) (22,793) (23,192)
Policyholder dividends and participation in
profits........................................... (7) (177) (641) (310) (862)
Amortization of deferred policy acquisition costs.. 7 (1,745) (3,024) (3,832) (2,102) (2,648)
Underwriting and policy acquisition costs.......... (3,073) (2,176) (1,661) (822) (708)
Administrative expenses............................ (4,318) (5,100) (6,162) (2,916) (3,005)
Other operating expenses........................... (2,602) (1,110) (634) (316) (704)
Interest expense on bank borrowings................ (29) (5) (7) (4) (5)
Interest credited to policyholder contract deposits (4,505) (5,799) (7,095) (3,209) (4,109)
Statutory insurance levy........................... (59) (64) (73) (30) (38)
------- ------- ------- ------- -------
Total benefits, claims and expenses................ (55,310) (64,504) (76,542) (38,330) (42,306)
------- ------- ------- ------- -------
Profit/(loss) before income tax expense and
minority interests................................ 20 (6,935) (3,297) (2,234) 96 (725)
Income tax expense................................. 21 (14) (4) (14) (3) (8)
------- ------- ------- ------- -------
Profit/(loss) before minority interest............. (6,949) (3,301) (2,248) 93 (733)
Minority interests................................. (41) 6 (2) (2) 19
------- ------- ------- ------- -------
Net profit/(loss).................................. (6,990) (3,295) (2,250) 91 (714)
======= ======= ======= ======= =======
Basic and diluted earnings/(loss) per share........ 22 (0.35) (0.16) (0.11) 0.00 (0.04)
------- ------- ------- ------- -------

The accompanying notes form an integral part of these consolidated financial
statements.

F-3

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of December 31, As of June 30,
----------------------- ---------------
Note 2000 2001 2002 2002 2003
---- ------- ------- ------- ------- -------
(RMB in millions)

ASSETS

Investments
Fixed maturity securities 37,684 53,284 76,337 61,449 82,017
Held-to-maturity securities, at amortized cost... 5.4 1,598 1,388 1,220 1,243 827
Non-trading securities, at estimated fair value.. 5.2 36,086 51,896 75,117 60,206 81,190

Equity securities 5.3 6,794 7,698 12,171 7,084 14,797
Non-trading securities, at estimated fair value.. 5.2 1,119 2,002 8,101 3,017 9,025
Trading securities, at estimated fair value...... 5,675 5,696 4,070 4,067 5,772
Term deposits.................................... 5.6 39,653 76,083 123,675 97,798 142,043
Statutory deposits--restricted................... 5.7 40 990 991 991 992
Investments in associated companies.............. 5.5 2,031 2,036 2,035 2,027 1,993
Policy loans..................................... 109 107 106 105 136
Securities purchased under agreements to resell.. 5.8 19,840 30,480 36,388 46,247 70,061
Other............................................ 572 336 231 299 209
Cash and cash equivalents........................ 23,275 17,855 14,529 17,575 23,592
------- ------- ------- ------- -------
129,998 188,869 266,463 233,575 335,840
------- ------- ------- ------- -------

Other assets
Accrued investment income........................ 10 3,033 3,527 4,198 4,003 4,277
Premiums receivable.............................. 11 1,388 1,844 1,757 2,878 3,282
Reinsurance assets............................... 8 970 1,100 1,224 1,091 971
Deferred policy acquisition costs............... 7 5,996 10,893 18,084 14,185 21,282
Property, plant and equipment, net of accumulated
depreciation................................... 9 15,617 18,347 18,457 18,237 18,610
Other............................................ 12 5,375 3,528 3,587 4,176 3,676
------- ------- ------- ------- -------
32,379 39,239 47,307 44,570 52,098
------- ------- ------- ------- -------
Total assets...................................... 162,377 228,108 313,770 278,145 387,938
======= ======= ======= ======= =======

The accompanying notes form an integral part of these consolidated financial
statements.

F-4

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS--(Continued)

As of December 31, As of June 30,
---------------------------- ------------------
Notes 2000 2001 2002 2002 2003
----- -------- -------- -------- -------- --------
(RMB in millions)

LIABILITIES AND EQUITY

Liabilities
Future life policyholder benefits....... 226,868 259,989 305,363 282,782 328,555
Policyholder contract deposits and other
funds................................. 89,373 105,609 156,273 139,575 210,975
Unearned premium reserves............... 4,131 4,441 5,036 4,058 4,719
Reserves for claims and claim adjustment
expenses.............................. 14 716 867 879 1,010 910
Annuity and other insurance balances
payable............................... 4,029 6,362 8,057 8,257 7,987
Premiums received in advance............ 735 1,481 1,767 1,231 1,860
Policyholder deposits................... 694 629 592 609 570
Policyholder dividends payable.......... 2 177 688 390 1,599
Securities sold under agreements to
repurchase............................ 15 90 14,608 3,602 4,501 --
Bank borrowings......................... 16 921 379 313 325 311
Provision............................... 17 73 330 445 388 460
Other liabilities....................... 19 3,489 4,206 4,716 4,967 4,800
Statutory insurance fund................ 18 1,132 1,215 1,337 1,269 1,399
-------- -------- -------- -------- --------
Total liabilities........................ 332,253 400,293 489,068 449,362 564,145
-------- -------- -------- -------- --------
Contingencies and commitments............ 24,25
Minority interests....................... 169 163 165 164 146
Owners' equity........................... (170,045) (172,348) (175,463) (171,381) (176,353)
-------- -------- -------- -------- --------
Total liabilities and equity............. 162,377 228,108 313,770 278,145 387,938
======== ======== ======== ======== ========

The accompanying notes form an integral part of these consolidated financial
statements.

F-5

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENTS

For the year ended For the six months
December 31, ended June 30,
------------------------- ----------------
2000 2001 2002 2002 2003
------- ------- ------- ------- -------
(RMB in millions)

CASH FLOWS FROM OPERATING ACTIVITIES
Net profit/(loss)................................................... (6,990) (3,295) (2,250) 91 (714)

Adjustments for non-cash items:
Changes in minority interests..................................... 41 (6) 2 1 (19)
Net unrealized gains/(losses) on investments...................... (298) 322 1,067 75 (280)
Amortization of deferred acquisition costs........................ 1,745 3,024 3,832 2,102 2,648
Other impairments................................................. 24 13 7 3 86
Profit/(loss) from investments in associated companies............ 45 32 6 14 (16)
Interest credited to policyholder contract deposits............... 4,505 5,799 7,095 3,209 4,109
Investment contract policy fees................................... (2,623) (2,816) (5,010) (3,139) (3,961)
Depreciation and amortization..................................... 1,092 1,115 1,359 650 746
Revaluation of investment properties.............................. -- -- -- -- 181
Amortization of fixed maturity securities' premiums and discounts. 223 128 129 64 88
Gains on disposals of fixed assets................................ 1,475 557 91 32 36

Changes in operational assets and liabilities:
Deferred policy acquisition costs................................. (5,574) (7,497) (10,649) (5,499) (5,846)
Reinsurance assets................................................ 21 (69) (5) (66) 253
Accrued investment income......................................... 94 (494) (671) (476) (79)
Receivables and payables.......................................... (1,988) 3,416 3,072 969 (628)
Reserves for claims and claim adjustment expenses................. 122 151 12 143 31
Unearned premium reserves......................................... 314 249 476 (308) (317)
Future life policyholder benefits................................. 27,738 33,121 45,374 22,793 23,192
Statutory insurance fund.......................................... 85 83 122 54 62
------- ------- ------- ------- -------
Net cash inflow from operating activities........................... 20,051 33,833 44,059 20,712 19,572
------- ------- ------- ------- -------

CASH FLOWS FROM INVESTING ACTIVITIES
Sales and maturities:
Fixed maturity securities......................................... 16,444 17,714 9,711 8,831 17,264
Equity securities................................................. 4,047 7,434 5,371 4,969 3,805
Fixed assets...................................................... 25 94 283 196 206

Purchases:
Fixed maturity securities......................................... (18,910) (32,899) (34,161) (16,080) (23,150)
Equity securities................................................. (6,327) (8,660) (10,911) (4,430) (6,151)
Fixed assets...................................................... (2,429) (2,327) (1,796) (765) (1,382)
Term deposits, net.................................................. (8,839) (37,380) (47,593) (21,716) (18,369)
Securities purchased under agreements to resell..................... (15,043) (10,640) (5,908) (15,767) (33,673)
Proceeds from investments in securities sold under agreements to
repurchase, net.................................................... 90 14,518 (11,006) (10,107) (3,602)
Other (mainly policy loans), net.................................... 1,501 182 112 35 (8)
------- ------- ------- ------- -------
Net cash outflow from investing activities.......................... (29,441) (51,964) (95,898) (54,834) (65,060)
------- ------- ------- ------- -------

The accompanying notes form an integral part of these consolidated financial
statements.

F-6

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENTS--(Continued)

For the year ended For the six months
December 31, ended June 30,
------------------------- -----------------
2000 2001 2002 2002 2003
------- ------- ------- ------ ------
(RMB in millions)

CASH FLOWS FROM FINANCING ACTIVITIES
Deposits accepted on investment contracts........... 23,075 27,332 64,574 43,287 61,223
Withdrawals from investment contracts............... (10,173) (14,079) (15,995) (9,391) (6,670)
Repayments of bank borrowings....................... (225) (542) (66) (54) (2)
------- ------- ------- ------ ------
Net cash inflow from financing activities........... 12,677 12,711 48,513 33,842 54,551
======= ======= ======= ====== ======
Net increase/(decrease) in cash and cash equivalents 3,287 (5,420) (3,326) (280) 9,063
------- ------- ------- ------ ------
Cash and cash equivalents
Beginning of year/period............................ 19,988 23,275 17,855 17,855 14,529
End of year/period.................................. 23,275 17,855 14,529 17,575 23,592
======= ======= ======= ====== ======
Supplemental cash flow information:
Income tax paid.................................... 14 4 14 3 8
Interest paid...................................... 29 5 7 4 5

The accompanying notes form an integral part of these consolidated financial
statements.

F-7

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS' EQUITY

Additional Unrealized
Paid-in paid-in Accumulated gains/
capital capital loss (losses) Total
------- ---------- ----------- ---------- --------
(RMB in millions)

As of January 1, 2000............................ 4,600 (876) (167,795) 2,046 (162,025)
Net loss......................................... -- -- (6,990) -- (6,990)
Unrealized losses, net of tax.................... -- -- -- (906) (906)
Profit capitalization............................ -- 802 (802) -- --
Investments transferred to parties under common
control........................................ -- (124) -- -- (124)
----- ---- -------- ----- --------
As of December 31, 2000.......................... 4,600 (198) (175,587) 1,140 (170,045)
----- ---- -------- ----- --------
Net loss......................................... -- -- (3,295) -- (3,295)
Unrealized gains, net of tax..................... -- -- -- 1,048 1,048
Profit capitalization............................ -- 117 (117) -- --
Investments transferred to parties under common
control........................................ -- (56) -- -- (56)
----- ---- -------- ----- --------
As of December 31, 2001.......................... 4,600 (137) (178,999) 2,188 (172,348)
----- ---- -------- ----- --------
Net loss......................................... -- -- (2,250) -- (2,250)
Unrealized losses, net of tax.................... -- -- -- (871) (871)
Profit capitalization............................ -- 244 (244) -- --
Investments transferred from parties under common
control........................................ -- 6 -- -- 6
----- ---- -------- ----- --------
As of December 31, 2002.......................... 4,600 113 (181,493) 1,317 (175,463)
===== ==== ======== ===== ========

The accompanying notes form an integral part of these consolidated financial
statements.

F-8

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS' EQUITY--(Continued)

Additional Unrealized
Paid-in paid-in Accumulated gains/
capital capital loss (losses) Total
------- ---------- ----------- ---------- --------
(RMB in millions)

As of January 1, 2002.......................... 4,600 (137) (178,999) 2,188 (172,348)
Net gain....................................... -- -- 91 -- 91
Unrealized gains, net of tax................... -- -- -- 880 880
Investments transferred to parties under common
control...................................... -- (4) -- -- (4)
----- ---- -------- ----- --------
As of June 30, 2002............................ 4,600 (141) (178,908) 3,068 (171,381)
===== ==== ======== ===== ========
As of January 1, 2003.......................... 4,600 113 (181,493) 1,317 (175,463)
Net loss....................................... -- -- (714) -- (714)
Unrealized losses, net of tax.................. -- -- -- (176) (176)
----- ---- -------- ----- --------
As of June 30, 2003............................ 4,600 113 (182,207) 1,141 (176,353)
===== ==== ======== ===== ========

The accompanying notes form an integral part of these consolidated financial
statements.

F-9

CHINA LIFE INSURANCE COMPANY LTD. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

China Life Insurance Company Limited (the "Company") was established in the
People's Republic of China ("China" or "PRC") on June 30, 2003 as a joint
stock company with limited liability in anticipation of a group
restructuring of China Life Insurance (Group) Company (formerly China Life
Insurance Company (the "Holding Company" or "CLIC")) and its subsidiaries
(the "Restructuring") in preparation for a listing of the Company's shares
on the New York Stock Exchange and the Main Board of the Stock Exchange of
Hong Kong Limited. The initial registered capital of the Company is RMB
20,000 million, consisting of 20,000 million ordinary shares of par value of
RMB 1.00 per share ("Domestic Shares"). The Company and its subsidiaries are
hereafter collectively referred to as the "Group".

CLIC was established in Beijing, China as a state-owned enterprise under the
State Council through the Ministry of Finance of the PRC (the "MOF"). CLIC
is engaged in life insurance business, providing life, annuities, accident
and health insurance products in China.

Pursuant to the Restructuring, CLIC transferred to the Company (1) all
long-term insurance policies (policies having a term of more than one year
from the date of issuance) issued on or after June 10, 1999, having policy
terms approved by or filed with the China Insurance Regulatory Commission
(the "CIRC") on or after June 10, 1999 and either (i) recorded as a
long-term insurance policy as of June 30, 2003 in a database attached to the
restructuring agreement as an annex or (ii) having policy terms for group
supplemental medical insurance (fund type), (2) stand-alone short-term
policies (policies having a term of one year or less from the date of
issuance) issued on or after June 10, 1999 and (3) all riders supplemental
to the policies described in clauses (1) and (2) above. These policies are
referred to as the "transferred policies". All other insurance policies were
retained by CLIC. These policies are referred to as the "non-transferred
policies". The Company issued 20,000 million Domestic Shares in exchange for
various liabilities related to the life insurance business of the
transferred policies and certain assets (collectively the "Transferred
Business"). CLIC retained (i) various liabilities related to the life
insurance business of non-transferred policies and certain assets, (ii)
equity interests in all subsidiaries and associated companies, (iii) all
non-core businesses, and (iv) the ownership of certain assets and
liabilities including certain office buildings, bank balances, investments
in fixed maturity and equity securities, borrowings, claims, contingent and
tax liabilities (collectively, the "Non-transferred Business").

Further pursuant to the Restructuring, on September 30, 2003, CLIC and the
Company signed a binding restructuring agreement that identified all
specific assets and liabilities to be transferred to the Company from CLIC.

2. BASIS OF PREPARATION

The consummation of the Restructuring occurred for accounting purposes on
September 30, 2003, which is the date on which the Company and CLIC signed
the legally binding restructuring agreement that identified all specific
assets and liabilities to be transferred to the Company from CLIC. The
Company's accompanying financial statements are the consolidated financial
statements of CLIC, after giving retroactive effect to the Company's issued
and outstanding shares on loss per share amounts.

Prior to the consummation of the Restructuring, the Transferred Business and
Non-transferred Business have been historically under common management from
a number of significant aspects, such as policy design, distribution, plan
servicing, asset management, accounting and financing. Therefore, the
Company's historical financial statements for each of the years ended
December 31, 2000, 2001 and 2002 and as of and for the six months ended June
30, 2002 and 2003 (the "Relevant Periods") could not reflect the carve-out of

F-10

CHINA LIFE INSURANCE COMPANY LTD. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

the Company's business for such periods due to the described common
management and are required to present the consolidated financial results of
the business of CLIC and its subsidiaries (including both the Transferred
Business and Non-Transferred Business).

Upon the consummation date of the Restructuring, the Non-transferred
business, consisting of an excess of liabilities over assets, retained by
CLIC was derecognized and reflected in the Company's financial statements as
a capital contribution on such date. This presentation is considered
appropriate as CLIC wholly owns the Transferred Business transferred to the
Company before and after the Restructuring.

In 2003, CLIC committed to pay certain of our former employees a pension
supplement through December 31, 2007. The present value of the aggregate
estimated future payments to be made by CLIC, amounting to RMB 180 million,
will be recognized as an expense, and a corresponding capital contribution
to the Company in the 2003 financial statements. Payments made to certain
former employees during the Relevant Periods were expensed as paid.

For purpose of the earnings/loss per share computations, the Company's
issuance of 20,000 million ordinary shares to CLIC is given retroactive
treatment and considered outstanding for all periods presented.

The names of some of the companies referred to in the financial statements
represent management's best efforts at translating the Chinese names of
these companies as no English names have been registered.

3. PRINCIPAL ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these
financial statements, which conform to Statements of Standard Accounting
Practices ("SSAP") issued by the Hong Kong Society of Accountants and
accounting principles generally accepted in Hong Kong (collectively, "H.K.
GAAP"), are as follows:

(a) Consolidation principles

i) Consolidation

The consolidated financial statements include the accounts of CLIC and
its subsidiaries made up to December 31, June 30.

Subsidiaries are those entities in which CLIC, directly or indirectly,
controls more than one half of the voting power; has the power to govern
the financial and operating policies; to appoint or remove the majority
of the members of the board of directors; or to cast majority of votes
at the meetings of the board of directors.

The results of subsidiaries acquired or disposed of during the
year/period are included in the consolidated profit and loss accounts
from the date of acquisition or up to the date of disposal, as
appropriate.

All significant intercompany transactions and balances within the Group
are eliminated on consolidation.

The gain or loss on the disposal of a subsidiary represents the
difference between the proceeds of the sale and the Group's share of its
net assets together with any unamortized goodwill or negative

F-11

CHINA LIFE INSURANCE COMPANY LTD. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

goodwill or goodwill/negative goodwill taken to reserves and which was
not previously charged or recognized in the consolidated profit and loss
accounts and any related accumulated foreign currency translation
reserve.

Minority interests represent the interests of outside shareholders in
the operating results and net assets of subsidiaries.

ii) Associated companies

An associated company is a company, not being a subsidiary or a joint
venture, in which an equity interest is held for the long-term and
significant influence is exercised in its management.

The consolidated profit and loss accounts include the Group's share of
the results of associated companies for the year/period, and the
consolidated balance sheet includes the Group's share of the net assets
of the associated companies and goodwill/negative goodwill (net of
accumulated amortization) on acquisition.

Equity accounting is discontinued when the carrying amount of the
investment in an associated company reaches zero, unless the Group has
incurred obligations or guaranteed obligations in respect of the
associated company.

(b) Revenue recognition

Premiums:

Premiums from traditional life insurance contracts, including participating
contracts and annuity policies with life contingencies, are recognized as
revenue when due from the policyholders. Benefits and expenses are provided
against such revenue to recognize profits over the estimated life of the
policies. Moreover, for single premium and limited pay contracts, premiums
are recorded as income when due with any excess profit deferred and
recognized in income in a constant relationship to the insurance in force
or, for annuities, the amount of expected benefit payments.

Premiums from the sale of accident and health insurance products are
recorded when written and are accreted to earnings on a pro-rata basis over
the term of the related policy coverage. However, for those contracts for
which the period of risk differs significantly from the contract period,
premiums are recognized over the period of risk in proportion to the amount
of insurance protection provided. The unearned premium reserve represents
the portion of the premiums written relating to the unexpired terms of
coverage.

Amounts collected as premiums from investment type contracts are reported as
deposits. Revenue from these contracts consists of policy fees charged
against the deposit amount for the cost of insurance, administration fees
and gains on surrenders during the year/period. Policy benefits and claims
that are charged to expenses include benefit claims incurred in the
year/period in excess of related policyholder contract deposits and interest
credited to policyholder deposits.

Net investment income:

Net investment income is accrued for interest from term deposits, cash and
cash equivalents, fixed maturity securities, securities purchased under
agreements to resell, policy loan and other loans, dividends from equity
securities, rental income from investment property and share of
profits/losses from investment in associates less investment expenses. Net
investment income is recorded on accrual basis.

F-12

CHINA LIFE INSURANCE COMPANY LTD. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The costs of acquiring new business including commissions, underwriting and
policy issue expenses, which vary with and are directly related to the
production of new business, are deferred. Deferred policy acquisition costs
are subject to recoverability testing at the time of policy issue and at the
end of each accounting period. Future investment income is taken into
account in assessing recoverability.

Deferred policy acquisition costs for traditional life insurance and annuity
policies are amortized over the expected life of the contracts as a constant
percentage of expected premiums. Expected premiums are estimated at the date
of policy issue and are consistently applied throughout the life of the
contract unless premium deficiency occurs.

Deferred policy acquisition costs for investment type contracts are
amortized over the expected life of the contracts based on a constant rate
of the present value of estimated gross profits expected to be realized over
the life of the contract. Estimated gross profits include expected amounts
to be assessed for mortality, administration, investment and surrender less
benefit claims in excess of policyholder balances, administrative expenses
and interest credited. Estimated gross profits are revised regularly and the
interest rate used to compute the present value of revised estimates of
expected gross profits is the latest revised rate applied to the remaining
benefit period. Deviations of actual results from estimated experience are
reflected in the profit and loss accounts.

(d) Insurance losses and reserves

Reserve for claims and claim adjustment expenses:

These represent liabilities for claims arising under short duration accident
and health insurance contracts. Claims and claim adjustment expenses are
charged to the profit and loss accounts as incurred. Unpaid claims and claim
adjustment expense reserves represent the accumulation of estimates for
ultimate losses and include provisions for claims incurred but not yet
reported. The reserves represent estimates of future payments of reported
and unreported claims for losses and related expenses with respect to
insured events that have occurred. Reserving is a complex process dealing
with uncertainty, requiring the use of informed estimates and judgments. The
Group does not discount its claims reserves, other than for settled claims
with fixed payment terms. Any changes in estimates are reflected in results
of operations in the period in which estimates are changed.

Future life policyholder benefits, policyholder contract deposits and other
funds:

These represent liabilities for estimated future policyholder benefit
liability for traditional life insurance policies and non-investment-linked
investment contracts.

Future life policyholder benefits for traditional life insurance policies
are calculated using a net level premium valuation method based on actuarial
assumptions as to mortality, persistency, expenses, withdrawal and
investment return, including a margin for adverse deviation. The assumptions
are established at policy issue and remain unchanged except where premium
deficiency occurs.

Future life policyholder benefits include the value of accumulated declared
bonuses or dividends that have been vested to policyholders.

F-13

CHINA LIFE INSURANCE COMPANY LTD. AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Policyholder contract deposits represent the accumulation of premium
received less charges plus declared dividends.

The policyholders' share of unrealized gains or losses in respect of assets
held by the Group, which may be paid to profit participating policyholders
in the future under the policy terms in respect of assets, is included in
liabilities for future life policyholder benefits offsetting the
policyholders' share of the change in unrealized gains and losses during the
year/period.

(e) Reinsurance

The Group cedes 20% (15% since January 1, 2003) of its insurance premiums
and risk from short duration accident and health contracts to China
Reinsurance Company under relevant statutory reinsurance regulations of the
PRC and cedes insurance and premiums risk from other contracts in the normal
course of business in order to limit the potential for losses arising from
longer exposures. Reinsurance does not relieve the originating insurer of
its liability. The Group may assume reinsurance business incidental to their
normal business. Such business is not significant to the Group's operations.

Reinsurance assets include the balances due under reinsurance contracts from
both insurance and reinsurance companies for paid and unpaid claims and
claim adjustment expenses, ceded unearned premiums, ceded future life policy
benefits and funds held under reinsurance treaties. Amounts recoverable from
reinsurers are estimated in a manner consistent with the claim liability
associated with the reinsured policy.

Reinsurance is recorded gross in the consolidated balance sheet unless a
right of offset exists. The Group evaluates the financial strength of
potential reinsurers and continually monitors the financial conditions of
reinsurers.

Reinsurance contracts are contracts under which the Group has assessed to
ensure that underwriting risk, defined as the reasonable possibility of
significant loss, and timing risk, defined as the reasonable possibility of
a significant variation in the timing of cash flows, are transferred by the
ceding company to the reinsurer.

(f) Investments

Held-to-maturity securities

Fixed maturity securities classified as held-to-maturity are those which the
Group has the ability and positive intent to hold to maturity.

Held-to-maturity securities are stated in the consolidated balance sheet at
cost plus/less any discount/premium amortized to date. The discount or
premium is amortized over the period to maturity and included as interest
income/expense in the consolidated profit and loss accounts. Provision is
made when there is a diminution in value other than temporary.

The carrying amounts of individual held-to-maturity securities or holdings
of the same securities are reviewed at the balance sheet date in order to
assess the credit risk and whether the carrying amounts are expected to be
recovered. Provisions are made when carrying amounts are not expected to be
recovered and are recognized in the consolidated profit and loss accounts as
an expense immediately.

F-14

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Non-trading securities

Investments other than trading or held-to-maturity are defined as
non-trading and are stated at fair value at the balance sheet date. Changes
in the fair value of individual securities are credited or debited to the
investment revaluation reserve until the security is sold, or is determined
to be impaired. Upon disposal, the cumulative gain or loss representing the
difference between the net sales proceeds and the carrying amount of the
relevant securities, together with any surplus/deficit transferred from the
investment revaluation reserve, is recognized in the consolidated profit and
loss accounts.

Where there is objective evidence that individual investments are impaired,
the cumulative loss recorded in the revaluation reserve is transferred to
the consolidated profit and loss accounts.

Trading securities

Fixed maturity securities and liquidity securities which the Group buys with
the intention to resell in the near term are classified as trading and are
carried at fair value. At each balance sheet date, the net unrealized gains
or losses arising from the changes in fair value of trading securities are
recognized in the consolidated profit and loss accounts. Profits or losses
on disposal of trading securities, representing the difference between the
net sales proceeds and the carrying amounts, are recognized in the
consolidated profit and loss accounts as they arise.

(g) Investment properties

Investment properties are interests in land and buildings in respect of
which construction work and development have been completed and which are
held for their investment potential, any rental income being negotiated at
arm's length.

Investment properties are valued at intervals of not more than three years
by independent valuers; in each of the intervening years valuations are
undertaken by professionally qualified executives of the Group. The
valuations are on an open market value basis related to individual
properties and separate values are not attributed to land and buildings. The
valuations are incorporated in the annual accounts. Increases in valuation
are credited to the investment properties revaluation reserve. Decreases in
valuation are first set off against increases on earlier valuations on a
portfolio basis and thereafter are debited to the consolidated profit and
loss accounts. Any subsequent increases are credited to the consolidated
profit and loss accounts up to the amount previously debited.

Upon the disposal of an investment property, the relevant portion of the
revaluation reserve realized in respect of previous valuations is released
from the investment properties revaluation reserve to the consolidated
profit and loss accounts.

(h) Policy loans

Policy loans and other investments originated by the Group are carried at
amortized cost, net of provision for impairment in value. Impairment loss on
policy loans is generally measured based on the present value of expected
future cash flows discounted at the instrument's effective interest rate,
except where the value of the asset is collateral dependent, in which case
the fair value of the underlying collateral is used. Interest income on
impaired assets is recognized based on the original effective rate of
interest.

F-15

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(i) Securities purchased under agreements to resell

The Group enters into purchases of securities under agreements to resell
substantially identical securities. These agreements are classified as
secured loans. Securities purchased under agreements to resell are recorded
at their cost plus accrued interest at the balance sheet date, which
approximates fair value. The amounts advanced under these agreements are
reflected as assets in the consolidated balance sheet. The Group does not
take physical possession of securities purchased under agreements to resell.
Sales or transfers of the securities are not permitted by the respective
stock exchanges on which they are listed while the loan is outstanding. In
the event of default by the counterparty to repay the loan, the Group has
the right to the underlying securities held by the stock exchanges which are
the custodians.

(j) Term deposits

Term deposits are bank deposits with fixed maturity dates. They are stated
at amortized cost.

(k) Cash and cash equivalents

Cash amounts represent cash on hand and demand deposits. Cash equivalents
are short-term, highly liquid investments with original maturities of 90
days or less, which approximates fair value.

(l) Securities sold under agreements to repurchase

Securities sold under agreements to repurchase, which are classified as
secured borrowings, generally mature within 180 days from the transaction
date. The Group may be required to provide additional collateral based on
the fair value of the underlying securities. Securities sold under
agreements to repurchase are recorded at their cost plus accrued interest at
the balance sheet date. It is the Group's policy to maintain effective
control over securities sold under agreements to repurchase; accordingly,
such securities continue to be carried on the consolidated balance sheets.

(m) Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated
depreciation and accumulated impairment loss, except for certain assets
acquired prior to January 1, 1997. These assets were acquired as a result of
the prior restructuring in 1996 of People's Insurance Company of China
("PICC"), a state-owned enterprise. The restructuring created CLIC's
predecessor as a specialized life insurance subsidiary of PICC. CLIC is
unable to obtain historical cost information for assets which were
transferred to CLIC in that restructuring. Accordingly, these assets are
stated at deemed costs less accumulated depreciation. Deemed cost is
determined on the basis of a valuation performed as of January 1, 2000.

The initial cost of property, plant and equipment comprises its purchase
price, including import duties and non-refundable purchase taxes, interest
costs on borrowings to finance the acquisition, and any directly
attributable costs of bringing the asset to its working condition and
location for its intended use. The cost of major renovations is included in
the carrying amount of the asset when it is probable that future economic
benefits in excess of the originally assessed standard of performance of the
existing asset will flow to the Group.

F-16

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Depreciation is computed on a straight-line basis to write down the cost of
each asset to their residual value over their estimated useful lives as
follows:

Estimated useful lives
----------------------

Buildings............................... 30 to 35 years
Leasehold improvements.................. Over the remaining
term of the lease
Office equipment, furniture and fixtures 3 to 11 years
Motor vehicles.......................... 4 to 6 years

Property, plant and equipment are reviewed for impairment losses whenever
events or changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognized for the amount by which the
carrying amount of the asset exceeds its recoverable amount, which is the
higher of an asset's net selling price and value in use.

The useful life and depreciation methods are reviewed periodically to ensure
that the method and period of depreciation are consistent with the expected
pattern of economic benefits from items of property, plant and equipment.

Asset under construction represents buildings under construction and are
stated at cost. Costs include construction and acquisition costs. No
provision for depreciation is made on assets under construction until such
time as the relevant assets are completed and ready for use.

(n) Deferred taxation

Deferred income tax is provided in full, using liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.
Currently enacted tax rates are used in the determination of deferred income
tax.

Deferred income tax assets are recognized to the extent that it is probable
that future taxable profit will be available against which the temporary
differences can be utilized.

Deferred income tax is provided on temporary differences arising on
investments in subsidiaries, associated companies and joint ventures, except
where the timing of the reversal of the temporary difference can be
controlled and it is probable that the temporary difference will not reverse
in the foreseeable future.

(o) Employee benefits

Pension obligations

The full-time employees of the Group are covered by various
government-sponsored pension plans under which the employees are entitled to
a monthly pension based on certain formulas. These government agencies are
responsible for the pension liability to these retired employees. The Group
contributes on a monthly basis to these pension plans. Under these plans,
the Group has no legal or constructive obligation for retirement benefits
beyond the contributions made. Contributions to these plans are expensed as
incurred. Voluntary payments made to certain former employees and which were
not made pursuant to a formal or informal plan are expensed as paid.

F-17

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Termination and early retirement benefits

Termination benefits are payable whenever an employee's employment is
terminated before the normal retirement date or whenever an employee accepts
voluntary redundancy in exchange for these benefits. The Group recognizes
termination benefits when it is demonstrably committed to either terminate
the employment of current employees according to a detailed formal plan
without possibility of withdrawal or to provide termination benefits as a
result of an offer made to encourage voluntary redundancy. Benefits falling
due more than 12 months after balance sheet date are discounted to present
value using incremental borrowing rates available to the Group.

Housing benefits

The Group sold staff quarters to its employees, subject to a number of
eligibility requirements, at below market prices. When staff quarters are
identified as being subject to sale under these arrangements, the carrying
value of the staff quarters is written down to the net recoverable amount.
Upon sale, any difference between sales proceeds and the carrying amount of
the staff quarters is charged to the consolidated profit and loss accounts.
The above staff quarters allocation scheme was phased out during the
Relevant Periods in accordance with the policies of the PRC Government. In
1998, the State Council of the PRC issued a circular which stipulated that
the sale of quarters to employees at preferential prices should be
withdrawn. In 2000, the State Council further issued a circular stating that
cash subsidies should be made to the employees following the withdrawal of
allocation of staff quarters. However, the specific timetable and procedures
to implement these policies were to be determined by individual provincial
or municipal government based on the particular situation of the province or
municipality.

Based on the relevant detailed local government regulations promulgated,
certain entities within the Group have adopted cash housing subsidy plans,
whereby, for those eligible employees who have not been allocated with
quarters at all or who have not been allocated with quarters up to the
prescribed standards before the staff quarters allocation scheme were
terminated, the Group will pay them one-off cash housing subsidies based on
their years of service, positions and other criteria. These cash housing
subsidies are charged to the consolidated profit and loss accounts in the
year in which it was determined that the payment of such subsidies is
probable and the amounts can be reasonably estimated. This was completed in
year 2001.

In addition, all full-time employees of the Group are entitled to
participate in various government-sponsored housing funds. The Group
contributes on a monthly basis to these funds based on certain percentages
of the salaries of the employees. The Group's liability in respect of these
funds is limited to the contributions payable in each period.

(p) Foreign currency transactions

Foreign currency transactions are accounted for at the exchange rates
prevailing at the date of transaction. Gains and losses resulting from the
settlement of such transaction and from the translation of monetary assets
and liabilities denominated in foreign currencies are recognized in the
consolidated profit and loss accounts.

F-18

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(q) Contingencies

A contingent liability is a possible obligation that arises from past events
and whose existence will only be confirmed by the occurrence or
non-occurrence of one or more uncertain future events not wholly within the
control of the Group. It can also be a present obligation arising from past
events that is not recognized because it is not probable that outflow of
economic resources will be required or the amount of obligation cannot be
measured reliably.

A contingent liability is not recognized in the consolidated balance sheet
but is disclosed in the notes to the financial statements. When a change in
the probability of an outflow occurs so that outflow is probable, it will
then be recognized as a provision.

(r) Segment reporting

Business segments provide products or services that are subject to risks and
returns that are different from those of other business segments.
Geographical segments provide products or services within a particular
economic environment that is subject to risks and returns that are different
from those of components operating in other economic environments. In
accordance with the Group's internal financial reporting, the Group has
determined that business segments be presented as the primary reporting
format. All assets and operations of the Group for the Relevant Periods are
located in the PRC, which is considered as one geographical location in an
economic environment with similar risks and returns. The accounting policies
of the segments are the same as those described in the summary of
significant accounting policies. Details of the segment information are
presented in Note 4.

(s) Business risks and uncertainties

The development of liabilities for future policy benefits for the Group's
products requires management to make estimates and assumptions regarding
mortality, morbidity, lapse, expense, and investment experience. Such
estimates are primarily based on historical experience and future
expectations of mortality, morbidity, expense, persistency, and investment
assumptions. Actual results could differ materially from those estimates.
Management monitors actual experience and, if circumstances warrant, revises
its assumptions and the related future policy benefit estimates.

The Group's investments are primarily comprised of fixed maturity
securities, equity securities, investment properties and securities
purchased under agreements to resell. Significant changes in prevailing
interest rates and geographic conditions may adversely affect the timing and
amount of cash flows on such investments and their related values. In
addition, the value of these investments is often derived from an appraisal,
an estimate or opinion of value. A significant decline in the fair value of
these investments could have an adverse effect on the Group's financial
condition.

The Group's activities are with policyholders located in the PRC. Note 5
discusses the types of securities that the Group invests in. Note 4
discusses the types of insurance products that the Group offers. The Group
does not have any significant concentrations to any one industry or
policyholder.

F-19

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. SEGMENT INFORMATION

(a) Business segments

The Group has the following main business segments:

(1) Individual life insurance business

Individual life insurance business relates primarily to the sale of life
insurance contracts to individuals and is composed of participation life
insurance business as well as traditional life insurance business.
Participation life insurance business relates primarily to the sale of
participating products, which provides the policyholder with a participation
in the profits arising from the invested assets relating to the policy.
Traditional life insurance business relates primarily to the sale of
non-participating products and annuities policies, which provides guaranteed
benefits to the insured without a participation in the profits.

(2) Group life insurance business

Group life insurance business relates primarily to the sale of life
insurance contracts to group entities and is composed of participation life
insurance business and traditional life insurance business as described
above.

(3) Accident and health insurance business

The accident and health insurance business relates primarily to the sale of
accident and health insurance and accident products.

(4) Corporate and other

Corporate and other business relates to equity interests in subsidiaries and
associated companies engaged in non-insurance businesses.

F-20

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(b) Basis of allocating net investment income and administrative and other
operating expenses

Net investment income is allocated among segments in proportion to the
respective segments' average statutory policyholder reserve and claims
provision at the beginning and end of the period. Administrative and other
operating expenses are allocated among segments in proportion to the expense
loadings of products in the respective segments.

For the year ended December 31, 2002
-----------------------------------------------
Individual Group Accident Corporate &
life life & health other Total
---------- ------ -------- ----------- -------
(RMB in millions)

Revenues
Gross written premiums and policy fees............. 58,902 749 9,118 -- 68,769
- --Term............................................. 160 1 -- --
- --Whole............................................ 24,942 344 -- --
- --Endowment........................................ 19,182 23 -- --
- --Annuity.......................................... 9,985 4 -- --
Policy fees........................................ 4,633 377 -- --
Net premiums earned and policy fees................ 58,902 749 6,773 -- 66,424
------- ------ ------ ---- -------
Net investment income.............................. 7,078 1,152 117 -- 8,347
Net realized gains on investments.................. 225 37 4 -- 266
Net unrealized losses on investments............... (905) (147) (15) -- (1,067)
Other income....................................... -- -- -- 338 338
------- ------ ------ ---- -------
Segment revenue.................................... 65,300 1,791 6,879 338 74,308
------- ------ ------ ---- -------
Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits........... (5,252) (1,735) (23) -- (7,010)
Accident and health claims and claim adjustment
expenses........................................ -- -- (4,053) -- (4,053)
Increase in future life policyholder benefits..... (45,487) 113 -- -- (45,374)
Policyholder dividends and participation in profits (614) (27) -- -- (641)
Amortization of deferred policy acquisition costs.. (3,574) (103) (155) -- (3,832)
Underwriting and policy acquisition costs.......... (1,258) (2) (401) -- (1,661)
Administrative expenses............................ (5,216) (9) (937) -- (6,162)
Other operating expenses........................... (370) (7) (47) (210) (634)
Interest expense on bank borrowings................ -- -- -- (7) (7)
Interest credited to policyholder contract deposits (4,599) (2,496) -- -- (7,095)
Statutory insurance levy........................... -- -- (73) -- (73)
------- ------ ------ ---- -------
Segment benefits, claims and expenses.............. (66,370) (4,266) (5,689) (217) (76,542)
------- ------ ------ ---- -------
Segment results.................................... (1,070) (2,475) 1,190 121 (2,234)
------- ------ ------ ---- -------
Income tax expense................................. -- -- -- (14) (14)
Minority interests................................. -- -- -- (2) (2)
------- ------ ------ ---- -------
Net profit/(loss).................................. (1,070) (2,475) 1,190 105 (2,250)
------- ------ ------ ---- -------

F-21

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

As of December 31, 2002
----------------------------------------------
Individual Group Accident Corporate &
life life & health other Total
---------- ------ -------- ----------- -------
(RMB in millions)

Assets
Investments...................................... 225,944 36,782 3,737 -- 266,463
Deferred policy acquisition costs................ 17,638 343 103 -- 18,084
Accrued investment income........................ 3,560 579 59 -- 4,198
------- ------ ----- -- -------
Segment assets................................... 247,142 37,704 3,899 -- 288,745

Unallocated
Property, plant and equipment.................... 18,457
Other assets..................................... 6,568
-------
Total............................................ 313,770
=======
Liabilities
Future life policyholder benefits................ 304,043 1,320 -- -- 305,363
Policyholder contract deposits and other funds... 117,951 38,322 -- -- 156,273
Unearned premium reserves........................ -- -- 5,036 -- 5,036
Securities sold under agreements to repurchase... 3,054 497 51 -- 3,602
Reserves for claims and claim adjustment expenses -- -- 879 -- 879
------- ------ ----- -- -------
Segment liabilities.............................. 425,048 40,139 5,966 -- 471,153

Unallocated
Other liabilities................................ 17,915
-------
Total............................................ 489,068
=======

F-22

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

For the year ended December 31, 2001
-----------------------------------------------
Individual Group Accident Corporate &
life life & health other Total
---------- ------ -------- ----------- -------
(RMB in millions)

Revenues
Gross written premiums and policy fees............. 47,571 1,350 7,948 -- 56,869
- --Term............................................. 183 4 -- --
- --Whole............................................ 22,697 984 -- --
- --Endowment........................................ 12,976 29 -- --
- --Annuity.......................................... 9,168 63 -- --
Policy fees........................................ 2,547 270 -- --
Net premiums earned and policy fees................ 47,571 1,350 6,045 -- 54,966
------- ------ ------ ---- -------
Net investment income.............................. 5,249 926 101 -- 6,276
Net realized losses on investments................. (5) (1) -- -- (6)
Net unrealized losses on investments............... (269) (48) (5) -- (322)
Other income....................................... -- -- -- 293 293
------- ------ ------ ---- -------
Segment revenue.................................... 52,546 2,227 6,141 293 61,207
------- ------ ------ ---- -------
Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits........... (8,740) (1,348) (11) -- (10,099)
Accident and health claims and claim adjustment
expenses........................................ -- -- (3,829) -- (3,829)
Increase in future life policyholder benefits..... (32,771) (350) -- -- (33,121)
Policyholder dividends and participation in profits (165) (12) -- -- (177)
Amortization of deferred policy acquisition costs.. (2,701) (123) (200) -- (3,024)
Underwriting and policy acquisition costs.......... (1,914) (2) (260) -- (2,176)
Administrative expenses............................ (3,923) (41) (1,136) -- (5,100)
Other operating expenses........................... (723) (17) (151) (219) (1,110)
Interest expense on bank borrowings................ -- -- -- (5) (5)
Interest credited to policyholder contract deposits (3,947) (1,852) -- -- (5,799)
Statutory insurance levy........................... -- -- (64) -- (64)
------- ------ ------ ---- -------
Segment benefits, claims and expenses.............. (54,884) (3,745) (5,651) (224) (64,504)
------- ------ ------ ---- -------
Segment results.................................... (2,338) (1,518) 490 69 (3,297)
------- ------ ------ ---- -------
Income tax expense................................. -- -- -- (4) (4)
Minority interests................................. -- -- -- 6 6
------- ------ ------ ---- -------
Net profit/(loss).................................. (2,338) (1,518) 490 71 (3,295)
------- ------ ------ ---- -------

F-23

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

As of December 31, 2001
------------------------------------------------
Individual Group Accident & Corporate &
life life health other Total
---------- ------ ---------- ----------- -------
(RMB in millions)

Assets
Investments...................................... 157,948 27,873 3,048 -- 188,869
Deferred policy acquisition costs................ 10,495 243 155 -- 10,893
Accrued investment income........................ 2,949 521 57 -- 3,527
------- ------ ----- -- -------
Segment assets................................... 171,392 28,637 3,260 -- 203,289

Unallocated
Property, plant and equipment.................... 18,347
Other assets..................................... 6,472
-------
Total............................................ 228,108
=======
Liabilities
Future life policyholder benefits................ 258,556 1,433 -- -- 259,989
Policyholder contract deposits and other funds... 70,701 34,908 -- -- 105,609
Unearned premium reserves........................ -- -- 4,441 -- 4,441
Securities sold under agreements to repurchase... 12,216 2,156 236 -- 14,608
Reserves for claims and claim adjustment expenses -- -- 867 -- 867
------- ------ ----- -- -------
Segment liabilities.............................. 341,473 38,497 5,544 -- 385,514

Unallocated
Other liabilities................................ 14,779
-------
Total............................................ 400,293
=======

F-24

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

For the year ended December 31, 2000
-------------------------------------------------
Individual Group Accident & Corporate &
life life health other Total
---------- ------ ---------- ----------- -------
(RMB in millions)

Revenues
Gross written premiums and policy fees............. 36,814 495 7,405 -- 44,714
- --Term............................................. 206 -- -- --
- --Whole............................................ 20,248 -- -- --
- --Endowment........................................ 5,406 26 -- --
- --Annuity.......................................... 8,788 12 -- --
Policy fees........................................ 2,166 457 -- --
Net premiums earned and policy fees................ 36,814 495 5,590 -- 42,899
------- ------ ------ ---- -------
Net investment income.............................. 3,566 731 77 -- 4,374
Net realized losses on investments................. (19) (4) -- -- (23)
Net unrealized gains on investments................ 243 50 5 -- 298
Other income....................................... -- -- -- 827 827
------- ------ ------ ---- -------
Segment revenue.................................... 40,604 1,272 5,672 827 48,375
------- ------ ------ ---- -------
Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits........... (7,962) (499) (6) -- (8,467)
Accident and health claims and claim adjustment
expenses........................................ -- -- (2,767) -- (2,767)
Increase in future life policyholder benefits..... (28,011) 273 -- -- (27,738)
Policyholder dividends and participation in profits (7) -- -- -- (7)
Amortization of deferred policy acquisition costs.. (1,483) (79) (183) -- (1,745)
Underwriting and policy acquisition costs.......... (2,789) (61) (223) -- (3,073)
Administrative expenses............................ (2,833) (140) (1,345) -- (4,318)
Other operating expenses........................... (1,244) (78) (418) (862) (2,602)
Interest expense on bank borrowings................ -- -- -- (29) (29)
Interest credited to policyholder contract deposits (3,048) (1,457) -- -- (4,505)
Statutory insurance levy........................... -- -- (59) -- (59)
------- ------ ------ ---- -------
Segment benefits, claims and expenses.............. (47,377) (2,041) (5,001) (891) (55,310)
------- ------ ------ ---- -------
Segment results.................................... (6,773) (769) 671 (64) (6,935)
------- ------ ------ ---- -------
Income tax expense................................. -- -- -- (14) (14)
Minority interests................................. -- -- -- (41) (41)
------- ------ ------ ---- -------
Net profit/(loss).................................. (6,773) (769) 671 (119) (6,990)
------- ------ ------ ---- -------

F-25

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

As of December 31, 2000
------------------------------------------------
Individual Group Accident & Corporate &
life life health other Total
---------- ------ ---------- ----------- -------
(RMB in millions)

Assets
Investments...................................... 105,995 21,710 2,293 -- 129,998
Deferred policy acquisition costs................ 5,567 229 200 -- 5,996
Accrued investment income........................ 2,473 507 53 -- 3,033
------- ------ ----- -- -------
Segment assets................................... 114,035 22,446 2,546 -- 139,027

Unallocated
Property, plant and equipment.................... 15,617
Other assets..................................... 7,733
-------
Total............................................ 162,377
=======
Liabilities
Future life policyholder benefits................ 225,785 1,083 -- -- 226,868
Policyholder contract deposits and other funds... 58,499 30,874 -- -- 89,373
Unearned premium reserves........................ -- -- 4,131 -- 4,131
Securities sold under agreements to repurchase... 73 15 2 -- 90
Reserves for claims and claim adjustment expenses -- -- 716 -- 716
------- ------ ----- -- -------
Segment liabilities.............................. 284,357 31,972 4,849 -- 321,178

Unallocated
Other liabilities................................ 11,075
-------
Total............................................ 332,253
=======

F-26

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

For the six months ended June 30, 2003
-------------------------------------------------
Individual Group Accident & Corporate &
life life health other Total
---------- ------ ---------- ----------- -------
(RMB in millions)

Revenues
Gross written premiums and policy fees............. 30,956 369 4,766 -- 36,091
Gross written premiums............................. 27,315 191 -- --
- --Term............................................. 195 -- -- --
- --Whole............................................ 14,426 191 -- --
- --Endowment........................................ 7,841 -- -- --
- --Annuity.......................................... 4,853 -- -- --
Policy fees........................................ 3,641 178 -- --
Net premiums earned and policy fees................ 30,956 369 4,093 -- 35,418
Net investment income.............................. 4,377 631 62 -- 5,070
Net realized gains on investments.................. 597 86 8 -- 691
Net unrealized gains on investments................ 242 35 3 -- 280
Other income....................................... -- -- -- 122 122
------- ------ ------ ---- -------
Segment revenue.................................... 36,172 1,121 4,166 122 41,581
------- ------ ------ ---- -------
Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits........... (3,925) (655) -- -- (4,580)
Accident and health claims and claim adjustment
expenses........................................ -- -- (2,455) -- (2,455)
Increase in future life policyholder benefits..... (23,266) 74 -- -- (23,192)
Policyholder dividends and participation in profits (838) (24) -- -- (862)
Amortization of deferred policy acquisition costs.. (2,551) (42) (55) -- (2,648)
Underwriting and policy acquisition costs.......... (528) (2) (178) -- (708)
Administrative expenses............................ (2,624) (100) (281) -- (3,005)
Other operating expenses........................... (201) (8) (19) (476) (704)
Interest expense on bank borrowings................ -- -- -- (5) (5)
Interest credited to policyholder contract deposits (2,738) (1,371) -- -- (4,109)
Statutory insurance levy........................... -- -- (38) -- (38)
------- ------ ------ ---- -------
Segment benefits, claims and expenses.............. (36,671) (2,128) (3,026) (481) (42,306)
------- ------ ------ ---- -------
Segment results.................................... (499) (1,007) 1,140 (359) (725)
------- ------ ------ ---- -------
Income tax expense................................. -- -- -- (8) (8)
Minority interests................................. -- -- -- 19 19
------- ------ ------ ---- -------
Net profit/(loss).................................. (499) (1,007) 1,140 (348) (714)
------- ------ ------ ---- -------

F-27

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

As of June 30, 2003
------------------------------------------------
Individual Group Accident & Corporate &
life life health other Total
---------- ------ ---------- ----------- -------
(RMB in millions)

Assets
Investments..................................... 289,928 41,812 4,100 -- 335,840
Deferred policy acquisition costs............... 20,798 387 97 -- 21,282
Accrued investment income....................... 3,692 533 52 -- 4,277
------- ------ ----- -- -------
Segment assets.................................. 314,418 42,732 4,249 -- 361,399

Unallocated
Property, plant and equipment................... 18,610
Other assets.................................... 7,929
-------
Total........................................... 387,938
=======
Liabilities
Future life policyholder benefits............... 327,309 1,246 -- -- 328,555
Policyholder contract deposits and other funds.. 165,273 45,702 -- -- 210,975
Unearned premium reserves....................... -- -- 4,719 -- 4,719
Securities sold under agreements to repurchase.. -- -- -- -- --
Reserves for claims and claim adjustment expense -- -- 910 -- 910
------- ------ ----- -- -------
Segment liabilities............................. 492,582 46,948 5,629 -- 545,159

Unallocated
Other liabilities............................... 18,986
-------
Total........................................... 564,145
=======

F-28

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

For the six months ended June 30, 2002
-------------------------------------------------
Individual Group Accident & Corporate &
life life health other Total
---------- ------ ---------- ----------- -------
(RMB in millions)

Revenues
Gross written premiums and policy fees............. 30,027 413 3,724 -- 34,164
Gross written premiums............................. 27,055 247 -- --
- --Term............................................. 71 2 -- --
- --Whole............................................ 12,112 226 -- --
- --Endowment........................................ 9,887 17 -- --
- --Annuity.......................................... 4,985 2 -- --
Policy fees........................................ 2,972 166 -- --
Net premiums earned and policy fees................ 30,027 413 3,265 -- 33,705
Net investment income.............................. 3,383 551 57 -- 3,991
Net realized gains on investments.................. 580 94 10 -- 684
Net unrealized losses on investments............... (64) (10) (1) -- (75)
Other income....................................... -- -- -- 121 121
------- ------ ------ --- -------
Segment revenue.................................... 33,926 1,048 3,331 121 38,426
------- ------ ------ --- -------
Benefits, claims and expenses
Insurance benefits and claims
Life insurance death and other benefits........... (3,427) (432) (10) -- (3,869)
Accident and health claims and claim adjustment
expenses........................................ -- -- (1,959) -- (1,959)
Increase in future life policyholder benefits..... (22,784) (9) -- -- (22,793)
Policyholder dividends and participation in profits (296) (14) -- -- (310)
Amortization of deferred policy acquisition costs.. (1,969) (40) (93) -- (2,102)
Underwriting and policy acquisition costs.......... (691) (1) (130) -- (822)
Administrative expenses............................ (2,629) (7) (280) -- (2,916)
Other operating expenses........................... (208) (5) (8) (95) (316)
Interest expense on bank borrowings................ -- -- -- (4) (4)
Interest credited to policyholder contract deposits (2,176) (1,033) -- -- (3,209)
Statutory insurance levy........................... -- -- (30) -- (30)
------- ------ ------ --- -------
Segment benefits, claims and expenses.............. (34,180) (1,541) (2,510) (99) (38,330)
------- ------ ------ --- -------
Segment results.................................... (254) (493) 821 22 96
------- ------ ------ --- -------
Income tax expense................................. -- -- -- (3) (3)
Minority interests................................. -- -- -- (2) (2)
------- ------ ------ --- -------
Net profit/(loss).................................. (254) (493) 821 17 91
------- ------ ------ --- -------

F-29

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

As of June 30, 2002
------------------------------------------------
Individual Group Accident & Corporate &
life life health other Total
---------- ------ ---------- ----------- -------
(RMB in millions)

Assets
Investments...................................... 198,006 32,233 3,336 -- 233,575
Deferred policy acquisition costs................ 13,763 298 124 -- 14,185
Accrued investment income........................ 3,394 552 57 -- 4,003
------- ------ ----- -- -------
Segment assets................................... 215,163 33,083 3,517 -- 251,763

Unallocated
Property, plant and equipment.................... 18,237
Other assets..................................... 8,145
-------
Total............................................ 278,145
=======
Liabilities
Future life policyholder benefits................ 281,387 1,395 -- -- 282,782
Policyholder contract deposits and other funds... 110,353 29,222 -- -- 139,575
Unearned premium reserves........................ -- -- 4,058 -- 4,058
Securities sold under agreements to repurchase... 3,816 621 64 -- 4,501
Reserves for claims and claim adjustment expenses -- -- 1,010 -- 1,010
------- ------ ----- -- -------
Segment liabilities.............................. 395,556 31,238 5,132 -- 431,926

Unallocated
Other liabilities................................ 17,436
-------
Total............................................ 449,362
=======

F-30

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

5. INVESTMENTS

5.1 Investment Results

Net investment income
-------------------------------------
For the For the
year ended six months ended
December 31, June 30,
-------------------- ---------------
2000 2001 2002 2002 2003
----- ----- ------ ----- -----
(RMB in millions)

Fixed maturity securities...................... 1,776 1,918 2,723 1,278 1,431
Equity securities.............................. 371 893 240 181 188
Term deposits and cash and cash equivalents.... 1,910 2,714 4,310 1,972 2,732
Investment properties.......................... (3) 29 67 34 58
Investments in associated companies............ (45) (32) (6) (14) 16
Policy loans................................... 4 3 7 3 3
Securities purchased under agreements to resell 342 815 1,094 584 653
Other investments.............................. 21 4 9 6 7
----- ----- ------ ----- -----
Subtotal....................................... 4,376 6,344 8,444 4,044 5,088
Securities sold under agreements to repurchase. -- (56) (71) (36) (2)
Investment expense............................. (2) (12) (26) (17) (16)
----- ----- ------ ----- -----
Total.......................................... 4,374 6,276 8,347 3,991 5,070
===== ===== ====== ===== =====

Net realized gains/(losses)
-------------------------------------
For the For the
year ended six months ended
December 31, June 30,
-------------------- ---------------
2000 2001 2002 2002 2003
----- ----- ------ ----- -----
(RMB in millions)
Fixed maturity securities
Gross realized gains.......................... 24 222 602 570 615
Gross realized losses......................... (125) (34) (97) (19) (50)
Impairment.................................... (28) -- (59) (36) (7)
----- ----- ------ ----- -----
Subtotal....................................... (129) 188 446 515 558
Equity securities
Gross realized gains.......................... 110 627 239 218 273
Gross realized losses......................... (1) (810) (417) (49) (140)
Impairment.................................... (3) (11) (2) -- --
----- ----- ------ ----- -----
Subtotal....................................... 106 (194) (180) 169 133
----- ----- ------ ----- -----
Total.......................................... (23) (6) 266 684 691
===== ===== ====== ===== =====

Net unrealized gains/(losses)
-------------------------------------
For the For the
year ended six months ended
December 31, June 30,
-------------------- ---------------
2000 2001 2002 2002 2003
----- ----- ------ ----- -----
(RMB in millions)
Equity securities.............................. 298 (322) (1,067) (75) 280
----- ----- ------ ----- -----
Total.......................................... 298 (322) (1,067) (75) 280
===== ===== ====== ===== =====

F-31

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

5.2 Non-trading securities

Cost or Gross Gross Estimated
amortized cost unrealized gains unrealized losses fair value
-------------- ---------------- ----------------- ----------
As of December 31, 2002 (RMB in millions)

Fixed maturity securities
Government bonds......... 49,661 1,634 (316) 50,979
Government agency bonds.. 20,615 351 (151) 20,815
Corporate bonds.......... 3,212 126 (15) 3,323
------ ----- ---- ------
Subtotal................. 73,488 2,111 (482) 75,117
------ ----- ---- ------

Equity securities
Common stocks, unlisted.. 957 -- -- 957
Funds.................... 7,523 3 (382) 7,144
------ ----- ---- ------
Subtotal................. 8,480 3 (382) 8,101
------ ----- ---- ------
Total.................... 81,968 2,114 (864) 83,218
====== ===== ==== ======

Cost or Gross Gross Estimated
amortized cost unrealized gains unrealized losses fair value
-------------- ---------------- ----------------- ----------
As of December 31, 2001 (RMB in millions)

Fixed maturity securities
Government bonds......... 37,016 2,092 (30) 39,078
Government agency bonds.. 10,688 148 -- 10,836
Corporate bonds.......... 1,956 35 (9) 1,982
------ ----- --- ------
Subtotal................. 49,660 2,275 (39) 51,896
------ ----- --- ------

Equity securities
Common stocks, unlisted.. 872 -- -- 872
Funds.................... 1,135 -- (5) 1,130
------ ----- --- ------
Subtotal................. 2,007 -- (5) 2,002
------ ----- --- ------
Total.................... 51,667 2,275 (44) 53,898
====== ===== === ======

Cost or Gross Gross Estimated
amortized cost unrealized gains unrealized losses fair value
-------------- ---------------- ----------------- ----------
As of December 31, 2000 (RMB in millions)

Fixed maturity securities
Government bonds......... 33,829 1,237 (227) 34,839
Government agency bonds.. 353 -- -- 353
Corporate bonds.......... 887 8 (1) 894
------ ----- ---- ------
Subtotal................. 35,069 1,245 (228) 36,086
------ ----- ---- ------

Equity securities
Common stocks, unlisted.. 1,119 -- -- 1,119
------ ----- ---- ------
Subtotal................. 1,119 -- -- 1,119
------ ----- ---- ------
Total.................... 36,188 1,245 (228) 37,205
====== ===== ==== ======

F-32

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Cost or Gross Gross Estimated
amortized cost unrealized gains unrealized losses fair value
-------------- ---------------- ----------------- ----------
As of June 30, 2003 (RMB in millions)

Fixed maturity securities
Government bonds......... 58,754 1,455 (373) 59,836
Government agency bonds.. 17,193 88 (99) 17,182
Corporate bonds.......... 4,095 102 (25) 4,172
------- ------- ------- -------
Subtotal................. 80,042 1,645 (497) 81,190
------- ------- ------- -------

Equity securities
Common stocks, unlisted.. 899 -- -- 899
Funds.................... 8,225 6 (105) 8,126
------- ------- ------- -------
Subtotal................. 9,124 6 (105) 9,025
------- ------- ------- -------
Total.................... 89,166 1,651 (602) 90,215
======= ======= ======= =======

Cost or Gross Gross Estimated
amortized cost unrealized gains unrealized losses fair value
-------------- ---------------- ----------------- ----------
As of June 30, 2002 (RMB in millions)

Fixed maturity securities
Government bonds......... 41,362 2,666 (178) 43,850
Government agency bonds.. 13,667 631 (100) 14,198
Corporate bonds.......... 2,048 122 (12) 2,158
------ ----- ---- ------
Subtotal................. 57,077 3,419 (290) 60,206
------ ----- ---- ------

Equity securities
Common stocks, unlisted.. 959 -- -- 959
Funds.................... 1,973 85 -- 2,058
------ ----- ---- ------
Subtotal................. 2,932 85 -- 3,017
------ ----- ---- ------
Total.................... 60,009 3,504 (290) 63,223
====== ===== ==== ======

The proceeds from sales of non-trading securities and the gross realized
gains and gross realized losses for the years ended December 31, 2000, 2001
and 2002 and for the six months ended June 30, 2002 and 2003 were as follows:

For the year ended For the six months
December 31, ended June 30,
- ---------------------- -----------------
2000 2001 2002 2002 2003
------ ------ ------ ------ ------
(RMB in millions)

Proceeds from sales of non-trading securities 14,191 17,039 14,390 10,823 20,651
Gross realized gains......................... 29 457 697 653 686
Gross realized losses........................ (126) (51) (389) (53) (64)

F-33

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

5.3 Equity securities

As of December 31, As of June 30,
- ------------------ --------------
2000 2001 2002 2002 2003
----- ----- ------ ----- ------
(RMB in millions)

Common stocks 1,203 963 957 959 899
Funds........ 5,591 6,735 11,214 6,125 13,898
----- ----- ------ ----- ------
Total........ 6,794 7,698 12,171 7,084 14,797
===== ===== ====== ===== ======

5.4 Fixed maturity securities--maturity schedule

As of December 31, As of June 30,
- ----------------- --------------
2000 2001 2002 2002 2003
----- ----- ----- ----- ----
(RMB in millions)

Held-to-maturity amortized cost
Maturing:
Within one year...................... 221 268 437 421 224
After one year but within five years. 857 603 373 449 295
After five years but within ten years 518 516 406 372 308
After ten years...................... 2 1 4 1 --
----- ----- ----- ----- ---
Total................................ 1,598 1,388 1,220 1,243 827
===== ===== ===== ===== ===

As of December 31, As of June 30,
- -------------------- -------------
2000 2001 2002 2002 2003
------ ------ ------ ------ ------
(RMB in millions)

Non-trading amortized cost
Maturing:
Within one year...................... 1,062 1,338 3,146 2,123 5,963
After one year but within five years. 9,616 16,400 18,174 14,777 15,170
After five years but within ten years 24,332 22,927 32,603 23,942 36,944
After ten years...................... 59 8,995 19,565 16,235 21,965
------ ------ ------ ------ ------
Total................................ 35,069 49,660 73,488 57,077 80,042
====== ====== ====== ====== ======

As of December 31, As of June 30,
- ----------------- --------------
2000 2001 2002 2002 2003
----- ----- ----- ----- ----
(RMB in millions)

Held-to-maturity estimated fair value
Maturing:
Within one year...................... 231 273 442 388 228
After one year but within five years. 896 635 400 474 322
After five years but within ten years 520 532 427 406 332
After ten years...................... 2 1 4 1 --
----- ----- ----- ----- ---
Total................................ 1,649 1,441 1,273 1,269 882
===== ===== ===== ===== ===

F-34

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

As of December 31, As of June 30,
- -------------------- -------------
2000 2001 2002 2002 2003
------ ------ ------ ------ ------
(RMB in millions)

Non-trading estimated fair value
Maturing:
Within one year...................... 1,088 1,368 3,179 2,218 6,099
After one year but within five years. 9,826 17,556 19,026 15,832 15,658
After five years but within ten years 25,095 23,824 33,340 25,407 37,549
After ten years...................... 77 9,148 19,572 16,749 21,884
------ ------ ------ ------ ------
Total................................ 36,086 51,896 75,117 60,206 81,190
====== ====== ====== ====== ======

5.5 Investments in associated companies

As of December 31, As of June 30,
------------------- ------------
2000 2001 2002 2002 2003
----- ----- ----- ----- -----
(RMB in millions)

Investment cost.................. 266 266 266 266 266
Share of post-acquisition loss... (121) (153) (159) (167) (143)
----- ----- ----- ----- -----
145 113 107 99 123
Advances to associated companies* 1,886 1,923 1,928 1,928 1,870
----- ----- ----- ----- -----
Interest in associated companies. 2,031 2,036 2,035 2,027 1,993
===== ===== ===== ===== =====

-----
* The advances to associated companies are non-interest bearing, unsecured
and have no fixed repayment terms.

The following is the principal associated company as of December 31, 2000,
2001 and 2002, and June 30, 2002 and 2003:

Interest
Place of establishment held
Name and operation Principal activity indirectly
---- ---------------------- ------------------ ----------

Huixian Holding Co., Ltd People's Republic Investment and 19.75%*
of China property holding

-----
* The Group holds 20% of the effective voting rights of Huixian Holding Co.,
Ltd.

5.6 Term deposits

As of December 31, As of June 30,
--------------------- --------------
2000 2001 2002 2002 2003
------ ------ ------- ------ -------
(RMB in millions)

Maturing:
Within one year...................... 15,107 5,929 6,621 6,571 4,100
After one year but within five years. 18,457 48,143 108,953 70,226 122,271
After five years but within ten years 6,089 21,011 7,101 20,000 14,670
After ten years...................... -- 1,000 1,000 1,001 1,002
------ ------ ------- ------ -------
Total................................ 39,653 76,083 123,675 97,798 142,043
====== ====== ======= ====== =======

F-35

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

5.7 Statutory deposits--restricted

As of December 31, As of June 30,
------------------ --------------
2000 2001 2002 2002 2003
---- ---- ---- ---- ----
(RMB in millions)

Maturing:
Within one year..................... 40 40 41 41 42
After one year but within five years -- 950 950 950 950
-- --- --- --- ---
Total............................... 40 990 991 991 992
== === === === ===

Insurance companies in China are required to deposit an amount equal to 20%
of their registered capital with a bank designated by the CIRC. These funds
may not be used for any purpose other than to pay off debts during a
liquidation proceeding.

5.8 Securities purchased under agreements to resell

As of December 31, As of June 30,
-------------------- -------------
2000 2001 2002 2002 2003
------ ------ ------ ------ ------
(RMB in millions)

Maturing:
Within 30 days.................. 8,464 15,836 14,740 11,159 27,182
After 30 days but within 90 days 2,923 6,229 6,186 11,783 17,368
Over 90 days.................... 8,453 8,415 15,462 23,305 25,511
------ ------ ------ ------ ------
Total........................... 19,840 30,480 36,388 46,247 70,061
====== ====== ====== ====== ======

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value is defined as the amount at which the instrument could be
exchanged in a current transaction between knowledgeable willing parties in
an arm's length transaction, rather than in a forced or liquidation sale.
The methods and assumptions used by the Group in estimating the fair value
of the financial instruments are:

. Cash and cash equivalents, term deposits, and securities purchased or
sold under agreements to resell or repurchase: the carrying amounts of
these assets in the balance sheet approximate fair values.

. Fixed maturity securities: fair values are generally based upon quoted
market prices. Where quoted market prices are not readily available, fair
values are estimated using either prices observed in recent transactions
or values obtained from quoted market prices of comparable investments.

. Equity securities: fair values are based on quoted market prices, except
certain common stocks, which are carried at cost as a reasonable estimate
of their fair value.

. Policy and other loans: the carrying values for policy loans approximate
fair value.

. Policyholder contract deposits and other funds: fair values are
calculated by discounted cash flow projections using current market
interest rates.

. Other investment assets: as quoted market prices are generally not
readily available for these assets, impairment is assessed on a regular
basis, and as significant unrealized gains for the Group are not expected
to arise, the carrying value of these assets in the balance sheet
(generally cost less provision for impairment) is used as an estimate of
the fair value.

F-36

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

. Bank borrowings: As the bank borrowings are at variable interest rates,
their carrying values approximate their fair values at the reporting date.

Fair value of financial instruments

Total fair value
-----------------------------------------------
As of December 31, As of June 30,
--------------------------- ------------------
2000 2001 2002 2002 2003
------- -------- -------- -------- --------
(RMB in millions)

Fixed maturity securities............... 37,735 53,337 76,390 61,475 82,072
Equity securities....................... 6,794 7,698 12,171 7,084 14,797
Term deposits........................... 39,653 76,083 123,675 97,798 142,043
Securities purchased under agreements to
resell................................ 19,840 30,480 36,388 46,247 70,061
Policy loans............................ 109 107 106 105 136
Other investments....................... 572 336 231 299 209
Cash and cash equivalents............... 23,275 17,855 14,529 17,575 23,592
Policyholder contract deposits and other
funds................................. (99,328) (116,012) (165,727) (150,898) (211,493)
Bank borrowings......................... (921) (379) (313) (325) (311)
Securities sold under agreements to
repurchase............................ (90) (14,608) (3,602) (4,501) --

Total carrying value
-----------------------------------------------
As of December 31, As of June 30,
--------------------------- ------------------
2000 2001 2002 2002 2003
------- -------- -------- -------- --------
(RMB in millions)

Fixed maturity securities............... 37,684 53,284 76,337 58,345 80,869
Equity securities....................... 6,794 7,698 12,171 6,928 15,591
Term deposits........................... 39,653 76,083 123,675 97,798 142,043
Securities purchased under agreements to
resell................................ 19,840 30,480 36,388 46,247 70,061
Policy loans............................ 109 107 106 105 136
Other investments....................... 572 336 231 299 209
Cash and cash equivalents............... 23,275 17,855 14,529 17,575 23,592
Policyholder contract deposits and other
funds................................. (89,373) (105,609) (156,273) (139,575) (210,975)
Bank borrowings......................... (921) (379) (313) (325) (311)
Securities sold under agreements to
repurchase............................ (90) (14,608) (3,602) (4,501) --

The Group's activities expose it to a variety of financial risks, including
the effects of changes in fixed maturity securities and equity market
prices, and interest rates. The Group's overall risk management program
focuses on the unpredictability of financial markets and seeks to minimize
potential adverse effects on the financial performance of the Group.

Risk management is carried out by a central assets management department
under policies approved by management. The central asset management
department identifies, evaluates and hedges financial risks in

F-37

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

close co-operation with the Group's operating units. The management provides
written principles for overall risk management, as well as written policies
covering specific areas, such as managing interest rate risk, credit risk,
and liquidity risk.

(i) Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will
fluctuate due to changes in market interest rates. Many of the Group's
insurance policies offer guaranteed returns to policyholders. These
guarantees expose the Group to interest rate risk. Interest rate risk is
normally controlled through matching such liabilities with suitable assets.
The limited availability of matching assets and the current regulatory
constraints in the PRC mean that the Group can only mitigate interest rate
risk to a certain extent. If the regulatory constraints are eased, the Group
expects to be able to take action to further mitigate the risk.

(ii) Market risk

The Group's investments include mainly securities investment funds and
bonds. Among these, the prices of listed securities investment funds and
bonds are determined by market forces. The Company's policy is to hold an
appropriately diversified investment portfolio as permitted by laws and
regulations to reduce the risk of concentration in one specific industry or
company. The Company also actively monitors the market prices of the
securities.

(iii) Credit risk

Credit risk is the risk that one party to a financial transaction or the
issuer of a financial instrument will fail to discharge an obligation and
cause another party to incur a financial loss. Credit risk is controlled by
the application of credit approvals, limits and monitoring procedures. Where
appropriate, the Group obtains collateral in the form of rights to cash,
securities, property and equipment.

(iv) Liquidity risk

Liquidity risk is the risk that the Group will not have access to sufficient
funds to meet its liabilities as they become due. In the normal course of
business, the Group attempts to match the maturity of invested assets to the
maturity of insurance liabilities.

F-38

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

7. DEFERRED POLICY ACQUISITION COSTS

Six months ended
Year ended December 31, June 30,
---------------------- --------------
2000 2001 2002 2002 2003
------ ------ ------ ------ ------
(RMB in millions)

Gross
Balance as of January 1................. 2,285 6,241 11,182 11,182 18,411
Acquisition costs deferred.............. 5,819 8,376 11,240 5,646 5,979
Amortization charged to income.......... (1,987) (3,269) (4,121) (2,243) (2,816)
Unrealized gains/(losses) on investments 124 (166) 110 (103) 25
------ ------ ------ ------ ------
Balance at period end................... 6,241 11,182 18,411 14,482 21,599
====== ====== ====== ====== ======
Ceded
Balance as of January 1................. (242) (245) (289) (289) (327)
Acquisition costs deferred.............. (245) (289) (327) (149) (158)
Amortization charged to income.......... 242 245 289 141 168
------ ------ ------ ------ ------
Balance at period end................... (245) (289) (327) (297) (317)
====== ====== ====== ====== ======
Net
Balance as of January 1................. 2,043 5,996 10,893 10,893 18,084
Acquisition costs deferred.............. 5,574 8,087 10,913 5,497 5,821
Amortization charged to income.......... (1,745) (3,024) (3,832) (2,102) (2,648)
Unrealized gains/(losses) on investments 124 (166) 110 (103) 25
------ ------ ------ ------ ------
Balance at period end................... 5,996 10,893 18,084 14,185 21,282
====== ====== ====== ====== ======

8. REINSURANCE ASSETS

As of December 31, As of June 30,
---------------- --------------
2000 2001 2002 2002 2003
---- ----- ----- ----- ----
(RMB in millions)

Ceded unearned premiums........... 826 887 1,006 812 708
Claims recoverable from reinsurers 143 174 176 200 172
Due from reinsurance companies.... 1 39 42 79 91
--- ----- ----- ----- ---
Total............................. 970 1,100 1,224 1,091 971
=== ===== ===== ===== ===

Approximately 100% of reinsurance assets as of the balance sheet dates were
reinsured with China Reinsurance Company.

F-39

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

9. PROPERTY, PLANT AND EQUIPMENT

Office
equipment,
furniture Assets
Investment and Motor under Leasehold
properties Buildings fixtures vehicles construction improvements Total
---------- --------- ---------- -------- ------------ ------------ ------
(RMB in millions)

Cost or deemed cost
As of January 1, 2000........ 826 11,622 1,424 1,876 2,693 126 18,567
Additions.................... 15 536 345 255 1,256 37 2,444
Disposals.................... -- (1,591) (138) (140) -- (16) (1,885)
Transfer upon completion..... -- 1,244 -- -- (1,244) -- --
----- ------ ----- ----- ------ --- ------
As of December 31, 2000...... 841 11,811 1,631 1,991 2,705 147 19,126
----- ------ ----- ----- ------ --- ------

Additions.................... 44 752 510 275 739 51 2,371
Disposals.................... -- (752) (152) (221) -- (4) (1,129)
Transfer from assets held for
sale....................... 2,108 -- -- -- -- -- 2,108
Transfer upon completion..... -- 1,584 -- -- (1,584) -- --
----- ------ ----- ----- ------ --- ------
As of December 31, 2001...... 2,993 13,395 1,989 2,045 1,860 194 22,476
----- ------ ----- ----- ------ --- ------

Additions.................... 18 493 354 277 617 55 1,814
Disposals.................... -- (462) (119) (368) -- (4) (953)
Transfer upon completion..... -- 1,066 -- -- (1,066) -- --
----- ------ ----- ----- ------ --- ------
As of December 31, 2002...... 3,011 14,492 2,224 1,954 1,411 245 23,337
===== ====== ===== ===== ====== === ======

As of January 1, 2002........ 2,993 13,395 1,989 2,045 1,860 194 22,476
Additions.................... 10 246 143 59 299 12 769
Disposals.................... -- (277) (27) (83) -- -- (387)
Transfer upon completion..... -- 507 -- -- (507) -- --
----- ------ ----- ----- ------ --- ------
As of June 30, 2002.......... 3,003 13,871 2,105 2,021 1,652 206 22,858
----- ------ ----- ----- ------ --- ------

As of January 1, 2003........ 3,011 14,492 2,224 1,954 1,411 245 23,337
Additions.................... -- 802 91 64 330 95 1,382
Disposals.................... (11) (175) (138) (116) -- (56) (496)
Revaluation.................. (181) -- -- -- -- -- (181)
Transfer upon completion..... -- 292 -- -- (292) -- --
----- ------ ----- ----- ------ --- ------
As of June 30, 2003.......... 2,819 15,411 2,177 1,902 1,449 284 24,042
===== ====== ===== ===== ====== === ======

F-40

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Accumulated depreciation
As of January 1, 2000.. -- (1,399) (573) (894) (61) (29) (2,956)
Charges for the year... -- (374) (218) (288) -- (34) (914)
Impairment loss........ -- (5) -- -- (19) -- (24)
Disposals.............. -- 195 69 111 -- 10 385
----- ------ ------ ------ ----- ---- ------
As of December 31, 2000 -- (1,583) (722) (1,071) (80) (53) (3,509)
----- ------ ------ ------ ----- ---- ------

Charges for the year... -- (477) (271) (301) -- (36) (1,085)
Impairment loss........ -- (13) -- -- 25 -- 12
Disposals.............. -- 130 138 184 -- 1 453
----- ------ ------ ------ ----- ---- ------
As of December 31, 2001 -- (1,943) (855) (1,188) (55) (88) (4,129)
----- ------ ------ ------ ----- ---- ------

Charges for the year... -- (631) (371) (280) -- (41) (1,323)
Impairment loss........ -- (7) -- -- -- -- (7)
Disposals.............. -- 157 111 309 -- 2 579
----- ------ ------ ------ ----- ---- ------
As of December 31, 2002 -- (2,424) (1,115) (1,159) (55) (127) (4,880)
===== ====== ====== ====== ===== ==== ======

As of January 1, 2002.. -- (1,943) (855) (1,188) (55) (88) (4,129)
Charges for the year... -- (295) (184) (145) -- (19) (643)
Impairment loss........ -- (3) -- -- -- -- (3)
Disposals.............. -- 64 21 69 -- -- 154
----- ------ ------ ------ ----- ---- ------
As of June 30, 2002.... -- (2,177) (1,018) (1,264) (55) (107) (4,621)
----- ------ ------ ------ ----- ---- ------

As of January 1, 2003.. -- (2,424) (1,115) (1,159) (55) (127) (4,880)
Charges for the year... -- (214) (223) (221) -- (62) (720)
Impairment loss........ -- (76) -- -- (10) -- (86)
Disposals.............. -- 69 72 113 -- -- 254
----- ------ ------ ------ ----- ---- ------
As of June 30, 2003.... -- (2,645) (1,266) (1,267) (65) (189) (5,432)
===== ====== ====== ====== ===== ==== ======
Net book value
As of December 31, 2000 841 10,228 909 920 2,625 94 15,617
===== ====== ====== ====== ===== ==== ======
As of December 31, 2001 2,993 11,452 1,134 857 1,805 106 18,347
===== ====== ====== ====== ===== ==== ======
As of December 31, 2002 3,011 12,068 1,109 795 1,356 118 18,457
===== ====== ====== ====== ===== ==== ======
As of June 30, 2002.... 3,003 11,694 1,087 757 1,597 99 18,237
===== ====== ====== ====== ===== ==== ======
As of June 30, 2003.... 2,819 12,766 911 635 1,384 95 18,610
===== ====== ====== ====== ===== ==== ======

F-41

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The analysis of the cost or valuation as of December 31, 2002 of the above
assets is as follows:

At cost..... -- 12,068 1,109 795 1,356 118 15,446
At valuation 3,011 -- -- -- -- -- 3,011
----- ------ ----- --- ----- --- ------
3,011 12,068 1,109 795 1,356 118 18,457
===== ====== ===== === ===== === ======

The analysis of the cost or valuation as of December 31, 2001 of the above
assets is as follows:

At cost..... -- 11,452 1,134 857 1,805 106 15,354
At valuation 2,993 -- -- -- -- -- 2,993
----- ------ ----- --- ----- --- ------
2,993 11,452 1,134 857 1,805 106 18,347
===== ====== ===== === ===== === ======

The analysis of the cost or valuation as of December 31, 2000 of the above
assets is as follows:

At cost..... -- 10,228 909 920 2,625 94 14,776
At valuation 841 -- -- -- -- -- 841
--- ------ --- --- ----- -- ------
841 10,228 909 920 2,625 94 15,617
=== ====== === === ===== == ======

The analysis of the cost or valuation as of June 30, 2003 of the above
assets is as follows:

At cost..... -- 12,766 911 635 1,384 95 15,791
At valuation 2,819 -- -- -- -- -- 2,819
----- ------ --- --- ----- -- ------
2,819 12,766 911 635 1,384 95 18,610
===== ====== === === ===== == ======

F-42

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The analysis of the cost or valuation as of June 30, 2002 of the above
assets is as follows:

At cost..... -- 11,694 1,087 757 1,597 99 15,234
At valuation 3,003 -- -- -- -- -- 3,003
----- ------ ----- --- ----- -- ------
3,003 11,694 1,087 757 1,597 99 18,237
===== ====== ===== === ===== == ======

Investment properties were revalued as of June 30, 2003 on the basis of
their open market value by Sallmanns (Far East) Limited, an independent firm
of chartered surveyors.

10. ACCRUED INVESTMENT INCOME

As of December 31, As of June 30,
----------------- --------------
2000 2001 2002 2002 2003
----- ----- ----- ----- -----
(RMB in millions)

Accrued interest income
Term deposits............ 1,592 2,068 2,589 2,356 2,629
Fixed maturity securities 1,366 1,430 1,591 1,626 1,633
Others................... 60 22 18 21 15
Accrued dividend income... 15 7 -- -- --
----- ----- ----- ----- -----
Total..................... 3,033 3,527 4,198 4,003 4,277
===== ===== ===== ===== =====

11. PREMIUMS RECEIVABLE

The ageing of premiums receivable is within two months.

12. OTHER

As of December 31, As of June 30,
----------------- --------------
2000 2001 2002 2002 2003
----- ----- ----- ----- -----
(RMB in millions)

Advances.................................. 1,413 1,254 1,420 1,362 1,390
Entrusted funds receivable................ 1,494 1,494 1,513 1,504 1,523
Receivable for fund unit redeemed......... -- -- -- 428 --
Deposits.................................. 121 105 103 129 76
Inventory held by real estate subsidiaries 1,996 254 240 256 200
Foreclosed assets......................... 96 196 200 201 218
Long-term deferred expenses............... 70 56 57 63 31
Others.................................... 185 169 54 233 238
----- ----- ----- ----- -----
Total..................................... 5,375 3,528 3,587 4,176 3,676
===== ===== ===== ===== =====

F-43

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

13. BENEFITS, CLAIMS AND EXPENSES

Gross
--------------------------------------
Year ended Six months
December 31, ended June 30,
---------------------- --------------
2000 2001 2002 2002 2003
------ ------ ------ ------ ------
(RMB in millions)

Accident and health claims and claim adjustment
expenses..................................... 3,459 4,786 5,066 2,449 2,888
Life insurance death and other benefits........ 8,467 10,099 7,010 3,869 4,580
Increase in future life policyholder benefits.. 27,738 33,121 45,374 22,793 23,192
------ ------ ------ ------ ------
Total insurance benefits and claims............ 39,664 48,006 57,450 29,111 30,660
====== ====== ====== ====== ======

Ceded
--------------------------------------
Year ended Six months
December 31, ended June 30,
---------------------- --------------
2000 2001 2002 2002 2003
------ ------ ------ ------ ------
(RMB in millions)
Accident and health claims and claim adjustment
expenses..................................... (692) (957) (1,013) (490) (433)
------ ------ ------ ------ ------
Total insurance benefits and claims............ (692) (957) (1,013) (490) (433)
====== ====== ====== ====== ======

Net
--------------------------------------
Year ended Six months
December 31, ended June 30,
---------------------- --------------
2000 2001 2002 2002 2003
------ ------ ------ ------ ------
(RMB in millions)
Accident and health claims and claim adjustment
expenses..................................... 2,767 3,829 4,053 1,959 2,455
Life insurance death and other benefits........ 8,467 10,099 7,010 3,869 4,580
Increase in future life policyholder benefits.. 27,738 33,121 45,374 22,793 23,192
------ ------ ------ ------ ------
Total insurance benefits and claims............ 38,972 47,049 56,437 28,621 30,227
====== ====== ====== ====== ======

14. INSURANCE RESERVES

Long duration contract liabilities arising from traditional life insurance
products include, depending on contract type, policyholder account balances
or the present value of future benefits less present value of valuation
premiums. Short duration contract liabilities relate to accident and health
products of one year duration or less.

F-44

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The liabilities for future life policyholder benefits on long duration
contacts have been established in accordance with the provisions of
Statement of Financial Accounting Standards No. 60 "Accounting and Reporting
by Insurance Enterprises". In accordance with the provisions of this
standard, the present value of estimated future policy benefits less the
present value of estimated future net premiums to be collected from
policyholders are accrued when premium revenue is recognized. These
estimates are based on the following assumptions:

(i) Interest rates are based on estimates of future yields on the Company's
investments. The discount rates used increase from 3.8% to 5.0%, with a
margin of provision for adverse deviation ranging from 0.25% to 0.50%. In
determining its interest rate assumptions, the Company considers past
investment experience, the current and future mix of its investment
portfolio and trends in yields. Actual investment yields in the years ended
December 31, 2000, 2001 and 2002 were 3.8%, 4.1% and 3.8%, respectively.
Assumed interest rates in future years reflect increased investment in
higher yielding securities, including corporate bonds, longer duration
securities and equity securities.

(ii) Mortality and morbidity rates, varying by age of the insured, and lapse
rates, varying by contract type, are based upon expected experience at date
of contract issue plus, where applicable, a margin for adverse deviation.
The mortality, morbidity and lapse assumptions used for 1999 through 2002
are based upon the results of an analysis of the Company's actual mortality,
morbidity and lapse experience incurred in those years. This mortality,
morbidity and lapse experience was found to be comparable in all years. In
setting the mortality assumption, mortality experience was compared to and
expressed as a percentage of the "CL" series of life tables. These tables
were compiled by the People's Insurance Company of China in 1994 and 1995
and issued by the People's Bank of China, the principal regulatory authority
at the time. The tables are based on policy samples drawn from 43
subsidiaries and branches and the mortality experience of these sample
policies during the period January 1, 1990 to December 31, 1993 were
studied. Currently all life insurance companies in China are required to use
these tables for product pricing.

The Company experienced a stable pattern of mortality, morbidity and lapse
experience during the period 1999 to 2002. The aggregate number of deaths
divided by the number of in force policies at the beginning of the year was
0.122% in 2000, 0.124% in 2001 and 0.127% in 2002. The aggregate number of
lapses and terminations divided by the number of in force policies at the
beginning of the year was 9.30% in 2000, 9.56% in 2001 and 9.37% in 2002.

(iii) The assumption for policy administration expenses has been based on
expected unit costs plus, where applicable, a margin for adverse deviation.
Unit costs have been based on an analysis of actual experience. The
per-policy costs were estimated to be 2% of premiums plus a fixed per-policy
expense.

Contracts in loss recognition use best-estimate assumptions of investment
returns, mortality, lapse and policy administration expenses, without
provision for adverse deviation. Mortality, morbidity, lapse and policy
administration costs assumptions are the same as for policies issued since
June 1999, except that there is no provision for adverse deviation so as not
to create future profits. A level 3.8% interest rate comprised the best
estimate of future investment returns on this business. All contracts in
loss recognition were retained by CLIC pursuant to the Restructuring.

Policyholder account balances for investment-type contracts are equal to the
policy account values. Account values consist of an accumulation of gross
premium payments less loadings for expenses, mortality and profit plus
credited interest less withdrawals and other exits, in accordance with the
provisions of Statement of Financial Accounting Standards No. 97 "Accounting
and Reporting by Insurance Enterprises for Certain Long-Duration Contracts
and for the Realized Gains and Losses from the Sale of Investments" .

F-45

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The amount of policyholder dividends to be paid is determined annually.
Policyholder dividends include life policyholders' share of net income and
unrealized appreciation of investments that are required to be allocated by
the insurance contract or by local insurance regulations. Experience
adjustments relating to future policyholder benefits and policyholder
contract deposits vary according to the type of contract. Investment,
mortality and morbidity results may be passed through by experience credits
or as an adjustment to the premium mechanism, subject to local regulatory
provisions.

Reserves for claims and claim adjustment expenses were as follows:

Six months ended
Year ended December 31, June 30,
---------------------- --------------
2000 2001 2002 2002 2003
------ ------ ------ ------ ------
(RMB in millions)

As of January 1
Gross reserves for claims and claim adjustment
expenses.................................... 804 716 867 867 879
Reinsurance recoverable....................... (161) (143) (174) (174) (176)
------ ------ ------ ------ ------
Net reserves for claims and claim adjustment
expenses.................................... 643 573 693 693 703
------ ------ ------ ------ ------
Claims and claim adjustment expenses incurred. 3,458 4,786 5,066 2,449 2,888
Claims and claim adjustment expenses paid..... (3,546) (4,635) (5,054) (2,306) (2,857)

As of December 31/June 30
Net reserves for claims and claim adjustment
expenses.................................... 573 693 703 810 774
Reinsurance recoverable....................... 143 174 176 200 136
------ ------ ------ ------ ------
Gross reserves for claims and claim adjustment
expenses.................................... 716 867 879 1,010 910
====== ====== ====== ====== ======

Accident and health claims are generally settled within two months of when
the claims are reported. Accordingly, no material amount of the charge for
claims incurred relates to prior years. The Group believes that the final
claims and claim adjustment expenses incurred would not differ materially
from the amounts provided at period ends.

Claims paid and incurred, and the ratios of claims incurred to net accident
and health premiums were as follows:

For the six
For the year ended months ended
December 31, June 30,
----------------- -----------
2000 2001 2002 2002 2003
----- ----- ----- ----- -----
(RMB in millions)

Claims incurred--net. 2,767 3,829 4,053 1,959 2,455
Claims incurred ratio 49% 63% 60% 60% 60%

F-46

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

15. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Liabilities are due within thirty days from the balance sheet date. The
carrying values of fixed maturity securities pledged as collateral are as
follows:

As of December 31, As of June 30,
----------------- --------------
2000 2001 2002 2002 2003
---- ------ ----- ----- ----
(RMB in millions)

Fixed maturity securities pledged 89 14,600 3,600 4,500 --
== ====== ===== ===== ==

16. BANK BORROWINGS

As of
As of December 31, June 30,
------------------ ---------
2000 2001 2002 2002 2003
---- ---- ---- ---- ----
Maturity schedule (RMB in millions)

Short-term borrowings. 907 370 311 322 309
Long-term borrowings..
Within 1 year........ -- -- 2 -- 2
Between 1 and 2 years -- -- -- 3 --
Between 2 and 5 years -- 9 -- -- --
Over 5 years......... 14 -- -- -- --
--- --- --- --- ---
Subtotal.............. 14 9 2 3 2
--- --- --- --- ---
Total................. 921 379 313 325 311
=== === === === ===

As of December 31, As of June 30,
------------------ --------------
2000 2001 2002 2002 2003
----- ---- ---- ----- ----
(RMB in millions)

Carrying value of investment properties, net, pledged.. -- 563 365 506 184
Carrying value of inventory pledged.................... 1,905 -- -- -- --
Net book value of property, plant and equipment pledged 84 88 65 84 56
----- --- --- ----- ---
Total.................................................. 1,989 651 430 590 240
===== === === ===== ===

F-47

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

17. PROVISION

Provision for early retirement and termination relates to benefits payable
whenever an employee's employment is terminated before the normal retirement
date or whenever an employee accepts voluntary redundancy in exchange for
these benefits.

Early retirement
and termination
----------------
(RMB in
millions)

As of January 1, 2000.. 24
Additional provision... 62
Payment for the year... (13)
----
As of December 31, 2000 73
----
Additional provision... 324
Payment for the year... (67)
----
As of December 31, 2001 330
----
Additional provision... 224
Payment for the year... (109)
----
As of December 31, 2002 445
----
As of January 1, 2003.. 445
Additional provision... 74
Payment for the year... (59)
----
As of June 30, 2003.... 460
----
As of January 1, 2002.. 330
Additional provision... 112
Payment for the year... (54)
----
As of June 30, 2002.... 388
----

18. STATUTORY INSURANCE FUND

According to the PRC's "Financial Regulations for Insurance Companies", the
Group is required to provide for the insurance guarantee fund at 1% of the
net premiums of general insurance, accident insurance, short-term health
insurance and reinsurance. No additional insurance guarantee fund will be
provided once it reaches 6% of total assets.

F-48

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

19. OTHER LIABILITIES

As of December 31, As of June 30,
----------------- --------------
2000 2001 2002 2002 2003
----- ----- ----- ----- -----
(RMB in millions)

Reserve for commission and expenses 964 1,110 1,047 1,204 1,138
Agent deposits..................... 248 351 451 420 477
Salary payable..................... 285 385 667 1,000 810
Staff welfare payable.............. 276 405 561 454 594
Tax payable........................ 247 236 258 227 208
Payable to constructors............ 373 397 336 362 324
Reinsurance liabilities............ 95 191 200 183 96
Regulatory fee payable............. -- 55 108 29 54
Others............................. 1,001 1,076 1,088 1,088 1,099
----- ----- ----- ----- -----
Total.............................. 3,489 4,206 4,716 4,967 4,800
===== ===== ===== ===== =====

20. PROFIT/(LOSS) BEFORE TAXATION

Profit/(loss) before taxation is stated after charging the following:

Six month ended
Year ended December 31, June 30,
----------------------- ---------------
2000 2001 2002 2002 2003
----- ----- ----- ------- -------
(RMB in millions)

Charging
Staff costs..........................................
Wages and salary..................................... 1,241 1,726 2,493 1,411 1,594
Housing benefits..................................... 1,476 565 90 41 54
Contribution to the defined contribution pension plan 60 105 146 80 77
Depreciation--owned property, plant and equipment.... 914 1,085 1,323 643 720
Loss on disposal of property, plant and equipment.... 39 49 91 32 36
Deficit on revaluation of investment properties...... -- -- -- -- 181

21. TAXATION

The reconciliation between the Group's effective tax rate and the statutory
tax rate of 33% in the PRC is as follows:

Six months ended
Year ended December 31, June 30,
---------------------- ---------------
2000 2001 2002 2002 2003
------ ------ ------ ------ ----
(RMB in millions)

Profit/(loss) before income tax expenses and minority
interests.......................................... (6,935) (3,297) (2,234) 96 (725)
------ ------ ------ ------ ----
Tax computed at the statutory tax rate of 33%........ (2,289) (1,087) (737) 32 (239)
Non-taxable income.................................. (21) (14) (8) (2) --
Expenses not deductible for tax purposes............ 510 1,267 1,546 531 575
Valuation allowance................................. 1,814 (162) (787) (558) (328)
------ ------ ------ ------ ----
Income taxes at effective tax rate................... 14 4 14 3 8
====== ====== ====== ====== ====

F-49

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

No deferred tax assets have been recognized by the Group. Deferred tax book
assets and liabilities, and valuation allowance, are analyzed as follows:

Six months ended
Year ended December 31, June 30,
------------------------- ----------------
2000 2001 2002 2002 2003
------- ------- ------- ------- -------
(RMB in millions)

Provided for in respect of:
Tax value of loss carried forward............ 11,993 11,862 10,082 11,798 10,904
Future policyholder benefits and policyholder
contract deposits and other funds.......... 42,723 44,036 47,041 45,993 47,468
Provision for asset impairment............... 2,196 2,013 1,708 1,981 2,039
Deferred policy acquisition costs............ (1,938) (3,608) (5,945) (4,730) (6,993)
Others....................................... 151 566 915 243 903
------- ------- ------- ------- -------
55,125 54,869 53,801 55,285 54,321
Valuation allowance........................... (55,125) (54,869) (53,801) (55,285) (54,321)
------- ------- ------- ------- -------

As of December 31, 2000, 2001, and 2002 and June 30, 2002 and 2003 the Group
had unrecognized tax losses of RMB 36,342 million, RMB 35,945 million, RMB
30,551 million, RMB 35,750 million and RMB 33,042 million respectively, to
carry forward to offset against future taxable income. These tax losses will
expire in five years.

22. EARNINGS/LOSS PER SHARE

Basic earnings/loss per share for the Relevant Periods have been computed by
dividing the profit/loss for the period by 20,000 million shares, the number
of shares issued by the Company upon its incorporation on June 30, 2003.
There is no difference between basic and diluted earnings/loss per share.

23. SIGNIFICANT RELATED PARTY TRANSACTIONS

(a) Related parties

Related parties are those parties which have the ability, directly or
indirectly, to control the other party or exercise significant influence
over the other party in making financial and operating decisions. Parties
are also considered to be related if they are subject to common control or
common significant influence.

Significant related party Relationship with the Company
------------------------- ------------------------------------

Huixian Holding Company. Associated company, Common directors

(b) Related party transactions

In addition to the related party transactions undertaken in connection with
the Restructuring described in Note 1 and the advance to associated
companies as described in Note 5 above, during the Relevant Periods the
Group has not entered into other transactions with related parties.

F-50

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

24. CONTINGENCIES

The following is a summary of the significant contingent liabilities:

As of June
As of December 31, 30,
------------------ ---------
2000 2001 2002 2002 2003
---- ---- ---- ---- ----
(RMB in millions)

Outstanding loan guarantees 442 447 443 445 145
Pending lawsuits........... 56 73 189 166 87

(a) The Group has acted as the guarantor for external borrowings by certain
third-party entities. For those guarantees where management believes it
is probable that the Group will have to pay up those guarantees,
provision has been made for the probable losses to the Group and at
amounts based on its best estimate. Other outstanding guarantees are
disclosed as contingent liabilities above.

(b) The Group has been named in a number of lawsuits arising in the ordinary
course of business. Provision has been made for the probable losses to
the Group on those claims when management can reasonably estimate the
outcome of the lawsuits taking into account the legal advice. No
provision has been made for pending lawsuits when the outcome of the
lawsuits cannot be reasonably estimated or management believes the
probability of loss is remote.

(c) For the above contingent liabilities, provision of RMB 4 million, RMB 4
million and RMB 42 million, RMB 31 million and RMB 71 million has been
made as of December 31, 2000, 2001 and 2002 and June 30, 2002 and 2003,
respectively.

25. COMMITMENTS

(a) Capital commitments

The Group has the following outstanding capital commitments not provided for
in the consolidated financial statements:

As of December 31, As of June 30,
------------------ --------------
2000 2001 2002 2002 2003
---- ---- ---- ---- ----
(RMB in millions)

Acquisition of property, plant and equipment 211 238 752 961 532

(b) Operating lease commitments

The Group has commitments to make the following future minimum lease
payments under non-cancelable operating leases:

As of December 31, As of June 30,
------------------ --------------
2000 2001 2002 2002 2003
---- ---- ---- ---- ----
(RMB in millions)

Land and buildings
Not later than one year.......................... 41 17 63 66 64
Later than one year but not later than five years 88 97 169 108 120
Later than five years............................ 8 33 22 14 12

F-51

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The operating lease payments charged to the profit and loss accounts for the
years ended December 31, 2000, 2001 and 2002 and for the six months ended
June 30, 2002 and 2003 were RMB 239 million, RMB 241 million, RMB 287
million, RMB 123 million and RMB 139 million, respectively.

26. RECONCILIATION OF H.K. GAAP AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES ("U.S. GAAP")

The consolidated financial statements of the Group have been prepared in
accordance with H.K. GAAP, which differs in certain significant respects
from U.S. GAAP. Differences between H.K. GAAP and U.S. GAAP, which may have
significant impacts on consolidated net profit/(loss) and consolidated
owners' equity, are described below.

The effect on net profit/(loss) of significant differences between H.K. GAAP
and U.S. GAAP for the year ended December 31, 2000, 2001 and 2002 and for
the six months ended June 30, 2002 and 2003 is as follows:

Six months
ended
Year ended December 31, June 30,
---------------------- ---------
2000 2001 2002 2002 2003
- ------ ------ ------ ---- ----
(RMB in millions)

The effect on owners' equity of significant differences between H.K. GAAP
and U.S. GAAP as of December 31, 2001 and 2002 and June 30, 2003 is as
follows:

Six months
ended
Year ended December 31 June 30
--------------------- ----------
2001 2002 2003
- -------- -------- ----------
(RMB in millions)

Owners' equity under H.K. GAAP.................... (172,348) (175,463) (176,353)

U.S. GAAP adjustments
Accumulated depreciation of investment properties (111) (178) (201)
Deficit on revaluation of investment properties.. -- -- 181
-------- -------- --------
Owners' equity under U.S. GAAP.................... (172,459) (175,641) (176,373)
======== ======== ========

Investment Properties

Under H.K. GAAP, investment properties are valued on an open market basis.
Under U.S. GAAP, investment properties are stated at historical cost less
accumulated depreciation and accumulated impairment loss. Cost of investment
properties, less residual value, is depreciated using a straight line method
over its estimated useful life.

F-52

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Property, plant, and equipment

Certain property, plant and equipment on hand as of January 1, 2000 have
been valued at fair values rather than at historical cost less depreciation,
which is required by U.S. GAAP. The Group has not been able to quantify the
effect of the difference in accounting treatment because, prior to January
1, 1997, the predecessor company did not maintain sufficiently detailed
historical cost records. The fair market values recorded in the opening
balance of the Group as of January 1, 2000 have been carried forward as the
deemed cost.

Accumulated other comprehensive income/(loss) represents the cumulative
gains and losses on items that are not reflected in earnings. The balances
and activities for the years ended December 31, 2000, 2001 and 2002 and for
the six months ended June 30, 2002 and 2003 are as follows:

Six months
Year ended December 31, ended June 30,
---------------------- -------------
2000 2001 2002 2002 2003
------ ----- ---- ---- ----
(RMB in millions)

Changes in net unrealized gains/ (losses) on investment
securities:
Net unrealized gains/(losses) arising during the period....... (1,048) 1,601 (234) 826 (191)
Reclassification adjustment for gains/(losses) included in net
earnings.................................................... 18 (387) (747) 157 (10)
------ ----- ---- ---- ----
Changes in net unrealized gains/(losses) on investment
securities.................................................. (1,030) 1,214 (981) 983 (201)
Adjustments for:
Deferred acquisition costs.................................... 124 (166) 110 (103) 25
------ ----- ---- ---- ----
Total other comprehensive income/(loss)....................... (906) 1,048 (871) 880 (176)
====== ===== ==== ==== ====

Statutory capital information

2000 2001 2002
------- ------- -------
(RMB in millions)

Statutory capital and surplus........................................ (54,903) (78,309) (71,680)
Minimum statutory capital and surplus necessary to satisfy regulatory
requirements....................................................... 11,642 13,649 17,453

According to Article 2003.1 issued by the China Insurance Regulatory
Commission (CIRC), all insurance companies have to report their statutory
capital and surplus (i.e., solvency margin) to the CIRC at the end of each
fiscal year. The solvency adequacy ratio is computed by dividing the actual
solvency margin by the minimum solvency margin. CIRC will closely monitor
those insurance companies with solvency adequacy ratio less than 100% and
may, depending on the individual circumstances, undertake certain regulatory
measures, including but not limited to restricting the payment of dividends.
As of December 31, 2001 and 2002 and June 30, 2003, the Group had
accumulated losses and no amounts were available for dividend payments to
stockholders.

Recently issued accounting standards

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 143. "Accounting
for Asset Retirement Obligations". SFAS No. 143

F-53

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

requires the Group to record the fair value of an asset retirement
obligation as a liability in the period in which it incurs a legal
obligation associated with the retirement of tangible long-lived assets that
result from the acquisition, construction, development and/or normal use of
the assets. The Group is required to adopt SFAS No. 143 on January 1, 2003.
The Group has not determined the potential effects that the adoption of this
Statement will have on the Group's combined financial statements.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" which applies to costs associated with an
exit activity (including restructuring) or with a disposal of long-lived
assets. SFAS No. 146 requires an entity to record a liability for costs
associated with an exit or disposal activity when that liability is incurred
and can be measured at fair value. Commitment to an exit plan or a plan of
disposal expresses only management's intended future actions and does not
meet the requirement for recognizing a liability and the related expense. An
entity is required to disclose information about its exit and disposal
activities, the related costs, and changes in those costs in the notes to
the interim and annual financial statements that include the period in which
an exit or disposal activity is initiated and in any subsequent period until
the activity is completed. The Group is required to adopt SFAS No. 146 on
January 1, 2003.

The provisions of SFAS No. 146 are required to be applied prospectively
after the adoption date to newly exited or disposed activities. Therefore,
management cannot determine the potential effects that the adoption of SFAS
No. 146 will have on the Group's combined financial statements.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock Based
Compensation--Transition and Disclosure, an amendment of FASB Statement No.
123" to provide alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirements
of SFAS No. 123, Accounting for Stock-Based Compensation, to require
prominent disclosures in both annual and interim financial statements about
the method of accounting for stock-based employee compensation and the
effect of the method used on reported results.

The amendments to SFAS No. 123 in paragraphs 2(a)-2(e) of the Statement
shall be effective for financial statements for fiscal years ending after
December 15, 2002. The amendment to SFAS No. 123 in paragraph 2(f) of the
Statement and the amendment to Opinion 28 in paragraph 3 is effective for
financial reports containing condensed financial statements for interim
periods beginning after December 15, 2002. The Group does not expect that
the adoption of SFAS No. 148 will have a material impact on the Group's
combined financial statements.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". This statement amends and
clarifies the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and hedging activities
under SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities". This statement clarifies when a contract with an initial net
investment meets the characteristic of a derivative and when a derivative
contains a financing component. This statement also amends the definition of
an underlying to conform to the language contained in FIN 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others". This statement is effective for
contracts entered into or modified after June 30, 2003, and for hedging
relationships designated after June 30, 2003. The Group is currently
assessing the impact of this statement on its results of operations,
financial position and cash flows upon adoption and has not yet completed
that assessment.

F-54

CHINA LIFE INSURANCE COMPANY LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". SFAS No.
150 changes the accounting for certain financial instruments that, under
previous guidance, could be classified as equity or "mezzanine" equity, but
now requires those instruments to be classified as liabilities (or assets in
some circumstances) in the balance sheet. Further, SFAS No. 150 requires
disclosure regarding the terms of those instruments and settlement
alternatives. The guidance in SFAS No. 150 is generally effective for all
financial instruments entered into or modified after May 31, 2003, and is
otherwise effective at the beginning of the first interim period beginning
after June 15, 2003. The Group is currently assessing the impact of this
statement on its results of operations, financial position and cash flows
upon adoption and has not yet completed that assessment.

In November 2002, FASB issued FASB Interpretation No. 45 ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees." FIN 45
requires a guarantor to recognize a liability at the inception of certain
guarantees for the fair value of the obligation, including the ongoing
obligation to stand ready to perform over the term of the guarantee.
Guarantees, as defined in FIN 45, include contracts that contingently
require the Group to make payments to a guaranteed party based on changes in
an underlying that is related to an asset, liability or equity security of
the guaranteed party, performance guarantees, indemnification agreements or
indirect guarantees of indebtedness of others. This new accounting is
effective for certain guarantees issued or modified after December 31, 2002.
In addition, FIN 45 requires certain additional disclosures that are
presented in Note 29. Management does not expect that the adoption of FIN 45
will have a material impact on the Group's financial position or its results
of operations.

In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities," an interpretation of ARB No.
51. FIN 46 provides a new framework for identifying variable interest
entities ("VIEs") and determining when a company should include the assets,
liabilities, noncontrolling interests and results of activities of VIEs in
its consolidated financial statements. FIN 46 requires VIEs to be
consolidated by a company if that company is subject to a majority of the
risk of loss from the VIEs' activities or entitled to receive a majority of
the entity's residual returns, or both. FIN 46 is effective immediately for
VIEs created after January 31, 2003 and is effective January 1, 2004 for
VIEs created prior to February 1, 2003. The Group is currently assessing the
impact of FIN 46 on its financial position and its operations.

In July 2003, the Accounting Standards Executive Committee ("AcSEC") issued
Statement of Position ("SOP") 03-1, "Accounting and Reporting by Insurance
Enterprises for Certain Non-Traditional Long-Duration Contracts and for
Separate Accounts." The SOP provides guidance on accounting and reporting by
insurance enterprises for certain non-traditional long-duration contracts
and for separate accounts. The SOP is effective for financial statements for
fiscal years beginning after December 15, 2003, with earlier adoption
encouraged. The SOP may not be applied retroactively to prior years'
financial statements, and initial application should be as of the beginning
of an entity's fiscal year. Management does not expect that the adoption of
SOP 03-1 will have a material impact on the Group's financial position or
its results of operations.

F-55

ANNEX A--ACTUARIAL CONSULTANTS' REPORT OF TILLINGHAST-TOWERS PERRIN

[GRAPHIC]

20 November 2003

The Directors
China Life Insurance Company Limited
16 Chaowai Avenue
Chaoyang District
Beijing 100020

Dear Sirs

ACTUARIAL CONSULTANTS' REPORT

1. Introduction

Tillinghast-Towers Perrin, the financial services consulting division of
Towers, Perrin, Forster & Crosby Inc, ("Tillinghast") has been engaged by China
Life Insurance Company Limited ("China Life") to provide actuarial advice and
opinions on matters relating to China Life's life insurance business. As part
of this engagement, we have been asked to assess embedded value and value of
one year's sales of China Life and to prepare a report on these matters for
inclusion in a prospectus accompanying this report ("the Prospectus") and in
connection with the proposed offering of American depository shares ("ADSs")
and overseas listed foreign-invested shares ("H shares").

This report sets out the scope of work that we have undertaken and
summarises the results of our work.

As described more fully in the section of the Prospectus "The
Restructuring", China Life was formed on 30 June 2003 as a joint stock company
in connection with the restructuring of China Life Insurance Company ("CLIC")
and a restructuring agreement has been signed between CLIC and China Life
giving effect to the restructuring.

The restructuring agreement between CLIC and China Life defines the policies
that were transferred from CLIC to China Life. The definition of a transferred
policy is summarised in the section of the Prospectus "The Restructuring".

Cash, specified investment assets and various other assets were also
transferred to China Life under the restructuring agreement. The net assets
(defined as assets less policy reserves and other liabilities, all measured on
the statutory bases of the People's Republic of China ("PRC") ) transferred to
China Life had a carrying value at 30 June 2003 of RMB 29.6 billion. In
consideration of this transfer, China Life issued 20 billion domestic shares to
CLIC.

CLIC's contracts with its intermediaries were also transferred to China Life.

A-1

China Life has entered into certain management and other agreements with
CLIC, as more fully explained in the section of the Prospectus "Relationship
with CLIC". These agreements include a Policy Management Agreement, under which
China Life has agreed to provide a number of policy administration services to
CLIC relating to the non-transferred policies. In addition, China Life and CLIC
have established a jointly owned asset management company, China Life Asset
Management Company Limited, which in turn entered into agreements with China
Life and with CLIC to provide investment management services to each company.

2. Scope of Work

The scope of our work was to assess and report on embedded value and value
of one year's sales of China Life as follows:

. Embedded value at 30 June 2003; and

. Value of one year's sales in respect of business issued during the year
to 30 June 2003.

For this purpose, embedded value has been determined on the basis of the
restructuring having been effective at 30 June 2003, and value of one year's
sales has been determined as if China Life had been fully operational during
the year to 30 June 2003.

The scope of our work did not include consideration of the financial
implications for China Life of the Policy Management Agreement, its holding in
China Life Asset Management Company Limited, or of other operational agreements
between China Life and CLIC. Consequently, the results shown in this report
exclude any value impact for China Life arising from these arrangements.

3. Definition of Embedded Value and Value of One Year's Sales

The embedded value of a life insurer is defined as the sum of the adjusted
net worth and the value of in force business allowing for the cost of solvency
margin held.

Adjusted net worth is equal to the sum of:

. Net assets, defined as assets less policy reserves and other liabilities,
all measured on PRC statutory basis; and

. Adjustment for relevant differences between the market value of assets
and the value determined on PRC statutory basis, together with relevant
adjustments to other liabilities.

The value of in force business and the value of one year's sales are
calculated as the discounted value of the projected stream of future after-tax
distributable profits for existing business in force at the valuation date and
for one year's sales respectively. Distributable profits are those profits
arising after allowance for policy reserves on the required PRC statutory
reserving basis and after allowance for solvency margins at the required
regulatory minimum level. The basis of calculation of the minimum solvency
margin is described in the section of the Prospectus "Regulation".

In Tables 4 and 5, we provide measures of China Life's embedded value and
value of one year's sales for long term business, on a range of assumptions, to
assist China Life in forming a view on the value of this business. In Table 6,
we provide measures of China Life's value of one year's sales for short term
business, on a range of assumptions, to assist China Life in forming a view on
the value of this business.

We have shown the cost of solvency margin as a separate component of the
embedded values and we have shown the value of one year's sales before and
after cost of solvency margin. This is to facilitate assessment of

A-2

the impact on value of holding alternative levels of solvency margin in excess
of the required regulatory minimum capital.

The values shown in this report have been determined using a deterministic
discounted cashflow methodology. This methodology makes implicit allowance for
the cost of investment guarantees and policyholder options, asset/liability
mismatch risk, credit risk and the economic cost of capital through the use of
a risk-adjusted discount rate. Clearly, the higher the discount rate, the
greater the allowance for these factors.

As a relatively recent development, alternative valuation methodologies and
approaches have emerged (for example, "market-consistent" methods) that make
explicit allowance for the above factors. Our work in preparing this report has
included consideration of measures of value that may be obtained from applying
such an alternative method. Based on this work, we have concluded that, under
current market and economic conditions and given the current nature and mix of
business offered by China Life, the range of deterministic valuation results
shown in this report incorporate reasonable allowance for the above factors.

It should be noted that, in assessing the total value of a life insurer, the
value attributable to future sales may be determined as the product of the
value of sales issued in one year and a multiplier which reflects an allowance
for future sales growth and the risks associated with achieving future sales at
the assumed profit margin. Tillinghast's scope of work for this opinion did not
extend to a consideration of those matters by which to assess the total value
of future sales of China Life.

4. Policy Data

We have been provided with the policy database underlying the summary of
transferred individual and group policies ("long term business policies") shown
in the section of the Prospectus "The Restructuring". Our determination of the
value of in force business for these policies at 30 June 2003 is based on this
database.

We have also used the policy databases as at 30 June 2003 and 31 December
2002 to estimate the volume and mix of new long term insurance business issued
during each of the preceding six months from these dates in order to estimate
the volume and mix of new long term insurance business issued during the year
to 30 June 2003. We have used this estimate of new business volumes and mix as
the basis for our calculation of the value of one year's sales for the year to
30 June 2003.

The manner in which data has been recorded in the above policy databases has
required us to exercise our professional judgement in order to derive estimates
of China Life's historical new business volumes from these databases. In the
absence of another source of new business data against which to validate our
estimates, we have undertaken certain tests that have sought to establish, with
reasonable assurance, whether this exercise of professional judgement has been
reasonable.

We consider that the tests we have applied are reasonable in the
circumstances and we are satisfied that these tests provide us with reasonable
assurance that the aggregate values of one year's sales shown in this report
are not materially misstated on account of the estimation process we have
applied. We are therefore satisfied that our exercise of professional judgement
has been reasonable in the circumstances.

New business premium volumes in respect of short term health and accident
business have been based on premiums received in the year to 30 June 2003.

5. Embedded Values and Values of One Year's Sales

Subject to the reliances and limitations set out in this report, we set out
in Tables 4 and 5 at the end of this report our assessment of China Life's
embedded value and value of one year's sales for long term business under
alternative assumptions. In Table 6, we set out our assessment of China Life's
value of one year's sales for short term business, under alternative
assumptions.

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In preparing these results, we have used a financial projection model of
China Life's life insurance business. In developing this model, we have relied
on information provided by, or on behalf of, China Life and which is summarised
in Section 6 of this report.

Section 6 also sets out important limitations behind any assessment of the
value of life insurance business, to which the reader's attention is drawn.

The values in Tables 4, 5 and 6 have been shown under alternative
assumptions given the particular uncertainties associated with the future
investment environment in China and other future operational matters in
relation to China Life's portfolio. These uncertainties are described more
fully in the section of the Prospectus "Risk Factors". The reader should
consider all of the risk factors set out in the Prospectus in assessing and
interpreting the results shown in Tables 4, 5 and 6 at the end of this report.

In our assessment, the situation of China Life is markedly different in
nature from that of companies in mature markets and stable environments. The
environment in which China Life is operating is extremely dynamic: China Life
is a rapidly growing company, introducing new ranges of products, undertaking a
substantial restructuring, and introducing a substantial change in strategy and
operations in a relatively immature market undergoing regulatory reform. In
these circumstances, past operational experience is less reliable as an
indicator of likely future experience than the past experience of a mature
company operating in a mature market.

Consequently, we have had to develop assumptions based on our judgement, our
knowledge of the Chinese insurance market and general industry experience,
which is largely drawn from other Asian markets in similar situations, although
it must be stressed that China Life is in a unique position in a unique market.
Thus our assumptions should be regarded only as being illustrative of possible
future experience. We strongly recommend that the readers of this report
consider the significance of each assumption by referring to the various values
given in order to gain an understanding of the impact on value that results
from the use of alternative assumptions.

In the remainder of this section we discuss the key assumptions used in the
determination of embedded value and value of one year's sales.

Discount Rates

We have shown values at a range of discount rates. The discount rate
appropriate to an investor will depend on the investor's own requirements, tax
position and perception of the risks associated with the realisation of future
profits. In calculating values at alternative discount rates, all other
assumptions, including those relating to investment returns, have been left
unchanged.

Net Worth Adjustments

In developing the adjusted net worth, we have allowed, where relevant, for
the difference between the market value of assets and the value as determined
on the PRC statutory basis. We have also allowed for certain miscellaneous
adjustments to current liabilities. The total net of tax adjustment amounted to
a reduction of RMB 0.1 billion.

Reserving Basis

The China Insurance Regulatory Commission ("CIRC") has introduced a new
reserving basis in respect of participating business to be effective from 31
December 2003 (in the case of China Life). The values shown in Tables 4 and 5
allow for the effect of the new reserving basis as if the new basis had been
effective as at 30 June 2003. The impact on value of the estimated increase in
reserve and solvency margin of approximately RMB 0.1 billion as at 30 June 2003
under the new basis has been allowed for in the value of in force business and
cost of solvency margin shown in Table 4.

A-4

We have calculated the value of one year's sales using the new reserving
basis for participating business.

Values using the previous reserving basis are also shown.

Investment Returns

We have shown values under alternative investment scenarios.

Under Scenario 1, future returns are based on forward rates derived from
yields available on Chinese Government Bonds in the Interbank market over the
10 trading days prior to the valuation date. The forward rates are such that
investment returns used in the valuation are projected to increase. The
investment return assumptions have been set to be consistent with the basis of
valuation of the assets backing the policy liabilities. Projected returns have
been set on a book yield basis for assets assumed to be held to maturity, and
on a market yield basis for other assets. We have applied the projected returns
by asset class to the long term asset mix indicated by China Life management.

The resulting assumed investment returns are shown in Table 1.

Table 1

Investment Return Assumption as at 30 June 2003

Calendar Year Investment Return Assumption
------------- ----------------------------

2003 3.64%
2004 3.70%
2005 3.79%
2006 3.90%
2007 4.01%
2008 4.11%
2009 4.19%
2010 4.26%
2011 4.33%
2012 4.41%
2013 4.48%
2014 4.55%
2015 4.62%
2016 4.69%
2017 4.75%
2018 4.83%
2019 4.89%
2020 4.94%
2021 4.97%
2022+ 4.99%

A-5

Values using the following alternative investment scenarios are also shown:

. Investment returns representing a scenario under which higher returns are
assumed for some asset classes with additional allowance for the impact
of a change in asset mix arising from a potential future relaxation of
regulations restricting permitted investments. This scenario has been
prepared by China Life. These returns are shown in Table 2.

Table 2

China Life's Higher Investment Return Assumption

Calendar Year Investment Return Assumption
------------- ----------------------------

2003 3.90%
2004 4.00%
2005 4.10%
2006 4.20%
2007 4.30%
2008 4.40%
2009 4.55%
2010 4.70%
2011 4.85%
2012+ 5.00%

. Investment return of a constant 4% pa.

Expenses

Unit cost assumptions have been developed using the total non-commission
expense base in 2002 of China Life and CLIC combined. The projected expenses
based on these unit costs when combined with the explicit allowance for
commissions and handling fees (see below) equate to approximately 95% of
expense allowances priced into products which is consistent with China Life and
CLIC combined experience over the last three years. Based on China Life
management's stated intention to improve the expense efficiency of its
operations, Scenario 1 assumes no future inflation of per policy expenses.

Values using the following alternative scenarios are also shown:

. Expenses equivalent to approximately 90% of expense allowances;

. Expense equivalent to approximately 100% of expense allowances; and

. Per policy expenses inflating at 2.5% pa.

Our assessment of embedded value of China Life excludes expenses incurred by
China Life in connection with the administration and investment management of
CLIC policies and assets under the Policy Management and Asset Management
Agreements. In addition, it excludes all revenue derived by China Life in
respect of these agreements.

Commission and Handling Fees

We have allowed for commission payments under the commission schedules
provided to us by China Life. For Group business and for products sold via
banks, we have allowed for a handling fee as a percentage of new premium, based
on experience in 2002.

A-6

Mortality

Assumptions have been developed based on input from China Life as to their
past experience and expectations of current and future experience, our
knowledge of the Chinese insurance market and our knowledge of other Asian
markets. Mortality assumptions have been expressed as a percentage of the
standard industry mortality tables: "China Life Tables". No allowance has been
made in the assumed mortality basis for AIDS-related deaths. China Life's
policies exclude payment of benefits in such circumstances and we have relied
on the effectiveness of this exclusion in setting the assumed mortality basis.
Scenario 1 assumes ultimate mortality rates of:

. Life products: 65% of China Life Table for non-annuitants.

. Deferred annuity products: 65% of China Life Table for annuitants,
together with an allowance for future mortality improvements.

In both cases, selection factors were also applied of 50% in year 1 and 25%
in year 2, with ultimate rates applicable thereafter.

Values using the following alternative scenarios are also shown:

. Ultimate mortality rates increased by 25 percentage points (i.e. to
ultimate rates of 90% of the above tables together with an allowance for
future mortality improvements for annuitants); and

. Ultimate mortality rates of non-annuitants increased by 25 percentage
points (i.e. to ultimate rates of 90% of table) and of annuitants
decreased by 25 percentage points (i.e. to ultimate rates of 40% of
table) together with an allowance for future mortality improvements.

Morbidity

Since the transferred long term policies of China Life have all been issued
on or after 10 June 1999, China Life has no morbidity experience on its
policies beyond the 4/th/ policy year.

Assumptions have been developed based on input from China Life as to their
past experience and expectations of current and future experience, our
knowledge of the Chinese insurance market, our knowledge of other Asian markets
and our understanding of typical terms available from reinsurers for such
risks. Scenario 1 assumes claims equal to 95% of the claims rates assumed in
the product pricing basis.

Values using the following alternative scenarios are also shown:

. 120% of pricing basis; and

. 70% of pricing basis.

Lapse and Surrender Rates

Since the transferred long term policies of China Life have all been issued
on or after 10 June 1999, China Life has no experience of lapse and surrender
rates on its policies beyond the 4/th/ policy year.

A-7

Assumptions have been developed based on input from China Life management as
to their past lapse and surrender experience and expectations of current and
future experience, our knowledge of the Chinese insurance market and our
knowledge of other Asian markets. Scenario 1 assumes lapse and surrender rates
as shown in Table 3:

Table 3

Lapse and Surrender Assumptions

Policy Year
------------------
1 2 3 4+
- --- --- --- ---

Regular Premium during premium paying period
Annuity.............................................. 25% 10% 10% 5%
Education............................................ 7.5% 5% 5% 5%
Others............................................... 10% 7.5% 5% 5%
Single Premium and after end of premium paying period
Annuity.............................................. 1% 5% 5% 5%
Others............................................... 1% 2.5% 2.5% 2.5%

The value of in force business and value of one year's sales are highly
sensitive to the assumed future lapse and surrender rates.

Values using the following alternative scenarios are also shown:

. First 2 policy years lapse and surrender rates doubled (with the lapse
and surrender rate assumptions for regular premium annuity being capped
at 35% in policy year 1); and

. All lapse and surrender rates doubled (with the lapse and surrender rate
assumptions for regular premium annuity being capped at 35% in policy
year 1).

Policyholder Dividends

Policyholder dividends were allowed for on the basis of China Life's
intended approach to the management of dividends, as advised by the company:

. Individual participating business: 70% of interest and mortality surplus;
and

. Group participating annuity business: 70% of interest surplus.

Values assuming 80% rather than 70% are also shown as an alternative
scenario.

Tax

Tax is assumed to be payable at 33% of profits, with exemption for certain
investment income, including income from Chinese government bonds, and dividend
income from investment funds. It is also assumed that certain salary expenses
are not deductible. Based on advice received from the management of China Life
we have assumed that 25% of total investment income is tax-exempt, and that 5%
of non-commission expenses are not deductible in determining taxable profits.

Values assuming that no income is tax-exempt are also shown as an
alternative scenario.

Values assuming that all non-commission expenses are tax deductible and
values assuming 10% of non-commission expenses are not tax deductible are also
shown as alternative scenarios.

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Staff Welfare Fund

All values are after allowance for contributions to the staff welfare fund
of 10% of after tax profits (where positive).

New Business Product Mix

The mix of new business used to determine the value of one year's sales is
based on the actual mix of new business sold in the 12 months to 30 June 2003.

New long term individual single premium business is predominantly
participating business. New long term individual regular premium business
issued in the 12 months to 30 June 2003 is split approximately 51%:49%
participating: non-participating. To illustrate the effect of a different mix
of new long term individual regular premium business, values assuming a split
of 66%:34% participating: non-participating are also shown as an alternative
scenario.

Short Term Business

Short term business covers accident business and health business. This
business has a term of one year, and all renewals are regarded as new business.
As such, a nil value is attributed to this business in the embedded value, and
the value of one year's sales represents the value of one year's profits from
the business written or renewed in the prior year. Values are shown in Table 6.

We have set claim ratio and expense ratio assumptions based on China Life's
experience in 2001 and 2002 and on input from China Life management on the
intended basis for managing this business. In Scenario 1, claim ratios as a
percentage of premium income are assumed to be 40% for accident and 100% for
health business.

China Life management have further informed us that this business will be
closely monitored and controlled. Consequently, value using alternative
scenarios based on relatively small changes in claim ratios of 10 percentage
points are shown. Additional alternative scenarios can thus be determined by
simple interpolation and extrapolation.

6. Reliances and Limitations

In performing our work, we have relied on audited and unaudited information
supplied to us by, or on behalf of, China Life for periods up to 30 June 2003
and on information from a range of other sources.

In particular, we have relied on:

. The databases of China Life's long term insurance policies, including the
numbers of and types of policies issued and in force (including policy
details), levels of in force premiums and volumes of new business written;

. Data regarding China Life's short term insurance business;

. Historical and pro forma financial information in relation to China Life
as at 30 June 2003 and prior dates;

. The terms of the restructuring agreement between CLIC and China Life;

. Information regarding both market and book value of China Life's assets;

. Information regarding the exemption of certain investment income for the
purpose of determining taxable profits;

A-9

. Information regarding the deductibility of salary expenses for the
purpose of determining taxable profits; and

. Information regarding the difference between the market value of assets
and the value as determined on the PRC statutory basis.

Reliance was also placed on, but not limited to, the accuracy and
completeness of information regarding historical operating experience,
commission and override payments to agents and distributors, regulatory
returns, details of policy terms and conditions and the terms of reinsurance
arrangements.

We have reviewed summary statistics from the database of China Life's long
term insurance policies for reasonableness and consistency, which has comprised
primarily a series of reconciliations to the information previously reported by
CLIC in the regulatory returns for its insurance business.

We have also reviewed certain of the more general business information
provided to us for reasonableness and consistency with our knowledge of the
life insurance industry but we have adopted, without review, the financial
statement information and information regarding asset values, as these fall
outside of our area of expertise. It should be noted that we have not carried
out an independent verification, or audit, of the accuracy or completeness of
the policy data and other information supplied to us.

In determining the results shown in this report, we have considered only
those claims made by life insurance policyholders in the normal course of
business under the terms of the transferred policies, as defined by the
restructuring agreement.

We have not reviewed the value or quality of the asset portfolio of China
Life, nor have we reviewed the adequacy of balance sheet provisions.

The values attributed to the life insurance business are highly dependent on
the results of financial projections. In developing the projections, numerous
assumptions have been made with respect to economic conditions and other
factors, many of which are beyond China Life's control. Changes in the internal
or external environment will affect the suitability of the parameters used in
the projections and could alter the projected results substantially. In
addition, deviations from most probable experience are normal and are to be
expected. Even without changes in the perceived environments, and in parameters
used to reflect them, actual results will vary from those projected due to
normal random fluctuations.

7. Disclosures and Consents

Tillinghast has previously been engaged by CLIC to provide advice and
assistance on various actuarial matters in connection with the restructure of
CLIC and the offer of shares in China Life. Tillinghast has given, and not
withdrawn, its written consent to the inclusion of this report and its name
within the Prospectus in the form and context in which they are included.
Tillinghast does not authorise or cause the issue of this Prospectus and takes
no responsibility for its contents.

Yours faithfully
for Tillinghast-Towers Perrin

/s/ Mark Saunders
Mark Saunders
Principal
Fellow of the Institute of Actuaries

A-10

Table 4

Embedded Value of China Life at 30 June 2003, with variation in assumptions
under alternative scenarios (RMB million)

Expense Lapse
Investment Expense Expense Scenario 4 Scenario 2 Lapse
Risk Reserve Investment Scenario 3 Scenario 2 Scenario 3 "Inflation "Double Scenario 3
Discount Scenario 2 Scenario 2 "Level "c.90% "c.100% of 2.5% 1st 2 "Double
Rate Scenario 1 "Previous" "Higher" 4%" allowances" allowances" p.a." years" all years"
-------- ---------- ---------- ---------- ---------- ----------- ----------- ---------- ---------- ----------

Adjusted Net
Worth...... 29,483 29,483 29,483 29,483 29,483 29,483 29,483 29,483 29,483
Value of In
Force...... 10.0% 30,299 30,475 33,366 27,313 30,734 29,878 29,600 28,565 22,271
Cost of
Solvency
Margin..... 10.0% (6,042) (6,032) (5,855) (6,194) (6,042) (6,042) (6,042) (5,749) (4,425)
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
Embedded
Value...... 10.0% 53,740 53,926 56,995 50,601 54,175 53,319 53,041 52,299 47,330
Adjusted Net
Worth...... 29,483 29,483 29,483 29,483 29,483 29,483 29,483 29,483 29,483
Value of In
Force...... 12.5% 24,512 24,727 27,071 22,578 24,911 24,129 23,992 23,129 18,872
Cost of
Solvency
Margin..... 12.5% (6,887) (6,875) (6,727) (6,981) (6,887) (6,887) (6,887) (6,565) (5,225)
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
Embedded
Value...... 12.5% 47,107 47,334 49,828 45,080 47,506 46,724 46,588 46,046 43,130
Adjusted Net
Worth...... 29,483 29,483 29,483 29,483 29,483 29,483 29,483 29,483 29,483
Value of In
Force...... 15.0% 20,391 20,637 22,566 19,128 20,761 20,037 19,988 19,254 16,293
Cost of
Solvency
Margin..... 15.0% (7,469) (7,455) (7,329) (7,526) (7,469) (7,469) (7,469) (7,132) (5,837)
----- ------ ------ ------ ------ ------ ------ ------ ------ ------
Embedded
Value...... 15.0% 42,404 42,665 44,720 41,085 42,775 42,051 42,002 41,605 39,939

Policyholder Mortality Tax Expense Expense
Dividend Scenario 3 Morbidity Morbidity Exempt Deduction Deduction
Scenario 2 Mortality "+25% life Scenario 2 Scenario 3 Scenario 2 Scenario 2 Scenario 3
"80% Scenario 2 -25% "120% "70% "0% "All tax "10% Not
distributed" "+25%" annuitants" table" table" exempt" deductible" deductible"
------------ ---------- ----------- ---------- ---------- ---------- ----------- -----------

Adjusted Net
Worth...... 29,483 29,483 29,483 29,483 29,483 29,483 29,483 29,483
Value of In
Force...... 29,342 29,212 29,252 28,899 31,742 24,227 30,391 30,207
Cost of
Solvency
Margin..... (6,044) (6,004) (6,013) (6,010) (6,075) (6,340) (6,042) (6,042)
------ ------ ------ ------ ------ ------ ------ ------
Embedded
Value...... 52,781 52,691 52,722 52,372 55,150 47,369 53,832 53,648
Adjusted Net
Worth...... 29,483 29,483 29,483 29,483 29,483 29,483 29,483 29,483
Value of In
Force...... 23,696 23,642 23,680 23,360 25,695 19,565 24,592 24,431
Cost of
Solvency
Margin..... (6,890) (6,853) (6,861) (6,858) (6,918) (7,133) (6,887) (6,887)
------ ------ ------ ------ ------ ------ ------ ------
Embedded
Value...... 46,290 46,272 46,302 45,985 48,260 41,915 47,187 47,027
Adjusted Net
Worth...... 29,483 29,483 29,483 29,483 29,483 29,483 29,483 29,483
Value of In
Force...... 19,680 19,665 19,701 19,414 21,393 16,241 20,462 20,319
Cost of
Solvency
Margin..... (7,471) (7,439) (7,445) (7,443) (7,496) (7,676) (7,469) (7,469)
------ ------ ------ ------ ------ ------ ------ ------
Embedded
Value...... 41,692 41,709 41,739 41,454 43,379 38,047 42,476 42,333

Section 5 provides fuller descriptions of the various scenarios. Figures might
not be additive due to rounding.

A-11

Table 5

Value of One Year's Sales of Long Term Business in the 12 months to 30 June
2003 of China Life, with variation in assumptions under alternative
scenarios (RMB million)

Value of
Sales
before
Cost
of
Solvency
Margin.. 10.0% 6,736 6,789 7,501 6,159 7,176 6,298 6,537 5,661 4,509
12.5% 5,294 5,358 5,923 4,951 5,714 4,876 5,145 4,456 3,699
15.0% 4,278 4,350 4,806 4,079 4,680 3,877 4,161 3,605 3,091
---- ----- ----- ----- ----- ----- ----- ----- ----- -----
Value of
Sales
after
Cost
of
Solvency
Margin.. 10.0% 5,010 5,067 5,830 4,404 5,451 4,572 4,812 4,119 3,220
12.5% 3,333 3,402 4,010 2,976 3,754 2,916 3,185 2,694 2,184
15.0% 2,164 2,241 2,733 1,958 2,566 1,763 2,047 1,694 1,409

Policyholder Mortality Tax Expense Expense
Dividend Scenario 3 Morbidity Morbidity Exempt Deduction Deduction Product
Scenario 2 Mortality "+25% life Scenario 2 Scenario 3 Scenario 2 Scenario 2 Scenario 3 Mix
"80% Scenario 2 -25% "120% "70% "0% "All tax "10% Not Scenario
distributed" "+25%" annuitants" table" table" exempt" deductible" deductible" "66%:34%"
------------ ---------- ----------- ---------- ---------- ---------- ----------- ----------- ---------

Value of
Sales
before
Cost
of
Solvency
Margin.. 6,277 6,500 6,511 6,421 7,059 4,912 6,822 6,649 5,972
4,901 5,109 5,119 5,037 5,556 3,794 5,376 5,212 4,733
3,935 4,126 4,135 4,061 4,498 3,011 4,356 4,200 3,856
----- ----- ----- ----- ----- ----- ----- ----- -----
Value of
Sales
after
Cost
of
Solvency
Margin.. 4,550 4,783 4,792 4,702 5,326 3,098 5,097 4,923 4,312
2,940 3,156 3,164 3,082 3,590 1,762 3,415 3,251 2,842
1,820 2,019 2,026 1,952 2,379 835 2,242 2,086 1,811

Section 5 provides fuller descriptions of the various scenarios. Figures might
not be additive due to rounding.

A-12

Table 6

Value of One Year's Sales of Short Term Business in the 12 months to 30 June
2003 of China Life with variation in assumptions under alternative claim ratio
scenarios (RMB million)

Scenario 2 Scenario 3 Scenario 4
Risk Discount "Health "Health "Accident
Rate Scenario 1 +10%" -10%" +10%"
------------- ---------- ---------- ---------- ----------

Value of Sales before Cost of Solvency Margin 10.0% 352 104 601 67
12.5% 326 85 566 50
15.0% 301 68 534 34
---- --- --- --- ----
Value of Sales after Cost of Solvency Margin. 10.0% 259 10 508 (26)
12.5% 206 (35) 446 (70)
15.0% 157 (76) 390 (110)

Section 5 provides fuller descriptions of the various scenarios. Figures might
not be additive due to rounding.

A-13

ANNEX B--VALUATION REPORT OF SALLMANNS (FAR EAST) LTD.

The following is the text of a letter, summary of values and valuation
certificates, prepared for the purpose of incorporation in this prospectus
received from Sallmanns (Far East) Limited, an independent valuer, in
connection with its valuation as at 30 September 2003 of the property interests
of the Company.

[LOGO]

5 December 2003

The Directors
China Life Insurance Company Limited
No.16 Chaowai Avenue
Chaoyang District
Beijing
The People's Republic of China

Dear Sirs,

In accordance with your instructions to value the property interests in
which China Life Insurance Company Limited (hereinafter referred to as the
"Company") has interest in the People's Republic of China (the "PRC"), we
confirm that we have carried out inspections, made relevant enquiries and
obtained such further information as we consider necessary for the purpose of
providing you with our opinion of the values of the relevant property interests
as at 30 September 2003.

In valuing the property interests which are held by the Company, we have
categorised the property interests into 36 sub-groups according to their
location and the Company's management structure. The property interests of each
sub-group are located in a province, an autonomous region, a directly
administered municipality or a municipality with independent planning in the
PRC, and are managed by a first-level (provincial) branch of the Company.

Wherever possible, our valuations of the property interests are our opinion
of the open market value which we would define as intended to mean "the best
price at which an interest in a property would have been completed
unconditionally for cash consideration on the date of the valuation assuming:

(a) a willing seller;

(b) that, prior to the date of valuation, there had been a reasonable period
(having regard to the nature of the property and the state of the market)
for the proper marketing of the interest, for the agreement of price and
terms and for the completion of the sale;

(c) that the state of the market, level of values and other circumstances were,
on any earlier assumed date of exchange of contracts, the same as on the
date of valuation;

(d) that no account is taken of any additional bid by a purchaser with a
special interest; and

(e) that both parties to the transaction had acted knowledgeably prudently and
without compulsion."

B-1

In cases where open market value basis is adopted, our valuations have been
made on the assumption that the owner sells the property interests on the open
market in their existing state without the benefit of a deferred terms
contract, leaseback, joint venture, management agreement or any similar
arrangement which would serve to affect the values of the property interests.

For some property interests in Group I, our valuations are our opinion of
their fair market value. Fair market value is defined as the estimated amount
at which the subject asset in its continued use might be expected to be
purchased and sold between a willing buyer and a willing seller, neither being
under compulsion, each having a reasonable knowledge of all relevant facts,
with equity to both, for continuation of the current operation of the relevant
property interests as part of an on-going business.

Where, due to the nature of the buildings and structures constructed on some
property interests in Group I, there are no market sales comparables, the
property interests have been valued on the basis of their depreciated
replacement cost. Depreciated replacement cost is defined as "the aggregate
amount of the value of the land for the existing use or a notional replacement
site in the same locality, and the gross replacement cost of the buildings and
other site works, from which appropriate deductions may then be made to allow
for the age, condition, economic or functional obsolescence and environmental
factors etc; all of these might result in the existing property being worth
less to the undertaking in occupation than would a new replacement." This
opinion of value does not necessarily represent the amount that might be
realised from the disposal of the subject assets in the open market, and this
basis has been used due to the lack of an established market upon which to base
comparable transactions. However, this approach generally furnishes the most
reliable indication of value for a property without a known used market.

In valuing the property interests in Group I which are currently under
construction, we have valued on the basis of their prevailing cost level and
status of construction as at the date of valuation and we have assumed that all
consents, approvals and licenses from the relevant government authorities for
their development have been granted without any onerous conditions or undue
delay, which might affect their values.

The property interests in Group II which are rented by the Company have no
commercial value due mainly to the short term nature or the prohibition against
assignment or sub-letting or otherwise due to the lack of substantial profit
rents.

The Company holds land use rights in respect of 2,978 parcels of land with
an aggregate site area of approximately 3,145,000 sq.m..

The Company holds 3,443 completed buildings and various ancillary structures
with an aggregate gross floor area of approximately 3,997,000 sq.m. and 65
buildings and structures which are under construction with an aggregate gross
floor area of approximately 350,000 sq.m upon completion. Of the 3,443
buildings, 372 items with an aggregate gross floor area of approximately 66,800
sq.m. are leased to independent third parties.

The Company also leases 2,597 buildings with an aggregate gross floor area
of approximately 1,697,000 sq.m. from China Life Insurance (Group) Company
("CLIC"). Of the leased properties, 833 buildings with an aggregate gross floor
area of approximately 637,000 sq.m. are owned by CLIC and 1,764 buildings with
an aggregate gross floor area of approximately 1,060,000 sq.m. are subleased by
CLIC from independent third parties. According to an opinion given by the
Company's PRC legal adviser, King & Wood, the Property Leasing Agreement
entered into between the Company and CLIC is lawful and the Company is entitled
to occupy and use the leased properties under the Property Leasing Agreement.
CLIC has undertaken to indemnify the Company against any losses, claims or
impediments in relation to the use of the leased properties.

In our valuations, we have complied with all the requirements contained in
Practice Note 12 to the Rules Governing the Listing of Securities issued by The
Stock Exchange of Hong Kong Limited except for those in respect of which waiver
has been applied in respect of Rule 5.06(1) to (3) and paragraph 5(2)(a) of
Practice Note

B-2

12 and paragraph (3a) of Practice Note 16 to the Rules Governing the Listing of
Securities on the Stock Exchange of Hong Kong Limited. We have also complied
with all the requirements contained in the Hong Kong Guidance Notes on the
Valuation of Property Assets (2nd Edition) published by the Hong Kong Institute
of Surveyors in March 2000.

We have been shown copies of various title documents and official site plans
relating to the property interests that are held by the Company. However, we
have not searched the original documents to verify any amendments which may not
appear on the copies handed to us. In our valuations, we have relied to a
considerable extent on the legal opinion provided by the Company's legal
adviser, King & Wood, on the PRC laws regarding the property interests of the
Company in the PRC.

We have not carried out detailed site measurements to verify the correctness
of the site areas in respect of the relevant property interests but have
assumed that the site areas shown on the documents and official site plans
handed to us are correct. Based on our experience of valuation of similar
property interests in the PRC, we consider the assumptions so made to be
reasonable. All documents and contracts have been used as reference only and
all dimensions measurements and areas are approximations. No on-site
measurements have been taken.

We have inspected the exterior and, where possible, the interior of the
property interests that we have attributed values, in respect of which we have
been provided with such information, as we have required for the purpose of our
valuations. However, no structural survey has been made, but in the course of
our inspection we did not note any apparent serious defects. We are not,
however, able to report that the property interests are free from rot,
infestation or any other structural defects. No tests were carried out to any
of the services.

No allowance has been made in our report for any charges, mortgage or
amounts owing on the property interests nor for any expenses or taxation which
may be incurred in effecting a sale. Unless otherwise stated, it is assumed
that the property interests are free from encumbrances, restrictions and
outgoings of an onerous nature which could affect their values.

We have relied to a considerable extent on the information provided to us
and have accepted advice given to us on such matters as planning approvals or
statutory notices, easements, tenure, occupation, letting, rentals, site and
floor areas and all other relevant matters.

We have had no reason to doubt the truth and accuracy of the information
provided to us by the Company. We have also sought and received confirmation
from the Company that no material factors have been omitted from the
information supplied. We consider that we have been provided with sufficient
information to reach an informed view, and have no reason to suspect that any
material information has been withheld.

Unless otherwise stated, all monetary amounts stated in this report are in
Renminbi (RMB).

Our valuations are summarised below and the valuation certificates are
attached.

Yours faithfully,
for and on behalf of
Sallmanns (Far East)
Limited

/s/ Paul L. Brown
-------------------------
Paul L. Brown
BSc. FRICS FHKIS
Director

Note: Paul L. Brown is a Chartered Surveyor who has 20 years of experience in
the valuation of properties in the PRC and 23 years of property valuation
experience in Hong Kong, the United Kingdom and the Asia-Pacific region.

B-3

SUMMARY OF VALUES

Capital value in existing
state as at
No. Property 30 September 2003
- --- -------- -------------------------
RMB

Group I--Property interests held by the Company in the PRC

1. Land, various buildings and structures located at Anhui Province, the PRC 378,140,000

2. Land, various buildings and structures located at Beijing, the PRC 486,490,000

3. Land, various buildings and structures located at Dalian City, Liaoning Province, 62,080,000
the PRC

4. Land, various buildings and structures located at Fujian Province (excluding 407,650,000
Xiamen City), the PRC

5. Land, various buildings and structures located at Gansu Province, the PRC 66,850,000

6. Land, various buildings and structures located at Guangxi Zhuang Autonomous 187,700,000
Region, the PRC

7. Land, various buildings and structures located at Guangdong Province 526,450,000
(excluding Shenzhen), the PRC

8. Land, various buildings and structures located at Guizhou Province, the PRC 143,840,000

9. Land, various buildings and structures located at Hainan Province, the PRC 26,060,000

10. Land, various buildings and structures located at Hebei Province , the PRC 392,210,000

11. Land, various buildings and structures located at Henan Province, the PRC 535,510,000

12. Land, various buildings and structures located at Heilongjiang Province, the PRC 456,390,000

13. Land, various buildings and structures located at Hubei Province, the PRC 501,240,000

14. Land, various buildings and structures located at Hunan Province, the PRC 702,230,000

15. Land, various buildings and structures located at Jilin Province, the PRC 109,880,000

16. Land, various buildings and structures located at Jiangsu Province, the PRC 985,490,000

17. Land, various buildings and structures located at Jiangxi Province, the PRC 368,730,000

18. Land, various buildings and structures located at Liaoning Province (excluding 412,850,000
Dalian City), the PRC

19. Land, various buildings and structures located at Inner Mongolia Autonomous 264,540,000
Region, the PRC

20. Land, various buildings and structures located at Ningbo City, Zhejiang 102,110,000
Province, the PRC

21. Land, various buildings and structures located at Ningxia Hui Autonomous 47,120,000
Region, the PRC

22. Land, various buildings and structures located at Qingdao City, Shandong 112,230,000
Province, the PRC

23. Land, various buildings and structures located at Qinghai Province, the PRC 81,650,000

B-4

Capital value in existing
state as at
No. Property 30 September 2003
- --- -------- -------------------------
RMB

24. Land, various buildings and structures located at Shandong Province (excluding 546,710,000
Qingdao City), the PRC

25. Land, various buildings and structures located at Shanxi Province, 213,720,000
the PRC

26. Land, various buildings and structures located at Shannxi Province, 280,990,000
the PRC

27. Land, various buildings and structures located at Shanghai, the PRC 513,470,000

28. Land, various buildings and structures located at Shenzhen City, Guangdong 134,850,000
Province, the PRC

29. Land, various buildings and structures located at Sichuan Province, the PRC 557,250,000

30. Land, various buildings and structures located at Tianjin, the PRC 90,720,000

31. Land, various buildings and structures located at Xiamen City, Fujian Province, 41,200,000
the PRC

32. Land, various buildings and structures located at Xinjiang Uygur Autonomous 196,440,000
Region, the PRC

33. Land, various buildings and structures located at Yunnan Province, the PRC 180,170,000

34. Land, buildings and structures located at Zhejiang Province (excluding Ningbo 742,170,000
City), the PRC

35. Land, various buildings and structures located at Chongqing, the PRC 101,130,000

36. A portion of a building located at Beijing (Head Office), the PRC No commercial value
-------------------
Sub-total : 10,956,260,000
-------------------

Group II--Property interests rented by the Company in the PRC

37. 101 leased properties located at Anhui Province, the PRC No Commercial Value

38. 28 leased properties located at Beijing, the PRC No Commercial Value

39. 4 leased properties located at Dalian City, Liaoning Province, the PRC No Commercial Value

40. 112 leased properties located at Fujian Province (excluding Xiamen City), the No Commercial Value
PRC

41. 150 leased properties located at Gansu Province, the PRC No Commercial Value

42. 56 leased properties located at Guangxi Zhuang Autonomous Region, the PRC No Commercial Value

43. 230 leased properties located at Guangdong Province (excluding Shenzhen), the No Commercial Value
PRC

44. 49 leased properties located at Guizhou Province, the PRC No Commercial Value

45. 16 leased properties located at Hainan Province, the PRC No Commercial Value

46. 112 leased properties located at Hebei Province, the PRC No Commercial Value

B-5

Capital value in existing
state as at
No. Property 30 September 2003
- --- -------- -------------------------
RMB

47. 168 leased properties located at Henan Province, the PRC No Commercial Value

48. 72 leased properties located at Heilongjiang Province, the PRC No Commercial Value

49. 97 leased properties located at Hubei Province, the PRC No Commercial Value

50. 80 leased properties located at Hunan Province, the PRC No Commercial Value

51. 65 leased properties located at Jilin Province, the PRC No Commercial Value

52. 97 leased properties located at Jiangsu Province, the PRC No Commercial Value

53. 93 leased properties located at Jiangxi Province, the PRC No Commercial Value

54. 52 leased properties located at Liaoning Province (excluding Dalian City), No Commercial Value
the PRC

55. 29 leased properties located at Inner Mongolia Autonomous Region, No Commercial Value
the PRC

56. 58 leased properties located at Ningbo City, Zhejiang Province, the PRC No Commercial Value

57. 24 leased properties located at Ningxia Hui Autonomous Region, the PRC No Commercial Value

58. 14 leased properties located at Qingdao City, Shandong Province, the PRC No Commercial Value

59. 11 leased properties located at Qinghai Province, the PRC No Commercial Value

60. 170 leased properties located at Shandong Province (exculding Qingdao City), No Commercial Value
the PRC

61. 147 leased properties located at Shanxi Province, the PRC No Commercial Value

62. 115 leased properties located at Shannxi Province, the PRC No Commercial Value

63. 32 leased properties located at Shanghai, the PRC No Commercial Value

64. 10 leased properties located at Shenzhen City, Guangdong Province, the PRC No Commercial Value

65. 75 leased properties located at Sichuan Province, the PRC No Commercial Value

66. 11 leased properties located at Tianjin, the PRC No Commercial Value

67. 11 leased properties located at Xiamen City, Fujian Province, the PRC No Commercial Value

68. 61 leased properties located at Xinjiang Uygur Autonomous Region, the PRC No Commercial Value

69. 105 leased properties located at Yunnan Province, the PRC No Commercial Value

70. 95 leased properties located at Zhejiang Province (excluding Ningbo City), No Commercial Value
the PRC

71. 46 leased properties located at Chongqing Sichuan Province, the PRC No Commercial Value

72. 1 leased properties located at Beijing (Head Office), the PRC No Commercial Value
-------------------
Sub-total: Nil
-------------------
Total: 10,956,260,000
===================

B-6

VALUATION CERTIFICATE

Group I--Property interests held by the Company in the PRC

Capital value
in existing
state as at
30 September
No. Property Description and tenure Particulars of occupancy 2003
- --- -------- ---------------------------------- ------------------------- -------------
RMB

1. Land, various buildings The properties comprise 126 The properties are 378,140,000
and structures office buildings and other currently occupied by the
located at ancillary buildings and structures Company for office
Anhui Province with a total gross floor area of purposes.
The PRC approximately 144,468 sq.m.,
mainly completed in various
stages from 1984 to 2003 (the
"Completed Properties"). The
main buildings include office
buildings, storehouses, carports,
dining halls, etc.

The properties are located on 131
parcels of land with a total site
area of approximately 117,318
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 131 parcels of land with a total site area of approximately
117,318 sq.m of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company and CLIC are in the
process of applying for change of registration of land user under the
name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 131 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses, claims
charges or expenses arising from the formalizing/changing of land title
registration.

2. Completed Properties

i. For 125 buildings of the Completed Properties with a total gross floor
area of approximately 138,137 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the remaining one of building of the Completed Properties with a
gross floor area of approximately 6,331 sq.m, we have not been provided
with any Building Ownership Certificate or Building Title Proof. The
Company and CLIC are in the process of formalizing/changing building
title registration under the name of the Company. Thus we have
attributed no commercial value to such building.

B-7

iii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 125 buildings of the Completed Properties
with a total gross floor area of approximately 138,137 sq.m are legally
owned by the Company. There is no material legal impediment for to
change title registration of these 125 buildings of the Completed
Properties from CLIC to the Company. The Company can then freely occupy,
let, transfer or mortgage the buildings upon obtaining Building
Ownership Certificates.

iv. CLIC has undertaken to have Building Ownership Certificates registered
under the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof ) from the incorporation date of the Company, to be
responsible for all costs, expenses and claims incurred, and to
indemnify the Company against all losses, claims, charges or expenses
arising from the formalizing/changing of building title registration.

3. For reference purpose, we are of the opinion that the value of one building
of Completed Property to which we have attributed no commercial value, is in
the amount of RMB6,770,000 as at the valuation date, providing that all
Building Ownership Certificates have been obtained by the Company and the
Company is entitled to freely occupy, let, transfer or mortgage such
properties.

B-8

VALUATION CERTIFICATE

2. Land, various buildings The properties comprise 16 office The properties are 486,490,000
and structures buildings and other ancillary currently occupied by the
located at buildings and structures with a Company mainly for office
Beijing total gross floor area of purposes.
The PRC approximately 60,486 sq.m.,
mainly completed in various
stages from 1984 to 2001 (the
"Completed Properties"). The
main buildings include office
buildings and composite buildings

The properties are located on 14
parcels of land with a total site
area of approximately 39,152
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 14 parcels of land with a total site area of approximately
39,152 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 14 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties

i. For 16 buildings of the Completed Properties with a total gross floor
area of approximately 60,486 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 16 buildings of the Completed Properties
with a total gross floor area of approximately 60,486 sq.m are legally
owned by the Company. There is no material legal impediment for the 16
buildings to change title registration from CLIC to the Company. The
Company can then freely occupy, let, transfer or mortgage the buildings
upon obtaining Building Ownership Certificates.

B-9

iii. CLIC has undertaken to have Building Ownership Certificates registered
under the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof) from the incorporation date of the Company, to be
responsible for all costs, expenses and claims incurred, and to
indemnify the Company against all losses, claims, charges or expenses
arising from the formalizing/changing of building title registration.

B-10

VALUATION CERTIFICATE

3. Land, various buildings The properties comprise 17 office The properties are 62,080,000
and structures buildings and other ancillary currently occupied by the
located at buildings and structures with a Company for office
Dalian City total gross floor area of purposes, exempt for
Liaoning Province approximately 19,449 sq.m., those, which comprise 2
The PRC mainly completed in various Completed Properties with
stages from 1989 to 1999 (the a total gross floor area of
"Completed Properties"). The approximately 334 sq.m.
main buildings include office which are leased to
buildings. independent third parties.

The properties are located on 17
parcels of land with a total site
area of approximately 8,203 sq.m.
for commercial use.

Notes:

1. Land Use Rights

i. For the 17 parcels of land with a total site area of approximately 8,203
sq.m of the properties, CLIC has obtained either Granted Land Use Rights
Certificates, or Allocated Land Use Rights Certificates, or Land Title
Proof in CLIC's name, and the Company and CLIC are in the process of
applying for change of registration of land user under the name of the
Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 17 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties

i. For 17 buildings of the Completed Properties with a total gross floor
area of approximately 19,449 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 17 buildings of the Completed Properties
with a total gross floor area of approximately 19,449 sq.m are legally
owned by the Company. There is no material legal impediment for the 17
buildings to change title registration from CLIC to the Company. The
Company can then freely occupy, let, transfer or mortgage the buildings
upon obtaining Building Ownership Certificates.

B-11

VALUATION CERTIFICATE

Capital value
in existing
state as at
Particulars of 30 September
No. Property Description and tenure occupancy 2003
- --- -------- ---------------------------------- --------------------------- -------------
RMB

4. Land, various buildings The properties comprise 165 The properties are 407,650,000
and structures office buildings and other currently occupied by the
located at ancillary buildings and structures Company mainly for office
Fujian Province with a total gross floor area of purposes, exempt for
(excluding Xiamen City) approximately 158,404 sq.m., those, which comprise 25
The PRC mainly completed in various Completed Properties with
stages from 1992 to 1998 (the a total gross floor area of
"Completed Properties"). The approximately 3,340 sq.m.
main buildings include office which are leased to
buildings, storehouses, carports, independent third parties.
dining halls etc.

The properties also comprise 7
buildings which are under
construction as at the date of
valuation (the "CIP Properties").
The estimated total construction
cost is approximately
RMB 58,430,000, of which some
RMB 39,590,000 has been
incurred as at the valuation date.
The total gross floor area of the
buildings will be 24,173 sq.m.
upon completion. The CIP
properties are scheduled to be
completed in about 2005.

The properties are located on 154
parcels of land with a total site
area of approximately 65,181
sq.m.for commercial use.

Notes:

I. Land Use Rights

i. For the 154 parcels of land with a total site area of approximately
65,181 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 154 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-12

2. Completed Properties and CIP Properties

i. For 146 buildings of the Completed Properties with a total gross floor
area of approximately 137,281 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 7 CIP Properties, CLIC has obtained various relevant approvals
to undertake the construction

iii. For the remaining 19 buildings of the Completed Properties with a total
gross floor area of approximately 21,123 sq.m, we have not been provided
with any Building Ownership Certificates or Building Title Proof. The
Company and CLIC are in the process of formalizing/changing building
title registration under the name of the Company. Thus, we have
attributed no commercial value to such buildings.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 146 buildings of the Completed Properties
with a total gross floor area of approximately 137,281 sq.m and the 7
CIP Properties are legally owned by the Company. There is no material
legal impediment for the 146 buildings to change title registration from
CLIC to the Company. There is no material legal impediment for the
Company to obtain Building Ownership Certificates for the 7 CIP
Properties upon their completion. The Company can then freely occupy,
let, transfer or mortgage the buildings (including CIP Properties after
completion) upon obtaining Building Ownership Certificates.

v. CLIC has undertaken to have Building Ownership Certificates registered
under the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof and for the CIP Properties should be upon their completion)
from the incorporation date of the Company, to be responsible for all
costs, expenses and claims incurred, and to indemnify the Company
against all losses, claims, charges or expenses arising from the
formalizing/changing of building title registration.

3. For reference purpose, we are of the opinion that the values of the
Completed Properties to which we have attributed no commercial value, are in
the amount of RMB 37,440,000, as at the valuation date providing that all
Building Ownership Certificates have been obtained by the Company and the
Company is entitled to freely occupy, let, transfer or mortgage such
properties.

B-13

VALUATION CERTIFICATE

5. Land, various buildings The properties comprise 35 office The properties are 66,850,000
and structures located at buildings and other ancillary currently occupied by the
Gansu Province buildings and structures with a Company mainly for office
The PRC total gross floor area of purposes.
approximately 49,315 sq.m.,
mainly completed in various
stages from 1986 to 2002 (the
"Completed Properties"). The
main buildings include office
buildings, guardrooms etc.

The properties are located on 35
parcels of land with a total site
area of approximately 47,885
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 35 parcels of land with a total site area of approximately
47,885 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 35 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties

i. For 35 buildings of the Completed Properties with a total gross floor
area of approximately 49,315 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 35 buildings of the Completed Properties
with a total gross floor area of approximately 49,315 sq.m are legally
owned by the Company. There is no material legal impediment for the 35
buildings to change title registration from CLIC to the Company. The
Company can then freely occupy, let, transfer or mortgage the buildings
upon obtaining Building Ownership Certificates.

B-14

B-15

VALUATION CERTIFICATE

6. Land, various The properties comprise 98 office buildings The properties are 187,700,000
buildings and and other ancillary buildings and structures currently occupied by
structures located with a total gross floor area of approximately the Company mainly
at Guangxi Zhuang 77,477 sq.m., mainly completed in various for office purposes,
Autonomous Region stages from 1978 to 2002 (the "Completed exempt for this,
The PRC Properties"). The main buildings include which comprises 1
office buildings, carports, storehouses, etc. Completed Property
with a gross floor
The properties also comprise 2 buildings area of approximately
which are under construction as at the date of 90 sq.m. which is
valuation (the "CIP Properties"). The leased to independent
estimated total construction cost is third parties.
approximately RMB 19,650,000, of which
some RMB 9,340,000 has been incurred as at
the valuation date. The total gross floor area
of the buildings will be 6,680 sq.m. upon
completion. The CIP Properties are
scheduled to be completed in 2004.

The properties are located on 101 parcels of
land with a total site area of approximately
74,427 sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 101 parcels of land with a total site area of approximately
74,427 sq.m. of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company and CLIC are in the
process of applying for change of registration of land user under the
name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 101 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties and CIP Properties

i. For 95 buildings of the Completed Properties with a total gross floor
area of approximately 76,327 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

B-16

ii. For 1 CIP Property, CLIC has obtained various relevant approvals to
undertake the construction. For the remaining building of the CIP
Properties, the Company and CLIC are in the process of application of
relevant approvals to undertake the construction.

iii. For the remaining 3 buildings of the Completed Properties with a total
gross floor area of approximately 1,150 sq.m, we have not been provided
with any Building Ownership Certificates or Building Title Proof. The
Company and CLIC are in the process of formalizing/changing building
title registration under the name of the Company. Thus, we have
attributed no commercial value to such buildings.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 95 buildings of the Completed Properties
with a total gross floor area of approximately 76,327 sq.m and 1 CIP
Property are legally owned by the Company. There is no material legal
impediment for the 95 buildings to change title registration from CLIC
to the Company. There is no material legal impediment for the Company to
obtain Building Ownership Certificates for 1 CIP Property upon their
completion. The Company can then freely occupy, let, transfer or
mortgage the buildings (including CIP Properties after completion) upon
obtaining Building Ownership Certificates.

v CLIC has undertaken to have Building Ownership Certificates registered
under the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof and for the CIP Properties should be upon their completion)
from the incorporation date of the Company, to be responsible for all
costs, expenses and claims incurred, and to indemnify the Company
against all losses, claims, charges or expenses arising from the
formalizing/changing of building title registration.

3. For reference purpose, we are of the opinion that the values of the
Completed Properties and CIP Properties to which we have attributed no
commercial value, are in the amount of RMB 8,280,000 as at the valuation
date providing that Building Ownership Certificates and Construction Permits
have been obtained by the Company and the Company is entitled to freely
occupy, let, transfer or mortgage such properties.

B-17

VALUATION CERTIFICATE

Capital value
in existing state as at
No. Property Description and tenure Particulars of occupancy 30 September 2003
- --- -------- ----------------------------------- --------------------------- -----------------------
RMB

7 Land, various The properties comprise 243 The properties are 526,450,000
buildings and office buildings and other currently occupied by the
structures located at ancillary buildings and structures Company mainly for office
Guangdong with a total gross floor area of purposes, exempt for
Province (excluding approximately 192,473 sq.m., those, which comprise 7
Shenzhen ) mainly completed in various Completed Properties with
The PRC stages from 1982 to 2001 (the a total gross floor area of
"Completed Properties"). The approximately 1,021 sq.m.
main buildings include office which are leased to
buildings, storehouses, carports, independent third parties.
dining halls, etc.

The properties also comprise 3
buildings which are under
construction as at the date of
valuation (the "CIP Properties").
The estimated total construction
cost is approximately RMB
61,780,000, of which some RMB
42,830,000 has been incurred as at
the valuation date. The total gross
floor area of the buildings will be
17,070 sq.m. upon completion.
The CIP Properties are scheduled
to be completed in 2004.

The properties are located on 225
parcels of land with a total site
area of approximately 61,551
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 225 parcels of land with a total site area of approximately
61,551 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 225 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-18

2. Completed Properties and CIP Properties

i. For 243 buildings of the Completed Properties with a total gross floor
area of approximately 192,473 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 3 CIP Properties, CLIC has obtained various relevant approvals
to undertake the construction.

iii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 243 buildings of the Completed Properties
with a total gross floor area of approximately 192,473 sq.m and the 3
CIP Properties are legally owned by the Company. There is no material
legal impediment for the 243 buildings to change title registration from
CLIC to the Company. There is no material legal impediment for the
Company to obtain Building Ownership Certificates for the 3 CIP
Properties upon their completion. The Company can then freely occupy,
let, transfer or mortgage the buildings (including CIP Properties after
completion) upon obtaining Building Ownership Certificates.

iv. CLIC has undertaken to have Building Ownership Certificates registered
under the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof and for the CIP Properties should be upon their completion)
from the incorporation date of the Company, to be responsible for all
costs, expenses and claims incurred, and to indemnify the Company
against all losses, claims, charges or expenses arising from the
formalizing/changing of building title registration.

B-19

VALUATION CERTIFICATE

8 Land, various buildings The properties comprise 108 The properties are 143,840,000
and structures located at office buildings and other currently occupied by the
Guizhou Province ancillary buildings and structures Company mainly for office
The PRC with a total gross floor area of purposes, exempt for
approximately 69,978 sq.m., those, which comprise 36
mainly completed in various Completed Properties with
stages from 1971 to 2002 (the a total gross floor area of
"Completed Properties"). The approximately 1,692 sq.m.
main buildings include office which are leased to
buildings, carports, hostel, etc. independent third parties.

The properties also comprise 2
buildings which are under
construction as at the date of
valuation (the "CIP Properties").
The estimated total construction
cost is approximately
RMB 18,060,000, of which some
RMB 17,130,000 has been
incurred as at the valuation date.
The total gross floor area of the
buildings will be 9,599 sq.m. upon
completion. The CIP properties
are scheduled to be completed in
2004.

The properties are located on 102
parcels of land with a total site
area of approximately 59,545
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 102 parcels of land with a total site area of approximately
59,545 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 102 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-20

2. Completed Properties and CIP Properties

i. For 104 buildings of the Completed Properties with a total gross floor
area of approximately 65,126 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 2 CIP Properties, CLIC has obtained various relevant approvals
to construction.

iii. For the 4 buildings of the Completed Properties with a total gross floor
area of approximately 4,852 sq.m, we have not been provided with any
Building Ownership Certificates or Building Title Proof. The Company and
CLIC are in the process of formalizing/changing building title
registration under the name of the Company. Thus, we have attributed no
commercial value to such buildings.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 104 buildings of the Completed Properties
with a total gross floor area of approximately 65,126 sq.m and the 2 CIP
Properties are legally owned by the Company. There is no material legal
impediment for the 104 buildings to change title registration from CLIC
to the Company. There is no material legal impediment for the Company to
obtain Building Ownership Certificates for the 2 CIP Properties upon
their completion. The Company can then freely occupy, let, transfer or
mortgage the buildings (including CIP Properties after completion) upon
obtaining Building Ownership Certificates.

3. For reference purpose, we are of the opinion that the values of the
Completed Properties to which we have attributed no commercial value, are in
the amount of RMB 7,140,000 as at the valuation date, providing that all
Building Ownership Certificates have been obtained by the Company and the
Company is entitled to freely occupy, let, transfer or mortgage such
properties.

B-21

VALUATION CERTIFICATE

Capital value
in existing state
as at
30 September
No. Property Description and tenure Particulars of occupancy 2003
- --- -------- --------------------------------- --------------------------- -----------------
RMB

9. Land, various buildings The properties comprise 16 office The properties are 26,060,000
and structures located at buildings and other ancillary currently occupied by the
Hainan Province buildings and structures with a Company for office
The PRC total gross floor area of purposes, exempt for
approximately 12,146 sq.m., those, which comprise 3
mainly completed in various Completed Properties with
stages from 1986 to 2000 (the a total gross floor area of
"Completed Properties"). The approximately 570 sq.m.
main buildings include office which are leased to
buildings, carports, hostel, etc. independent third parties.

The properties are located on 16
parcels of land with a total site
area of approximately 20,050
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 16 parcels of land with a total site area of approximately
20,050 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 16 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties

i. For 16 buildings of the Completed Properties with a total gross floor
area of approximately 12,146 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 16 buildings of the Completed Properties
with a total gross floor area of approximately 12,146 sq.m are legally
owned by the Company. There is no material legal impediment for the 16
buildings to change title registration from CLIC to the Company. The
Company can then freely occupy, let, transfer or mortgage the buildings
upon obtaining Building Ownership Certificates.

iii. CLIC has undertaken to have Building Ownership Certificates registered
under the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof) from the incorporation date of the Company, to be
responsible for all costs, expenses and claims incurred, and to
indemnify the Company against all losses, claims charges or expenses
arising from the formalizing/changing of building title registration.

B-22

VALUATION CERTIFICATE

10. Land, various buildings The properties comprise 120 The properties are 392,210,000
and structures located at office buildings and other currently occupied by the
Hebei Province ancillary buildings and structures Company mainly for office
The PRC with a total gross floor area of purposes, exempt for
approximately 126,672 sq.m., those, which comprise 5
mainly completed in various Completed Properties with
stages from 1984 to 2001 (the a total gross floor area of
"Completed Properties"). The approximately 95 sq.m.
main buildings include office which are leased to
buildings, boiler rooms, independent third parties.
guardrooms, carports, etc.

The properties also comprise 11
buildings and various structures
which are under construction as at
the date of valuation (the "CIP
Properties"). The estimated total
construction cost is approximately
RMB 245,970,000 of which some
RMB 157,770,000 has been
incurred as at the valuation date.
The total gross floor area of the
buildings will be 58,951 sq.m.
upon completion. The CIP
Properties are scheduled to be
completed in 2004.

The properties are located on 111
parcels of land with a total site
area of approximately 180,695
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 111 parcels of land with a total site area of approximately
180,695 sq.m of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company and CLIC are in the
process of applying for change of registration of land user under the
name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 111 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

B-23

and claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties and CIP Properties

i. For 117 buildings of the Completed Properties with a total gross floor
area of approximately 123,572 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 8 CIP Properties, CLIC has obtained various relevant approvals
to undertake the construction. For 3 CIP Properties, the Company and
CLIC are in the process of application of relevant approvals to
undertake the construction.

iii. For the 3 buildings of the Completed Properties with a total gross floor
area of 3,100 sq.m, we have not been provided with any Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of formalizing /changing building title registration
under the name of the Company. Thus, we have attributed no commercial
value to such buildings.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 117 buildings of the Completed Properties
with a total gross floor area of approximately 123,572 sq.m and the 8
CIP Properties are legally owned by the Company. There is no material
legal impediment for the 117 buildings to change title registration from
CLIC to the Company. There is no material legal impediment for the
Company to obtain Building Ownership Certificates for the 8 CIP
Properties upon their completion. The Company can then freely occupy,
let, transfer or mortgage the buildings (including CIP Properties after
completion) upon obtaining Building Ownership Certificates.

3. For reference purpose, we are of the opinion that the values of the
Completed Properties and CIP Properties to which we have attributed no
commercial value, are in the amount of RMB 30,840,000 as at the valuation
date providing that all Building Ownership Certificates and Construction
Permits have been obtained by the Company and the Company is entitled to
freely occupy, let, transfer or mortgage such properties.

B-24

VALUATION CERTIFICATE

11. Land, various buildings The properties comprise 186 The properties are 535,510,000
and structures located at office buildings and other currently occupied by the
Henan Province ancillary buildings and structures Company mainly for office
The PRC with a total gross floor area of purposes, exempt for
approximately 260,635 sq.m., those, which comprise 14
mainly completed in various Completed Properties with
stages from 1983 to 2002 (the a total gross floor area of
"Completed Properties"). The approximately 536 sq.m.
main buildings include office which are leased to
buildings, boiler rooms, independent third parties.
guardrooms, carports, etc.

The properties also comprise 1
building which is under
construction as at the date of
valuation (the "CIP Property").
The estimated total construction
cost is approximately
RMB 13,500,000, of which some
RMB 13,000,000 has been
incurred at the valuation date. The
gross floor area of the building
will be 7,127 sq.m. upon
completion. The CIP Property are
scheduled to be completed in
2004.

The properties are located on 122
parcels of land with a total site
area of approximately 255,156
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 122 parcels of land with a total site area of approximately
255,156 sq.m of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company and CLIC are in the
process of applying for change of registration of land user under the
name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 122 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

B-25

and claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties and CIP Properties

i. For 182 buildings of the Completed Properties with a total gross floor
area of approximately 253,285 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 1 CIP Property, CLIC has obtained various relevant approvals to
undertake the construction.

iii. For the 4 buildings of the Completed Properties with a total gross floor
area of approximately 7,350 sq.m, we have not been provided with any
Building Ownership Certificates or Building Title Proof. The Company and
CLIC are in the process of formalizing/changing building title
registration under the name of the Company. Thus, we have attributed no
commercial value to such buildings.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 182 buildings of the Completed Properties
with a total gross floor area of approximately 253,285 sq.m and the 1
CIP Property are legally owned by the Company. There is no material
legal impediment for the 182 buildings to change title registration from
CLIC to the Company. There is no material legal impediment for the
Company to obtain Building Ownership Certificates for the 1 CIP Property
upon their completion. The Company can then freely occupy, let, transfer
or mortgage the buildings (including CIP Properties after completion)
upon obtaining Building Ownership Certificates.

3. For reference purpose, we are of the opinion that the values of the
Completed Properties to which we have attributed no commercial value, are in
the amount of RMB 12,270,000 as at the valuation date providing that all
Building Ownership Certificates have been obtained by the Company and the
Company is entitled to freely occupy, let, transfer or mortgage such
properties.

B-26

VALUATION CERTIFICATE

Capital value
in existing state
as at
Particulars of 30 September
No. Property Description and tenure occupancy 2003
- --- -------- ----------------------------------- --------------------------- -----------------
RMB

12. Land, various buildings The properties comprise 133 The properties are 456,390,000
and structures located at office buildings and other currently occupied by the
Heilongjiang Province ancillary buildings and structures Company mainly for office
The PRC with a total gross floor area of purposes, exempt for
approximately 165,334 sq.m., those, which comprise 1
mainly completed in various Completed Properties with
stages from 1976 to 2002 (the a total gross floor area of
"Completed Properties"). The approximately 310 sq.m.
main buildings include office which is leased to
buildings, boiler rooms, independent third parties.
guardrooms, carports, etc.

The properties also comprise 1
building which is under
construction as at the date of
valuation (the "CIP Property").
The estimated total construction
cost is approximately
RMB 13,000,000, of which some
RMB 9,500,000 has been incurred
as at the valuation date. The gross
floor area of the building will be
4,200 sq.m. upon completion. The
CIP Property is scheduled to be
completed in December 2003.

The properties are located on 110
parcels of land with a total site
area of approximately 96,463
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 110 parcels of land with a total site area of approximately
96,463 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 110 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-27

2. Completed Properties and CIP Properties

i. For 133 buildings of the Completed Properties with a total gross floor
area of approximately 165,334 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 1 CIP Property, CLIC has obtained various relevant approvals to
undertake the construction.

iii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 133 buildings of the Completed Properties
with a total gross floor area of approximately 165,334 sq.m and the 1
CIP Property is legally owned by the Company. There is no material legal
impediment for the 133 buildings to change title registration from CLIC
to the Company. There is no material legal impediment for the Company to
obtain Building Ownership Certificates for the 1 CIP Property upon their
completion. The Company can then freely occupy, let, transfer or
mortgage the buildings (including CIP Property after completion) upon
obtaining Building Ownership Certificates.

iv. CLIC has undertaken to have Building Ownership Certificates registered
under the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof and for the CIP Properties should be upon their completion)
from the incorporation date of the Company, to be responsible for all
costs, expenses, and claims incurred, and to indemnify the Company
against all losses, claims, charges or expenses arising from the
formalizing/changing of building title registration.

B-28

VALUATION CERTIFICATE

13. Land, various buildings The properties comprise 129 The properties are 501,240,000
and structures located at office buildings and other currently occupied by the
Hubei Province ancillary buildings and structures Company mainly for office
The PRC with a total gross floor area of purposes, exempt for
approximately 224,425 sq.m., those, which comprise 5
mainly completed in various Completed Properties with
stages from 1981 to 2002 (the a total gross floor area of
"Completed Properties"). The approximately 1,002 sq.m.
main buildings include office which are leased to
buildings, boiler rooms, dining independent third parties.
halls, carports, dormitories, etc.

The properties are located on 117
parcels of land with a total site
area of approximately 165,249
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 117 parcels of land with a total site area of approximately
165,249 sq.m of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company and CLIC are in the
process of applying for change of registration of land user under the
name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 117 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties

i. For 129 buildings of the Completed Properties with a total gross floor
area of approximately 224,425 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 129 buildings of the Completed Properties
with a total gross floor area of approximately 224,425 sq.m are legally
owned by the Company. There is no material legal impediment for the 129
buildings to change title registration from CLIC to the Company. The
Company can then freely occupy, let, transfer or mortgage the buildings
upon obtaining Building Ownership Certificates.

B-29

3. For the building with a gross floor area of approximately 2,739 sq.m., the
relevant Land Use Rights Certificate is in the process of application. It's
transferability is unknown. So we have attributed no commercial value to it.
For reference purpose, we are of the opinion that the value of the building
is in the amount of RMB 3,280,000.

B-30

VALUATION CERTIFICATE

Capital value
in existing state
as at
30 September
No. Property Description and tenure Particulars of occupancy 2003
- --- -------- ----------------------------------- --------------------------- -----------------
RMB

14. Land, various buildings The properties comprise 223 The properties are 702,230,000
and structures located at office buildings and other currently occupied by the
Hunan Province ancillary buildings and structures Company mainly for office
The PRC with a total gross floor area of purposes, exempt for
approximately 254,445 sq.m., those, which comprise 48
mainly completed in various Completed Properties with
stages from 1980 to 2001 (the a total gross floor area of
"Completed Properties"). The approximately 10,393
main buildings include office sq.m. which are leased to
buildings, carports, guardrooms, independent third parties.
dining halls, etc.

The properties also comprise 2
buildings which are under
construction as at the date of
valuation (the "CIP Properties").
The estimated total construction
cost is approximately RMB
132,020,000, of which some RMB
118,630,000 has been incurred to
the valuation date. The total gross
floor area of the buildings will be
31,069 sq.m. upon completion.
The CIP Properties are scheduled
to be completed in 2004.

The properties are located on 217
parcels of land with a total site
area of approximately 276,575
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 217 parcels of land with a total site area of approximately
276,575 sq.m of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company and CLIC are in the
process of applying for change of registration of land user under the
name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 217 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-31

2. Completed Properties and CIP Properties

i. For 222 buildings of the Completed Properties with a total gross floor
area of approximately 252,585 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 2 CIP Properties, CLIC has obtained various relevant approvals
to undertake the construction.

iii. For the remaining building of the Completed Properties with a gross
floor area of approximately 1,860 sq.m, we have not been provided with
any Building Ownership Certificate or Building Title Proof. The Company
and CLIC are in the process of formalizing/changing building title
registration under the name of the Company. As such, we have attributed
no commercial value to such buildings.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 222 buildings of the Completed Properties
with a total gross floor area of approximately 252,585 sq.m and the 2
CIP Properties are legally owned by the Company. There is no material
legal impediment for the 222 buildings to change title registration from
CLIC to the Company. There is no material legal impediment for the
Company to obtain Building Ownership Certificates for the 2 CIP
Properties upon their completion. The Company can then freely occupy,
let, transfer or mortgage the buildings (including CIP Properties after
completion) upon obtaining Building Ownership Certificates.

3. For reference purpose, we are of the opinion that the values of the
Completed Properties to which we have attributed no commercial value, are in
the amount of RMB 1,780,000 as at the valuation date providing that all
Building Ownership Certificates have been obtained by the Company and the
Company is entitled to freely occupy, let, transfer or mortgage such
properties.

B-32

VALUATION CERTIFICATE

15. Land, various buildings The properties comprise 45 office The properties are 109,880,000
and structures located at buildings and other ancillary currently occupied by the
Jilin Province buildings and structures with a Company mainly for office
The PRC total gross floor area of purposes.
approximately 58,827 sq.m.,
mainly completed in various
stages from 1986 to 2001 (the
"Completed Properties"). The
main buildings include office
buildings, carports, etc.

The properties also comprise 2
buildings which are under
construction as of the date of
valuation (the "CIP Properties").
The estimated total construction
cost is approximately RMB
6,630,000, of which RMB
3,250,000 has been incurred as at
the date of valuation. The total
gross floor area of the buildings
will be 3,882 sq.m. upon
completion. The CIP Properties
are scheduled to be completed in
late 2004.

The properties are located on 36
parcels of land with a total site
area of approximately 40,061
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 36 parcels of land with a total site area of approximately
40,061 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 36 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-33

2. Completed Properties and CIP Properties

i. For 45 buildings of the Completed Properties with a total gross floor
area of approximately 58,827 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 2 CIP Properties, CLIC has obtained various relevant approvals
to undertake the construction.

iii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 45 buildings of the Completed Properties
with a total gross floor area of approximately 58,827 sq.m and the 2 CIP
Properties are legally owned by the Company. There is no material legal
impediment for the 45 buildings to change title registration from CLIC
to the Company. There is no material legal impediment for the Company to
obtain Building Ownership Certificates for the 2 CIP Properties upon its
completion. The Company can then freely occupy, let, transfer or
mortgage the buildings, (including CIP properties after completion) upon
obtaining Building Ownership Certificates.

iv. CLIC has undertaken to have Building Ownership Certificates registered
under the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof) from the incorporation date of the Company, to be
responsible for all costs, expenses and claims incurred, and to
indemnify the Company against all losses, claims, charges or expenses
arising from the formalizing/changing of building title registration.

B-34

VALUATION CERTIFICATE

Capital value
in existing
state
as at
30 September
No. Property Description and tenure Particulars of occupancy 2003
- --- -------- ---------------------------------- --------------------------- -------------
RMB

16. Land, various buildings The properties comprise 121 The properties are 985,490,000
and structures located at office buildings and other currently occupied by the
Jiangsu Province ancillary buildings and structures Company mainly for office
The PRC with a total gross floor area of purposes, exempt for
approximately 280,990 sq.m., those, which comprise 21
mainly completed in various Completed Properties with
stages from 1986 to 2003 (the a total gross floor area of
"Completed Properties"). The approximately 4,157 sq.m.
main buildings include office which are leased to
buildings, carports, etc. independent third parties.

The properties also comprise 6
buildings which are under
construction as at the date of
valuation (the "CIP Properties").
The estimated total construction
cost is approximately
RMB 99,000,000, of which some
RMB 92,110,000 has been
incurred as at the valuation date.
The total gross floor area of the
buildings will be 53,859 sq.m.
upon completion. The CIP
Properties are scheduled to be
completed in late 2004.

The properties are located on 131
parcels of land with a total site
area of approximately 183,556
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 131 parcels of land with a total site area of approximately
183,556 sq.m of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company and CLIC are in the
process of applying for change of registration of land user under the
name of the Company.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-35

2. Completed Properties and CIP Properties

i. For 120 buildings of the Completed Properties with a total gross floor
area of approximately 280,530 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company is in the
process of applying for change of registration of building ownership
under the name of the Company.

ii. For the 2 CIP Properties, CLIC has obtained various relevant approvals
to undertake the construction. For the remaining item of the CIP
property, CLIC is in the process of application of relevant approvals to
undertake the construction.

iii. For the remaining building of the Completed Properties with a gross
floor area of approximately 460 sq.m, we have not been provided with any
Building Ownership Certificate or Building Title Proof. The Company and
CLIC are in the process of formalizing/changing building title
registration under the name of the Company. Thus, we have attributed no
commercial value to such building.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 120 buildings of the Completed Properties
with a total gross floor area of approximately 280,530 sq.m and the 2
CIP Properties are legally owned by the Company. There is no material
legal impediment for the 120 buildings to change title registration from
CLIC to the Company. There is no material legal impediment for the
Company to obtain Building Ownership Certificates for the 2 CIP
Properties upon their completion. The Company can then freely occupy,
let, transfer or mortgage the buildings (including CIP Properties after
completion) upon obtaining Building Ownership Certificates.

3. For reference purpose, we are of the opinion that the values of the
Completed Properties and CIP Properties to which we have attributed no
commercial value, are in the amount of RMB 27,810,000 as at the valuation
date providing that all Building Ownership Certificates and Construction
Permits have been obtained by the Company and the Company is entitled to
freely occupy, let, transfer or mortgage such properties.

B-36

VALUATION CERTIFICATE

Capital value
in existing state
as at
30 September
No. Property Description and tenure Particulars of occupancy 2003
- --- -------- ----------------------------------- --------------------------- -----------------
RMB

17. Land, various buildings The properties comprise 101 The properties are 368,730,000
and structures located at office buildings and other currently occupied by the
Jiangxi Province ancillary buildings and structures Company mainly for office
The PRC with a total gross floor area of purposes, exempt for
approximately 146,194 sq.m., those, which comprise 1
mainly completed in various Completed Properties with
stages from 1978 to 2002 (the a total gross floor area of
"Completed Properties"). The approximately 160 sq.m.
main buildings include office which is leased to
buildings, carports, guardrooms, independent third parties.
dining halls, etc.

The properties also comprise 2
buildings which are under
construction as at the date of
valuation (the "CIP Properties").
The estimated total construction
cost is approximately RMB
33,000,000, of which some RMB
22,520,000 has been incurred as at
the valuation date. The total gross
floor area of the buildings will be
11,830 sq.m. upon completion.
The CIP Properties are scheduled
to be completed in late 2003.

The properties are located on 99
parcels of land with a total site
area of approximately 126,722
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 99 parcels of land with a total site area of approximately
126,722 sq.m of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company and CLIC are in the
process of applying for change of registration of land user under the
name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 99 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-37

2. Completed Properties and CIP Properties

i. For 100 buildings of the Completed Properties with a total gross floor
area of approximately 145,894 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 2 CIP Properties, CLIC has obtained various relevant approvals
to undertake the construction.

iii. For 1 building of the Completed Properties with a gross floor area of
approximately 300 sq.m, we have not been provided with any Building
Ownership Certificate or Building Title Proof. The Company and CLIC are
in the process of formalizing/changing building title registration under
the name of the Company. Thus, we have attributed no commercial value to
such building.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 100 buildings of the Completed Properties
with a total gross floor area of approximately 145,894 sq.m and the 2
CIP Properties are legally owned by the Company. There is no material
legal impediment for the 100 buildings to change title registration from
CLIC to the Company. There is no material legal impediment for the
Company to obtain Building Ownership Certificates for the 2 CIP
Properties upon their completion. The Company can then freely occupy,
let, transfer or mortgage the buildings (including CIP Properties after
completion) upon obtaining Building Ownership Certificates.

3. For reference purpose, we are of the opinion that the values of Completed
Properties to which we have attributed no commercial value, are in the
amount of RMB 190,000 as at the valuation date providing that all Building
Ownership Certificates have been obtained by the Company and the Company is
entitled to freely occupy, let, transfer or mortgage such properties.

B-38

VALUATION CERTIFICATE

Capital value
in existing
state
as at
Particulars of 30 September
No. Property Description and tenure occupancy 2003
- --- -------- ---------------------------------- --------------------------- -------------
RMB

18. Land, various buildings The properties comprise 60 office The properties are 412,850,000
and structures located at buildings and other ancillary currently occupied by the
Liaoning Province buildings and structures with a Company mainly for office
(excluding Dalian City) total gross floor area of purposes, exempt for
The PRC approximately 167,823 sq.m., those, which comprise 18
mainly completed in various Completed Properties with
stages from 1985 to 2001 (the a total gross floor area of
"Completed Properties"). The approximately 3,908 sq.m.
main buildings include office which are leased to
buildings, boiler rooms, carports, independent third parties.
hostel, etc.

The properties also comprise 2
buildings and structures which are
under construction as at the date
of valuation (the "CIP
Properties"). The estimated total
construction cost is approximately
RMB 45,000,000, of which some
RMB 29,500,000 has been
incurred as at the valuation date.
The total gross floor area of the
buildings will be 12,375 sq.m.
upon completion. The CIP
Properties are scheduled to be
completed in 2004.

The properties are located on 57
parcels of land with a total site
area of approximately 97,338
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 57 parcels of land with a total site area of approximately
97,338 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 57 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-39

2. Completed Properties and CIP Properties

i. For 58 buildings of the Completed Properties with a total gross floor
area of approximately 145,361 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 2 CIP Properties, CLIC has obtained various relevant approvals
to undertake the construction.

iii. For the 2 buildings of the Completed Properties with a total gross floor
area of approximately 22,462 sq.m, we have not been provided with any
Building Ownership Certificates or Building Title Proof. The Company and
CLIC are in the process of formalizing/changing building title
registration under the name of the Company. Thus, we have attributed no
commercial value to such buildings.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 58 buildings of the Completed Properties
with a total gross floor area of approximately 145,361 sq.m are legally
owned by the Company. There is no material legal impediment for the 58
buildings to change title registration from CLIC to the Company. There
is no material legal impediment for the Company to obtain Building
Ownership Certificates for the 2 CIP Properties upon their completion.
The Company can then freely sublet, transfer or mortgage the buildings
(including CIP Properties after completion) upon obtaining Building
Ownership Certificates.

3. For reference purpose, we are of the opinion that the values of the
Completed Properties to which we have attributed no commercial value, are in
the amount of RMB 74,050,000, as at the valuation date providing that all
Building Ownership Certificates have been obtained by the Company and the
Company is entitled to freely occupy, let, transfer or mortgage such
properties.

B-40

VALUATION CERTIFICATE

Capital value
in existing
state
as at
Particulars of 30 September
No. Property Description and tenure occupancy 2003
- --- -------- ----------------------------------- --------------------------- -------------
RMB

19. Land, various buildings The properties comprise 129 The properties are 264,540,000
and structures located at office buildings and other currently occupied by the
Inner Mongolia ancillary buildings and structures Company mainly for office
Autonomous Region with a total gross floor area of purposes, exempt for
The PRC approximately 135,377 sq.m., those, which comprise 10
mainly completed in various Completed Properties with
stages from 1989 to 2002 (the a total gross floor area of
"Completed Properties"). The approximately 251 sq.m.
main buildings include office which are leased to
buildings, boiler rooms, independent third parties.
guardrooms, carports, dining halls,
etc.

The properties also comprise 6
buildings and structures which are
under construction as at the date
of valuation (the "CIP
Properties"). The estimated total
construction cost is approximately
RMB 41,770,000, of which some
RMB 29,316,000 has been
incurred as at the valuation date.
The total gross floor area of the
buildings will be 11,618 sq.m.
upon completion. The CIP
Properties are scheduled to be
completed in 2004.

The properties are located on 89
parcels of land with a total site
area of approximately 147,875
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 89 parcels of land with a total site area of approximately
147,875 sq.m of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company and CLIC are in the
process of applying for change of registration of land user under the
name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 89 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-41

2. Completed Properties and CIP Properties

i. For 123 buildings of the Completed Properties with a total gross floor
area of approximately 132,144 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For 5 CIP Properties, CLIC has obtained various relevant approvals to
undertake the construction. For the remaining CIP property, the Company
and CLIC are in the process of application of relevant approvals to
undertake the construction.

iii. For the 6 buildings of the Completed Properties with a total gross floor
area of approximately 3,234 sq.m, we have not been provided with any
Building Ownership Certificates or Building Title Proof. The Company and
CLIC are in the process of formalizing/changing building title
registration under the name of the Company. As such, we have attributed
no commercial value to such buildings.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 123 buildings of the Completed Properties
with a total gross floor area of approximately 132,144 sq.m and the 5
CIP Properties are legally owned by the Company. There is no material
legal impediment for the 123 buildings to change title registration from
CLIC to the Company. There is no material legal impediment for the
Company to obtain Building Ownership Certificates for the 5 CIP
Properties upon their completion. The Company can then freely occupy,
let, transfer or mortgage the buildings (including CIP Properties after
completion) upon obtaining Building Ownership Certificates.

3. For reference purpose, we are of the opinion that the values of the
Completed Properties and CIP Properties to which we have attributed no
commercial value, are in the amount of RMB 7,170,000 as at the valuation
date providing that all Building Ownership Certificates and Construction
Permits have been obtained by the Company and the Company is entitled to
freely occupy, let, transfer or mortgage such properties.

B-42

VALUATION CERTIFICATE

20. Land, various buildings The properties comprise 23 office The properties are 102,110,000
and structures located at buildings and other ancillary currently occupied by the
Ningbo City buildings and structures with a Company mainly for office
Zhejiang Province total gross floor area of purposes, exempt for
The PRC approximately 24,737 sq.m., those, which comprise 5
mainly completed in various Completed Properties with
stages from 1987 to 1999 (the a total gross floor area of
"Completed Properties"). The approximately 604 sq.m.
main buildings include office which are leased to
buildings, carports, etc. independent third parties.

The properties are located on 21
parcels of land with a total site
area of approximately 7,338 sq.m.
for commercial use.

Notes:

1. Land Use Rights

i. For the 21 parcels of land with a total site area of approximately 7,338
sq.m of the properties, CLIC has obtained either Granted Land Use Rights
Certificates, or Allocated Land Use Rights Certificates, or Land Title
Proof in CLIC's name, and the Company and CLIC are in the process of
applying for change of registration of land user under the name of the
Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 21 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties

i. For 23 buildings of the Completed Properties with a total gross floor
area of approximately 24,737 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 23 buildings of the Completed Properties
with a total gross floor area of approximately 24,737 sq.m are legally
owned by the Company. There is no material legal impediment for the 23
buildings to change title registration from CLIC to the Company. The
Company can then freely occupy, let, transfer or mortgage the buildings
upon obtaining Building Ownership Certificates.

B-43

B-44

VALUATION CERTIFICATE

Capital value
in existing
state
as at
Particulars of 30 September
No. Property Description and tenure occupancy 2003
- --- -------- ---------------------------------- ------------------------- -------------
RMB

21. Land, various buildings The properties comprise 54 office The properties are 47,120,000
and structures located at buildings and other ancillary currently occupied by the
Ningxia Hui Autonomous buildings and structures with a Company mainly for office
Region total gross floor area of purposes.
The PRC approximately 21,461 sq.m.,
mainly completed in various
stages from 1983 to 2002 (the
"Completed Properties"). The
main buildings include office
buildings, boiler rooms, carports,
etc.

The properties are located on 39
parcels of land with a total site
area of approximately 17,971
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 39 parcels of land with a total site area of approximately
17,971 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 39 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties

i. For 54 buildings of the Completed Properties with a total gross floor
area of approximately 21,461 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 54 buildings of the Completed Properties
with a total gross floor area of approximately 21,461 sq.m are legally
owned by the Company. There is no material legal impediment for the 54
buildings to change title registration from CLIC to the Company. The
Company can then freely occupy, let, transfer or mortgage the buildings
upon obtaining Building Ownership Certificates.

B-45

iii. CLIC has undertaken to have Building Ownership Certificates
registered under the name of the Company within 12 months (for those
buildings with Building Title Proof should be within the valid period
of the Building Title Proof) from the incorporation date of the
Company, to be responsible for all costs, expenses and claims
incurred, and to indemnify the Company against all losses, claims,
charges or expenses arising from the formalizing/changing of building
title registration.

B-46

VALUATION CERTIFICATE

22. Land, various buildings The properties comprise 17 office The properties are 112,230,000
and structures located at buildings and other ancillary currently occupied by the
Qingdao City buildings and structures with a Company mainly for office
Shandong Province total gross floor area of purposes, exempt for
The PRC approximately 23,449 sq.m., those, which comprise 2
mainly completed in various Completed Properties with
stages from 1974 to 2001 (the a total gross floor area of
"Completed Properties"). The approximately 121 sq.m.
main buildings include office which are leased to
buildings, carports, etc. independent third parties.

The properties also comprise 1
building which is under
construction as at the date of
valuation (the "CIP Property").
The estimated total construction
cost is approximately RMB
8,000,000, of which RMB 10,000
has been incurred as at the date of
valuation. The gross floor area of
the building will be 4,000 sq.m.
upon completion. The CIP
Property is scheduled to be
completed in 2004.

The properties are located on 12
parcels of land with a total site
area of approximately 36,617
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 12 parcels of land with a total site area of approximately
36,617 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 12 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-47

2. Completed Properties

i. For 17 buildings of the Completed Properties with a total gross floor
area of approximately 23,449 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the CIP Property, CLIC has obtained various relevant approvals to
undertake the construction.

iii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 17 buildings of the Completed Properties
with a total gross floor area of approximately 23,449 sq.m and the CIP
Property are legally owned by the Company. There is no material legal
impediment for the 18 buildings to change title registration from CLIC
to the Company. There is no material legal impediment for the Company to
obtain Building Ownership Certificate for the CIP Property upon its
completion. The Company can then freely occupy, let, transfer or
mortgage the buildings (including CIP Property after Completion) upon
obtaining Building Ownership Certificates.

iv. CLIC has undertaken to have Building Ownership Certificates registered
under the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof) from the incorporation date of the Company, to be
responsible for all costs, expenses and claims incurred, and to
indemnify the Company against all losses, claims, charges or expenses
arising from the formalizing/changing of building title registration.

B-48

VALUATION CERTIFICATE

23. Land, various buildings The properties comprise 54 office The properties are 81,650,000
and structures located at buildings and other ancillary currently occupied by the
Qinghai Province buildings and structures with a Company mainly for office
The PRC total gross floor area of purposes, exempt for
approximately 31,222 sq.m., those, which comprise 10
mainly completed in various Completed Properties with
stages from 1961 to 2003 (the a total gross floor area of
"Completed Properties"). The approximately 1,955 sq.m.
main buildings include office which are leased to
buildings, boiler rooms, independent third parties.
guardrooms, carports, etc.

The properties are located on 30
parcels of land with a total site
area of approximately 34,031
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 30 parcels of land with a total site area of approximately
34,031 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 30 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties

i. For 54 buildings of the Completed Properties with a total gross floor
area of approximately 31,222 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 54 buildings of the Completed Properties
with a total gross floor area of approximately 31,222 sq.m. There is no
material legal impediment for the 54 buildings to change title
registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the buildings upon obtaining Building
Ownership Certificates.

B-49

B-50

VALUATION CERTIFICATE

24. Land, various buildings The properties comprise 228 The properties are 546,710,000
and structures located at office buildings and other currently occupied by the
Shandong Province ancillary buildings and structures Company mainly for office
(excluding Qingdao City) with a total gross floor area of purposes, exempt for
The PRC approximately 247,680 sq.m., those, which comprise 2
mainly completed in various Completed Properties with
stages from 1968 to 2002 (the a total gross floor area of
"Completed Properties"). The approximately 2,180 sq.m.
main buildings include office which are leased to
buildings, boiler room, independent third parties.
guardroom, carports, etc.

The properties are located on 127
parcels of land with a total site
area of approximately 264,903
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 127 parcels of land with a total site area of approximately
264,903 sq.m of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company and CLIC are in the
process of applying for change of registration of land user under the
name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 127 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties

i. For 223 buildings of the Completed Properties with a total gross floor
area of approximately 244,912 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 5 buildings of the Completed Properties with a total gross floor
area of approximately 2,768 sq.m, we have not been provided with any
Building Ownership Certificates or Building Title Proof. The Company and
CLIC are in the process of formalizing/changing building title
registration under the name of the Company. As such, we have attributed
no commercial value to such buildings.

B-51

iii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 223 buildings of the Completed Properties
with a total gross floor area of approximately 244,912 sq.m are legally
owned by the Company. There is no material legal impediment for the 223
buildings to change title registration from CLIC to the Company. The
Company can then freely occupy, let, transfer or mortgage the buildings
upon obtaining Building Ownership Certificates.

iv. CLIC has undertaken to have Building Ownership Certificates registered
under the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof) from the incorporation date of the Company, to be
responsible for all costs, expenses and claims incurred, and to
indemnify the Company against all losses, claims, charges or expenses
arising from the formalizing/changing of building title registration.

3. For reference purpose, we are of the opinion that the values of the
Completed Properties to which we have attributed no commercial value, are in
the amount of RMB 2,240,000 as at the valuation date providing that all
Building Ownership Certificates have been obtained by the Company and the
Company is entitled to freely occupy, let, transfer or mortgage such
properties.

B-52

VALUATION CERTIFICATE

25. Land, various buildings The properties comprise 63 office The properties are 213,720,000
and structures located at buildings and other ancillary currently occupied by the
Shanxi Province buildings and structures with a Company mainly for office
The PRC total gross floor area of purposes, exempt for
approximately 78,122 sq.m., those, which comprise 10
mainly completed in various Completed Properties with
stages from 1985 to 2001 (the a total gross floor area of
"Completed Properties"). The approximately 998 sq.m.
main buildings include office which are leased to
buildings, boiler rooms, carports, independent third parties.
etc.

The properties also comprise 3
buildings which are under
construction as at the date of
valuation (the "CIP Properties").
The estimated total construction
cost is approximately RMB
230,500,000, of which some RMB
81,870,000 has been incurred as at
the valuation date. The total gross
floor area of the buildings will be
26,766 sq.m. upon completion.
The CIP Properties are scheduled
to be completed in 2004.

The properties are located on 58
parcels of land with a total site
area of approximately 77,375
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 58 parcels of land with a total site area of approximately
77,375 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 58 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-53

2. Completed Properties and CIP Properties

i. For 61 buildings of the Completed Properties with a total gross floor
area of approximately 76,938 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For 2 CIP Properties, CLIC has obtained various relevant approvals to
undertake the construction. For the remaining CIP Property, the Company
and CLIC are in the process of application of relevant approvals to
undertake the construction.

iii. For the remaining 2 buildings of the Completed Properties with a total
gross floor area of approximately 1,184 sq.m, we have not been provided
with proper Building Ownership Certificates or Building Title Proof. The
Company and CLIC are in the process of formalizing/changing building
title registration under the name of the Company. As such, we have
attributed no commercial value to such buildings.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 61 buildings of the Completed Properties
with a total gross floor area of approximately 76,938 sq.m and the 2 CIP
Properties are legally owned by the Company. There is no material legal
impediment for the 61 buildings to change title registration from CLIC
to the Company. There is no material legal impediment for the Company to
obtain Building Ownership Certificates for the 2 CIP Properties upon
their completion. The Company can then freely occupy, let, transfer or
mortgage the buildings (including CIP Properties after completion) upon
obtaining Building Ownership Certificates.

3. For reference purpose, we are of the opinion that the value of the Completed
Properties and the CIP Property to which we have attributed no commercial
value, are in the amount of RMB 14,680,000 as at the valuation date,
providing that all Building Ownership Certificates and Construction Permits
have been obtained by the Company and the Company is entitled to freely
occupy, let, transfer or mortgage such properties.

B-54

VALUATION CERTIFICATE

Capital value
in existing
state
as at
30 September
No. Property Description and tenure Particulars of occupancy 2003
- --- -------- ---------------------------------- --------------------------- -------------
RMB

26. Land, various buildings The properties comprise 118 The properties are 280,990,000
and structures located at office buildings and other currently occupied by the
Shanxi Province ancillary buildings and structures Company mainly for office
The PRC with a total gross floor area of purposes, exempt for
approximately 113,562 sq.m., those, which comprise 11
mainly completed in various Completed Properties with
stages from 1965 to 2003 (the a total gross floor area of
"Completed Properties"). The approximately 7,379 sq.m.
main buildings include office which are leased to
buildings, boiler rooms, independent third parties.
guardrooms, carports, etc.

The properties also comprise 5
buildings and various structure
which are under construction as at
the date of valuation (the "CIP
Properties"). The estimated total
construction cost is approximately
RMB 57,700,000, of which some
RMB 43,310,000 has been
incurred as at the valuation date.
The total gross floor area of the
buildings will be 20,637 sq.m.
upon completion. The CIP
Properties are scheduled to be
completed in 2004.

The properties are located on 113
parcels of land with a total site
area of approximately 125,961
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 113 parcels of land with a total site area of approximately
125,961 sq.m of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company and CLIC are in the
process of applying for change of registration of land user under the
name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 113 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

B-55

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties and CIP Properties

i. For 117 buildings of the Completed Properties with a total gross floor
area of approximately 112,830 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 5 CIP Properties, CLIC has obtained various relevant approvals
to undertake the construction.

iii For the remaining item of the Completed Properties with a gross floor
area of approximately 732 sq.m, we have not been provided with any
Building Ownership Certificate of Building Title Proof. The Company and
CLIC are in the process of formalizing/changing building title
registration under the name of the Company. Thus, we have attributed no
commercial value to such building.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 117 buildings of the Completed Properties
with a total gross floor area of approximately 112,830 sq.m and the 5
CIP Properties are legally owned by the Company. There is no material
legal impediment for the 117 buildings to change title registration from
CLIC to the Company. There is no material legal impediment for the
Company to obtain Building Ownership Certificates for the 5 CIP
Properties upon their completion. The Company can then freely occupy,
let, transfer or mortgage the buildings (including CIP Properties after
completion) upon obtaining Building Ownership Certificates.

3. For reference purpose, we are of the opinion that the value of the Completed
Property to which we have attributed no commercial value, is in the amount
of RMB 580,000 as at the valuation date providing that all the Building
Ownership Certificates have been obtained by the Company and the Company is
entitled to freely occupy, let, transfer or mortgage the completed property.

B-56

VALUATION CERTIFICATE

Capital value
in existing
state
as at
30 September
No. Property Description and tenure Particulars of occupancy 2003
- --- -------- --------------------------------- --------------------------- -------------
RMB

27. Land, various buildings The properties comprise 58 office The properties are 513,470,000
and structures located at buildings and other ancillary currently occupied by the
Shanghai buildings and structures with a Company mainly for office
The PRC total gross floor area of purposes, exempt for
approximately 64,100 sq.m., those, which comprise 5
mainly completed in various Completed Properties with
stages from 1986 to 1999 (the a total gross floor area of
"Completed Properties"). The approximately 1,003 sq.m.
main buildings include office which are leased to
buildings, dining halls, etc. independent third parties.

The properties are located on 33
parcels of land with a total site
area of approximately 20,781
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 33 parcels of land with a total site area of approximately
20,781 sq.m of the properties, CLIC has obtained Realty Title
Certificates in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 33 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Realty Title Certificates.

iii. CLIC has undertaken to have Realty Title Certificates registered under
the name of the Company within 12 months from the incorporation date of
the Company, to be responsible for all costs, expenses and claims
incurred, and to indemnify the Company against all losses, claims,
charges or expenses arising from the formalizing/changing of land title
registration.

2. Completed Properties

i. For 58 buildings of the Completed Properties with a total gross floor
area of approximately 64,100 sq.m, CLIC has obtained Realty Title
Certificates. The Company and CLIC are in the process of applying for
change of registration of building ownership under the name of the
Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 58 buildings of the Completed Properties
with a total gross floor area of approximately 64,100 sq.m are legally
owned by the Company. There is no material legal impediment for the 58
buildings to change title registration from CLIC to the Company. The
Company can then freely occupy, let, transfer or mortgage the buildings
upon obtaining Realty Title Certificates.

B-57

iii. CLIC has undertaken to have Realty Title Certificates registered under
the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof) from the incorporation date of the Company, to be
responsible for all costs, expenses and claims incurred, and to
indemnify the Company against all losses, claims, charges or expenses
arising from the formalizing/changing of building title registration.

B-58

VALUATION CERTIFICATE

28. Land, various buildings The properties comprise 48 office The properties are 134,850,000
and structures located at buildings and other ancillary currently occupied by the
Shenzhen City buildings and structures with a Company for office
Guangdong Province total gross floor area of purposes.
The PRC approximately 19,710 sq.m.,
mainly completed in various
stages from 1994 to 2000 (the
"Completed Properties").

The properties are located on 48
parcels of land with a total site
area of approximately 10,465
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 48 parcels of land with a total site area of approximately
10,465 sq.m of the properties, CLIC has obtained Realty Title
Certificates in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 48 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Realty Title Certificates.

2. Completed Properties

i. For 48 buildings of the Completed Properties with a total gross floor
area of approximately 19,710 sq.m, CLIC has obtained Realty Title
Certificates. The Company and CLIC are in the process of applying for
change of registration of building ownership under the name of the
Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 48 buildings of the Completed Properties
with a total gross floor area of approximately 19,710 sq.m are legally
owned by the Company. There is no material legal impediment for the 48
buildings to change title registration from CLIC to the Company. The
Company can then freely occupy, let, transfer or mortgage the buildings
upon obtaining Realty Title Certificates.

B-59

VALUATION CERTIFICATE

Capital value
in
existing state
as at
30 September
No. Property Description and tenure Particulars of occupancy 2003
- --- -------- ---------------------------------- --------------------------- --------------
RMB

29. Land, various buildings The properties comprise 245 The properties are 557,250,000
and structures located at office buildings and other currently occupied by the
Sichuan Province ancillary buildings and structures Company mainly for office
The PRC with a total gross floor area of purposes, exempt for
approximately 287,849 sq.m., those, which comprise 98
mainly completed in various Completed Properties with
stages from 1983 to 2002 (the a total gross floor area of
"Completed Properties"). The approximately 14,690
main buildings include office sq.m. which are leased to
buildings, carports, etc. independent third parties.

The properties also comprise 2
buildings which are under
construction as at the date of
valuation (the "CIP Properties").
The estimated total construction
cost is approximately
RMB 22,900,000, of which some
RMB 11,590,000 has been
incurred as at the valuation date.
The total gross floor area of the
buildings will be 7,356 sq.m. upon
completion. The CIP Properties
are scheduled to be completed in
2004.

The properties are located on 234
parcels of land with a total site
area of approximately 154,630
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 229 parcels of land with a total site area of approximately
152,669 sq.m of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company and CLIC are in the
process of applying for change of registration of land user under the
name of the Company.

ii. For the 5 parcels of land with a total site area of approximately 1,961
sq.m of the properties, we have not been provided with any title
documents. The Company and CLIC are in the process of formalizing title
registration under the name of the Company. Thus, we have attributed no
commercial value to such land.

iii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 229 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

B-60

iv. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties and CIP Properties

i. For 239 buildings of the Completed Properties with a total gross floor
area of approximately 272,027 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 2 CIP Properties, CLIC has obtained various relevant approvals
to undertake the construction.

iii. For the 6 buildings of the Completed Properties with a total gross floor
area of approximately 15,822 sq.m, we have not been provided with any
Building Ownership Certificates or Building Title Proof. The Company and
CLIC are in the process of formalizing/changing building title
registration under the name of the Company. As such, we have attributed
no commercial value to such buildings.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 239 buildings of the Completed Properties
with a total gross floor area of approximately 272,027 sq.m and the 2
CIP Properties are legally owned by the Company. There is no material
legal impediment for the 239 buildings to change title registration from
CLIC to the Company. There is no material legal impediment for the
Company to obtain Building Ownership Certificates for the 2 CIP
Properties upon their completion. The Company can then freely occupy,
let, transfer or mortgage the buildings (including CIP Properties after
completion) upon obtaining Building Ownership Certificates.

3. For reference purpose, we are of the opinion that the values of the land,
Completed Properties and CIP Properties to which we have attributed no
commercial value, are in the amount of RMB 56,180,000, as at the valuation
date providing that all granted Land Use Rights Certificates, Building
Ownership Certificates and Construction Permits have been obtained by the
Company and the Company is entitled to freely occupy, let, transfer or
mortgage such properties.

B-61

VALUATION CERTIFICATE

30. Land, various buildings The properties comprise 17 office The properties are 90,720,000
and structures located at buildings and other ancillary currently occupied by the
Tianjin buildings and structures with a Company mainly for office
The PRC total gross floor area of purposes.
approximately 26,779 sq.m.,
mainly completed in various
stages from 1984 to 2001 (the
"Completed Properties"). The
main buildings include office
buildings, storehouses, etc.

The properties also comprise 2
buildings which are under
construction as at the date of
valuation (the "CIP Properties").
The estimated total construction
cost is approximately RMB
21,000,000, of which no money
has been incurred as at the
valuation date. The total gross
floor area of the buildings will be
7,410 sq.m. upon completion. The
CIP Properties are scheduled to be
completed in 2004.

The properties are located on 13
parcels of land with a total site
area of approximately 29,323
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 13 parcels of land with a total site area of approximately
29,323 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 13 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-62

2. Completed Properties and CIP Properties

i. For 15 buildings of the Completed Properties with a total gross floor
area of approximately 26,484 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC
are in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 2 CIP Properties, CLIC has obtained various relevant
approvals to undertake the construction.

iii. For the 2 buildings of the Completed Properties with a total gross
floor area of approximately 296 sq.m, we have not been provided with
any Building Ownership Certificates or Building Title Proof. The
Company and CLIC are in the process of formalizing/changing building
title registration under the name of the Company. Thus, we have
attributed no commercial value to such buildings.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 15 buildings of the Completed Properties
with a total gross floor area of approximately 26,484 sq.m and the 2
CIP Properties are legally owned by the Company. There is no material
legal impediment for the 15 buildings to change title registration
from CLIC to the Company. There is no material legal impediment for
the Company to obtain Building Ownership Certificates for the 2 CIP
Properties upon their completion. The Company can then freely occupy,
let, transfer or mortgage the buildings (including CIP Properties
after completion) upon obtaining Building Ownership Certificates.

v. CLIC has undertaken to have Building Ownership Certificates
registered under the name of the Company within 12 months (for those
buildings with Building Title Proof should be within the valid period
of the Building Title Proof and for the CIP Properties should be upon
their completion) from the incorporation date of the Company, to be
responsible for all costs, expenses and claims incurred, and to
indemnify the Company against all losses, claims, charges or expenses
arising from the formalizing/changing of building title registration.

3. For reference purpose, we are of the opinion that the values of the
Completed Properties to which we have attributed no commercial value, are in
the amount of RMB 350,000,000 as at the valuation date providing that all
Building Ownership Certificates have been obtained by the Company and the
Company is entitled to freely occupy, let, transfer or mortgage such
properties.

B-63

VALUATION CERTIFICATE

31. Land, various buildings The properties comprise 39 office The properties are 41,200,000
and structures located at buildings and other ancillary currently occupied by the
Xiamen City buildings and structures with a Company mainly for office
Fujian Province total gross floor area of purposes.
The PRC approximately 9,031 sq.m., mainly
completed in various stages from
1992 to 1998 (the "Completed
Properties"). The main buildings
include office buildings, carports,
dining halls, etc.

The properties are located on 39
parcels of land with a total site
area of approximately 3,031 sq.m.
for commercial use.

Notes:

1. Land Use Rights

i. For the 39 parcels of land with a total site area of approximately 3,031
sq.m of the properties, CLIC has obtained either Granted Land Use Rights
Certificates, or Allocated Land Use Rights Certificates, or Land Title
Proof in CLIC's name, and the Company and CLIC are in the process of
applying for change of registration of land user under the name of the
Company.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties

i. For 39 buildings of the Completed Properties with a total gross floor
area of approximately 9,031 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 39 buildings of the Completed Properties
with a total gross floor area of approximately 9,031 sq.m are legally
owned by the Company. There is no material legal impediment for the 39
buildings to change title registration from CLIC to the Company. The
Company can then freely occupy, let, transfer or mortgage the buildings
upon obtaining Building Ownership Certificates.

B-64

iii. CLIC has undertaken to have Building Ownership Certificates registered
under the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof) from the incorporation date of the Company, to be
responsible for all costs, expenses and claims incurred, and to
indemnify the Company against all losses, claims charges or expenses
arising from the formalizing/changing of building title registration.

B-65

VALUATION CERTIFICATE

Capital value
in
existing state
as at
Particulars of 30 September
No. Property Description and tenure occupancy 2003
- --- -------- ---------------------------------- --------------------------- --------------
RMB

32. Land, various buildings The properties comprise 113 The properties are 196,440,000
and structures located at office buildings and other currently occupied by the
Xinjiang Uygur ancillary buildings and structures Company mainly for office
Autonomous Region with a total gross floor area of purposes, exempt for
The PRC approximately 88,035 sq.m., those, which comprise 11
mainly completed in various Completed Properties with
stages from 1983 to 2002 (the a total gross floor area of
"Completed Properties"). The approximately 2,970 sq.m.
main buildings include office which are leased to
buildings, boiler rooms, independent third parties.
guardrooms, carports, etc.

The properties also comprise 1
building which is under
construction as at the date of
valuation (the "CIP Property").
The estimated total construction
cost is approximately
RMB 4,580,000, of which some
RMB 7,310,000 has been incurred
to the valuation date. The gross
floor area of the building will be
3,056 sq.m. upon completion. The
CIP Property is scheduled to be
completed in 2004.

The properties are located on 92
parcels of land with a total site
area of approximately 96,813
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 92 parcels of land with a total site area of approximately
96,813 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 92 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-66

2. Completed Properties and CIP Property

i. For 113 buildings of the Completed Properties with a total gross floor
area of approximately 88,035 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 1 CIP Property, CLIC has obtained various relevant approvals to
undertake the construction.

iii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 112 buildings of the Completed Properties
with a total gross floor area of approximately 88,035 sq.m and the 1 CIP
Property are legally owned by the Company. There is no material legal
impediment for the 113 buildings to change title registration from CLIC
to the Company. There is no material legal impediment for the Company to
obtain Building Ownership Certificates for the 1 CIP Property upon their
completion. The Company can then freely occupy, let, transfer or
mortgage the buildings (including CIP Properties after completion) upon
obtaining Building Ownership Certificates.

iv. CLIC has undertaken to have Building Ownership Certificates registered
under the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof and for the CIP Properties should be upon their completion)
from the incorporation date of the Company, to be responsible for all
costs, expenses and claims incurred, and to indemnify the Company
against all losses, claims, charges or expenses arising from the
formalizing/changing of building title registration.

B-67

VALUATION CERTIFICATE

Capital value
in existing
state
as at
30 September
No. Property Description and tenure Particulars of occupancy 2003
- --- -------- ----------------------------------- --------------------------- -------------
RMB

33. Land, various buildings The properties comprise 153 The properties are 180,170,000
and structures located at office buildings and other currently occupied by the
Yunnan Province ancillary buildings and structures Company mainly for office
The PRC with a total gross floor area of purposes, exempt for
approximately 118,718 sq.m., those, which comprise 5
mainly completed in various Completed Properties with
stages from 1980 to 2002 (the a total gross floor area of
"Completed Properties"). The approximately 283 sq.m.
main buildings include office which are leased to
buildings, carports, dormitories, independent third parties.
etc.

The properties also comprise 4
buildings and structures which are
under construction as at the date
of valuation (the "CIP
Properties"). The estimated total
construction cost is approximately
RMB 58,000,000, of which some
RMB 9,440,000 has been incurred
as at the valuation date. The total
gross floor area of the buildings
will be 9,205 sq.m. upon
completion. The CIP Properties
are scheduled to be completed in
2005.

The properties are located on 116
parcels of land with a total site
area of approximately 118,759
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 113 parcels of land with a total site area of approximately
114,258 sq.m of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company and CLIC are in the
process of applying for change of registration of land user under the
name of the Company.

ii. For the 3 parcels of land with a total site area of approximately 4,501
sq.m of the properties, we have not been provided with any title
documents. The Company and CLIC are in the process of formalizing title
registration under the name of the Company. Thus, we have attributed no
commercial value to such land.

iii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 113 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

B-68

2. Completed Properties and CIP Properties

i. For 142 buildings of the Completed Properties with a total gross floor
area of approximately 95,685 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company is in the
process of applying for change of registration of building ownership
under the name of the Company.

ii. For the 4 CIP Properties, CLIC has obtained various relevant approvals
to undertake the construction.

iii. For the 11 buildings of the Completed Properties with a total gross
floor area of approximately 23,034 sq.m, we have not been provided with
any Building Ownership Certificates or Building Title Proof. The Company
and CLIC are in the process of formalizing/changing building title
registration under the name of the Company. Thus, we have attributed no
commercial value to such buildings.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 142 buildings of the Completed Properties
with a total gross floor area of approximately 95,685 sq.m and the 4 CIP
Properties are legally owned by the Company. There is no material legal
impediment for the 142 buildings to change title registration from CLIC
to the Company. There is no material legal impediment for the Company to
obtain Building Ownership Certificates for the 4 CIP Properties upon
their completion. The Company can then freely occupy, let, transfer or
mortgage the buildings (including CIP Properties after completion) upon
obtaining Building Ownership Certificates.

3. For reference purpose, we are of the opinion that the values of the land,
Completed Properties to which we have attributed no commercial value, are in
the amount of RMB 23,320,000 as at the valuation date providing that all
granted Land Use Rights Certificates and Building Ownership Certificates
have been obtained by the Company and the Company is entitled to freely
occupy, let, transfer or mortgage such properties.

B-69

VALUATION CERTIFICATE

Capital value
in existing
state
as at
30 September
No. Property Description and tenure Particulars of occupancy 2003
- --- -------- ----------------------------------- ----------------------------- -------------
RMB

34. Land, various buildings The properties comprise 101 The properties are 742,170,000
and structures located at office buildings and other currently occupied by the
Zhejiang Province ancillary buildings and structures Company mainly for office
(excluding Ningbo City) with a total gross floor area of purposes, which comprise
The PRC approximately 187,083 sq.m., 13 Completed Properties
mainly completed in various with a total gross floor area
stages from 1986 to 2002 (the of approximately 6,548
"Completed Properties"). The sq.m. which are leased to
main buildings include office independent third parties.
buildings, dining halls, carports,
etc.

The properties also comprise 2
buildings which are under
construction as at the date of
valuation (the "CIP Properties").
The estimated total construction
cost is approximately RMB
58,000,000, of which some RMB
9,440,000 has been incurred as at
the valuation date. The total gross
floor area of the buildings will be
11,200 sq.m. upon completion.
The CIP Properties are scheduled
to be completed in 2005.

The properties are located on 83
parcels of land with a total site
area of approximately 65,395
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 83 parcels of land with a total site area of approximately
65,395 sq.m. of the properties, CLIC has obtained either Granted Land
Use Rights Certificates, or Allocated Land Use Rights Certificates, or
Land Title Proof in CLIC's name, and the Company is in the process of
applying for change of registration of land user under the name of the
Company.

ii. According to an opinion given by the Company's PRC legal adviser, the
land use rights pertaining to the 83 parcels of the land are legally
owned by the Company. There is no material legal impediment to change
title registration from CLIC to the Company. The Company can then freely
occupy, let, transfer or mortgage the land use rights upon obtaining
Land Use Rights Certificates.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

B-70

2. Completed Properties and CIP Properties

i. For 99 buildings of the Completed Properties with a total gross floor
area of approximately 179,027 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For 1 CIP Property, CLIC has obtained various relevant approvals to
undertake the construction For the remaining item of the CIP property,
the Company and CLIC are in the process of application of relevant
approvals to undertake the construction.

iii. For the remaining 2 buildings of the Completed Properties with a total
gross floor area of approximately 8,056 sq.m, we have not been provided
with any Building Ownership Certificates or Building Title Proof. The
Company and CLIC are in the process of formalizing/changing building
title registration under the name of the Company. Thus, we have
attributed no commercial value to such buildings.

iv. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 99 buildings of the Completed Properties
with a total gross floor area of approximately 179,027 sq.m and the 1
CIP Property are legally owned by the Company. There is no material
legal impediment for the 99 buildings to change title registration from
CLIC to the Company. There is no material legal impediment for the
Company to obtain Building Ownership Certificates for the 1 CIP Property
upon their completion. The Company can then freely occupy, let, transfer
or mortgage the buildings (including CIP Properties after completion)
upon obtaining Building Ownership Certificates.

3. For reference purpose, we are of the opinion that the values of the
Completed Properties and CIP Properties to which we have attributed no
commercial value, are in the amount of RMB 20,480,000 as at the valuation
date providing that all Building Ownership Certificates and Construction
Permits have been obtained by the Company and the Company is entitled to
freely occupy, let, transfer or mortgage such properties.

B-71

VALUATION CERTIFICATE

Capital value
in existing
state
as at
Particulars of 30 September
No. Property Description and tenure occupancy 2003
- --- -------- --------------------------------------------------- ------------------ -------------
RMB

35. Land, various The properties comprise 40 office buildings and The properties are 101,130,000
buildings and other ancillary buildings and structures with a currently occupied
structures located at total gross floor area of approximately 35,391 by the Company
Chongqing sq.m., mainly completed in various stages from mainly for office
The PRC 1985 to 2002 (the "Completed Properties"). The purposes, exempt
main buildings include office buildings, dining for those, which
halls, carports, etc. comprise 5
Completed
The properties also comprise 1 building which is Properties with a
under construction as at the date of valuation (the total gross floor
"CIP Properties"). The estimated total area of
construction cost is approximately approximately
RMB 17,800,000, of which some 205 sq.m. which
RMB 6,900,000 has been incurred as at the are leased to
valuation date. The total gross floor area of the independent third
buildings will be 7,980 sq.m. upon completion. parties.
The CIP Property is scheduled to be completed
in 2004.

The properties are located on 36 parcels of land
with a total site area of approximately 18,525
sq.m. for commercial use.

Notes:

1. Land Use Rights

i. For the 36 parcels of land with a total site area of approximately
18,525 sq.m of the properties, CLIC has obtained either Granted Land Use
Rights Certificates, or Allocated Land Use Rights Certificates, or Land
Title Proof in CLIC's name, and the Company and CLIC are in the process
of applying for change of registration of land user under the name of
the Company.

iii. CLIC has undertaken to have Land Use Rights Certificates registered
under the name of the Company within 12 months from the incorporation
date of the Company, to be responsible for all costs, expenses and
claims incurred, and to indemnify the Company against all losses,
claims, charges or expenses arising from the formalizing/changing of
land title registration.

2. Completed Properties CIP Properties

i. For 40 buildings of the Completed Properties with a total gross floor
area of approximately 35,391 sq.m, CLIC has obtained either Building
Ownership Certificates or Building Title Proof. The Company and CLIC are
in the process of applying for change of registration of building
ownership under the name of the Company.

ii. For the 1 CIP Property, CLIC has obtained various relevant approvals to
undertake the construction.

B-72

iii. According to an opinion given by the Company's PRC legal adviser, the
building ownership rights of 40 buildings of the Completed Properties
with a total gross floor area of approximately 35,391 sq.m and 1 CIP
Property are legally owned by the Company. There is no material legal
impediment for the 40 buildings to change title registration from CLIC
to the Company. There is no material legal impediment for the Company to
obtain Building Ownership Certificates for the 1 CIP Property upon their
completion. The Company can then freely occupy, let, transfer or
mortgage the buildings (including CIP Properties after completion) upon
obtaining Building Ownership Certificates.

iv. CLIC has undertaken to have Building Ownership Certificates registered
under the name of the Company within 12 months (for those buildings with
Building Title Proof should be within the valid period of the Building
Title Proof and for the CIP Properties should be upon their completion)
from the incorporation date of the Company, to be responsible for all
costs, expenses and claims incurred, and to indemnify the Company
against all losses, claims, charges or expenses arising from the
formalizing/changing of building title registration.

B-73

VALUATION CERTIFICATE

Capital value
in existing state
as at
30 September
No. Property Description and tenure Particulars of occupancy 2003
- --- -------- --------------------------------- ------------------------- -----------------
RMB

36. A portion of a The properties comprise Levels 23 The property is currently No commercial
building Located at to 32 of a 32-storey office occupied by the Company value
Beijing (Head Office) building (China Life Tower) for office purposes.
The PRC completed in about 2002.

The total gross floor area of the
property is approximately
15,356.76 sq.m.

Notes:

1. The land use rights to China Life Tower have been granted to Beijing
Zhongbaoxin Real Estate Development Company Limited, a subsidiary of CLIC
and a connected party of the Company, for a term of 50 years expiring on 20
March 2045 for composite use.

2. According to a Commercial Property Purchasing Contract dated 20 August 2002
entered into between Beijing Zhongbaoxin Real Estate Development Company
Limited and CLIC, Levels 23 to 32 of China Life Tower with a total gross
floor area of approximately 15,356.76 sq.m. was purchased by CLIC in a
consideration of RMB 321,362,846 and all the consideration will be fully
paid before 31 January 2005. The property was transferred to the Company as
part of the restructuring.

As confirmed by the Company and CLIC, RMB 209,017,484 has been paid to the
date of 18 November 2003 and the outstanding amount of RMB 112,345,362 will
be paid by the Company. In the course of our valuation, we did not take into
account the consideration as the amount of the consideration was mutually
agreed by the parties themselves.

3. According to an opinion given by the Company's PRC legal adviser,

i. There is no title document of the property under the name of the Company
or CLIC.

ii. The Company and CLIC are in the process of formalizing/changing land and
building title registration under the name of the Company. The
formalities to release the mortgage in relation to the property is
currently ongoing.

iii. CLIC has undertaken to be responsible for all costs, expenses and claims
incurred and to indemnify the Company against any losses, claims,
charges or expenses arising from the formalizing/changing of land and
building title registration.

iv. There is no material legal impediment for the Company to occupy the
property before the registration formality is completed.

4. In our valuation, we have attributed no commercial value to the property
without property title document under the name of the Company.

B-74

153,676,475 American Depositary Shares
Representing 6,147,059,000 H Shares

China Life Insurance Company Limited
[NAME IN CHINESE CHARACTERS]

US$ per ADS

[LOGO]

-----------------

Prospectus

, 2003

-----------------

Joint Global Coordinators and Joint Global Bookrunners
(in alphabetical order)

China International Citigroup Credit Suisse First Boston Deutsche Bank
Capital Corporation

Financial Advisers to China Life

China International
Capital Corporation Lehman Brothers

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 6. Indemnification of Directors and Officers

There is no statute, charter provision, by-law, contract or other
arrangement under which any of our controlling persons, directors or officers
is insured or indemnified in any manner against liability which he may incur in
his capacity as such.

Item 7. Recent Sales of Unregistered Securities

Upon the establishment of China Life on June 30, 2003, an aggregate of
20,000,000,000 state-owned shares were issued to CLIC. No other securities of
China Life have been issued or sold by China Life within the past three years.

The offer and sale of shares of China Life to CLIC took place outside the
United States and were exempt from registration under the Securities Act of
1933 as provided by Regulation S under the Securities Act of 1933.

Item 8. Exhibits and Financial Statement Schedules

(a) Exhibits.

Exhibit
No. Description of Exhibit
- ------- ----------------------

1.1 Form of U.S. and International Underwriting Agreement*

3.1 Articles of Association of the Registrant+

4.1 Form of H share certificate+

4.2 Form of Deposit Agreement, including form of American Depositary Receipt**

5.1 Opinion of King & Wood, PRC counsel to the Registrant, as to the validity of the H shares

8.1 Opinion of King & Wood, PRC counsel to the Registrant, as to certain tax matters (included as part of
Exhibit 5.1)

8.2 Opinion of Allen & Overy, Hong Kong legal advisor to the Registrant, as to certain tax matters

8.3 Opinion of Debevoise & Plimpton, U.S. counsel to the Registrant, as to certain tax matters+

10.1 Restructuring Agreement+

10.2 Trademark License Agreement+

10.3 Policy Management Agreement+

10.4 Asset Management Agreement between China Life Insurance Company Limited and China Life
Insurance Asset Management Company Limited

10.5 Asset Management Agreement between China Life Insurance (Group) Company and China Life
Insurance Asset Management Company Limited

10.6 Property Leasing Agreement+

10.7 Non-Competition Agreement+

II-1

Exhibit
No. Description of Exhibit
- ------- ----------------------

10.8 Corporate Placing Agreement among China Life Insurance Company Limited, Mitcham Resources
Limited, China International Capital Corporation Limited, Citigroup Global Markets Asia Limited,
Credit Suisse First Boston (Hong Kong) Limited and Deutsche Bank AG, Hong Kong Branch*

10.9 Corporate Placing Agreement among China Life Insurance Company Limited, Hutchison
International Limited, China International Capital Corporation Limited, Citigroup Global Markets
Asia Limited, Credit Suisse First Boston (Hong Kong) Limited and Deutsche Bank AG, Hong Kong
Branch*

10.10 Corporate Placing Agreement among China Life Insurance Company Limited, Richbo Investment
Limited, China International Capital Corporation Limited, Citigroup Global Markets Asia Limited,
Credit Suisse First Boston (Hong Kong) Limited and Deutsche Bank AG, Hong Kong Branch*

10.11 Corporate Placing Agreement among China Life Insurance Company Limited, Chow Tai Fook
Nominee Limited, China International Capital Corporation Limited, Citigroup Global Markets Asia
Limited, Credit Suisse First Boston (Hong Kong) Limited and Deutsche Bank AG, Hong Kong
Branch*

10.12 Form of Hong Kong Underwriting Agreement*

21.1 List of subsidiaries of the Registrant+

23.1 Consent of PricewaterhouseCoopers

23.2 Consent of King & Wood (included as part of Exhibit 5.1)

23.3 Consent of Allen & Overy (included as part of Exhibit 8.2)

23.4 Consent of Debevoise & Plimpton (included as part of Exhibit 8.3)+

23.5 Consent of Sallmanns (Far East) Limited

23.6 Consent of Tillinghast-Towers Perrin+

24.1 Power of Attorney (included in signature page)

- --------
* To be filed by amendment.
** Incorporated by reference to the Depositary's Registration Statement on Form
F-6 (filed with respect to the American Depositary Receipts) (File No.
333-110622), filed with the Commission on November 20, 2003.
+ Previously filed.

(b) Financial Statement Schedules

All supplemental schedules are omitted because of the absence of conditions
under which they are required or because the information is shown in the
financial statements or notes thereto.

Item 9. Undertakings

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 6, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling

II-2

precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

1. for purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.

2. for the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.

The undersigned Registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

II-3

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-1 and has duly caused this Amendment No. 2 to
the Registration Statement on Form F-1 to be signed on its behalf by the
undersigned, thereunto duly authorized, in Beijing, People's Republic of China,
on December 5, 2003.

CHINA LIFE INSURANCE COMPANY
LIMITED

By: /s/ Miao Fuchun
------------------------------
Name: Miao Fuchun
Title: Director and Vice
President

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Wang Xianzhang and Miao Fuchun and each
of them, as his true and lawful attorneys-in-fact and agents, with full power
of substitution and re-substitution, for him in his name, place and stead, in
any and all capacity, in connection with this Registration Statement, including
to sign and file in the name and on behalf of the undersigned as director or
officer of the Registrant (i) any and all amendments or supplements (including
any and all stickers and post-effective amendments) to this Registration
Statement, with all exhibits thereto, and other documents in connection
therewith, and (ii) any and all additional registration statements, and any and
all amendments thereto, relating to the same offering of securities as those
that are covered by this Registration Statement that are filed pursuant to Rule
462(b) promulgated under the Securities Act of 1933, as amended with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorney-in-fact and
agents, and each of them full power and authority to do and perform each and
every act and things requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.

II-4

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities and on the date indicated.

Signature Title Date
--------- ----- ----

* Wang Xianzhang December 5, 2003
- ----------------------------- Chairman of the Board and
President (principal
executive officer)

* Liu Jiade December 5, 2003
- ----------------------------- Vice President
(principal financial and
accounting officer)

* Miao Fuchun December 5, 2003
- ----------------------------- Director and Vice President

* Wu Yan December 5, 2003
- ----------------------------- Director

* Long Yongtu December 5, 2003
- ----------------------------- Independent non-executive
director

* Chau Tak Hay December 5, 2003
- ----------------------------- Independent non-executive
director

* By: /s/ Miao Fuchun
--------------------------
Miao Fuchun,
Attorney-in-fact

II-5

SIGNATURE OF AUTHORIZED REPRESENTATIVE OF THE REGISTRANT

Pursuant to the requirements of the Securities Act, the undersigned, the
duly authorized representative in the United States of China Life Insurance
Company Limited, has signed this Registration Statement or amendment thereto in
Newark, Delaware on December 5, 2003.

By: /s/ Donald J. Puglisi
------------------------------
Name: Donald J. Puglisi
Title: Managing Director

II-6

EXHIBIT INDEX

Exhibit
No. Description of Exhibit
- ------- ----------------------

1.1 Form of U.S. and International Underwriting Agreement*

3.1 Articles of Association of the Registrant+

4.1 Form of H share certificate+

4.2 Form of Deposit Agreement, including form of American Depositary Receipt**

5.1 Opinion of King & Wood, PRC counsel to the Registrant, as to the validity of the H shares

8.1 Opinion of King & Wood, PRC counsel to the Registrant, as to certain tax matters (included as part of
Exhibit 5.1)

8.2 Opinion of Allen & Overy, Hong Kong legal advisor to the Registrant, as to certain tax matters

8.3 Opinion of Debevoise & Plimpton, U.S. counsel to the Registrant, as to certain tax matters+

10.1 Restructuring Agreement+

10.2 Trademark License Agreement+

10.3 Policy Management Agreement+

10.4 Asset Management Agreement between China Life Insurance Company Limited and China Life
Insurance Asset Management Company Limited

10.5 Asset Management Agreement between China Life Insurance (Group) Company and China Life
Insurance Asset Management Company Limited

10.6 Property Leasing Agreement+

10.7 Non-Competition Agreement+

10.12 Form of Hong Kong Underwriting Agreement*

21.1 List of subsidiaries of the Registrant+

23.1 Consent of PricewaterhouseCoopers

23.2 Consent of King & Wood (included as part of Exhibit 5.1)

Exhibit
No. Description of Exhibit
------- ----------------------

23.3 Consent of Allen & Overy (included as part of Exhibit 8.2)

23.4 Consent of Debevoise & Plimpton (included as part of Exhibit 8.3)+

23.5 Consent of Sallmanns (Far East) Limited

23.6 Consent of Tillinghast-Towers Perrin+

24.1 Power of Attorney (included in signature page)