08:51 CHINA LIFE<02628> - Results Announcement (2) Note: (i). As of 31 December 2004, the carrying value of government bonds plus the related accrued interest entrusted with Min Fa Security Limited Company ("Min Fa Security") for custody by the Company totalled RMB 412 million. The government bonds entrusted in Min Fa Security is for custodian purposes only and not a part of an asset management arrangement. In order to centralize the control over these bonds, the Company has asked Min Fa Security to transfer the custodian. Min Fa Security was unable to execute the transfer and it became known that Min Fa Security is in financial difficulty. Subsequently, the China Securities and Regulatory Commission announced on 18 October 2004 that from close of business on 18 October 2004, the assets of Min Fa Security have been put into the custody of and are being operated by China Oriental Asset Management Corporation ("China Oriental"). The Company has registered its claim against Min Fa Security in January 2005. As a result, the Company has made a provision of RMB 320 million. The Company continues to take all of the above necessary steps to safeguard the Company's rights over the bonds. As of the issue date of the financial statements, except for the bonds with Min Fa Security, all other fixed maturity and equity securities are entrusted with China Life Assets Management Company Limited ("AMC"), the subsidiary of the Company. 2. Benefits, claims and expenses Gross Ceded Net RMB million RMB million RMB million For the year ended 31 December 2004 Accident and health claims and claim adjustment expenses 7,469 (1,051) 6,418 Life insurance death and other benefits 6,816 - 6,816 Increase in future life policyholder benefits 33,154 - 33,154 ---------------------------------------- Total insurance benefits and claims 47,439 (1,051) 46,388 ====================================== For the year ended 31 December 2003 Accident and health claims and claim adjustment expenses 5,744 (862) 4,882 Life insurance death and other benefits 8,570 - 8,570 Increase in future life policyholder benefits 43,084 - 43,084 ---------------------------------------- Total insurance benefits and claims 57,398 (862) 56,536 ====================================== 3. Deferred policy acquisition costs Group 2004 2003 RMB million RMB million Gross At 1 January 25,164 18,411 Acquisition costs deferred 13,672 11,818 Amortisation charged to income (6,559) (5,350) Unrealised losses on investments 704 285 ------------------------- At 31 December 32,981 25,164 ========================= Ceded At 1 January (296) (327) Acquisition costs deferred (194) (296) Amortisation charged to income 296 327 --------------------- At 31 December (194) (296) ====================== Net At 1 January 24,868 18,084 Acquisition costs deferred 13,478 11,522 Amortisation charged to income (6,263) (5,023) Unrealised losses on investments 704 285 ------------------------ At 31 December 32,787 24,868 =======================