China Life Insurance (NYSE:LFC)

BEIJING, August 23, 2011 /PRNewswire-Asia/ -- China Life Insurance Company Limited (the "Company" or "China Life") (NYSE: LFC; SSE: 601628; HKSE: 2628) announced today that the board of directors of the Company (the "Board") has approved the proposal to issue subordinated term debts with an aggregate amount of not exceeding RMB 30 billion by the Company. The subordinated term debts will be issued to qualified investors who meet relevant regulatory requirements. The term of the subordinated term debts will be no less than five years and the interest rate will be determined by making reference to market interest rate. The proceeds will be used to replenish the Company's supplementary capital and raise the solvency ratio of the Company.

Our principal cash inflows come from insurance premiums, deposits, proceeds from sales and maturity of financial assets and investment income. The primary liquidity concerns with respect to these cash inflows are the risk of early withdrawals by contract holders and policyholders, as well as the risks of default by debtors, interest rate changes and other market volatilities. We closely monitor and manage these risks. See “Item 4. Information on the Company—Business Overview—Investments”. Additional sources of liquidity to meet unexpected cash outflows are available from our investment portfolio. As of December 31, 2010, the amount of cash and cash equivalents was RMB 47,854 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 December 31, 2010, the amount of term deposits was RMB 441,585 million. As of December 31, 2010, investments in debt securities had a fair value of RMB 606,269 million.

Our investment portfolio also provides us with a source of liquidity to meet unexpected cash outflows. As of December 31, 2010, investments in equity securities had a fair value of RMB 195,918 million and investments in debt securities had a fair value of RMB 606,269 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 relatively lower than those in more developed financial markets. We are also subject to market liquidity risk due to the large size of our investments in some of the markets in which we invest. From time to time some of our positions in our investment 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.

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