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China Life Insurance Co. (2628.HK) repeated its earlier assurances Wednesday that its state-controlled parent company would be liable for any damages arising from the irregularities found by a government audit.
In a legal notice, the board of directors of China's largest life insurer said it had completed its review of the National Audit Office's report, and said it believed the problems it discovered would have no material impact on the company's operations, cash flow or financial position.
China Life has previously said the government directed its parent company to pay 67.5 million yuan (US$8.15 million) in back taxes and fines as a result of the audit office's report.
That report concluded that the company made certain investments that were not permitted by China's Insurance Law, that it made use of individual agents that were not legally qualified, and that some of its branches carried out activities, including making overpayments upon the refund of premiums and annuities, that breached industry regulations.
The audit covered the period up to 2002, before China Life's predecessor was restructured into two companies, the current publicly listed company, and the parent company that remains controlled by the State. That move was intended to make the listed company more attractive to investors by giving it only the healthiest assets of the group.
However, China Life did not offer further comment on the regulatory issues raised in the audit report.
(Shenzhen Daily July 8, 2004)
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