China Pacific Insurance : Q&A for CPIC 2021 Annual Results Announcement

Summary of Q & A of 2021 Annual Results Announcement

(Shanghai, March 2022 )

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 return to 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 go operational 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 torecruiting 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, weadjusted 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 turn would 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 dividend level will be set based on realities of our business operation and the environment, while considering sustainable development and regulatory requirements.

3. Q: You mentioned the Golden Triangle of insurance products, i.e.,

health protection, pension & retirement, and wealth inheritance. How do you differentiate yourself from your peers or other financial firms?

A: In 2020, the board approved the health business strategy of CPIC, and we established an ad hoc committee headed by chairman Kong to coordinate efforts in the area. In 2021, the work proceeded in an effective way and on all fronts.

In health insurance, the underwriting quality of CPIC P/C improved enormously; NBV margin of CPIC Life remained stable, and the business line represented a much higher share of incremental premiums and customers.

Our key differentiator is the building of the ecosystem. We made fast progress in tele-medicine in hope of improving access to premium health care service by our customers. We inaugurated the CPIC Guangci On-line

Hospital in collaboration with Ruijin Hospital, established Shantai

Technology Co. Ltd., which is now open for business. We launched the brand of CPIC Family Doctor, connecting hospitals, health check entities and pharmacies, in a bid to build an integrated off-line and on-line ecosystem covering both insurance products and health management services via cooperation between multiple parties. The programme was launched in

September last year, and so far users have exceeded 1mn. With a