CPIC Newsletter for Investors_No. 5 (2022)

Total equity base (in million)9,620

A-share6,845

H-share2,775

Total Cap (in RMB million)199,924

A-share156,888

H-share (in HKD million)53,0636-month highest/lowest

A-share (in RMB)29.84/21.65

H-share (in HKD)25.80/18.14

GDR (in USD)21.40/18.60

Regulatory Updates

Regulator seeks public opinion for new rules on sales of life/health insurance for 2nd time

China contemplates setting up Financial Stabilisation Fund

Industry Information

Investor Relations Department

Tel: 021-58767282

Fax: 021-68870791 E-MAIL:[email protected]Add: 15F, 1 Zhongshan Rd. S. Shanghai, P.R. China, 200010 Contact: GONG Zheng Tel:021-33968661

E-MAIL:[email protected]

China Pacific Insurance Company (the "Company") abides by the disclosure obligations by securities regulators and stock exchanges in accordance with the law. The newsletter is for information purpose only and do not constitute investment suggestion in any circumstances. The Company nor has any liability for any loss howsoever arising from any information contained in the newsletter. All copyrights are reserved by the Company. The newsletter belongs to non-public information. Without written authorization by the Company, none part of the newsletter could be copied or substituted to others in any circumstance

CPIC Investor's Newsletter

Huhuibao cumulatively paid out 524mn yuan on 90,000 claims

Auto insurance reform saves over 250bn yuan for consumers

Company News

P/C, life and health insurance subsidiaries of CPIC Group rank 1st in customer service ratings

Special Report

Summary of Q & A of 2021 Annual Results Announcement

Regulatory Updates

Regulator seeks public opinion for new rules on sales of life/health insurance for 2nd time

The new Exposure Draft no longer specified the methods of the classification of insurance sales personnel, and instead, required insurance companies to establish the system for such classification based on the qualifications criteria released by China Insurance Association. Newly recruited sales agents shall meet the requirement by the end of 2023, while existing personnel by the end of 2024.

The new document kept the requirement for segmentation of insurance products, depending on their types, complexity and riskiness, and this will be matched with the classification of sales personnel.

In terms of management of insurance policies taken out by insurance agents themselves, the new draft maintained the ban on such polices as a precondition for recruitment, probational evaluation and promotion, or as a metric for performance assessment and sales campaigns.

In sales eligibility management, insurers still need to assess the insurance needs, risk tolerance and financial means of applicants to ensure they match the profiles of products. On the other hand, the original stipulation that total premiums shall not exceed 30% of customers' annual household income was changed to 50% and 5 times of annual household income for regular-pay and single-pay, respectively. Meanwhile, insurers shall not accept application for unit-linked or universal life by those aged over 60 years. Insurers should stick to the rules unless they obtain disclaimer declarations from such customers.

The new draft also relaxed restrictions on commissions. The first draft stipulated that first-year fees shall not exceed 80% of first-year premiums for intermediaries, first-year commission shall not exceed 40% of direct commission of the insurance policy, and the duration of renewed commission shall not be lower than either 10 years or the payment period, whichever is shorter. But under the new draft, commission as a share of total premiums was capped at the pricing expense loading.

As for cooperation between insurance companies and commercial banks, the original wording which allowed "exclusive banking outlets" was deleted. The latest draft encourages qualified banks to establish a dedicated team of insurance sales personnel and improve their professionalism.

China contemplates setting up Financial Stabilisation Fund

On April 6, PBoC released the Draft Exposure of Financial Stabilisation Law, which, among others, proposed to establish the Financial Stabilisation Fund. Under the management of State Council Financial Stabilisation Committee, it serves as a standby bail-out fund in cases of material financial risks. The Fund will depend on capital of financial firms, financial infrastructure and other channels as prescribed by the State Council.

The draft requires entities in trouble to first mitigate the risk on their own, including capital injection by majority shareholders or de facto controllers as per Resumption and Bail-out Contingency Programmes or Regulatory Commitments. At the same time, market-based M & A or restructuring, deposit security fund and industry security fund may also play a part. For risks that jeopardise regional financial stability, and cannot be resolved through market-based mechanisms or recourse of losses, local public resources will kick in. For material financial risks which may disrupt financial stability, the Financial Stabilisation Fund will step in.

Industry Information

Huhuibao cumulatively paid out 524mn yuan on 90,000 claimsAs of Feb. 28, Huhuibao, a government-sponsored medical insurance programme in Shanghai, paid out a total of 524mn yuan on nearly 90,000 claims during the 8 months of its operation, with daily average payment of 2,157,000 yuan, and as much as 587,000 yuan paid for the largest single claim and 696,800 yuan for individual claimants.

The split between male and female is almost half half, with the share of women at 49.81%. The share of those of 66 years and above was 45.36%. The top 3 illnesses for claims are malignant tumour, muscle & bones & connective tissues and cardio-vascular, and the incidence is rising among younger people, especially for malignant tumour. Those aged between 19 and 45 accounted for 13% of total cases of the disease, and many were boin the 1990s or even 2000s.

Auto insurance reform saves over 250bn yuan for consumers

As of the end of 2021, the interim targets of auto insurance reform, i.e., lowering prices, expanding coverage and improving quality, have been mostly met.

First, auto insurance premiums were reduced by 250bn yuan in total. Average vehicle premium was 2,761 yuan, down by 21% from before the reform, with 87% of consumers benefiting from this. Non-claims discount on commercial auto insurance fell from 0.789 prior to the reform to 0.750.

Second, protection increased. Sum assured on compulsory auto insurance rose from 122,000 to 200,000, and the average SA on third party liability amounted to 1.57mn yuan, an increase of 650,000 from before the reform. Of this, the share of insurance policies with SA of 1mn yuan or above reached 91%. Up to 88% of customers take out commercial auto insurance, versus 80% before the reform.

Third was higher claims amounts. Loss ratio rose to 72.4%, up by almost 13pt.

Fourth is lower expense ratio, which decreased by nearly 11pt. Of this, the commission ratio fell by 5pt, and the business and management expense ratio by 6pt.

Fifth is the debut of specialised new energy vehicle products.

Company News

P/C, life and health insurance subsidiaries of CPIC Group rank 1st in customer service ratings

On March 29, CBIT released the Insurance Customer Service Quality Index of 2021, the first full-year rating after the publication of its 2021 Interim Index. CPIC P/C and CPIC Life scored 94.46 points and 94.74 points respectively, both ranking No.1 in the 60 P/C insurers and 79 life/health insurers (including 7 specialised health insurance companies) covered in the evaluation. CPIC Health, with 87.23 points, also ranked the 1st place among specialised health insurance companies.

Special Report

Summary of Q & A of 2021 Annual Results Announcement

On March 28, CPIC hosted its 2021 Annual Results Announcement, and below is a summary of the Q & A session.

1.Q: Chairman Kong, what do you think about CPIC's performance in 2021, and what areas will you focus on in 2022 and beyond?

A: The past year can be summarised as "progress amid stability" , which is a hard-won result. In life insurance, we launched transformation underpinned by "3 Directions and 5 Mosts", with a vision of "becoming a life insurer with the best customer experience". The P/C operation is committed to enhancing capabilities in direct reach to customers and differentiated business management, so as to set an example of high-quality development for China's P/C insurance market. Asset management, given the long-term nature of liabilities, balanced between seizing market opportunities and effectively controlling risks, and maintained solid investment results. 800 Service Officers from headquarters to grass-root branch offices reached out to customers, lending more intimacy and accessibility to CPIC Service. Our deployment in retirement and health care boosted the system of "products + services". The board, with diversified composition, professional expertise and an international vision, demonstrated capabilities in making forward-looking and strategic decisions.

The outlook can be described as "challenging but promising". Our aspiration for "industry leadership in healthy and steady development" remains unchanged, and currently, it's essential that we adhere to the original targets, and retuto the basics. We initiated Transformation 2.0 a few years ago, which instilled more vibrancy, more innovativeness and tenacity into our culture.

Specifically, our priorities include: first is the transformation of life insurance, and we will press ahead with it via the 8 projects until the targets are met; second is investments in health care and retirement, which will gooperational in due course, with nationwide deployment of retirement communities roughly in shape. CPIC Family Doctor, a tele-medicine programme, has over 1mn users served by 400 dedicated medical professionals. There will also be substantial progress in rehab care; third is the establishment of CPIC Sequoia Joint Office, which facilitated exploratory investment in the health care sector, diversified the ecosystem and promoted synergy between assets and liabilities; fourth, to implement ESG philosophies in an all-around way, we signed into UN PSI and UN PRI last year, and released the Sustainable Development Report; fifth, we will continue to roll out the system of professional managers, committed to recruiting high-end talent and developing young talent, so as to further improve our organisational health.

Of course, it takes time for us to "win the final victory". In 2022 and beyond, maintaining stability remains our first priority, and on top of that, we will pursue change and progress, and strive to achieve high-quality development.

2.Q: Your shareholder dividend fell in spite of steady growth of accounting profits and OPAT in 2021. Why? Was it because of C-ROSS

II? Any guidance for dividend policy in the medium to long term?

A: C-ROSS II tightens capital recognition, leading to decline of solvency margin ratios of our insurance subsidiaries across the board. To ensure sufficient and reasonable solvency under the new capital regime, and to support business development and deployment in new areas, we have initially put in place a capital planning system covering all subsidiaries, with formulation of concrete measures, which are being implemented. At the same time, we are looking at all possible options on the table as allowed by regulatory policies, such as application for a transitional period, or the issuance of perpetual bonds for capital replenishment. There is still uncertainty around these options, and so as a precautionary measure, we adjusted the dividend level for 2021 to ensure the implementation of our high-quality development strategies.

In terms of strategic investment, last year, the 14th 5-year Development Programme of CPIC Group was approved, and we are vigourously pushing forward strategic deployment on the front of health care, technological innovation and key regional initiatives, such as the Yangtze River Delta Region, the Greater Bay Area and the Integrated Area of Beijing, Tianjin and Hebei. These investments,would support current business development, and more importantly, seek to foster engines of future growth and in tuwould generate long-term returns for investors.

We are working on a full-fledged 3-year capital plan based on C-ROSS II. Capital plans, including shareholder dividend, have significant bearing on the long-term business development of a company, and thus require a long-term view. We remain committed to generating reasonable returns for shareholders. Since our listing, we have maintained a high pay-out ratio and dividend yield, and going forward our dividend policy will stay consistent. The future cash

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China Pacific Insurance (Group) Co. Ltd. published this content on 19 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 April 2022 08:28:22 UTC.