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

Summary of Q & A of 2021 Interim Results Announcement

（August 2021, Shanghai）

1. Q: The past half year has been very tough for listed insurance companies. For investors, there has been a great deal of uncertainties surrounding the industry. What is management view on the trends and dynamics of the sector going forward? What is your thinking on strategies to ensure development in the medium and long term ?

A: The first half of 2021 was indeed difficult, with lots of "unknowns", testing the tenacity, wisdom, patience and confidence of business leaders. I'd like to describe the past half year as"stable". As an enterprise, in the face of profound changes rarely seen before caused by COVID-19, maintaining "stability" is of paramount importance. But that does not mean "business as usual". Instead, it calls for the pursuit of improvement, progress and change while ensuring stable fundamentals.

"Improvement" means maintaining an upward trend in fundamentals no matter how the environment changes. This year marks our 30th anniversary. What helped to navigate us through twists and turns of economic and industry cycles was our commitments to the long term, to high-quality development, to transformation centering on customer needs

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and to generating returns to our shareholders so that they can share in the company's growth. We have persisted in value growth of life insurance business, high-quality development of property and casualty insurance, and stability and prudence of investment, which formed our fundamentals and were regarded as the label of CPIC.

"Progress" can be seen from the figures we released in the interim report. New business sales of life insurance pretty much met our target, with MDRT members passing 1,000 for the first time; we stood the test of automobile insurance comprehensive reform, with rapid development of non-auto business; premiums from agricultural insurance are expected to surpass RMB10bn; we also reported solid results in investment.

"Change"refers to reshaping of growth drivers in a new stage of development of the insurance. Our deployment in retirement and health care sectors are well underway, which has gained further traction recently. By the end of the year, we will complete 2 projects in Chengdu and Dali, which will go operational in due course. We joined hands with Ruijin Hospital and established Guangci CPIC Internet Hospital, which launched its first product "CPIC Family Doctor", offering services like on-line consulting, off-line referrals and drug delivery. CPIC Fin-tech, in the preparatory stage, is now in test-run, being more pro-active and efficient in

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providing services. At the same time, with the support of the board, we are working on the strategy of sustainable development for the next 5 years, covering liabilities, assets and our own operation, so as to contribute to the fulfillment of national strategies and the green and low-carbonsocio-economic transitioning of China.

An enterprise always faces uncertainties, and the commercial logic of insurance is to tackle the uncertainties of tomorrow by investing in today. We have learned a lot from the past 30 years of operating in this market. We will continue doing the right, and perhaps also difficult thing, and we know this takes time.

No matter how the environment changes, we will not waver in our determination and direction. We are confident that what we are doing now is a CPIC solution in the face of growing uncertainties, which, in time, will bear desirable results, and provide a satisfactory answer to our customers, employees and shareholders.

2. Q: Investors pay much attention to your dividends. Given the gap between OPAT and net profit growth, could management give us more guidance on the dividend policy for this year?

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1. Our dividend payment may aptly be described as generous, which has also become a label of the company, evidenced by nearly 50% of average pay-out ratio since our listing. We are committed to generating reasonable returns to our investors.
   As a company, we are expected, and understandably, to maximise returns for our shareholders while ensuring healthy business operation. To achieve this, we need to overcome difficulties, and a favourable environment is also necessary. But ultimately it depends on our own effort. Going forward, the company, and the board as well, will maintain the sustainability and stability of the dividend policy, and set a suitable dividend level based on the company's business performance, capital needs arising from business growth, regulatory requirements and capital constraints. This not only ensures a reasonable return for shareholders but also enables us to capture opportunities in innovation, especially in deployment in

"products + services" so that our development can be on a more sustainable footing.

3. Q: Could you elaborate on the plans and progress of the Health Strategy, and areas you focus on?

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1. In terms of overall development of health insurance at the Group level, combining our subsidiaries, the business line as a whole realised double digit growth in the first half of this year. The growth rate was roughly twice that of the industry average. Of this, medical insurance, which is more closely linked with service, grew the fastest. By the way, health insurance mainly consists of medical insurance and critical illness insurance. We seek to boost up-sell to increase the level of protection on CI insurance, while enhancing capabilities in medical insurance upgrading to improve customer penetration by medical services, thus continuously enhancing customer satisfaction.
   There are two definitive trends in the health insurance business. One is long-term inflation of medical costs, with China having the highest inflation rate among major economies of the world. The other is that medical service is a must for customers. Therefore, building an ecosystem for health insurance is vital. To a large extent, investment in the health sector has to start from scratch, and in this equation, marketisation and professionalism are key levers.
   On the one hand, we use market-based mechanisms to help us start the business. We established an in-house team of 400 medical professionals and another team of 200 technology professionals for tele-medicine in 6

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