China Pacific Insurance : CPIC Newsletter for Investors_No.7

	Investor's Newsletter（July 31, 2023）	vol. No.7 in 2023
	CPIC（SH601601, HK02601, LSE CPIC）

Stock Data (ending 30 June 2023)

Total equity base (in million)	9,620
A-share	6,845
H-share	2,775
Total Cap (in RMB million)	229,855
A-share (in RMB million)	177,834
H-share (in HKD million)	56,200
6-month highest/lowest
A-share (in RMB)	33.61/23.01
H-share (in HKD)	24.49/16.69
GDR (in USD)	24.23/16.92

IR Calendar

Contents

• Regulatory Updates

The National Administration of Financial Regulation (NAFR): Banking and insurance institutions should carry out comprehensive self-inspection to identify risk exposure of cybersecurity and data security

The National Administration of Financial Regulation (NAFR): Extend tax incentives to all mainstream types of health insurance

• Industry Information

Actuarial examination will be resumed, with fellow actuary examination optimized and covering 7 insurance categories, including life insurance and health insurance

Strengthen the industry policy support for cybersecurity insurance

Investor Relations Department

Tel: [phone]

Fax: [phone]

E-MAIL: [e-mail]

Add: 15F, 1 Zhongshan Rd. S.

Shanghai, P.R. China, 200010

Contact: Chloé LIU, QIAO Shengmei

Tel:[phone]

E-MAIL: [e-mail]

Disclaimer:

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

• Company News

CPIC held 2023 Investor Day

• Special Report

Q & A of 2023 CPIC Investor Day

Premium Income (Unit: in RMB million)

	Jan.- June	Changes	June	Changes
P&C	104,948	14.3%	19,548	10.1%
Life	155,067	4.0%	30,178	39.0%

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Regulatory Updates

• The National Administration of Financial Regulation (NAFR): Banking and insurance institutions should carry out comprehensive self-inspection to identify risk exposure of cybersecurity and data security

On July 5, NAFR issued the "Notice on Strengthening Cybersecurity and Data Security Management in Third-party Cooperation", requiring banking and insurance institutions to carry out comprehensive self-inspection to identify risk exposure of cybersecurity and data security in the cooperation in digital ecology and make corresponding rectifications. The Notice specifies that banking and insurance institutions should include stricter data security requirements in contracts and agreements. Where there is any violation of regulations or contract agreements, the violating outsourcing company should be held accountable, and the scope of cooperation with such company should not be expanded until such violation is rectified.

• The National Administration of Financial Regulation (NAFR): Extend tax incentives to all mainstream types of health insurance

On July 6, NAFR released on its official website the "Notice of the National Administration of Financial Regulation on Insurance Products Applicable to Preferential Individual Income Tax Policies for Commercial Health Insurance". The Notice specifies that medical insurance, long-term care insurance, and disease insurance plans that meet certain requirements are entitled to preferential tax policies; and the scope of the insured is expanded, where the policyholder can insure themselves, as well as their spouse, children, and parents. The new regulations will be implemented starting from August 1.

Industry Info

• Actuarial examination will be resumed, with fellow actuary examination optimized and covering 7 insurance categories, including life insurance and health insurance

On July 17, the National Administration of Financial Regulation and the Ministry of Human Resources and Social Security jointly issued "Regulations on the Professional Qualification of Actuaries" and "Implementing Measures for the Professional Qualification Examination of Actuaries" to establish a management and examination system for the professional qualification of actuaries with Chinese characteristics. The two documents came into force as of the date of promulgation. According to these

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documents, the associate actuary examination should include five subjects, namely, Probability Theory and Mathematical Statistics, Economic and Financial Integration, Actuarial Mathematics, Actuarial Modeling and Data Analytics, and Actuarial Risk Management. Fellow actuary examination should be divided into 7 professional categories, namely, life insurance, non-life insurance, health insurance, social insurance and pension plan, financial risk management, asset management, and data science. Each category includes 1 public subject, 3 professional subjects, and 1 optional subject to meet the demand for actuaries in multiple fields in China.

• The Ministry of Industry and Information Technology and the National Administration of Financial Regulation: Strengthen the industry policy support for cybersecurity insurance

On July 17, the Ministry of Industry and Information Technology and the National Administration of Financial Regulation issued the "Opinions on Promoting Regulated and Sound Development of Cybersecurity Insurance". The Opinions require that a standard system for cybersecurity insurance policies should be established and improved; innovation in cybersecurity insurance products and services should be enhanced; technology-empowered cybersecurity insurance development should be boosted; demand in the cybersecurity industry should be further unleashed, and an ecosystem for cybersecurity insurance development should be fostered. In particular, the Opinions notes that the industry should offer stronger policy support for cybersecurity insurance to guide innovation in cybersecurity insurance and development of insurance products in line with characteristics and laws of cybersecurity. The industry should also improve fiscal policies, fully utilize existing local policies (usually the first version/edition of its kind), and provide insurance tax reduction and subsidies, etc.

Company News

• CPIC held 2023 Investor Day

On July 4, CPIC held the 2023 Investor Day in Hangzhou, with nearly a hundred investors and analysts from home and abroad present. Pan Yanhong, Chairman of CPIC Life, Su Shaojun, Secretary of CPIC's Board of Directors, John Cai, General Manager (CEO) of CPIC Life, and other relevant executives of the Company attended the event physically or virtually. This event mainly included the workplace experience activity in the morning and the "Changhang" meeting in the afternoon. The workplace experience activity in the morning was held in CPIC Life Zhejiang Branch. Nearly 40 outstanding marketers shared their experience in using NBS, "U Selected" system and other technology tools, as well as their insights into "Changhang"

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Action Program. The "Changhang" meeting in the afternoon was held at Pacific Care Home (Lin'an, Hangzhou), where executives of CPIC Life transparently and effectively presented the achievements of Changhang Transformation Phase I and the blueprint of Phase II from aspects of professional marketing, value-based banking and insurance, industry service systems, corporate governance, risk control and investment, as well as culture and leadership. They also discussed some hot topics with the audience. This event completely showcased CPIC Life's planning and execution of strategies. Through face-to-face communication with frontline workers and a comprehensive introduction by executives, it has demonstrated CPIC's firm confidence and determination in Changhang Action Plan.

Special Report

• Q & A of 2023 CPIC Investor Day (Hangzhou, July 2023)

Q1: Phase I of Changhang Transformation has recently been concluded. In light of your original objectives, what have you accomplished according to plan and what have you done better than expected?

1. The blueprint of the transformation highlights 3 objectives, i.e., industry leadership, new model of life insurance and long-term commitments. As for industry leadership, our NBV growth turned positive in the second half of last year, the first among our peers. And the momentum continued to build up, with notable improvement in business quality metrics such as policy persistency and claims ratio. In terms of the new model of life insurance, there was substantial progress on multiple fronts, from career-based agency force to value-oriented bancassurance, from the supportive "product + service" system to risk management, from compliance to investment, and from culture, leadership to talent development. When it comes to long-term commitments, the work Phase I of Changhang Transformation started will continue, such as the restructuring of agency force centring on "3 Directions and 5 Mosts", and value-oriented bancassurance, all aiming to enhance our productivity; Phase II would focus on organisational transformation, which, in turn, will help with productivity improvement and cultivation of new growth drivers. The two projects are supportive of each other.

Q2: Phase II of Changhang Transformation intends to shift from centralised management to more independent business operation on the part of branch offices. But how can you maintain the cost advantage of the centralised model? What is the boundary of responsibilities between head-office and branch offices? How do you draw the line? How can you minimise the short-term volatility of business results when implementing Phase II?

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1. When business was fast growing, we put emphasis on "one voice" across the entire organisation, i.e., the head-office gives orders, and branch offices execute. Excellent execution became an advantage of us.

But in the new stage of development, as customers become more sophisticated and their needs more diverse, the old approach is no longer compatible with the new customer-centric model. Therefore, we put forward the concept of "headquarters for empowerment and branch offices for business operation". We hope the head-office could focus on value management, top-level design and strategic planning, while the 38 provincial-level branches, which are in different stages of development, with varying local market conditions, customer profiles and needs, and different organisational endowments, will ensure an alignment of top-level design and development strategies from above with their own, specific realities, and operate on a more discretionary, self-motivated basis. To be specific, they are supposed to be responsible for market strategies, talent development & succession, allocation of financial resources, KPI systems and be more accountable for value creation and profits. The old model is like a slow train, and we want to build a high-speed train. They both move on the same track, towards the same direction. But the high-speed train has multiple drivers, with each compartment, namely, each branch office, having its own engine. In such a way can we ensure a sustainable future of Changhang Transformation.

CPIC Life has 3 gold mines: the sales force, employees and customers. Last year, we mainly focused on fixing the sales force so as to unlock its potential and boost productivity. Next, we'll work on employees, like how to better motivate them, tap their poitential in productivity and creativity, which lies at the heart of organisational vitality. A typical problem with many large firms is that only the head-office is responsible for business performance, such as profits, value growth and business quality, as well as compliance and risk management, while branches only look after sales. Hence problems with business quality, and short-termism practices such as massive recruiting and extra incentives on top of the Basic Law for business promotion. Next, we'll start with level-II branches, and go down to level-III branches, so that management of branch offices can be serious about business management and shoulder more responsibilities in value creation, cost control, profit contribution, talent and leadership development, risk management and business quality.

As for how to avoid short-term pressures in transformation, pains with the agency channel are already in the past, because we made a paradigm shift which boosted productivity and helped agents with customer service. Ultimately, it's all about enhancing business management capabilities. We seek to improve the professionalism of staff at all levels, from headquarters to branch offices. Their focus will shift away from keeping tabs on how well

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