**�й�̫ƽ���գ����ţ��ɷ����޹�˾** **CHINA PACIFIC INSURANCE (GROUP) CO., LTD.** (A joint stock company incorporated in the People��s Republic of China with limited liability) **2023 Annual Report** **(Trading Symbol��CPIC)** **C****ontents** [Important information 2](#_Toc99203174) [Corporate information and definitions 4](#_Toc99203175) [Business overview 7](#_Toc99203177) [Chairman��s statement 12](#_Toc99203182) [Operating results 18](#_Toc99203183) [Highlights of accounting and operation data 18](#_Toc99203184) [Review and analysis of operating results 20](#_Toc99203185) [Embedded value 67](#_Toc99203186) [Corporate governance 76](#_Toc99203187) [Report of the Board of Directors and significant events 76](#_Toc99203188) [Changes in the share capital and shareholders�� profile 91](#_Toc99203189) [Directors, supervisors, senior management and employees 95](#_Toc99203190) [Corporate governance 110](#_Toc99203216) [Documents available for inspection 158](#_Toc99203521) Financial Reports **Cautionary Statements:** Certain statements included in this report, including future plans and development strategies, are not historical facts and are "forward-looking". Forward-looking statements are based upon various assumptions, including, without limitation, the management��s examination of historical operating trends, data contained in its records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and which are beyond its control, and the Company may not achieve or accomplish these expectations, beliefs or projections. The occurrence or non-occurrence of an assumption could cause the Company��s actual financial condition and results to differ from or fail to meet expectations expressed or implied by, such forward-looking statements. None of the Company or its management can guarantee or give any assurance to investors regarding the future accuracy of the opinions set forth herein or as to the actual occurrence of any predicted developments. Investors and other related parties are advised to be mindful of the risk, and be aware of the difference between the Company��s plans or projections and its commitments. Such forward-looking statements speak only as at the date on which they are made and are not intended to give any assurances as to future results. You are advised to exercise caution and should not rely on the forward-looking statements in this report. **Important information** **I.** **The** **b****oard of** **d****irectors, the** **b****oard of** **s****upervisors, the** **d****irectors, the** **s****upervisors and the senior management of the Company warrant that the contents of this annual report are true, accurate and complete and that there is no false representation, misleading statement or material omission in this report; and they severally and jointly accept responsibility for the contents of this report.** **II****.****The Company's 202****3****Annual Report was considered and approved at the** **2****n****d****session of the** **10****th** **b****oard of** **d****irectors on 2****8****March 202****4****,** **which 12 directors were required to attend and all of them attended in person.****For the purposes of the United Kingdom��s Financial Conduct Authority��s Disclosure Guidance and Transparency Rule 4.1.12(3), each of the directors of the Company named in the section ��Directors, supervisors and senior management�� of this report, to the best of his or her knowledge, confirm that: (1) the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and (2) the** **annual****report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face****.** **III****.****Ernst & Young Hua Ming LLP** **audited the 202****3****financial statements** **of the Company** **and issued the standard unqualified auditor****��****s report.** **IV****. Mr.** **FU F****an (person in charge of the Company), Mr. ZHANG Yuanhan (****principal****in charge of accounting and** **c****hief** **a****ctuary) and Ms. XU Zhen (****h****ead of the** **Accounting****Department) warrant the truthfulness, accuracy and completeness of the financial statements contained in this annual report.** **V****.** **T****he****profit distribution for 20****2****3** **is****made based on the audited financial statements of the parent company. The Company intends to declare an annual cash dividend of RMB1.02 per share (tax included). Based on the total share capital of 9,620,341,455 shares, the amount of the dividend in aggregate will be RMB9,812,748,284.10. The remaining retained profits will be carried forward to 2024. No capital reserve was transferred to the share capital during the year. The** **above-said****profit distribution****plan is to be approved at** **the shareholders��****general meeting.** **VI****.** **T****he Company was exposed to various risks, including insurance risk, market risk, credit risk, liquidity risk, operational risk, reputational risk, strategy risk, capital management risk and other** **G****roup specific risks. For** **more** **detail, please refer to the** **s****ection "Corporate governance" of this report.** **VII****. There w****ere****no fund****s****misappropriated****by major shareholders or related parties** **of****the Company.** **VIII****. The Company did not provide external guarantees in violation of the prescribed decision-making procedures.** CHINA PACIFIC INSURANCE (GROUP) CO., LTD. BOARD OF DIRECTORS **Corporate information and definitions** Legal Name in Chinese: �й�̫ƽ���գ����ţ��ɷ����޹�˾ (������̫����) Legal Name in English: CHINA PACIFIC INSURANCE (GROUP) CO., LTD. (��CPIC��) Legal Representative: FU Fan Board Secretary: SU Shaojun Securities Representative: CHEN Haozhi Contact for Shareholder Inquiries: Investor Relations Dept. of the Company Tel: +86-21-58767282 Fax: +86-21-68870791 Email: [[email protected]](/cdn-cgi/l/email-protection) Address: 1 South Zhongshan Road, Huangpu, Shanghai, PR China Registered Office: 1 South Zhongshan Road, Huangpu, Shanghai, PR China Office Address: 1 South Zhongshan Road, Huangpu, Shanghai, PR China Postal Code: 200010 Website: http://www.cpic.com.cn Email: [[email protected]](/cdn-cgi/l/email-protection) Selected Newspapers for Disclosure (A Share): China Securities, Shanghai Securities and Securities Times Announcements for A Share Published at: http://www.sse.com.cn Announcements for H Share Published at: http://www.hkexnews.hk Announcements for GDR Published at: http://www.londonstockexchange.com Report Available at: Investor Relations Dept. of the Company Stock Exchange for A Share Listing: The Shanghai Stock Exchange Stock Name for A Share: �й�̫�� Stock Code for A Share: 601601 Stock Exchange for H Share Listing: The Stock Exchange of Hong Kong Limited Stock Name for H Share: ��??̫�� Stock Code for H Share: 02601 Stock Exchange for GDR Listing: London Stock Exchange Stock Name for GDR: China Pacific Insurance (Group) Co., Ltd. Trading symbol for GDR: CPIC Accountant (A Share): Ernst & Young Hua Ming LLP Office address: Level 17, Ernst & Young Tower, Oriental Plaza, No.1 East Changan Ave. Dongcheng District, Beijing, PR China Signing Certified Public Accountants: GUO Hangxiang, WANG Ziqing Accountant (H Share): Ernst & Young Hua Ming LLP (Recognised PIE Auditor) Office address: Level 17, Ernst & Young Tower, Oriental Plaza, No.1 East Changan Ave. Dongcheng District, Beijing, PR China Accountant (GDR): Ernst & Young Hua Ming LLP Office address: Level 17, Ernst & Young Tower, Oriental Plaza, No.1 East Changan Ave. Dongcheng District, Beijing, PR China Signing Certified Public Accountants: GUO Hangxiang **Definitions** In this report, unless the context otherwise requires, the following terms shall have the meanings set out below: | | | | --- | --- | | ��The Company��, ��the Group��, ��CPIC�� or ��CPIC Group�� | China Pacific Insurance (Group) Co., Ltd. | | ��CPIC Life�� | China Pacific Life Insurance Co., Ltd., a subsidiary of China Pacific Insurance (Group) Co., Ltd. | | ��CPIC P/C�� | China Pacific Property Insurance Co., Ltd., a subsidiary of China Pacific Insurance (Group) Co., Ltd. | | ��CPIC AMC�� | Pacific Asset Management Co., Ltd., a subsidiary of China Pacific Insurance (Group) Co., Ltd. | | ��CPIC HK�� | China Pacific Insurance Co., (H.K.) Limited, a wholly-owned subsidiary of China Pacific Insurance (Group) Co., Ltd. | | ��Changjiang Pension�� | Changjiang Pension Insurance Co., Ltd., a subsidiary of China Pacific Insurance (Group) Co., Ltd. | | ��CPIC Fund�� | CPIC Fund Management Co., Ltd., a subsidiary of China Pacific Insurance (Group) Co., Ltd. | | ��CPIC Anxin Agricultural�� | Pacific Anxin Agricultural Insurance Co., Ltd., a subsidiary of China Pacific Insurance (Group) Co., Ltd. | | ��CPIC Health�� | Pacific Health Insurance Co., Ltd., a subsidiary of China Pacific Insurance (Group) Co., Ltd. | | ��CPIC Capital�� | CPIC Capital Company Limited, a subsidiary of China Pacific Insurance (Group) Co., Ltd. | | ��CPIC Technology�� | Pacific Insurance Technology Co., Ltd., a wholly-owned subsidiary of China Pacific Insurance (Group) Co., Ltd. | | ��C-ROSS II�� | China Risk Oriented Solvency System Phase II | | ��CBIRC�� | Former China Banking and Insurance Regulatory Commission | | ��CSRC�� | China Securities Regulatory Commission | | ����NAFR�� | National Administration of Financial Regulation | | ��SSE�� | Shanghai Stock Exchange | | ��SEHK�� | The Stock Exchange of Hong Kong Limited | | ��LSE�� | London Stock Exchange | | ��PRC GAAP�� | China Accounting Standards for Business Enterprises issued by Ministry of Finance of the People's Republic of China, and the application guide, interpretation and other related regulations issued afterwards | | ��New Accounting Standards�� | The Accounting Standard for Business Enterprises Nos. 22, 23, 24, 37 and 25 promulgated and revised by the Ministry of Finance of the People's Republic of China in 2017 and 2020 sequentially | | ��Articles of Association�� | The articles of association of China Pacific Insurance (Group) Co., Ltd. | | ��Hong Kong Listing Rules�� | The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited | | ��Model Code for Securities Transactions�� | Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited | | ��Corporate Governance Code�� | Corporate Governance Code as set out in Appendix C1 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited | | ��SFO�� | The Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) | | ��Substantial Shareholder�� | Has the meaning given to it under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), being a person who has an interest in the relevant share capital of the Company, the nominal value of which is equal to or more than 5% of the nominal value of the relevant share capital of the Company | | ��GDR�� | Global depositary receipts | | ��ESG�� | Environmental, Social and Governance | | ��RMB�� | Renminbi | | ��pt�� | Percentage point | **Business overview** **K****ey** **indicators** Unit: RMB million | | | | --- | --- | | Insurance revenue ?C CPIC Life 85,461   -3.5% Insurance revenue ?C CPIC P/C 177,128   +11.8% **Group** **operating income****note 1** **323,945    -2.5%** | **Group embedded value** **529,493****+1.9%** | | NBV margin of life business 13.3%    +1.7pt **NBV****of life****business** **10,962****+19.1%** | **Underwriting combined ratio** **P/C** **business****note** **2** **97.7%    +0.7pt** | | Group net investment yield 4.0%   -0.3pt **Group comprehensive investment yield** **2.7%****+0.4****pt** | **Group OPAT attributable to shareholders of the parent****note 3****35,518   -0.4%** | | **Group net profit attributable to shareholders of the parent****note 1** **27,257    -27.1%** | CPIC Life 210%    -8pt CPIC P/C 214%    +12pt **Group** **comprehensive** **solvency margin ratio** **257%    +1pt** | | **Group number of customers****(��000)** **179,869    +9,342** | **Annual cash dividend****note** **4** **RMB****1****.02 per share** **(tax inclu****ded****)** | Notes: 1. The Company adopted the new insurance standard and the new financial instruments standards from 1 January 2023.  Comparative figures of the prior period are restated according to the requirements of the new standards. According to requirements of the new insurance standard, the Company adjusted comparative figures of the prior period which related to insurance business. According to requirements of new financial instruments standards, the Company did not adjust comparative figures of the prior period which related to investment business. 2. Consolidated data of CPIC P/C, CPIC Anxin Agricultural and CPIC HK. 3. Figures for comparative periods were restated. 4. Subject to SGM approval. **Core Competitiveness** As a leading comprehensive insurance group in China, we are committed to value growth, firmly pursue development via transformation, stay focused on the core business of insurance, and strive for continued progress in high-quality development. We have achieved steady growth of overall business results, steady improvement of market standings, enhanced control of major risks, sustained improvement of comprehensive strength, with increased contribution to China��s social and economic development and people��s well-being. **Focus** We stay focused on insurance. As a composite insurer with multiple business segments along the insurance value chain, we continuously enhance capabilities in professional insurance business operation so as to better contribute to China��s real economy and people��s pursuit of a better life. Our life/health insurance business, committed to improving people��s well-being, deepens integration of insurance products and services. It puts customers�� need first and strives to improve the supply of products and services centring on health protection, retirement provision and wealth management; contributes to China��s multi-tiered social security system through retirement finance and elderly care; presses ahead with channel diversification, enhances professional capacity-building of the agency force, and improves capabilities for services across the entire life cycle of customers. The property and casualty insurance business is committed to serve the New Development Pattern and improve the risk reduction system. Automobile insurance business steps up customer resources management (CRM), optimises the mode of risk management of new energy vehicles; accelerates innovation in technology insurance, green insurance, improves insurance supply in rural areas and for agriculture to facilitate China��s Rural Invigoration Initiative. As for investment, we adhere to prudent, long-term and responsible investing, explore opportunities in forward-looking, emerging industries in the context of China��s key national strategies and development regions, strengthen co-ordination of assets and liabilities, and contribute to steady growth of the Company. **Prudence** We are committed to prudent business operation, upholding the philosophy of ��increasing protection, reducing and mitigating risks and doing insurance for people��. We continuously improve our corporate governance structure with legal entities shouldering the primary responsibility. We are proud of modernised corporate governance mechanisms featuring good coordination and checks and balances, with the management, the Board of Directors, the Board of Supervisors and the Shareholders�� General Meeting each performing their duties, in accordance with rules and policies which clearly define their respective roles and responsibilities. That helps the Company to execute strategies and conduct business in an orderly manner. We adhere to the business philosophy of long-term, sustainable development, with a performance evaluation system balancing short term, and long term, development and risk management. We put in place a risk management system covering risk governance, risk strategies and management of major risk categories, continue to improve risk management rules and policies, enhance digitalisation in risk control, foster an enabling corporate culture integrating risk management and internal control, and continuously enhance capabilities for prudent business operation, compliance and risk management, so as to ensure sustainable and healthy development of the Company. **Innovation** We persist in customer orientation and forge ahead with transformation and innovation in a bid to foster new drivers for high-quality development. The health care strategy centres on the ��Healthy China Initiative�� and national retirement finance strategies, provides differentiated, personalised product/service solutions in response to changing customer needs and behaviours, and continuously enhances the supply of health services and elderly care; promotes specialty service programmes such as CPIC Home and CPIC Family Doctors via collaboration with partners to advance the core business of insurance. The strategy in integrated regional development departs from local development endowments, consolidates comprehensive advantages in the Yangtse River Delta Region, innovates cross-border business in the Greater Bay Area, promotes head-office economy in the Area of Beijing, Tianjin and Hebei, and leverages diversified deployment in circle of Chengdu and Chongqing; deepens the synergy of life and P/C insurance business, the coordination of assets and liabilities, and the integration of products and services. The digital empowerment strategy aims to facilitate high-quality development, expands the ecosystem of digital and intelligent services, establishes and improves Group-wise data governance system, promotes the development of hallmark applications such as Digital Employees, an application driven by large-scaled modelling; strengthens integrated digital and smart risk control, accelerates investment research capabilities for digital and intelligent decision-making, enhances digital and smart operational management, steps up empowerment by digital and smart CRM, advances digital finance, in a bid to accelerate the shift of growth drivers. **Responsibility** We leverage insurance as ��a cushion of economic shocks�� and ��a social stabiliser��, uphold ��insurance for people��, conduct inclusive finance, and stay committed to creating value for our employees, customers, shareholders and the society. We adhere to customer orientation, ensure the pivotal role of CPIC Service Officers in consumer rights protection, with increasing visibility of the brand of ��Responsible, Smart and Caring�� CPIC Service. We provide employees with access to an innovative learning platform, step up training and coaching of young talent, optimise organisational structure in a bid to enhance employees�� experience and their sense of fulfillment, belonging and satisfaction. We diligently perform our corporate social responsibilities, manage and mitigate risks, boost economic development and improve social governance, innovate in the supply of green insurance products and services, accelerate capacity-building in ESG investment, promote green finance in the insurance industry, in order to facilitate sustainable social and economic development of China. We continue to strengthen investor communication, improve transparency in information disclosure to improve investor recognition; maintain stable and prudent shareholder dividend levels so that shareholders can share in the growth of the Company. **Honours and awards** if !supportListsl endifCPIC Group maintained the ranking of 5th place among the World's 100 Most Valuable Insurance Brands in 2023 released by Brand Finance. if !supportListsl endifCPIC Group won Outstanding Partner of Hangzhou Asian Games and Asian Para Games granted by the General Administration of Sport of China, China Disabled Persons' Federation, CPC Zhejiang Provincial Committee and Zhejiang Provincial Government. if !supportListsl endifCPIC Group was granted the Best Cases Award at the 2023 Best Practices of the Board of Directors of Listed Companies organised by the Chinese Association of Public Companies. if !supportListsl endifCPIC P/C won the Green Action Annual Award at the 21st Finance and Economic Rankings by Hexun.com. if !supportListsl endifCPIC Life won the Annual Insurance Service Award at the 2023 " Shangzheng - Jinlicai" Annual Awards sponsored by the Shanghai Securities News. if !supportListsl endifCPIC P/C and CPIC Life both ranked high at the Insurance Service Quality Index for the first half of 2023 released by China Banking and Insurance Information Technology Co., Ltd. if !supportListsl endifAt the ��3rd China Insurance Investment Golden Bull Awards�� by China Securities Daily, CPIC AMC won the ��Golden Bull Award for Insurance Investment��. Its CPIC Excellence Dividend Value Equity Product won the ��Golden Bull Award for Portfolio Insurance Asset Management Products (equity)�� and CPIC Excellence Product No.9 (pure debt) won the ��Golden Bull Award for Portfolio Insurance Asset Management Products (fixed income)��. if !supportListsl endif��Tong Xin Yuan��, a charitable brand of CPIC Health, won the ��2023 China Insurance Ark Award for Social Responsibility�� sponsored by the Securities Times. if !supportListsl endifChangjiang Pension won the ��Pension Manager of the Year Award�� at the 2023 China Financial Value Ranking held by YICAI. **Chairman��s statement** **Dear shareholders,** In 2023, in spite of a complex and challenging global political and economic landscape, subdued global economic growth, and domestic economic constraints such as lack of effective demand and weakened short term market expectations in the short term, China��s economic development still demonstrated immense potential, great resilience and strong dynamism. Its long-term outlook remains positive. At the same time, the reform of China��s financial regulatory system has been implemented, with a tightening of financial supervision. In the face of both challenges and opportunities, the insurance sector advanced with transformation to unlock its potential. In an uncertain market environment, we adhered to high-quality development, deepened transformation, and delivered a stable business performance, with improved market share, steady progress in value-creating capabilities and more breakthroughs in key areas, which consolidated the foundation of sustainable development. **In 2023, we forged ahead with reform in a coordinated way, with steady increase in comprehensive strength.** We deepened transformation and enhanced our capabilities to serve national strategies. Group operating income amounted to RMB323.945 billion, of which, insurance revenue reached RMB266.167 billion, a growth of 6.6% year on year; Group OPATnote1,2 reached RMB35.518 billion, remaining stable. As of the end of 2023, Group EV amounted to RMB529.493 billion, an increase of 1.9% from the end of 2022; Group AuMnote 2 stood at RMB2,922.308 billion, a growth of 10.1% from the end of the preceding year; Group number of customers totalled 179.869 million, an increase by 9.342 million from the end of 2022. **In the year, we continued to grow value, with improving momentum in KPIs for high-quality development.** CPIC Life deepened the Changhang Transformation and reported robust NBV growth on the back of channel diversification. NBV for the year amounted to RMB10.962 billion, a growth of 19.1% year on year. The quality and mix of the agency force continued to improve, with steady improvement in core manpower productivity and income; we pushed for an organisational shift towards corporate headquarters focusing on empowerment and branch offices on independent business operation and accelerated the building of a customer-oriented, self-driven, value-creating organisation. CPIC P/C adhered to high-quality development, accelerated sustainable development strategy, and achieved all-around improvement in business management, with a 11.8% growth in insurance revenue, and an underwriting combined ratio of 97.7%. We delivered underwriting profitability in automobile, non-auto mobile and agricultural insurance business, further cementing the foundation of profitable, sustainable and high-quality development. In asset management, we optimised the ALM system across economic cycles, enhanced capabilities for investment research, compliance management and risk control, with resilient investment performance amid a volatile and weak capital market. Comprehensive investment yield for 2023 stood at 2.7%, a year-on-year growth of 0.4pt. **In the year, we addressed both symptoms and root-causes, with enhanced capacity for governance amid a complex environment.** We continuously improved professional capability for risk management, pro-actively responded to emerging risks arising from new technologies, new models and new business areas; strengthened forward-looking early-warning, identification and control of risks, with enhanced capacity for risk management and top SARMRA rankings. We stepped up ESG capacity-building, released our first Climate Change Report to facilitate green development; continued to optimise the integrated model of corporate governance, diversify channels of investor communications, strictly implemented rules on information disclosure and improved our transparency. We were awarded top rating by SSE in information disclosure evaluation for the tenth consecutive year, included among the Best Cases of the Board of Directors of Publicly Listed Companies for 2023 by the Chinese Association of Listed Companies, and won top rankings in corporate governance evaluation by the insurance regulator. CPIC P/C and CPIC Life maintained top ratings in the business operation assessment by the Chinese Insurance Association for consecutive years. **In 2023, we boosted innovation via collaboration, with progress being made in insurtech via resource sharing and cooperation.** With a vision of ��industry leadership in digital and intelligent capabilities��, we accelerated digital empowerment and innovation. We launched Digital Employees based on large-scaled modelling, which served as labour equivalents at our Internal Audit Centre. CPIC P/C deepened the use of RPA, and the ��smart factory�� can replace a monthly average manpower of 400 people, which helped to improve efficiency with integrated operation. CPIC Life launched Xin Shuang Lu (meaning ��double recording��) driven by light-weight remote visual interactive technology, which enabled ��cloud-based virtual meetings�� between sales personnel and customers, thus enhancing customer experience. We released our first Report on CPIC Individual Customers, which showcased the role big data played in driving customer resources management; inaugurated ��Meeting Room at the Huangpu River��, a platform to engage with our strategic customers, and built an open, collaborative ecosystem for win-win results. Through the Asian Games in Hangzhou, we deepened the marketing model of ��insurance + sports + health + service��, and the ��CPIC Blue Team�� PR programme won the Best Marketing Cases by the organising committee of the Hangzhou Asian Games. There was a smooth succession of the Board and management at the end of 2023. 2024 is a critical year of transition for CPIC. Looking ahead, the global economy faces both risks and opportunities, and China strives to sustain its economic recovery amid downward pressures. It is our firm belief that, no matter how the environment changes, the long-term positive outlook for China��s economy remains unchanged. The insurance market has great potential to continue its high-quality development. Our DNA of focus, prudence and innovation will continue. The new Board of Directors will continue to act with confidence, meet challenges head on. We will maintain the business philosophy of customer-orientation, demonstrate stronger energy and resilience, press ahead with transformation, seize emerging opportunities of development, and move firmly towards the vision of ��a leading insurance financial group with global competitiveness��. **We will make efforts to both ��strengthen and to explore�� centring on the 5 priorities.** The Central Work Meeting on Financial Services floated the target of building China into a financial powerhouse, which instilled great vitality into the high-quality development of the insurance industry. The 5 priorities in financial services will create major opportunities for the industry. Accordingly, we will strengthen capabilities in techfin, improve full-cycle service of technological innovation, and contribute to China��s vision of an independent technological powerhouse; promote inclusive finance, uphold the people-centred philosophy and deliver breakthroughs in China��s key national strategies; expand retirement-related financial services, particularly pension fund management and supply of innovative products and services. At the same time, we will actively explore new areas and frontiers, especially green finance to serve China��s green, low-carbon transitioning and the green upgrading of China��s economy; boost the digital economy to advance digital transformation and empowerment of the core business of insurance, setting a good example for the industry. **We will focus on ��quality and profitability�� and further strengthen our core business segments.** Life insurance business will adhere to its aim of value growth, continue to roll out the Changhang Transformation, promote channel diversification, accelerate the building of the ��product+service�� system to meet the diverse needs of customers, so as to enhance overall quality and profitability; put in place an organisational model with corporate headquarters focusing on empowerment and branch offices on independent business operation, and substantially strengthen our value-creating capabilities. P/C insurance business will continue to focus on quality first. While maintaining solid underwriting profitability of both auto and non-auto business, we will ensure stability of existing business and make efforts to foster new growth drivers, establish and improve an integrated disaster response system covering ��prevention, reduction, relief and claims payment�� and the risk reduction management system, so as to cement the foundation of high-quality development. As for asset management, we will follow the logic of the market, improve the sense of ��the big picture��, and strengthen capacity-building for professional investment expertise. Particularly a long-term view of value investing, a holistic view of insurance asset management, forward-looking approach towards investment in emerging areas, global awareness of asset management, a sense of balance between risk and reward, embrace market-based mechanisms such as incentive and constraint systems.  We will optimise the unified internal credit-rating and credit risk management system, improve the long-term mechanism for risk handling, and continue to increase value contribution of investment. **We** **wi****ll stay ��pragmatic and results-driven��, committed to delivering more benefits in the implementation of the 3 key strategies.** The strategy in health care strives to enhance empowerment of the core insurance business, pro-actively respond to customers�� need for health protection and changes in their behaviours, proceed with ecosystem building for full life-cycle health services, promote our specialty service programmes such as CPIC Care Home and Yuanshen Rehabilitation, and continuously strengthen capacity for retirement and health services. The strategy in integrated regional development will depart from local development endowments, take firm steps in the roll-out of innovative mechanisms to increase their local impact, so that regional development can be fully aligned with national strategies, with more breakthroughs in enhancing key regional market competitiveness. The strategy in digital empowerment will focus on building a leading ecosystem in technological services, accelerate digitally-enabled CRM, consolidate digital integrated risk control, enhance operational efficiency and investment research, so as to achieve new breakthroughs in forming new productive forces. **We will advance intra-Group collaboration by innovative means of ��integration and well-targeting measures��.** We will persist with the customer-oriented business philosophy, continue to upgrade CRM to achieve ��access to integrated services by one customer via one interface��, promote further alignment of customers�� diverse needs and the system of business operation and services, so as to deliver better synergies. We will fully leverage our advantage as a composite insurer, step up coordination of assets and liabilities and explore a collaboration-driven, new business model of ��insurance + health care & retirement + wealth management��. We will continuously optimise the service value chain, effectively strengthen customer-oriented value-creating capabilities, and promote steady improvement in customer value contribution. We will also intensify efforts in consumer rights protection, and secure the standing of CPIC Service as a premier insurance service brand. **We will combine ��precision and optimisation�� to solidify the foundation of business management.** We will improve the formulation of forward-looking strategic planning, enhance its execution throughout the organisation so that it can more effectively drive high-quality development and ensure the fulfilment of our overall strategic objectives. We will stimulate organic development, unleash potential, conduct precise management, optimise organisational structure in line with our strategic development needs, improve talent development, and ensure steady progress in high-quality development. We will continuously enhance integrated corporate governance, effectively engage with the society, shareholders, customers and employees to achieve a win-win outcome. We will continue to improve the integration of the compliance management and risk control system into business operations. In the course of our development in the past 32 years, generations of CPIC employees and agents forged ahead with a pioneering spirit, worked diligently, overcame difficulties and bore witness to the rise of a thriving Chinese insurance market, a compelling story with a dedicated chapter for CPIC. Thanks to their hard work, CPIC has continued to grow over the years, maintained its market leadership, and advances with the market. We will carry forward the cause of CPIC, persist with a long-term view, fulfil the mission of our times through solid, hard work. We will make sustained efforts to ensure stable fundamentals, gather great stregth, and foster new growth engines. We will stay committed to our responsibilities to society and people, and strive for a higher level of quality development, making even greater contributions to the effort of building China into a financial powerhouse. Notes: 1.Attributable to shareholders of the parent. 2.Figures for comparative periods were restated. FU Fan Chairman of the Board of Directors CPIC Group **Operating results** **Highlights of accounting and operation data** **I. Key accounting data and financial indicators** **of the Company as at period ends** Unit: RMB million | | | | | | | | --- | --- | --- | --- | --- | --- | | **Key accounting data** | **2023** | **2022** | | **Changes****(%)** | **2****021** | | **Unadjusted** | **Adjusted****n****ote****2** | | Operating income | 323,945 | 455,372 | 332,140 | (2.5) | 440,643 | | Profit before tax | 32,001 | 25,176 | 42,483 | (24.7) | 30,796 | | Net profitnote1 | 27,257 | 24,609 | 37,381 | (27.1) | 26,834 | | Net profit net of non-recurring profit or lossnote1 | 27,135 | 24,505 | 37,277 | (27.2) | 26,699 | | Net cash flows from operating activities | 137,863 | 147,911 | 148,664 | (7.3) | 108,407 | | | | | | | | | --- | --- | --- | --- | --- | --- | | | **31 December****20****2****3** | **31 December****2022** | | **Changes (%)** | **31 December****2****021** | | **Unadjusted** | **Adjusted****n****ote****2** | | Total assets | 2,343,962 | 2,176,299 | 2,071,336 | 13.2 | 1,946,164 | | Equitynote 1 | 249,586 | 228,446 | 196,477 | 27.0 | 226,741 | Notes: 1.Attributable to shareholders of the parent. 2.The Company adopted the new insurance standard and the new financial instruments standards from 1 January 2023. Comparative figures of the prior period are restated according to the requirements of the new standards. According to requirements of the new insurance standard, the Company adjusted comparative figures of the prior period which related to insurance business. According to requirements of new financial instruments standards, the Company did not adjust comparative figures of the prior period which related to investment business. Unit: RMB | | | | | | | | --- | --- | --- | --- | --- | --- | | **Key accounting indicators** | **2023** | **2022** | | **Changes****(%)** | **2****021** | | **Unadjusted** | **Adjusted****n****ote****3** | | Basic earnings per sharenote1 | 2.83 | 2.56 | 3.89 | (27.1) | 2.79 | | Basic earnings per share net of non-recurring profit or lossnote 1 | 2.82 | 2.55 | 3.87 | (27.2) | 2.78 | | Diluted earnings per sharenote1 | 2.83 | 2.56 | 3.89 | (27.1) | 2.79 | | Weighted average return on equity (%)note 1 | 11.4 | 10.8 | 19.2 | (7.8pt) | 12.2 | | Weighted average return on equity net of non-recurring profit or loss(%)note 1 | 11.4 | 10.8 | 19.1 | (7.7pt) | 12.1 | | Net cash flows per share from operating activitiesnote2 | 14.33 | 15.38 | 15.45 | (7.3) | 11.27 | | | **31 December****20****2****3** | **31 December****2022** | | **Changes (%)** | **31 December****2021** | | **Unadjusted** | **Adjusted****n****ote****3** | | Net assets per sharenote1 | 25.94 | 23.75 | 20.42 | 27.0 | 23.57 | Notes: 1. Attributable to shareholders of the parent. 2.Calculated by the weighted average number of ordinary shares in issue. 3.The Company adopted the new insurance standard and the new financial instruments standards from 1 January 2023. Comparative figures of the prior period are restated according to the requirements of the new standards. According to requirements of the new insurance standard, the Company adjusted comparative figures of the prior period which related to insurance business. According to requirements of new financial instruments standards, the Company did not adjust comparative figures of the prior period which related to investment business. Unit: RMB million | | | | | | | --- | --- | --- | --- | --- | | **Key accounting data by quarter** | **For the three months from** **1 January to 31 March 2023** | **For the three months from** **1 April to 30 June 2023** | **For the three months from** **1 July to 30 September 2023** | **For the three months from** **1 October to 31 December 2023** | | Operating income | 94,386 | 81,153 | 80,387 | 68,019 | | Net profitnote | 11,626 | 6,706 | 4,817 | 4,108 | | Net profit net of non-recurring profit or lossnote | 11,583 | 6,634 | 4,805 | 4,113 | | Net cash flows from operating activities | 49,324 | 35,935 | 25,733 | 26,871 | Note: Attributable to shareholders of the parent. **II.****Non-recurring** **items** Unit: RMB million | | | | --- | --- | | **Non-recurring items** | **2023** | | Gains on disposal of non-current assets | 23 | | Government grants recognised in current profit or loss | 219 | | Custody fees of entrusted operation | 62 | | Other net non-operating income and expenses other than aforesaid items | (128) | | Effect of income tax relating to non-recurring profit or loss | (53) | | Net non-recurring profit or loss attributable to non-controlling interests | (1) | | Total | 122 | **I****II.** **Other key financial and regulatory indicators** Unit: RMB million | | | | | --- | --- | --- | | **Indicators** | **31 December 2023/** | **31 December 2022(****Adjusted****)****n****ote****5****/** | | **2023** | **2022(****Adjusted****)****n****ote****5** | | **The Group** | | �� | | ��Investment assetsnote1 | 2,250,073 | 1,956,458 | | ��Investment yield (%)note2 | 2.6 | 4.1 | | ��Insurance revenue | 266,167 | 249,745 | | ��Insurance service expenses | 231,023 | 213,988 | | ��Insurance contract assets | 335 | 305 | | ��Insurance contract liabilities | 1,872,620 | 1,664,848 | | ��Liabilities for incurred claims | 95,226 | 95,768 | | ��Liabilities for remaining coverage | 1,777,394 | 1,569,080 | | ��Reinsurance contract assets | 39,754 | 33,205 | | ��Reinsurance contract liabilities | - | 809 | | ��Allocation of reinsurance premiums | 15,838 | 15,427 | | ��Recoveries of insurance service expenses from reinsurers | 14,399 | 12,609 | | ��Insurance finance expenses for insurance contracts issued | 46,741 | 58,074 | | ��Reinsurance finance income for reinsurance contracts held | 1,174 | 1,108 | | **CPIC Life** | | | | Contractual service margin of insurance contracts issued | 323,974 | 326,461 | | Contractual service margin of the issued insurance contracts initially recognised in the period | 11,731 | 8,440 | | **CPIC P/C** | | | | ��Underwriting combined ratio (%)note 3 | 97.7 | 96.9 | | ��Underwriting loss ratio (%)note 4 | 69.1 | 68.0 | Notes: 1. Investment assets include cash at bank and on hand, etc. 2. Total investment yield = (interest income + investment income + rental income from investment properties + gains/(losses) arising from changes in fair value - impairment losses of financial assets - interest expenses from securities sold under agreements to repurchase) / average investment assets, excluding foreign exchange gain or loss. Average investment assets used as the denominator are computed based on Modified Dietz method in principle and do not consider the impact of the fair value change of debt investments at fair value through other comprehensive income. 3. Underwriting combined ratio = (insurance service expenses + insurance finance income or expenses + changes in insurance premium reserves + (allocation of reinsurance premiums paid ?C recoveries of insurance service expenses from reinsurers - reinsurance finance income or expenses)) / insurance revenue. 4. Underwriting loss ratio = (incurred claims + changes in liability for incurred claims + gains or losses on the onerous contracts + insurance finance income or expenses + changes in insurance premium reserves + (allocation of reinsurance premiums paid - recoveries of insurance service expenses from reinsurers - reinsurance finance income or expenses))/Insurance revenue. 5. The Company adopted the new insurance standard and the new financial instruments standards from 1 January 2023. Comparative figures of the prior period are restated according to the requirements of the new standards. According to requirements of the new insurance standard, the Company adjusted comparative figures of the prior period which related to insurance business. According to requirements of new financial instruments standards, the Company did not adjust comparative figures of the prior period which related to investment business. **Review and analysis of operating results** **Business o****verview** **I. Key businesses** We provide, through our subsidiaries, a broad range of risk protection solutions, wealth management and asset management products and services. In particular, we provide life/health insurance products & services through CPIC Life, property and casualty insurance products & services through CPIC P/C and CPIC Anxin Agricultural, and specialised health insurance products & health management services through CPIC Health. We manage insurance funds, including third-party assets, through our investment arm, CPIC AMC; provide retirement financial solutions and other related asset management service via Changjiang Pension, carry out private equity fund management through CPIC Capital, and also engage in mutual fund management business through CPIC Fund. We also provide market-oriented technological empowerment service via CPIC Technology. In 2023, China��s insurance market realised a primary premium income of RMB5.12 trillion, up by 9.1% from 2022. Of this, premiums from life/health insurance companies amounted to RMB3.54 trillion, a growth of 10.2%, and that from property and casualty insurance companies RMB1.59 trillion, up by 6.7%. Measured by primary insurance premiums, CPIC Life and CPIC P/C are China��s 3rd largest insurers for life and property and casualty insurance, respectively. **II. Main items on consolidated financial statements with change of over 30% and reasons** Unit: RMB million | | | | | | | --- | --- | --- | --- | --- | | **Balance sheet items** | **31 December 2023** | **31 December 2022(Adjusted)****note** | **Changes (%)** | **Main reason for the changes** | | Financial assets at fair value through profit or loss | - | 26,560 | (100.0) | Adoption of the new financial instruments standards | | Securities purchased under agreements to resell | 2,808 | 21,124 | (86.7) | Timing difference | | Interest receivables | - | 19,656 | (100.0) | Adoption of the new financial instruments standards | | Available-for-sale financial assets | - | 715,085 | (100.0) | | Held-to-maturity financial assets | - | 514,250 | (100.0) | | Investments classified as loans and receivables | - | 397,270 | (100.0) | | Financial Investments: Financial assets at fair value through profit or loss | 581,602 | - | / | | Financial Investments: Financial assets at amortised cost | 82,334 | - | / | | Financial Investments: Debt investments at fair value through other comprehensive income | 1,247,435 | - | / | | Financial Investments: Equity investments at fair value through other comprehensive income | 97,965 | - | / | | Deferred income tax assets | 7,076 | 19,661 | (64.0) | Decrease in deductible temporary differences | | Taxes payable | 3,536 | 5,166 | (31.6) | Timing difference | | Interest payable | - | 469 | (100.0) | Adoption of the new financial instruments standards | | Reinsurance contract liabilities | - | 809 | (100.0) | Change in insurance business | | Deferred income tax liabilities | 1,119 | 568 | 97.0 | Increase in taxable temporary differences | | Other comprehensive income | 7,992 | (11,581) | (169.0) | Change in fair value of financial investments at fair value through other comprehensive income | | Retained profits | 121,448 | 92,588 | 31.2 | Profit for the period and adoption of the new financial instruments standards | | Non-controlling interests | 18,118 | 5,195 | 248.8 | Issuing bonds | | | | | | | | --- | --- | --- | --- | --- | | **Income statement items** | **2023** | **2022** **(****Adjus****t****ed)****note** | **Changes (%)** | **Main reason for the changes** | | Interest income | 58,262 | - | / | Adoption of the new financial instruments standards | | Investment income | 7,053 | 77,510 | (90.9) | | Share of profits of associates and joint ventures | (386) | 401 | (196.3) | Decrease in the investment income | | Losses arising from changes in fair value | (11,712) | (61) | 19,100.0 | Adoption of the new financial instruments standards and market fluctuation | | Exchange gains | 159 | 1,085 | (85.3) | Fluctuation of exchange rate | | Impairment losses on financial assets | (2,013) | - | / | Adoption of the new financial instruments standards | | Asset impairment losses | - | (5,303) | (100.0) | | Other comprehensive income/(loss) | 1,552 | (25,353) | (106.1) | Change in fair value of financial investments at fair value through other comprehensive income due to capital market fluctuation | Note: The Company adopted the new insurance standard and the new financial instruments standards from 1 January 2023. Comparative figures of the prior period are restated according to the requirements of the new standards. According to requirements of the new insurance standard, the Company adjusted comparative figures of the prior period which related to insurance business. According to requirements of new financial instruments standards, the Company did not adjust comparative figures of the prior period which related to investment business. **Performance** **o****verview** We focused on the core business of insurance, stayed committed to value growth and long-termism, deepened the customer-oriented strategic transformation, and delivered positive momentum of overall business results and continued growth of comprehensive strength. CPIC Life strived to become a life insurer with the best customer experience, focused on long-termism, deepened the Changhang Transformation, enhanced customer-oriented, value-creating capabilities, and undertook to build a new organisational model with headquarters focusing on empowerment and branch offices on autonomous business operation; CPIC P/C persisted in value growth, carried out precise business operation and targeted management, accelerated implementation of the sustainable development strategy, with all-around improvement in business management, and strengthened momentum of profitable, sustainable high-quality development; asset management further optimised the ALM system across economic cycles, enhanced professional investment research capabilities, strengthened compliance management and internal control, and reported resilient investment results. **I. Performance highlights** During the reporting period, Group operating income amounted to RMB323.945 billion, of which, insurance revenue reached RMB266.167 billion, a growth of 6.6% year on year. Group net profitnote 1,2 reached RMB27.257 billion, down by 27.1% from 2022, with Group OPAT notes 1,2,3 of RMB35.518 billion, down by 0.4%. Group EV amounted to RMB529.493 billion, an increase of 1.9% from the end of 2022. Of this, Group value of in-force businessnote 4 amounted to RMB237.974 billion, up by 7.4%. Life insurance business delivered RMB10.962 billion in new business value (NBV), a growth of 19.1% year on year, with an NBV margin of 13.3%, up by 1.7pt. Property and casualty insurance businessnote 5 recorded an underwriting combined ratio of 97.7%, up by 0.7pt from 2022. Comprehensive investment yield of Group investment assets went up by 0.4pt year on year to 2.7%. As of the end of the reporting period, Group total number of customers reached 180 million, an increase of 9.34 million. **CPIC Life reported** **solid** **NBV** **growth****with channel diversification****delivering initial success** if !supportListsl endifNBV reached RMB10.962 billion, up by 19.1% year on year, with an NBV margin of 13.3%, up by 1.7pt. if !supportListsl endifWritten premiums amounted to RMB252.817 billion, up by 3.2% year on year. Of this, new business premiums grew by 3.7%. if !supportListsl endifOPATnote 2 of life insurance reached RMB27.257 billion, a year-on-year growth of 0.4%; contract service margin amounted to RMB323.974 billion, down by 0.8% from the end of 2022. if !supportListsl endifThe agency channel deepened career-based restructuring, with considerable improvement in productivity and income of core manpower; bancassurance focused on value growth, with notable improvement in value contribution; business quality management was intensified, with continued optimisation of policy persistency. **Underwriting c****ombined ratio****of p****roperty and casualty business****note** **5****stayed healthy,** **with rapid top-line growth** if !supportListsl endifUnderwriting combined ratio was 97.7%, up by 0.7pt from the level of 2022. Of this, underwriting expense ratio stood at 28.5%, down by 0.3pt, and underwriting loss ratio 69.2%, up by 1.0pt. if !supportListsl endifPrimary premium income amounted to RMB190.614 billion, a year-on-year increase of 11.4%. Of this, non-auto business grew by 19.1% and accounted for 45.6% of total property and casualty insurance premiums, up by 2.9pt. if !supportListsl endifAutomobile insurance enhanced CRM capabilities, with improved customer retention; non-auto business maintained an overall stable business quality, with emerging business lines such as liability insurance, agricultural insurance and health insurance maintaining rapid growth. **Persisted in** **strategic** **asset allocation****based on profiles of liabilities, with** **resilient****investment** **performance** if !supportListsl endifThe share of debt financial assets stood at 74.5%, up by 5.4pt from the beginning of 2023; that of equity financial assets 14.5%, down by 0.3pt from the year beginning, and of this, core equitynote6 accounted for 10.7% of total investment assets, a decrease of 0.8pt from the year beginning. if !supportListsl endifComprehensive investment yield of Group investment assets reached 2.7%, up by 0.4pt year on year. Total investment yieldnote2 was 2.6%, down by 1.5pt, with net investment yield of 4.0%, down by 0.3pt. if !supportListsl endifGroup AuMnote2 amounted to RMB2,922.308 billion, an increase of 10.1% from the end of 2022. Of this, third-party AuM amounted to RMB672.235 billion, a decrease of 3.7%. Notes: 1. Attributable to shareholders of the parent. 2. Figures for comparative periods were restated. 3. OPAT is based on net profit on the financial statements, while excluding certain P/L items with short-term volatility and material one-off items which management does not consider to be part of the Company��s day-to-day business operation. Short-term investment volatility applies to business of CPIC P/C, CPIC Life and CPIC Health, etc., while excluding business based on VFA; it refers to the difference between actual investment income and long-term investment assumptions, while considering the impact of income tax. Material one-off items includes the difference between deductible amounts for pre-tax profit of the current period and the average deductible amounts for pre-tax profit of the preceding years. 4. Based on the Group��s share of CPIC Life��s value of in-force business after solvency. 5. Consolidated data of CPIC P/C, CPIC Anxin Agricultural and CPIC HK. 6. Stocks and equity funds included. **II. Key****p****erformance** **i****ndicators** Unit: RMB million | | | | | | --- | --- | --- | --- | | **Indicators** | **As at****31****December 2023** **/for the period****between January and****December in 2023** | **As at****3****1 Dec****ember 2022** **/for the period****between January and****December in 2022** | **Changes****(%)** | | **Key value indicators** | | | | | **Group e****mbedded value** | 529,493 | 519,621 | 1.9 | | **Value of in-force busine****s****s****note 1** | 237,974 | 221,479 | 7.4 | | **Group n****et assets****note 2,3** | 249,586 | 196,477 | 27.0 | | **N****BV****of** **CPIC L****ife** | 10,962 | 9,205 | 19.1 | | **N****BV****margin of** **CPIC L****ife (%)** | 13.3 | 11.6 | 1.7pt | | **Underwriting combined ratio of** **CPIC P/C****(%)** | 97.7 | 96.9 | 0.8pt | | **Comprehensive investment yield (%)** | 2.7 | 2.3 | 0.4pt | | **Key operating indicators** | | | | | **Insurance revenue** | 266,167 | 249,745 | 6.6 | | CPIC Life | 85,461 | 88,590 | (3.5) | | CPIC P/C | 177,128 | 158,483 | 11.8 | | **G****roup number of customers (��****000****)****note 4** | 179,869 | 170,527 | 5.5 | | **Average number of insurance policies per customer** | 2.32 | 2.29 | 1.3 | | **Monthly average** **agent****number****(��****000****)** | 210 | 279 | (24.7) | | **Surrender rate of CPIC Life (%)** | 1.8 | 1.8 | - | | **Total investment yield****(%)****note 2** | 2.6 | 4.1 | (1.5pt) | | **N****et** **investment yield****(%)** | 4.0 | 4.3 | (0.3pt) | | **Third-party AuM** | 672,235 | 697,947 | (3.7) | | **Key financial indicators** | | | | | **Net** **p****rofit attributable to** **shareholders****of the parent****note 2** | 27,257 | 37,381 | (27.1) | | CPIC Lifenote 2 | 19,532 | 29,474 | (33.7) | | CPIC P/Cnote 2 | 6,575 | 8,187 | (19.7) | | **B****asic earnings per share** **(****RMB)****note 2,3** | 2.83 | 3.89 | (27.1) | | **N****et assets per share (RMB)****note 2,3** | 25.94 | 20.42 | 27.0 | | **Comprehensive s****olvency margin ratio (%)** | | | | | CPIC Group | 257 | 256 | 1pt | | CPIC Life | 210 | 218 | (8pt) | | CPIC P/C | 214 | 202 | 12pt | Notes: 1. Based on the Group��s share of CPIC Life��s value of in-force business after solvency. 2. Figures for comparative periods were restated. 3. Attributable to shareholders of the parent. 4. The Group number of customers refers to the number of applicants and insureds who hold at least one insurance policy within the insurance period issued by one or any of CPIC subsidiaries as at the end of the reporting period. In the event that the applicants and insureds are the same person, they shall be deemed as one customer. **Life/health****insurance b****usiness** **CPIC Life delivered robust NBV growth, forged ahead with the Changhang Transformation, reported sustained, and balanced value growth on the back of channel diversification, upgraded the customer-oriented system of products and services, undertook to build a new organisational model with headquarters focusing on empowerment and branch offices on autonomous business operation, with strong momentum in business performance. CPIC Health rolled out the strategic transformation focusing on ��new products, new channels and new technology��, with enhanced professional capability for sustainable development****.** **I. CPIC Life** **(I)** **Business** **a****nalysis** In 2023, amid China��s economic recovery, CPIC Life pursued high-quality development, continued with its goal of providing the best customer experience on the market, upheld long-termism, and deepened the Changhang Transformation. As a result, the subsidiary reported RMB252.817 billion in written premiums, an increase of 3.2% year on year. Of this, new business premiums grew by 3.7%, and renewed premiums by 3.0%. It reported OPATnote of RMB27.257 billion, a growth of 0.4%. Overall, the first phase of Changhang Transformation has delivered positive results, manifest in the pick-up of business momentum. First, NBV grew rapidly, with steady improvement of NBV margin. The subsidiary reported RMB10.962 billion in NBV for 2023, a year-on-year growth of 19.1%, or 30.8% before adjusting economic assumptions and evaluation methods; NBV margin stood at 13.3%, up by 1.7pt. Second, the quality and mix of agency force continued to improve, with steady improvement in core manpower income and productivity. Third, we deepened the channel diversification strategy, with a sharp increase in value growth from value-oriented bancassurance and work-site marketing and steady increase in their value contribution. Fourth, business quality continued to improve, with marked improvement in policy persistency. While consolidating the achievements in the first phase, the company initiated a staff-oriented organisational restructuring, seeking to build corporate headquarters focusing on empowerment and branch offices on independent business operation. At the same time, it embarked on the design of the second phase of the transformation to accelerate the paradigm shift, in a bid to fully establish the new business model. In 2024, the subsidiary will put in place a customer-based, value-oriented ��closed-loop�� operational system underpinned by channel diversification, all-around operational support, management of value-creation, and boost value-driven transformation to achieve more breakthroughs in high-quality development. Note: Figures for comparative periods were restated. 1. Analysis by channels CPIC Life seeks to build a more diversified channel mix with the agency force at the core, in order to expand avenues of value growth. Unit: RMB million | | | | | | --- | --- | --- | --- | | **F****or** **12 months ended 31 December** | **2023** | **2022** | **Changes (%)** | | **W****ritten premiums** | **252,817** | **244,879** | **3.2** | | **Agency channel** | **195,478** | **189,775** | **3.0** | | New policies | 32,377 | 28,350 | 14.2 | | Regular premium business | 26,175 | 19,792 | 32.3 | | Renewed policies | 163,101 | 161,425 | 1.0 | | **Bancassurance****channel** | **38,069** | **33,826** | **12.5** | | New policies | 33,291 | 32,140 | 3.6 | | Renewed policies | 4,778 | 1,686 | 183.4 | | **Group channel** | **18,096** | **21,207** | **(14.7)** | | New policies | 17,208 | 20,469 | (15.9) | | Renewed policies | 888 | 738 | 20.3 | | **Other channels****note** | **1,174** | **71** | **1,553.5** | Note: Other channels include telemarketing & internet sales. (1) Agency channel Committed to providing personalised products and services and maximising value-creation for customers, CPIC Life pressed ahead with the restructuring of the agency force centring on ��3 Directions and 5 Mosts��. To promote career-based development, it established 2 separate operational modes for agents, i.e., financial advisory and post-sale follow-up service to upgrade the integrated business model for the agency channel; fully leveraged the amended Basic Law to drive changes in 3 behaviours of agents; persisted in high-quality recruitment and coaching, launched an integrated training programme for new recruits covering recruitment, coaching and retention to drive growth of core manpower. To improve professionalism, the company rolled out an on-line and off-line integrated, differentiated CRM system based on customer segmentation, needs analysis and service matching; rolled out the value proposition of wealth management, retirement and health protection through the Xin Xun Ying (meaning training camps under the new model) training system, and enhanced agency force capabilities. As for digitalisation, it re-deployed around the Digital Blueprint based on the needs of employees, agents and customers to empower agency force management and development. In 2023, the channel realised RMB195.478 billion in written premiums, a year-on-year growth of 3.0%, and of this, regular-pay new business amounted to RMB26.175 billion, up by 32.3%. The subsidiary firmly pursued the Changhang Transformation, focused on improving the capabilities of the agency force, and realised steady business growth during the reporting period. In the year, monthly average agent number reached 210,000, with a year-end headcount of 199,000; monthly average FYP per agent reached RMB12,837, up by 51.8%. Core manpower started to stabilise, with marked improvement in productivity and income. Monthly average FYP per core agent reached RMB43,503, up by 26.6% and monthly average FYC per core agent RMB6,051, up by 46.3%, all on a year-on-year basis. | | | | | | | --- | --- | --- | --- | --- | | **F****or** **12 months ended 31 December** | **2023** | **2022** | **Changes (%)** | | | Monthly average agent number (��000) | 210 | 279 | (24.7) | | | Monthly average performing ratio of agents (%) | 67.9 | 63.4 | 4.5pt | | | Monthly average FYP per core agent (RMB) | 43,503 | 34,376 | 26.6 | | | Monthly average FYC per core agent (RMB) | 6,051 | 4,136 | 46.3 | | (2) Bancassurance channel CPIC Life stayed committed to value growth, persisted in high-quality development of bancassurance, and strived to diversify customer segments to drive value growth. Based on customer needs, it innovated a product and service operational system underpinned by customer segmentation, and achieved diversification of customer segments and improvement of service. It focused on key business growth drivers and re-engineered the management and operational mode of the channel, with continued improvement of management effectiveness. It conducted behaviour management via digital platforms and achieved sustained enhancement of team professional capabilities. During the reporting period, it realised RMB38.069 billion in written premiums from the channel, up by 12.5% year on year, and of this, regular-pay new business premiums amounted to RMB9.024 billion, a growth of 170.2%. NBV from the channel grew by 115.6% from 2022. (3) Group channel CPIC Life vigorously supported China��s national initiatives, persisted in quality value growth, stayed committed to providing integrated solutions to its corporate and institutional clients and related customers, and improving their satisfaction. To improve people��s well-being, it offered affordable insurance solutions to communities such as the elderly, farmers, new urban residents, low-income groups, and disabled people, while vigorously pushing forward long-term care and customised urban commercial medical insurance. In terms of retirement provision, it developed a wide range of pension products, which can effectively meet the needs of its corporate clients for supplementary retirement provision and long-term funds withdrawals. As for health protection, it provided comprehensive employee benefit solutions for grass-root governments and all kinds of enterprises in key sectors. With regard to work-site marketing, it focused on key industries, invested in key branch offices, optimised project management so as to build a productive team. During the reporting period, the channel recorded RMB18.096 billion in written premiums. Of this, those from work-site marketing reached RMB1.19 billion, a year-on-year growth of 273.4%, with the business structure continues to improve. 2. Analysis by product types CPIC Life is committed to serving its customer needs and striving to build a new ecosystem with deep integration of products and services. During the year, it focused on the Golden Triangle system of products and services based on the 3 core needs of health protection, wealth management and retirement, conducted customer segmentation, established a customer-driven model for supply and upgrading of products and services, so as to provide integrated solutions for the entire life cycle of customers. In health protection, we upgraded the ��Jinsheng Wuyou�� product suite, which offered the flexibility of ��base policy + a selection of riders�� to satisfy customers�� need for tailor-made products. At the same time, we launched ��Wuyou Guanjia�� service under CPIC Blue Passports exclusively for CI insurance and subject to further upgrading. In retirement and wealth inheritance, we upgraded ��Chang Xiang Ban��, a whole-life insurance product positioned to meet customers�� diverse needs for risk protection, wealth inheritance, and long-term savings, covering over 510,000 customers. CPIC Home deepened its presence in all of the 3 categories, with 14 retirement communities in 12 cities, and a total of 15,800 beds under planning. As of the end of 2023, 8 communities opened for business, including those in Hangzhou, Chengdu, Nanjing, Xiamen, Dali, Chongming District of Shanghai, Putuo District of Shanghai, and Qingdao; launched Bai Sui Ju, a programme for integrated, intelligent home-based old-age nursing, covering 60 offices of 29 branches by the end of 2023. In terms of wealth management, based on customer insights, we provided trust service of insurance funds, with channel-specific customisation in a bid to enhance customer experience. For the reporting period, traditional business generated RMB159.477 billion in written premiums, up by 33.3% year on year. Of this, long-term health insurance contributed RMB45.600 billion, down by 3.7%. Participating business delivered RMB59.245 billion in written premiums, down by 31.2%, due to decline of interest rates and lowering of pricing interest rates for insurance products. Unit: RMB million | | | | | | --- | --- | --- | --- | | **F****or** **12 months ended 31 December** | **2023** | **2022** | **Changes (%)** | | **W****ritten premiums** | **252,817** | **244,879** | **3.2** | | Traditional | 159,477 | 119,624 | 33.3 | | Long-term health | 45,600 | 47,362 | (3.7) | | Participating | 59,245 | 86,126 | (31.2) | | Universal | 18,812 | 21,412 | (12.1) | | Tax-deferred pension | 66 | 75 | (12.0) | | Short-term accident and health | 15,217 | 17,642 | (13.7) | **Information of****the****top five products****in 20****23** Unit: RMB million | | | | | | | | --- | --- | --- | --- | --- | --- | | **For 12 months****ended 3****1 December** | | | | | | | **Ranking** | **Name** | **Type** | **Written Premium** | **Main channel** | | | 1 | Chang Xiang Ban (shengshiban) whole life ����飨ʢ���棩�������� | Traditional | 15,048 | Agency channel | | | 2 | Jin You Ren Sheng whole life A (2014) ���������������գ��ֺ��ͣ�A�2014�棩 | Participating | 13,867 | Agency channel | | | 3 | Bao Li Ying endowment ����ӯ��ȫ���� | Traditional | 11,449 | Bancassurance | | | 4 | Chang Xiang Ban (anniversary celebration) whole life ����飨���棩�������� | Traditional | 11,308 | Agency channel | | | 5 | Xin Xiang Shi Cheng (anniversary celebration) endowment �����³ϣ����棩��ȫ���� | Traditional | 10,848 | Agency channel | | 3. Policy persistency ratio We continued to strengthen business quality control, and as a result, the 13-month policy persistency ratio of individual customers improved by 7.7pt to 95.7%; while the 25-month policy persistency ratio rose by 10.6pt year on year to 84.0%. | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | **F****or** **12 months ended 31 December** | **2023** | | **2022** | | **Changes** | | | | Individual customers 13-month persistency ratio (%)note 1 | | 95.7 | | 88.0 | | 7.7pt | | | Individual customers 25-month persistency ratio (%)note 2 | | 84.0 | | 73.4 | | 10.6pt | | Notes: 1. 13-month persistency ratio: premiums from in-force policies 13 months after their issuance as a percentage of premiums from policies which entered into force during the same period. 2. 25-month persistency ratio: premiums from in-force policies 25 months after their issuance as a percentage of premiums from policies which entered into force during the same period. 4. Top 10 regions for written premiums Written premiums of CPIC Life mainly came from economically developed regions or populous areas. Unit: RMB million | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | **F****or** **12 months ended 31 December** | **2023** | | | **2022** | **Changes (%)** | | | | **Written premiums** | | **252,817** | **244,879** | | | **3.2** | | | Jiangsu | | 27,372 | 26,562 | | | 3.0 | | | Zhejiang | | 24,081 | 20,735 | | | 16.1 | | | Henan | | 21,314 | 23,257 | | | (8.4) | | | Shandong | | 19,604 | 19,923 | | | (1.6) | | | Guangdong | | 14,895 | 13,189 | | | 12.9 | | | Shanghai | | 13,887 | 8,084 | | | 71.8 | | | Hebei | | 13,583 | 13,585 | | | - | | | Shanxi | | 10,289 | 10,161 | | | 1.3 | | | Hubei | | 9,571 | 10,133 | | | (5.5) | | | Beijing | | 9,432 | 7,566 | | | 24.7 | | | Subtotal | | 164,028 | 153,195 | | | 7.1 | | | Others | | 88,789 | 91,684 | | | (3.2) | | **(****II****)** **Profit analysis** Unit: RMB million | | | | | | --- | --- | --- | --- | | **F****or** **12 months ended 31 December** | **202****3** | **202****2** | **Changes (%)** | | **Insurance service performance and others** | **25,886** | **25,806** | **0.3** | | Insurance revenue | 85,461 | 88,590 | (3.5) | | Insurance service expenses | (57,178) | (59,957) | (4.6) | | Total investment incomenote2 | 36,708 | 61,763 | (40.6) | | Finance underwriting gains/(losses) note3 | (41,153) | (56,587) | (27.3) | | **Investment performance** | **(4,445)** | **5,176** | **(185.9)** | | **Pre-tax profit** | **21,441** | **30,982** | **(30.8)** | | Income tax | (1,909) | (1,508) | 26.6 | | **Net profit** | **19,532** | **29,474** | **(33.7)** | Notes: if !supportLists1. endifCPIC Life adopted the new insurance standard and the new financial instruments standards from 1 January 2023.  Comparative figures of the prior period are restated according to the requirements of the new standards. According to requirements of the new insurance standard, it adjusted comparative figures of the prior period which related to insurance business. According to requirements of new financial instruments standards, the company did not adjust comparative figures of the prior period which related to investment business. if !supportLists2. endifTotal investment income includes investment income, interest income, gains/(losses) arising from change in fair value, rental income from investment properties, interest expenses on securities sold under agreements to repurchase, impairment losses on financial assets, other asset impairment losses, and taxes and surcharges applicable to investment business, etc. if !supportLists3. endifFinance underwriting gains/(losses) includes insurance finance expenses for insurance contracts issued and reinsurance finance income for reinsurance contracts held. **Insurance revenue** for the reporting period was RMB85.461 billion, down by 3.5% from 2022, mainly because of decrease in premiums from short-term insurance; at the same time, the contract service margin (CSM) declined in 2022 due to capital market volatility, which led to decrease in amortised amounts of CSM in 2023. Unit: RMB million | | | | | | | --- | --- | --- | --- | --- | | **F****or** **12 months ended 31 December** | **202****3** | **202****2** | **Changes (%)** | | | **Insurance revenue** | **85,461** | **88,590** | **(3.5)** | | | Long-term insurance | 72,805 | 72,929 | (0.2) | | | Short-term insurance | 12,656 | 15,661 | (19.2) | | **Insurance service expenses** amounted to RMB57.178 billion, down by 4.6% year on year, mainly due to decrease in premiums from short-term insurance, which, in turn, resulted in lower claims payments. Unit: RMB million | | | | | | --- | --- | --- | --- | | **F****or** **12 months ended 31 December** | **202****3** | **202****2** | **Changes (%)** | | **Insurance service expenses** | **57,178** | **59,957** | **(4.6)** | | Long-term insurance | 45,000 | 44,815 | 0.4 | | Short-term insurance | 12,178 | 15,142 | (19.6) | **Investment performance**for the reporting period amounted to RMB-4.445 billion, down by 185.9%, mainly due to adoption of the new financial instruments standards and capital market volatility. As a result, CPIC Life recorded a net profit of RMB19.532 billion for 2023, down by 33.7% year on year. **II. CPIC Health** In 2023, CPIC Health saw sustained improvement in various business metrics. Under the New Accounting Standards, it delivered RMB2.079 billion in insurance revenue and health management fee income, and net profit of RMB31 million, with enhanced professional capability for sustainable development. The subsidiary accelerated strategic transformation centring on ��new products, new channels and new technology��. It adhered to the philosophy of ��products are service��, stepped up the development of on-line business and, deepened cooperation with care providers, drug companies and insurance, in a bid to provide customers with caring, professional health protection and related services.  In particular, it targeted youth customers, upgraded Lan Yi Bao, an internet product brand, explored new modes of internet marketing, promoted customer resources management integrating the internet and customers, and put in place a closed loop for customer acquisition, retention and up-selling. It seized opportunities arising from the launch of tax-deferred health insurance and debuted a tax deferred medical insurance product for whole-life cancer protection under Lan Yi Bao. It deepened cooperation with China��s premier care providers such as Ruijin Hospital and Huaxi Hospital, and launched a series of innovative managed care products covering protection gaps of substandard risks, the elderly and children. It also launched ��Tuntun Huipei��, an on-line claims handling brand, which provides both claims management and health care service, and enhances customer experience and satisfaction. **Property** **and c****asualty****insurance** **In the face of a complex social and economic environment,** **CPIC P/C****note** **persisted in high-quality development, promoted sustainable development strategy, and achieved** **substantial****improvement****s****in****business management capabilities. It established an integrated disaster response system covering prevention, reduction, relief and claims payment, and a risk reduction management system, ensur****ing****timely response****s****to typhoons and other natural disasters, maintained decent underwriting profitability for both automobile and non-auto insurance business****and****reported rapid premium growth, with enhanced momentum of profitable****and****sustainable high-quality development****.** Note: References to CPIC P/C in this report do not include CPIC Anxin Agricultural. **I. CPIC** **P****/C** **(I)** **Business analysis** During the reporting period, CPIC P/C recorded primary premium income of RMB188.342 billion, up by 11.4% from 2022, and an insurance revenue of RMB177.128 billion, a growth of 11.8%, with an underwriting combined ratio of 97.7%, up by 0.8pt year on year. Of this, underwriting loss ratio stood at 69.1%, up by 1.1pt, as a result of the normalisation of economic activity and travel; underwriting expense ratio was 28.6%, down by 0.3pt. 1. Analysis by lines of business Unit: RMB million | | | | | | --- | --- | --- | --- | | **For 12 months ended 31 December** | **202****3** | **202****2** | **Changes (%)** | | **Primary premium income** | **188,342** | **169,073** | **11.4** | | Automobile insurance | 103,514 | 97,992 | 5.6 | | Compulsory automobile insurance | 27,298 | 26,153 | 4.4 | | Commercial automobile insurance | 76,216 | 71,839 | 6.1 | | Non-automobile insurance | 84,828 | 71,081 | 19.3 | | Liability insurance | 19,657 | 14,956 | 31.4 | | Agricultural insurance | 17,721 | 13,754 | 28.8 | | Health insurance | 17,361 | 14,641 | 18.6 | | Commercial property insurance | 6,813 | 6,335 | 7.5 | | Others | 23,276 | 21,395 | 8.8 | (1) Automobile insurance CPIC P/C adhered to the strategy of ��high-quality development and systematic business operation�� for its automobile insurance business. While ensuring stable business fundamentals, it strived to enhance CRM and channel efficiency, and continued to improve targeted management. In 2023, it reported primary premium income of RMB103.514 billion from automobile business, a growth of 5.6% year on year, with an underwriting combined ratio of 97.6%, up by 1.1pt, and of this, underwriting loss ratio stood at 70.6%, up by 1.1pt and underwriting expense ratio 27.0%, staying flat versus that of the preceding year. The company explored new business model for NEVs, fully integrating into the vehicle industry ecosystem, and establishing a collaborative cooperation mechanism with car manufacturers. In 2023, premium income of NEV auto insurance increased by 54.7% year-on-year. (2) Non-automobile insurance CPIC P/C closely followed national initiatives and the needs of the real economy, focused on key areas and accelerated innovation, continued to enhance CRM capabilities, stepped up business quality control, and optimised the risk reduction system. During the reporting period, it posted RMB84.828 billion in primary non-auto insurance premiums, up by 19.3% year on year, with an underwriting combined ratio of 97.7%, the same as that of the preceding year. Of the major business lines, emerging businesses such as liability insurance, agricultural insurance, health insurance and engineering insurance maintained strong momentum of growth, with an overall stable business quality. Liability insurance centred on the New Development Pattern, stepped up support for modernisation of state governance and the shift of government roles, fully leveraged its insurance expertise, and provided specialised, differentiated and customised insurance products in areas of work-place safety, environmental protection, technology innovation, cyber-security, life sciences and people��s well-being. During the reporting period, the business line delivered RMB19.657 billion in primary premium income, up by 31.4% from 2022, with an underwriting combined ratio of 100.6%. Going forward, the company will continue to optimise business mix, promote the development of high-quality business and enhance regular control of key projects, so as to improve the business quality of the business line. Agricultural insurance is committed to ensuring food security, promoting the development of modern agricultural sector, and supporting rural invigoration. It capitalised on its first-mover advantage in technology and product innovation, vigorously participated in the trials of full-cost indemnity insurance of the 3 staple food crops as well as soy beans, rubber and sugar canes, promoted business development of ��agricultural insurance +��, such as insurance + futures and insurance + credit, and continued to strengthen its product supply for ��*sannong*��, i.e., agriculture, rural areas and farmers. During the reporting period, the business line delivered RMB17.721 billion in primary premium income, up by 28.8% year on year, with an underwriting combined ratio of 98.8%, down by 0.4pt versus the level in 2022. Health insurance seized opportunities of the Healthy China Initiative, furthered deployment in various business areas, innovated product supply, further tapped into niche market businesses such as long-term care, chronic illness insurance and Huiminbao, stepped up the development of mid- and high-end commercial health insurance, while strengthening business quality and claims cost control. During the reporting period, health insurance reported RMB17.361 billion in primary premium income, a growth of 18.6% year on year, with an underwriting combined ratio of 99.2%, down by 3.3pt, achieving a turnaround in underwriting profitability. Commercial property insurance persisted in high-quality development, pro-actively supported the real economy, and promoted stable business development. In 2023, the company generated RMB6.813 billion in primary premium income from the business line, up by 7.5% year on year, with an underwriting combined ratio of 97.2%. (3) Key financials of major business lines Unit: RMB million | | | | | | | --- | --- | --- | --- | --- | | **For 12 months ended 31 December 2023** | | | | | | **Name of insurance** | **Primary premium income** | **Amounts Insured** | **Underwriting profit** | **Underwriting****c****ombined ratio** **(%)** | | Automobile insurance | 103,514 | 96,284,297 | 2,410 | 97.6 | | Liability insurance | 19,657 | 270,842,074 | (109) | 100.6 | | Agricultural insurance | 17,721 | 583,512 | 194 | 98.8 | | Health insurance | 17,361 | 224,966,072 | 72 | 99.2 | | Commercial property insurance | 6,813 | 18,879,502 | 206 | 97.2 | 2. Top 10 regions for premium income CPIC P/C derived RMB123.615 billion in primary premium income from the top 10 regional markets in 2023, up by 11.5% year on year and accounting for 65.6% of total premiums. The company optimised resources allocation to drive business development of regional markets and branch offices. Unit: RMB million | | | | | | | --- | --- | --- | --- | --- | | **F****or** **12 months ended 31 December** | **2023** | **2022** | **Changes (%)** | | | **Primary premium income** | **188,342** | **169,073** | **11.4** | | | Guangdong | 24,508 | 21,611 | 13.4 | | | Jiangsu | 21,189 | 18,950 | 11.8 | | | Zhejiang | 18,585 | 16,901 | 10.0 | | | Shanghai | 14,122 | 11,995 | 17.7 | | | Shandong | 10,434 | 9,558 | 9.2 | | | Sichuan | 7,330 | 6,290 | 16.5 | | | Beijing | 6,899 | 6,466 | 6.7 | | | Hebei | 6,884 | 6,301 | 9.3 | | | Hubei | 6,850 | 6,614 | 3.6 | | | Henan | 6,814 | 6,134 | 11.1 | | | Subtotal | 123,615 | 110,820 | 11.5 | | | Others | 64,727 | 58,253 | 11.1 | | 3.Premium income by channels Below sets out the primary premium income by channels during the reporting period. Unit: RMB million | | | | | | --- | --- | --- | --- | | **For 12 months ended 31 December** | **202****3** | **202****2** | **Changes (%)** | | **Primary premium income** | **188,342** | **169,073** | **11.4** | | Agency | 110,840 | 104,530 | 6.0 | | Direct | 51,892 | 44,971 | 15.4 | | Brokerage | 25,610 | 19,572 | 30.9 | **(II) P****rofit****analysis** Unit: RMB million | | | | | | --- | --- | --- | --- | | **For 12 months ended 31 December** | **202****3** | **202****2** | **Changes (%)** | | Insurance revenue | 177,128 | 158,483 | 11.8 | | Insurance service expenses | (170,240) | (151,229) | 12.6 | | Net income/(losses) from  reinsurance contracts heldnote 1 | (235) | (103) | 128.2 | | Underwriting finance losses and othersnote 2 | (2,513) | (2,243) | 12.0 | | **Underwriting profit** | **4,140** | **4,908** | **(15.6)** | | Underwriting combined ratio(%) | 97.7 | 96.9 | 0.8pt | | **Total investment income****note** **3** | **4,780** | **6,411** | **(25.4)** | | Net of other income and expenses | (899) | (863) | 4.2 | | **Pre-tax profit** | **8,021** | **10,456** | **(23.3)** | | Income tax | (1,446) | (2,269) | (36.3) | | **Net profit** | **6,575** | **8,187** | **(19.7)** | Notes: if !supportLists1. endifNet income/(losses) from reinsurance contracts held include allocation of reinsurance premiums, recoveries of insurance service expenses from reinsurers, reinsurance finance income for reinsurance contracts held, etc. if !supportLists2. endifUnderwriting finance losses and others include insurance finance income or expenses and changes in insurance premium reserves, etc. if !supportLists3. endifTotal investment income for 2023 includes investment income, interest income, gains/(losses) arising from change in fair value, rental income from investment properties, interest expenses on securities sold under agreements to repurchase, interest expense on capital replenishment bonds, taxes and surcharges applicable to investment business and impairment losses on financial assets, etc.; total investment income for 2022 includes investment income, gains/(losses) arising from change in fair value, rental income from investment properties, interest expenses on securities sold under agreements to repurchase, interest expense on capital replenishment bonds, taxes and surcharges applicable to investment business and other asset impairment losses. **In****surance revenue**for the reporting periodamounted to RMB177.128 billion, up by 11.8% year on year, mainly as a result of fast growth of overall business. Of this, insurance revenue of automobile insurance reached RMB101.929 billion, up by 6.2%, and that of non-auto insurance RMB75.199 billion, an increase of 20.4%. Unit: RMB million | | | | | | | --- | --- | --- | --- | --- | | **F****or** **12 months ended 31 December** | **202****3** | **20****2****2** | **Changes (%)** | | | **Insurance revenue** | **177,128** | **158,483** | **11****.8** | | | Automobile insurance | 101,929 | 96,011 | 6.2 | | | Non-automobile insurance | 75,199 | 62,472 | 20.4 | | **Insurance service expenses** for the reporting period amounted to RMB170.240 billion, up by 12.6% from 2022, mainly due to increase in claims and expenses as a result of overall business growth. Of this, insurance service expenses of automobile insurance reached RMB98.351 billion, up by 7.4%, and that of non-auto insurance RMB71.889 billion, an increase of 20.6% year on year. Unit: RMB million | | | | | | | | --- | --- | --- | --- | --- | --- | | **F****or** **12 months ended 31 December** | **2023** | | **2022** | | **Changes (%)** | | **Insurance service expenses** | **170,240** | **151,229** | | **12.6** | | | Automobile insurance | 98,351 | 91,606 | | 7.4 | | | Non-automobile insurance | 71,889 | 59,623 | | 20.6 | | **Net losses from reinsurance contracts held** amounted to RMB235 million, an increase by RMB132 million compared with that of the preceding year, largely due to impact of scale and mix of business ceded, and loss ratios of related business. **Underwriting finance losses and others** amounted to RMB2.513 billion, a growth of 12.0%, mainly because of rapid business development, which led to a rise in insurance contract liabilities and subsequently an increase in the time value of liabilities. **Total investment income** for the period reached RMB4.780 billion, down by 25.4%, mainly as a result of the adoption of New Accounting Standards on financial instruments in 2023 and capital market volatility. As a result, CPIC P/C reported a net profit of RMB6.575 billion for 2023, a decrease of 19.7% from 2022. **II.** **CPIC Anxin Agricultural** In 2023, CPIC Anxin Agricultural stayed focused on the core business of agricultural insurance, pursued product and technology innovations, and realised RMB2.485 billion in insurance revenue, up by 41.6% year on year; recorded RMB1.985 billion in primary premium income, up by 13.4% year on year. Of this, agricultural insurance reported a primary premium income of RMB1.329 billion, a growth of 13.3%, with an underwriting combined ratio of 97.9%, down by 1.6pt. Net profit amounted to RMB182 million, remained relatively stable as compared with the preceding year. **III. CPIC HK** We conduct overseas P/C business via CPIC HK, a wholly-owned subsidiary. As at 31 December 2023, its total assets stood at RMB1.273 billion, with net assets of RMB311 million. Primary premium income for the reporting period amounted to RMB287 million, with an underwriting combined ratio of 98.8%, and a net loss of RMB143 million. **Asset** **m****anagement** **We persisted****in****long-term, value****,** **prudent****and responsible****investing****,** **further optimised the** **insurance** **ALM system****across economic cycles to ensure its sustainability, and enhanced professional investment expertise.****Within the SAA framework, we** **con****duct****ed** **flexible** **Tactical Asset Allocation****(****TAA****)****, continued****to** **exten****d****duration of** **fixed income** **assets****based on stringent control of****credit risk****to mitigate the reinvestment risk; enhanced pro-active management of equity assets while fully considering the impact of the** **N****ew** **A****ccounting** **S****tandards. The share-dividend core strategy delivered positive results in the past 10 years****.****As a result, we****delivered** **resilient****investment performance, with** **Group AuM** **on****stead****il****y increas****ing****.** **I. Group AuM** As at the end of December 2023, Group AuM totalled RMB2,922.308 billion, rising 10.1% from the end of 2022. Of this, Group in-house investment assets amounted to RMB2,250.073 billion, a growth of 15.0%, and third-party AuM RMB672.235 billion, a decrease of 3.7%, with a management fee income of RMB2.022 billion, down by 6.3% from 2022. Unit: RMB million | | | | | | --- | --- | --- | --- | | | **3****1****December****2023** | **3****1****December****2022** | **Changes (%)** | | **Group****Au****M****note** | **2,922,308** | **2,654,405** | **10.1** | | Group in-house investment assetsnote | 2,250,073 | 1,956,458 | 15.0 | | Third-party AuM | 672,235 | 697,947 | (3.7) | | CPIC AMC | 225,154 | 272,412 | (17.3) | | Changjiang Pension | 352,032 | 354,349 | (0.7) | | CPIC Fund | 94,249 | 70,721 | 33.3 | | CPIC Capital | 800 | 465 | 72.0 | Note: Figures for comparative periods were restated due to adoption of New Accounting Standards. **II. Group in-house** **investment** **assets** In 2023, amid China��s sustained economic recovery, the government issued a host of supportive policies to address issues in economic development, particularly weak consumer demand and difficulties facing the business community, in hope of better unlocking the potential of economic growth. In equity assets, with progress of China��s high-quality development, sectors with better earnings prospects became more attractive investment targets. As for fixed income assets, adjustment of the monetary policy may help to capture opportunities in treasury bonds and new types of fixed income assets compatible with long-term insurance funds. Based on our outlook for long-term macro-economic trends, we continued with our fine-tuned ��dumb-bell shaped�� asset allocation strategy, i.e., steadily increasing allocation into long-term T-bonds to extend the duration of fixed income assets, while moderately increasing investments in equity assets and alternative assets including private equity to enhance long-term returns. At the same time, to control credit risk, we continued to lower the share of investment in corporate debt securities. We conducted TAA with flexibility under the guidance of SAA, pro-actively responded to challenges of equity market volatility and secular decline of interest rates. We are committed to value growth, continuously strengthening our capacity in professional investment management, optimised the standardised investment management system, and vigorously explored innovative investment instruments and strategies; improved capital allocation capabilities and strengthened capital constraints, enhanced the overall foundation of capital and investment management; further improved the early-warning and mitigation system of credit risk to enhance risk management; put in place infrastructure for ESG investment including information systems, vigorously explored ESG investment, incorporated ESG into the value chain of asset management, initiated carbon inventory assessment of investment assets, and promoted ESG philosophies and their impact. In terms of investment concentration, our investments are concentrated in financial services, communications & transport and infrastructure, with resilience in the face of risks. Our equity investments spread across a wide range of instruments; as for fixed income assets, the debt issuers boasted strong overall strength, and in addition to government bonds, our counter-parties mainly included China State Railway Group Co., Ltd., and large firms such as major state-owned commercial banks. **(I) Group c****onsolidated investment portfolios** Unit: RMB million | | | | | | | --- | --- | --- | --- | --- | | | **3****1****December****202****3** | **Share (%)** | **1** **January****2023** | **Share (%)** | | **Group investment assets (total)** | **2,250,073** | **100.0** | **2,021,933** | **1****00.0** | | **By investment category** | | | | | | Cash and cash equivalents | 34,263 | 1.5 | 54,272 | 2.7 | | Term deposits | 165,501 | 7.3 | 211,234 | 10.4 | | Debt category financial assets | 1,676,100 | 74.5 | 1,396,316 | 69.1 | | ��Debt securities | 1,163,626 | 51.7 | 870,482 | 43.0 | | ��Bond funds | 10,393 | 0.5 | 11,577 | 0.6 | | ��Preferred shares | 47,724 | 2.1 | 47,915 | 2.4 | | ��Debt investment plansnote1 | 296,154 | 13.2 | 271,375 | 13.4 | | ��Wealth management productsnote2 | 113,195 | 5.0 | 127,141 | 6.3 | | ��Others | 45,008 | 2.0 | 67,826 | 3.4 | | Equity category financial assets | 325,234 | 14.5 | 299,942 | 14.8 | | ��Stocks | 188,455 | 8.4 | 182,072 | 9.0 | | ��Equity funds | 52,004 | 2.3 | 49,704 | 2.5 | | ��Wealth management productsnote2 | 19,652 | 0.9 | 16,743 | 0.8 | | ��Others | 65,123 | 2.9 | 51,423 | 2.5 | | Long-term equity investments | 23,184 | 1.0 | 25,829 | 1.3 | | Investment properties | 10,667 | 0.5 | 11,202 | 0.6 | | Other investmentsnote3 | 15,124 | 0.7 | 23,138 | 1.1 | | **By accounting****measurement** | | | | | | Financial assets at amortised costnote 4 | 82,334 | 3.7 | 91,428 | 4.5 | | Financial assets at fair value through other comprehensive incomenote 5 | 1,345,400 | 59.8 | 1,204,410 | 59.6 | | Financial assets at fair value through profit or lossnote 6 | 581,619 | 25.8 | 415,955 | 20.6 | | Long-term equity investments | 23,184 | 1.0 | 25,829 | 1.3 | | Otherinvestmentsnote7 | 217,536 | 9.7 | 284,311 | 14.0 | Notes�� if !supportLists1. endifDebt investment plans mainly include infrastructure and real estate funding projects. if !supportLists2. endifWealth management products mainly include wealth management products issued by commercial banks, products by insurance asset management companies, collective trust plans by trust firms, special asset management plans by securities firms and credit assets backed securities by banking institutions, etc. if !supportLists3. endifOther investments mainly include restricted statutory deposits and derivative financial assets, etc. if !supportLists4. endifFinancial assets at amortised cost include financial assets at amortised cost on consolidated financial statements. if !supportLists5. endifFinancial assets at fair value through other comprehensive income include debt investments at fair value through other comprehensive income and equity investments at fair value through other comprehensive income on consolidated financial statements. if !supportLists6. endifFinancial assets at fair value through profit or loss include financial assets at fair value through profit or loss and derivative financial assets on consolidated financial statements. if !supportLists7. endifOther investments mainly include cash at bank and on hand, securities purchased under agreements to resell, term deposits, restricted statutory deposits and investment properties, etc. if !supportLists8. endifAccording to requirements of new financial instruments standards, the Company did not adjust comparative figures which related to investment business on 31 December 2022. Figures on 1 January 2023 are listed in order to increase comparability. 1. By investment category As of the end of the reporting period, the share of bond securities investments was 51.7%, an increase of 8.7pt from the beginning of 2023. Of this, treasury bonds, local government bonds and financial bonds issued by government-sponsored banks made up 35.9% of total investment assets. The duration on fixed income assets reached 9.4 years, extended by 1.1 years versus the beginning of 2023. Moreover, 99.1% of enterprise bonds and financial bonds issued by non-government-sponsored banks had an issuer/debt rating of AA or above. Of this, the share of AAA reached 96.5%. We are proud of our professional internal credit-rating team and sound credit risk management systems covering the entire bond securities investment process, namely, before, during and after the investment. We continued to improve the Group-wise integrated credit-rating management system, evaluated credit-ratings of both the debt and debt issuers and identified the credit risk based on our internal credit-rating systems, while considering other factors such as macroeconomic conditions, and external credit-ratings in order to make sound, well-informed investment decisions. At the same time, to pro-actively control the credit risk of the stock of bond holdings, we followed a uniform and standardised set of regulations and procedures to review risk status, based on both regular and ad hoc follow-up tracking post the investment. Our corporate/enterprise bond holdings spread over a wide range of sectors resulting in good diversification; we set great store by credit risk management, strictly controlling exposure to the real estate sector, and carefully selecting investment targets to ensure that risks are manageable. Overall, debt issuers of our investments all had good financial strength, with credit risk under control. The share of equity financial assets stood at 14.5%, down by 0.3pt from the beginning of 2023. Of this, stocks and equity funds accounted for 10.7% of total investment assets, down by 0.8pt. On the back of disciplined TAA processes, we continued to promote resource realignment for investment research and the building of investment research platforms, enhanced tracking and analysis of market conditions, fully considered the impact of New Accounting Standards, made effective use of accounting classification of assets, conducted pro-active, flexible management of equity assets, strengthened the core share-dividend strategy, and realised steady investment performance. As of the end of the reporting period, non-public financing instruments (NPFIs) totalled RMB418.228 billion, accounting for 18.6% of total investment assets. While ensuring full compliance with regulatory requirements and internal risk control policies, we persisted in prudent management as is inherently required of insurance companies, staying highly selective of debt issuers and projects. The underlying projects spread across sectors like infrastructure, communications & transport, real estate, and non-bank financial institutions, which were geographically concentrated in China��s prosperous areas such as Beijing, Sichuan, Hubei, Shandong, and Jiangsu. Overall, the credit risk of our NPFI holdings is stable. 97.2% of NPFIs had external credit-ratings, and of these, the share of AAA reached 97.6%, and that of AA+ and above 99.6%. 52.7% of NPFIs were exempt from debt issuer external credit-ratings, and the rest was secured with credit-enhancing measures such as guarantee or pledge of collateral, with the overall credit risk under control. **Mix and distribution of yields of non-public financing instruments** | | | | | | | --- | --- | --- | --- | --- | | **Sectors** | **Share of investments (%)** | **Nominal yield (%)** | **Average duration (year)** | **Average remaining duration****(year)** | | Infrastructure | 41.7 | 4.6 | 8.3 | 5.4 | | Communications & transport | 16.8 | 4.5 | 9.1 | 5.8 | | Real estate | 14.2 | 4.8 | 7.2 | 4.2 | | Non-bank financial institutions | 12.4 | 4.9 | 5.1 | 1.4 | | Energy and manufacturing | 5.1 | 4.6 | 6.8 | 4.2 | | Others | 9.8 | 4.8 | 8.7 | 5.3 | | **Total** | **100.0** | **4.7** | **7.8** | **4.7** | Note: Non-public financing instruments include wealth management products issued by commercial banks, debt investment plans, collective trust plans by trust firms, special asset management plans by securities firms and credit assets backed securities by banking institutions, etc. 2. By accounting methods Under the New Accounting Standards, investment assets of the Company are mainly classified into 3 categories: financial assets at fair value through other comprehensive income, financial assets at fair value through profit or loss, and others. The share of financial assets at fair value through other comprehensive income increased by 0.2pt from the beginning of the year, while that of financial assets at fair value through profit or loss grew by 5.2pt from the year beginning, mainly due to increased bond securities investments in both categories; the proportion of financial assets at amortised cost fell by 0.8pt, largely because of reduced share of debt investment plans in the category; the share of long-term equity investments fell by 0.3pt from the beginning of the year, mainly due to slightly decreased share of assets under structured entities; the share of others dropped by 4.3pt, mainly as a result of decrease in term deposits in the category. **(II)** **Group consolidated investment income** For the reporting period, net investment income totalled RMB77.739 billion, up by 2.3% from 2022. This stemmed mainly from increased dividend income. Net investment yield reached 4.0%, down by 0.3pt compared with that of 2022. Total investment income amounted to RMB52.237 billion, down by 28.3% year on year, mainly attributable to adoption of New Accounting Standards, securities trading losses and increase in losses from fair value change, with total investment yield of 2.6%, down by 1.5pt year on year. Comprehensive investment yield rose by 0.4pt year on year to 2.7%, largely due to the increased impact from equity financial assets at fair value through other comprehensive income. Unit: RMB million | | | | | | --- | --- | --- | --- | | **For** **12****months ended 3****1****December** | **20****2****3** | **2022** | **Changes (%)** | | Interest income | 58,262 | 61,780 | (5.7) | | Dividend income | 18,750 | 13,510 | 38.8 | | Rental income from investment properties | 727 | 703 | 3.4 | | **Net investment income** | **77,739** | **75,993** | **2.3** | | (Losses)/gains from securities trading | (11,311) | 1,819 | (721.8) | | Losses arising from changes in fair value | (11,712) | (61) | 19,100.0 | | Impairment losses of investment assets | (2,093) | (5,300) | (60.5) | | Other incomenote1 | (386) | 401 | (196.3) | | **Total investment income** | **52,237** | **72,852** | **(28.3)** | | Net investment yield (%)note2 | 4.0 | 4.3 | (0.3pt) | | Total investment yield (%)note2 | 2.6 | 4.1 | (1.5pt) | | Comprehensive investment yield (%)note2,3 | 2.7 | 2.3 | 0.4pt | Notes�� 1. Other income included share of profit/(loss) of associates and joint ventures, etc. 2. The impact of securities sold under agreements to repurchase was considered in the calculation of net investment yield. Average investment assets as the denominator in the calculation of net/total investment yield and comprehensive investment yield were computed based on the Modified Dietz method and did not consider the impact of the fair value change of debt investments at fair value through other comprehensive income. 3. The figure as the numerator in the calculation of comprehensive investment yield included total investment income, the change of equity investments at fair value through other comprehensive income at current period and amounts of transferring to retained profits at current period caused by the impact of equity investments at fair value through other comprehensive income, etc. 4. Certain comparative figures have been adjusted to conform to the presentation of the current period. **III.** **Third-party AuM** Group third-party AuM amounted to RMB672.235 billion, and of this, that of CPIC AMC totalled RMB225.154 billion, with a share of 33.5%; and that of Changjiang Pension RMB352.032 billion, accounting for 52.4%. **(I)** **CPIC AMC** In 2023, the risk-free interest rates, though already low, continued to drop, amid a volatile capital market and complex, fast-changing credit risk environment. CPIC AMC followed high-quality development, pro-actively enhanced its investment capabilities and managed various risks, and steadily promoted the development of third-party business. As of the end of the reporting period, its third-party AuM amounted to RMB225.154 billion, a decrease of 17.3% from the end of 2022. During the reporting period, the company pre-emptively adjusted strategies, conducted alternative investment business in a prudent manner, raised the threshold of project access, so as to strictly control credit risk. It focused on green assets, adding 3 registered green products in the year, with a registered size of about RMB13 billion. It supported local SOEs in their effort to make better use of assets, launched an asset-backed scheme for underground commercial properties of Ningbo Subway. The subsidiary vigorously explored emerging businesses, and was one of the first batch of 5 insurance AMCs granted qualifications for ABS business and infrastructure REITs at Shanghai Stock Exchange and Shenzhen Stock Exchange. It also launched the ��CPIC - Haitong Hengxin Asset-backed Plan for High-quality Development of Micro- and Small-sized Companies��, which has received the Letter of No Objection from the SSE for its upcoming sale on the exchange. As of the end of the reporting period, assets under outstanding alternative investments by CPIC AMC exceeded RMB170 billion, continued to be at the forefront of the industry. As for portfolio asset management products, in 2023, CPIC AMC focused on customer needs and value growth, scaled back low-value businesses, while expanding core-strategy products focussing on pro-active management. Given its mature equity investment strategies, the company built a diversified product line-up for equity products. The Excellence Share-dividend Equity Investment Product delivered a positive yield of 7.56% amid market decline, with nearly RMB10 billion under management. To meet the asset allocation needs of banking and insurance customers, the company consolidated its corner-stone strategy, diversified the ��fixed income + �� product line-up based on multiple niche strategies, continuously issued products based on amortised cost and bank deposits in line with changes in market conditions, marketed its OCI advantageous strategies and ��fixed income +�� strategy to third-party insurance companies, so as to meet requirements of the New Accounting Standards. As of the end of the reporting period, CPIC AMC reported RMB183.148 billion in third-party portfolio asset management products and AuM under dedicated accounts. **(II) Changjiang Pension** During the reporting period, Changjiang Pension stayed committed to serving China��s national retirement strategies, particularly in retirement planning and savings, overcame difficulties, pursued progress while ensuring stable fundamentals, and strived to become a top-notch provider of specialised pension-related financial services with social prestige. As at 31 December 2023, its third-party assets under trustee management amounted to RMB410.993 billion, up by 17.5% from the end of 2022; third-party assets under investment management reached RMB352.032 billion, down by 0.7%, due to regulatory requirements to scale back on certain retirement business. The subsidiary stays focused on retirement-related financial services, continued to expand the pension business. It stepped up marketing in key regions and towards key customers, successfully acquired and retained a large number of large- and medium-sized corporate clients for annuity business, and at the same time optimised its collective plans to better satisfy needs of small- and medium-sized companies. It maintained leading investment performance in corporate debt portfolios for basic social pension schemes, which in turn led to a steady increase in fund contribution, with pension funds under management exceeding RMB680 billion, a growth of 15% from the end of 2022. In light of capital market trends and characteristics of pension fund investment, the subsidiary strived to generate relative returns on top of absolute returns, improved the investment decision-making process, enhanced attribution analysis of investment performance, and deepened the ESG investment research system. In particular, efforts were made to steadily enhance core investment research capabilities via talent succession planning, deployment in infrastructure platforms, and the KPI system. Data released by the Ministry of Human Resources and Social Security for Q3 of 2023 indicated that, out of 22 managers, the company ranked 3rd for investment performance of fixed income portfolios under both single plans and collective plans of corporate annuity. **Customer** **resource management** **We stayed** **focused****on our customer-centric business philosophies****and****deepened CPIC Service****.****W****ith** **a****vision of ��****offering** **integrated service to one customer via one interface��****, we strived to continuously enhance service capabilities, opt****i****mised the service ecosystem for the full life cycle of customers, built a** **differentiate****d, smart** **service****system based on customer segments****,****strengthened consumer rights protection, fully leveraged our advantage as a composite insurance group** **and pushed for steady growth of****customer value contribution****.** **I.** **I****ndividual customer****s** We are customer-oriented, committed to provide convenient, efficient products/services to our customers, with improvement in the scope and penetration of customer service in recent years. As of the end of 2023, the number of individual customers of the Group amounted to 178 million, up by 5.6% from the end of 2022; the number of customers with 2 insurance policies and above stood at 39.55 million, up by 6.8% from the end of 2022. We diversified ecosystems for intra-Group collaboration to generate increased value per customer. In recent years, cross-selling across different business segments within the Group continued to progress, and as of the end of 2023, the number of individual customers holding insurance policies of multiple Group subsidiaries amounted to 11.26 million, up by 6.1% from the end of 2022. CPIC Life saw a 3.5% growth in the number of long-term life insurance customers with annualised premiums of RMB15,000 and above; as for CPIC P/C, 95.4% of policy holders of compulsory automobile insurance for private vehicles took out commercial insurance, a growth of 1.4pt from the end of 2022, and the number of customers with SA of RMB1 million and above on TPL of automobile insurance stood at 24.24 million, up by 6.0% from the end of 2022. The renewal rate of individual customers of automobile insurance reached 75.4%, up by 1.6pt from 2022. | | | | | | --- | --- | --- | --- | | | **2023** | **2022** | **Change (%)** | | Average number of insurance policies per individual customer | 2.32 | 2.29 | 1.3 | | Number of individual customers holding 2 insurance policies and above (��0000) | 3,955 | 3,705 | 6.8 | | Number of individual customers holding insurance policies of multiple Group subsidiaries(��0000) | 1,126 | 1,061 | 6.1 | | Number of customers with annualised long-term insurance premiums of RMB15,000 and above of CPIC Life (��0000) | 260 | 251 | 3.5 | | Number of customers with SA of a million yuan and above on TPL of automobile insurance of CPIC P/C (��0000) | 2,424 | 2,287 | 6.0 | Note: Number of customers was based on insurance applicants. We closely follow changes to customers and strive to enhance service capabilities accordingly. First, we continuously improved the ecosystem of health service covering full life cycles of customers. CPIC Blue Passports upgraded the full-process pro-active service, adding programmes such as Assistance from Remote Locations and Name Your Preferred Doctors for Appointments. CPIC Family Doctors upgraded the system of family doctors and launched Digital Medical Files. As of the end of 2023, the number of CPIC customers using our health service reached 7.14 million. CPIC Home has 14 retirement communities in 12 cities, with a total of over 15,800 beds under planning. As of the end of 2023, 7,596 beds for old-age nursing were in supply. Second, with the help of big data, we made efforts to improve capabilities for differentiated business operation and services specific to customer segments.  Based on customer profiles, we innovated Jia An Xin 2.0 and Tai Jian Kang, tailor-made products specifically for middle-aged and elderly people, and our motor insurance customers; diversified on-line products offering under Lan Yi Bao, achieving a rapid growth in on-line customers, consisting mostly of young people. Third, we strived to enhance customer experience and service efficiency through ��smart service��. CPIC P/C established an integrated disaster response and mitigation system, leveraged digitalisation to accelerate loss-adjustment and resource allocation, so as to improve transparency in information, timeliness in relief effort, and accuracy in claims payment. CPIC Life re-engineered the journey of insurance policy services, realised one-stop, once-and-for-all handling of customer complaints. All types of claims service have been covered under on-line scenarios, and the rate of once-and-for-all complaints handling improved by 10pt. We promoted the branding of CPIC Service, and enhanced capacity-building of consumer rights protection. CPIC P/C and CPIC Life maintained industry leadership in regulatory evaluation for consumer rights protection and rankings of service quality index. We value customer feed-backs, enhanced tracking of Net Promoter Score ("NPS"), an instrument for customer experience evaluation, constantly diversified scenarios for NPS tracking, so as to collect customer feed-backs in a more timely and comprehensive way. That would provide real-time, useful input for optimisation of operational management and products & services. **II.** **Group customer** To fully leverage intra-Group collaboration and improve value contribution from corporate/institutional clients, we continuously enhanced the supply of integrated solutions centring on ��One CPIC and One Interface��, fostered the ��cluster�� of strategic and key accounts, and strived to build an ecosystem of synergy-driven development featuring ��strategic cooperation, openness and win-win outcomes��. In 2023, we stayed fully aligned with China��s national priorities, deepened customer engagement, expanded the scope of strategic accounts centring on key national strategies such as the Healthy China Initiative, Rural Invigoration, and Green Development.  As of the end of 2023, there were 1,009 strategic accounts included under the collaborative development mode of the Group, a net increase of 207; we newly entered into 32 strategic partnerships with provincial-level governments (including provinces, autonomous regions, provincial- and vice-provincial level municipalities), with a coverage ratio of 88.9%, up by 11.1pt from the preceding year. We focused on value, heightened cooperation with our strategic accounts, striving for breakthroughs in new products, new models and new levers, deepened the joint operational mode across subsidiaries, with the share of strategic accounts in agreement with multiple subsidiaries reaching 61.4%, up by 10.2pt versus the level in 2022. We innovated the service mode for strategic accounts, promoted customisation of solutions, expanded the width and depth of services, established the BBE service system, launched the ��Pavilion for Snapshot of CPIC Service��, which offered first-hand experience of our service for employees of our strategic accounts, accessible both off-line and on-line. **ESG** if !supportListsI. endif**ESG management** We attach great importance to ESG, formulated the ESG Programme (2023-2025) of China Pacific Insurance (Group) Co. Ltd., and accelerated ESG governance and capacity-building to boost high-quality development. **(I) ESG****vision** **and** **objectives** Continuously improve ESG governance, promote the integration of ESG philosophies into corporate values and business practice; put in place an industry leading system of sustainable financial products and services, committed to continuously enhancing supply-side capabilities which help to improve the environment, people��s well-being and social governance; establish a low-carbon, energy-saving operational model, gradually reduce our own energy consumption, effectively lower carbon emissions of investment portfolios; vigorously foster ESG culture, enhance ESG branding, and improve our capability to pursue sustainable development in an all-around manner. **(****II) ESG governance** We put in place a complete ESG governance structure incorporating the decision-making body, the management and the execution, with clear defined roles and responsibilities. Meanwhile, we stepped up the formulation of work mechanisms, processes and regulations to ensure implementation of ESG programmes in an orderly manner. ![]() **II****. ESG** **practice** In light of national initiatives and the development needs of real economy, guided by the UN sustainable development goals (SDGs), and giving full play to its professional advantages, the Company continued to roll out ESG actions. It joined into the UN PRI, UN PSI, UNGC and GIP for the ��Belt and Road�� Initiative, adopting international standards to jointly build a sustainable ecosystem for the industry. **(I) Environmental** | | | | --- | --- | | **Green insurance** | | In 2023, the Company continued to innovate in green insurance products and services in terms of climate risk mitigation, pollution control, clean energy, green transport, and carbon market development. Cumulative SA of catastrophe protection exceeded RMB895 billion, which is testament to our active role in catastrophe insurance. We continued to support environmental liability projects by providing cover against environment pollution risks with total SA exceeding RMB12.5 billion to more than 5,000 companies across the country; SA for clean energy projects surpassed RMB2.9 trillion. We also launched a series of innovative ecological carbon sink insurance products and carbon asset-related insurance, issued industry��s first insurance policy of 27 products such as the carbon-asset impairment loss insurance and guarantee insurance for loans secured by carbon emission quotas. | | | | --- | --- | | **Green investment** | | We made steady progress in green investment, formulated our Responsible Investment Policy and Management Rules for ESG Investment, developed the ESG rating system, and pushed for incorporation of ESG factors into the investment management process. We were involved in investments of green projects spanning clean transport, clean energy, circular economy and pollution control, etc., via channels of debt investment schemes and equity investment schemes. We set up a Green Carbon Fund with CICC, participated in the Low Carbon & Green Economy Fund by Baowu Group, to support the green upgrading of infrastructure and green industrial technologies. As of the end of 2023, cumulative green investments amounted to over RMB200 billion. Debt Investment Schemes, such as Lushan Water Pumping & Storage Debt Investment Scheme, Zhongyuan Yuzi Environmental Protection Debt Investment Scheme, and Wuhan Subway Infrastructure Debt Investment Scheme, all our investment projects, were granted the top-notch (G-1) green certification by professional rating agencies. | | | | --- | --- | | **Green operation** | | We fully implemented green operation. In 2023, we completed a system-wide carbon accounting for the first time, defined the Group's unified carbon emissions accounting methodology, set up a visualized operation-side carbon footprint management platform and carbon management system; promoted paperless operation to reduce resource consumption via electronic insurance policies, invoices, etc.; advocated green travel and green office, with group-wide adoption of digital systems for office work, procurement and business travel; established the ��Tan Xian Jia�� platform to help employees practice green office and green travel, with over 39,000 cumulative users; implemented emission reduction initiatives, launched ��Green, Low-carbon Demonstration Zones�� on a trial basis, so as to lay the foundation for an orderly reduction in overall carbon emissions from business operation. | | | | --- | --- | | **Conservation of biodiversity** | | The Company has always been committed to promoting biodiversity through green insurance and public welfare initiatives. We innovated ecosystem carbon sink insurance, rolled out China��s first grassland carbon sink remote index insurance, first wetland carbon sink ecological value insurance, and first single tree carbon sink insurance; underwrote public liability insurance against damage caused by wild Asian elephants for consecutive years, paying out a total of over RMB410 million in claims to more than 187,000 farming households; and underwrote China��s first environmental relief liability insurance in Yunnan to offer dedicated protection for green peacocks' habitats. Since 2020, CPIC and its employees have donated more than RMB33 million to fund the completion of three phases of the Sanjiangyuan Ecological Park project, with over 130 hectares of land afforested and nearly 120,000 trees planted. **(II) Social** | | | | --- | --- | | **Supporting national initiatives** | | In 2023, the Company served as both an insurance provider and risk management service provider for the 19th Asian Games in Hangzhou. We provided a customised package of insurance solutions and general risk management services covering P/C, life and health insurance with SA totaling over RMB400 billion. We innovated carbon neutrality services for national-level exhibitions and provided ��carbon neutrality + comprehensive insurance protection solutions�� for domestic and international events such as China International Import Expo (CIIE), China Carbon Expo, and China International Fair for Trade in Services, setting an industry benchmark for green exhibitions. We also supported the "Belt and Road" Initiative, and provided cover against overseas business risk with total SA of over RMB2 trillion over the past 10 years, underwriting over 1,000 projects across nearly 120 countries and regions. | | | | --- | --- | | **Inclusive insurance** | | The Company continued its innovation in inclusive insurance products to enhance their coverage and affordability to improve people��s well-being. As of the end of 2023, CPIC Life participated in 44 on-going Huiminbao  programmes in 77 cities of 15 provinces,  serving over 20 million policyholders; successfully built Huhuibao, i.e., the programme in Shanghai into an industry benchmark, with over 6.25 million policyholders cumulatively; our long-term care insurance projects benefited over 50 million participants cumulatively; we continuously diversified financial services for new Shanghai residents and micro-business owners, helping more than 470,000 micro- and small business owners gain access to financing through the "bank + guarantee insurance" model. We launched a special plan under Huhuibao 2023 for certain specific communities, offering protection packages to over 40,000 sanitation workers in Shanghai. | | | | --- | --- | | **Health care** | | We actively implemented the blueprint of health business, and improved our supply of health insurance products and health management services. Lan Yi Bao, a long-term medical insurance product, covered cumulatively more than 1.4 million customers; Jia An Xin, an innovative medical insurance product for sub-standard risks, provides health protection for not only healthy populations but also people with 5 chronic diseases. We also cooperated with Ruijin Hospital and set up online and offline care providers such as Guangci CPIC On-line Hospital and Guangci Memorial Hospital; CPIC Family Doctors launched digital medical records and corporate clinics, with more than 6 million users so far. With Yuanshen Rehabilitation, we set up the industry��s first consortium in rehabilitation care and explored the "insurance + rehabilitation" service model; we cultivated Qing Qing Cheng Zhang, a brand of youth health services, and officially opened the flagship pavilion in Shanghai, and established the "WCH-CPIC Joint Innovation Centre" with the Huaxi Hospital, leading in ��insurance + health care�� innovation in Southwest China. | | | | --- | --- | | **Elderly care** | | In response to China��s national strategies to address population aging, we focused on the silver economy, and contributed to the country��s elderly care system, with 14 CPIC Home established in 12 cities, and 8 of them, such as the one in Shanghai, Chengdu, Dali and Hangzhou, are already in operation. Investments were made for a total of 15,800 beds. We also explored home-based nursing for the elderly under the brand Bai Sui Ju, including house remodelling adapted for old-age, daily medical service and long-term care, so as to meet diverse needs of the elderly people. | | | | --- | --- | | **Consumer rights protection** | | The Company fully implemented regulatory requirements and improved its consumer rights protection system. We continued to deepen the 4-tiered CPIC Service Officers system and strengthened capacity building for consumer protection in new circumstances; established the first batch of CPIC "Consumer Rights Protection Demonstration Zones" to enhance our visibility and reputation in the region; developed the "CPIC Digital Middle Platform for Consumer Rights Protection" to enhance the effectiveness of technology-enabled full-process consumer rights protection. CPIC P/C and CPIC Life maintained industry leadership in regulatory assessment of consumer rights protection and insurance service quality index. | | | | --- | --- | | **Employee rights and development** | | We are committed to harmonious and stable labour relations, continuously improved the remuneration management system, offered competitive compensation and have established an enterprise annuity system. We strived to ensure employees�� entitled leaves and holidays, organised sports games, health checks, workplace physical exercises, and psychological counselling, among other initiatives, for employees on a regular basis, and provided health management services for employees and their families. We continued to improve the multi-levelled talent cultivation system, held executive training sessions to strengthen our management team. We also rolled out various learning and talent development programmes to improve the Company��s succession planning, such as the ��Young Talent Training Camp��, ��Director Trainees��, Management Trainees, and ��Baige Qianfan��. In 2023, our online learning platform "CPIC Learning" made the list of "Exemplary Learning Platforms of Chinese Companies". It offered more than 14,000 online courses, organised more than 12,000 live streaming session, with over 100,000 daily active users. | | | | --- | --- | | **Rural invigoration** | | In 2023, we continued to strengthen the long-term mechanism for rural invigoration with our own characteristics. Continued efforts were made in shantytown renovation and infrastructure building to improve the rural living environment, with outstanding bond investment for such purposes exceeding RMB10 billion. We have put in place a grass-root service network underpinned by over 3,800 CPIC rural service stations and over 15,000 insurance assistants. We cumulatively sent 270 employees to work in rural villages. In 2023, we provided agricultural insurance protection to over 23 million farming households with SA exceeding RMB780 billion, with nearly RMB14.4 billion in claims pay-out. CPIC P/C provided cover for China��s 3 staple food crops with SA of nearly RMB80 billion, playing an important part in ensuring China��s food security. We were active in conducting local specialty insurance covering specialty farm produce and crops in rural areas, and explored new models for safeguarding farmers�� income. | | | | --- | --- | | **Charity** | | We established a philanthropy platform to encourage participation of charitable activities by employees, customers, and other stakeholders. CPIC Blue, a charitable foundation, focused on ��the elderly people and children��, particularly those with cognitive disorders and autism. We helped create an accurate eye-movement early-screening model, the first of its kind in China, and set up neighbourhood brain health service stations to offer early testing, diagnostic assessment, public education and volunteer services. Nearly 100,000 people have benefited from the early screening service so far. We launched a painting and calligraphy training programme to help autistic children improve self-confidence and integrate with society; carried out educational volunteer activities in Sanjiangyuan of Qinghai, set up a volleyball base for children, and arranged live broadcasts of the Asian Games at local primary schools funded by Project Hope. In 2023, the Company's charitable donations totaled RMB64.88 million. **(****III) G****overnance** | | | | --- | --- | | **Corporate governance** | | As per relevant laws and regulations and regulatory requirements, we put in place a governance system consisting of shareholders�� general meeting (SGM), the board of directors, the board of supervisors and senior management, with co-operation, co-ordination and checks and balances between the top authority, the decision-making body, the body responsible for oversight and that of execution. We rolled out implementation of regulations concerning ��procedures for major issues, major personnel appointments and major investments�� and "preliminary review by CPC committees" at the grass-root level. We continued to optimise our board structure to carter for diversified shareholdings by state-owned shareholders, institutional investors and the public; improved board diversity and professionalism, with the share of external directors reaching 86% and that of female directors 29%, which helped with board decision-making and the protection of minority shareholder interests. We put in place an integrated risk management system. The Group's solvency ratios have consistently stayed above the regulatory minimum levels, and our insurance subsidiaries continued to lead the industry in integrated risk rating. We fully complied with information disclosure rules, and continued to improve the quality of information disclosure, with an A rating in information disclosure evaluation by the SSE for ten consecutive years. For details please refer to the section ��Corporate Governance�� of this report. | | | | --- | --- | | **Anti-corruption** | | In compliance with directives of the central government on anti-corruption work in SOEs, we enforced internal rules such as Interim Provisions on Anti-fraud Work and Measures for Accountability for Employee Misconduct, and further enhanced the procedures for whistle-blowing, investigation, handling, reporting and accountability for malpractice or violations of the law. We released the 3-year Action Plan (2023-2025) for Clean Culture and Negative List of Employee Conduct to improve working style, integrity of employees and party members. We carried out anti-corruption and integrity advocacy campaigns and training sessions, and all employees signed the Integrity Commitment Statements (2023 edition). | | | | --- | --- | | **ESG risk management** | | In light of ESG risk management requirements, the Company continued to leverage risk appetites to enhance its risk management capability. We incorporated climate risk into our assessment model and independently developed an intelligent risk control platform "Risk Radar" to strengthen the monitoring, early warning and response to key risks, and to prevent concentrated claims pay-outs due to catastrophes. We conducted active research on climate risk and regional green insurance development, and maintained close communication with governmental and regulatory bodies, research institutes and enterprises in different industries to create an industry-research co-operation mechanism. | | | | --- | --- | | **Data** **security** | | We take data security very seriously, established the Steering Committee for Cyber-security and IT to coordinate data security management efforts; drafted and revised a series of policies, including Provisional Regulations on Data Security and Rules on Information Security Management of Application Systems; established a data indicator monitoring system, designed and implemented the "DiTP Digital Security Operation Project", and strengthened the management of cyber-security, data security and smart operation; organised training on prevention of social engineering attacks, development of security certificates, and information security skills for specialists; and formulated emergency response plans for data security and carried out regular drills. In 2023, we received no administrative penalty due to any breach of rules on customer information security. | | | | --- | --- | | **Supply chain management** | | The Company continued to improve its procurement and supplier management mechanism and implemented Provisions on Supplier Management, adding ESG requirements to supplier selection, process management, assessment and evaluation. It signed Anti-Commercial Bribery Agreements with its suppliers, strictly prohibiting bribery and corruption in the course of cooperation. The Company is committed to increasing the share of energy-saving and environmentally-friendly products in purchase, and put forward clear requirements on supplier ISO 14001 (environmental management system) certification and product energy consumption levels. For further details, please refer to the 2023 Sustainable Development Report of China Pacific Insurance (Group) Co., Ltd. to be disclosed on the websites of the SSE (www.sse.com.cn), the HKEX ([www.hkexnews.hk](http://www.hkexnews.hk)), the LSE (www.londonstockexchange.com) and the Company (www.cpic.com.cn). **Analysis of** **s****pecific** **i****tems** **I. Consolidated income statement** Unit: RMB million | | | | | | | --- | --- | --- | --- | --- | | **For 12 months ended 31 December** | | **2023** | **2022** **(Adjusted)****note** | **Main reason****s****for the changes** | | CPIC Life | 19,532 | | 29,474 | Decrease in investment income | | CPIC P/C | 6,575 | | 8,187 | Decrease in investment income | | CPIC Group and eliminations, etc. | 1,150 | | (280) | Increase in net profit of consolidated structured entities of the Group | | Net profit attributable to shareholders of the parent | 27,257 | | 37,381 | Decrease in investment income | Note: The Company adopted the new insurance standard and the new financial instruments standards from 1 January 2023. Comparative figures of the prior period are restated according to the requirements of the new standards. According to requirements of the new insurance standard, the Company adjusted comparative figures of the prior period which related to insurance business. According to requirements of new financial instruments standards, the Company did not adjust comparative figures of the prior period which related to investment business. **II. Liquidity analysis** **(I) Cash flow statement** Unit: RMB million | | | | | | --- | --- | --- | --- | | **For 12 months ended 31 December** | **2023** | **2022(Adjusted)****note** | **Changes (%)** | | Net cash flows from operating activities | 137,863 | 148,664 | (7.3) | | Net cash flows used in investing activities | (161,357) | (169,736) | (4.9) | | Net cash flows from financing activities | 3,294 | 28,481 | (88.4) | | Effects of exchange rate changes on cash and cash equivalents | 131 | 773 | (83.1) | | Net (decrease)/increase in cash and cash equivalents | (20,069) | 8,182 | (345.3) | Note: The Company adopted the new insurance standard and the new financial instruments standards from 1 January 2023. Comparative figures of the prior period are restated according to the requirements of the new standards. According to requirements of the new insurance standard, the Company adjusted comparative figures of the prior period which related to insurance business. According to requirements of new financial instruments standards, the Company did not adjust comparative figures of the prior period which related to investment business Net cash flows from operating activities decreased by 7.3% for the year ended 31 December 2023, amounted to RMB 137.863 billion, mainly attributable to rise in cash paid for claims under insurance contracts issued. Net cash flows used in investing activities decreased by 4.9% for the year ended 31 December 2023, amounted to RMB 161.357 billion, mainly attributable to increase in cash received from disposal of investments. Net cash flows from financing activities decreased by 88.4% for the year ended 31 December 2023, amounted to RMB 3.294 billion, mainly attributable to securities sold under agreements to repurchase which was net increase during the year ended 31 December 2022 and net decrease during the same period of 2023. **(II) Gearing ratio** | | | | | | --- | --- | --- | --- | | | **31 December 202****3** | **31 December 20****22(Adjusted)****note 2** | **Changes** | | Gearing ratio (%)note 1 | 89.4 | 90.5 | (1.1pt) | Notes: 1. Gearing ratio = (total liabilities + non-controlling interests)/total assets. 2. The Company adopted the new insurance standard and the new financial instruments standards from 1 January 2023. Comparative figures of the prior period are restated according to the requirements of the new standards. According to requirements of the new insurance standard, the Company adjusted comparative figures of the prior period which related to insurance business. According to requirements of new financial instruments standards, the Company did not adjust comparative figures of the prior period which related to investment business. **(III) Liquidity analysis** We centralise liquidity management including that of our subsidiaries at the Group level. As the parent company, our cash flows mainly stem from dividends from our subsidiaries and gains from our own investment activities. Our liquidity mainly comes from premiums, net investment income, sales or maturity of financial assets and cash from financing activities. The demand for liquidity primarily arises from surrenders, reduction in sum assured or other forms of earlier termination of insurance contracts, insurance claims or benefit pay-outs, payment of dividends to shareholders and cash required for daily operation. We normally record net cash inflows from our operating activities due to growing premium income. Meanwhile, adhering to ALM, and in line with our SAA, we would maintain an appropriate level of allocation in highly liquid assets to meet liquidity requirement. Financing abilities also form a major part of our liquidity management. We have access to additional liquidity through securities repurchase arrangement and other financing arrangements. We believe that our current liquidity level is sufficient for our needs in the foreseeable future. **III.** **Items concerning fair value accounting** The financial instruments measured at fair value are detailed in notes XV and XVI of financial statements. **IV****. Structured entities controlled by the** **Group** The structured entities controlled by the Group are detailed in note VI-2 to the financial statements. **V. Significant changes of key financial** **indicators****and reasons for such changes** Unit: RMB million | | | | | | | --- | --- | --- | --- | --- | | | **31 December 2023/ 2023** | **31 December 2022(Adjusted)****note****/ 2022(Adjusted)****note** | **Changes (%)** | **Main reason****s** | | Total assets | 2,343,962 | 2,071,336 | 13.2 | Business expansion | | Total liabilities | 2,076,258 | 1,869,664 | 11.0 | Business expansion | | Total equity | 267,704 | 201,672 | 32.7 | Profit for the period, change in fair value of financial investments at fair value through other comprehensive income and adoption of the new financial instruments standards | | Operating profit | 32,060 | 42,540 | (24.6) | Decrease in investment income | | Net profit attributable to shareholders of the parent | 27,257 | 37,381 | (27.1) | Decrease in investment income | Note: The Company adopted the new insurance standard and the new financial instruments standards from 1 January 2023. Comparative figures of the prior period are restated according to the requirements of the new standards. According to requirements of the new insurance standard, the Company adjusted comparative figures of the prior period which related to insurance business. According to requirements of new financial instruments standards, the Company did not adjust comparative figures of the prior period which related to investment business. **VI. Solvency** As per regulatory requirements, we calculate and disclose our core capital, actual capital, minimum required capital and solvency margin ratios. As at 31 December 2023, the solvency margin ratios of the Group, CPIC Life, CPIC P/C, CPIC Health, and CPIC Anxin Agricultural were all above regulatory minimum levels. Unit: RMB million | | | | | | --- | --- | --- | --- | | | **3****1 Dec****ember****2023** | **31 December 2022** | **Reason****s****for** **c****hange** | | **CPIC Group** | | | | | Core capital | 303,908 | 332,414 | Change in interest rate, capital market fluctuation, profit for the period and bond issuance by subsidiaries | | Actual capital | 456,938 | 479,073 | Change in interest rate, capital market fluctuation, profit for the period and bond issuance by subsidiaries | | Minimum required capital | 178,017 | 187,333 | Growth of insurance business, changes to asset allocation and optimisation in new regulation | | Core solvency margin ratio (%) | 171 | 177 | | | Comprehensive solvency margin ratio (%) | 257 | 256 | | | | | | | | --- | --- | --- | --- | | **CPIC Life** | | | | | Core capital | 173,981 | 207,848 | Change in interest rate, capital market fluctuation, profit for the period and issuance of bond | | Actual capital | 312,005 | 344,222 | Change in interest rate, capital market fluctuation, profit for the period and issuance of bond | | Minimum required capital | 148,723 | 157,802 | Growth of insurance business, changes to asset allocation and optimisation in new regulation | | Core solvency margin ratio (%) | 117 | 132 | | | Comprehensive solvency margin ratio (%) | 210 | 218 | | | **CPIC P****/C** | | | | | Core capital | 47,415 | 45,266 | Capital market fluctuation and profit for the period | | Actual capital | 61,775 | 55,154 | Capital market fluctuation, profit for the period and issuance of bond | | Minimum required capital | 28,898 | 27,246 | Growth of insurance business, changes to asset allocation and optimisation in new regulation | | Core solvency margin ratio (%) | 164 | 166 | | | Comprehensive solvency margin ratio (%) | 214 | 202 | | | **CPIC Health** | | | | | Core capital | 3,134 | 3,089 | Change in interest rate, capital market fluctuation, and profit for the period | | Actual capital | 3,488 | 3,225 | Change in interest rate, capital market fluctuation, and profit for the period | | Minimum required capital | 1,352 | 1,216 | Growth of insurance business, changes to asset allocation and optimisation in new regulation | | Core solvency margin ratio (%) | 232 | 254 | | | Comprehensive solvency margin ratio (%) | 258 | 265 | | | **CPIC** **Anxin Agricultural** | | | | | Core capital | 2,836 | 2,759 | Capital market fluctuation and profit for the period | | Actual capital | 3,128 | 3,020 | Capital market fluctuation and profit for the period | | Minimum required capital | 831 | 818 | Growth of insurance business, changes to asset allocation and optimisation in new regulation | | Core solvency margin ratio (%) | 341 | 337 | | | Comprehensive solvency margin ratio (%) | 376 | 369 | | Note: New regulation refers to the "Notice on Optimising the Regulatory Standards for the Solvency of Insurance Companies" (Jingui [2023] No.5) issued by the NAFR in September 2023. Please refer to the summaries of solvency reports (excerpts) published on the websites of SSE (www.sse.com.cn), SEHK (www.hkexnews.hk), LSE (www.londonstockexchange.com) and the Company (www.cpic.com.cn) for more information about the solvency of CPIC Group and its main insurance subsidiaries. **VII. Insurance** **contract liabilities** Insurance contract liabilities of the Company consist of liability for remaining coverage (LRC) and liability for incurred claims (LIC). LRC comprises ��excluding loss component�� and ��loss component��. As at 31 December 2023, the remaining balance of LRC amounted to RMB1,777.394 billion, representing an increase of 13.3% from the end of 2022. The remaining balance of LIC amounted to RMB95.226 billion, down by 0.6% from the end of 2022. The rise in insurance contract liabilities was mainly caused by business growth and accumulation of insurance liabilities. Unit: RMB million | | | | | | --- | --- | --- | --- | | | **31 December 2022** | **Change during the** **period** | **31 December 2023** | | | **Total insurance contract liabilities** | **1,664,848** | **207,772** | **1,872,620** | | Liabilities for remaining coverage | 1,569,080 | 208,314 | 1,777,394 | | Excluding loss component | 1,554,969 | 206,431 | 1,761,400 | | Loss component | 14,111 | 1,883 | 15,994 | | Liabilities for incurred claims | 95,768 | (542) | 95,226 | | **Total insurance contract liabilities** | **1,664,848** | **207,772** | **1,872,620** | | Component not measured by PAA | 1,546,326 | 200,783 | 1,747,109 | | Component measured by PAA | 118,522 | 6,989 | 125,511 | **VIII. Reinsurance business** We determine retained insured amounts and reinsurance ratio according to insurance regulations and our business development and risk management needs. To lower the concentration risk of reinsurance, we also entered into reinsurance agreements with various industry-leading reinsurance companies. The criteria for the selection of reinsurance companies include their financial strength, professional expertise, service level, claims settlement efficiency and price. Generally, we prefer domestic and overseas reinsurance/insurance companies with proven records and in compliance with regulatory regulations, including international reinsurance companies with ratings of A- or above. Our reinsurance partners mainly include China Reinsurance (Group) Corporation and its subsidiaries, i.e., China Property & Casualty Reinsurance Company Ltd. and China Life Reinsurance Company Ltd., Swiss Reinsurance Company Ltd and Munich Reinsurance Company. **IX****. Main subsidiaries & associates and equity participation** As of the end of the reporting period, the Company��s main subsidiaries, associates and equity participation are set out as below: Unit: RMB million | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | **Company** | **Main business scope** | **Registered capital** | **Group shareholding****note****2** | **Total assets** | **Net assets** | **Net profit** | | China Pacific Property Insurance Co., Ltd. | Property indemnity insurance; liability insurance; credit and guarantee insurance; short-term health and accident insurance; reinsurance of the above said insurance; insurance funds investment as approved by relevant laws and regulations; other business as approved by CBIRC. | 19,948 | 98.5% | 213,360 | 54,909 | 6,575 | | China Pacific Life Insurance Co., Ltd. | Personal lines insurance including life insurance, health insurance, accident insurance, etc. denominated in RMB or foreign currencies; reinsurance of the above said insurance; statutory life/health insurance; agency and business relationships with domestic and overseas insurers and organisations, loss adjustment, claims and other business entrusted from overseas insurance organisations; insurance funds investment as prescribed by Insurance Law of the PRC and relevant laws and regulations; international insurance activities as approved; other business as approved by CBIRC. | 8,628 | 98.3% | 2,014,824 | 129,447 | 19,532 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | Changjiang Pension Insurance Co., Ltd. | Outsourced money management business denominated in RMB or foreign currencies for the purpose of elderly provisions; asset management of capital denominated in RMB or foreign currencies; advisory business pertaining to asset management; other business as approved by NAFR; other business as approved by as allowed by other departments of the State Council. | 3,000 | 61.1% | 6,416 | 4,060 | 207 | | Pacific Asset Management Co., Ltd. | Asset management of capital and insurance funds; outsourcing of fund management; advisory services relating to asset management; other asset management business as allowed by the PRC laws and regulations. | 2,100 | 99.7% | 5,298 | 4,538 | 657 | | Pacific Health Insurance Co., Ltd. | Health and accident insurance denominated in RMB yuan or foreign currencies; health insurance sponsored by the government or supplementary to state medical insurance policies; reinsurance of the above said insurance; health insurance-related advisory and agency business; insurance funds investment as approved by relevant laws and regulations; other business as approved by CBIRC. | 3,600 | 99.7% | 9,124 | 3,329 | 31 | | Pacific Anxin Agricultural Insurance Co., Ltd. | Agricultural insurance; property indemnity insurance; liability insurance; statutory liability insurance; credit and guarantee insurance; short-term health insurance and accident insurance; property insurance relating to rural areas and farmers; reinsurance of the above said insurance; insurance agency business. | 1,080 | 66.8% | 5,632 | 2,987 | 182 | | CPIC Fund Management Co., Ltd. | Fund management business; the launch of mutual funds and other business as approved by competent authorities of the PRC. | 150 | 50.8% | 902 | 702 | 102 | Notes: 1. Figures for companies in the table are on an unconsolidated basis. For other information pertaining to the Company��s main subsidiaries, associates or invested entities, please refer to ��Review and analysis of operating results�� of this report, and ��Scope of consolidation�� and ��Long-term equity investments�� in Notes of the Financial Report. 2. Figures for Group shareholding include direct and indirect shareholdings. **X. Top five customers** During the reporting period, the top 5 customers accounted for approximately 0.6% of the Company��s income, and none of them constituted Related Parties of the Company. Given its business nature, the Company does not have any supplier that is directly related to its business. **X****I. Seizure, attachment, and freeze of major assets or their pledge as collateral** The Company��s assets are mainly financial assets. The repurchase of bonds forms part of the Company��s day-to-day securities investment activities, and as of the end of the reporting period, no abnormality was detected. **Outlook** **I. Market environment and business plan** In 2024, the spite of a complex and challenging environment, favourable factors for China��s economy continue to outweigh adverse conditions, with economic recovery on track and long-term outlook remaining positive. The coordination of macro-economic policy and industrial policy would help the Chinese economy to achieve improved quality with reasonable growth. In the medium and long term,  rising per capita income and bolstered consumer confidence will improve insurance demand; major initiatives in reform, development and innovation such as industrial upgrade, digital economy, green development, rural invigoration, inclusive finance, and the silver economy will sustain long-term insurance industry development; insurance funds can also benefit from investment opportunities arising from China��s key national projects and initiatives, particularly the building of the modern industrial system and regional integrated development. The vision of building China into a financial powerhouse requires coordinated development in technology, green transitioning, inclusive finance, elderly-care provision and digital finance, in addition to an increased tightening of financial regulation, underpinned by the supervision of institutions, behaviours, functionality, look-through, and continuous supervision. This will help with long-term, healthy development of China��s insurance market. Going forward, we will stay committed to the vision of ��being the best in customer experience, business quality and risk control capabilities��, and ��leadership in healthy and steady development of the insurance industry��. The Company will press ahead with high-quality development, pursue progress while ensuring stable business fundamentals, continue to strengthen the core insurance business and further strengthen our competitive edge; press ahead with the 3 key strategies in health care & elderly care management, business development in key regions and technology empowerment in a bid to foster strategic comparative advantage; ensure the prevention of major risks and enhance resilience in development. **II.** **Major risks and mitigating measures** In 2024, the global political environment remains difficult, with ongoing in geo-political conflicts, polarisation of economic development and technological advancement, and rising uncertainty. On the domestic front, China��s economy faces multiple challenges such as weak effective demand, faltering growth drivers and uncertainty around market expectations. As for the insurance industry, high-quality development needs to be boosted. In particular, for life insurance, management of business value has become even more important in the context of secular interest rate decline and constraint from capital;  on the side of P/C insurance, business quality control will be under pressure, given the impact of extreme weather events and development of emerging business; insurance asset management will be doubly impacted, i.e., increased pressure in risk management of invested assets and challenge in reinvestment, given exacerbated financial market volatility, deterioration of credit risk, secular decline of interest rates, and the lack of assets acceptable in both yields and credit-worthiness. At the same time, the use of new technologies and business innovations calls for enhanced capabilities in identification, management of emerging risks. In the face of such risks, we will stay prudent in our risk appetite, better understand both opportunities and challenges of the new stage of development, and carefully handle risks and uncertainties in our business operation, in a bid to facilitate high-quality development of the Company and better serve China��s national strategies and the real economy. To this end, first, we will enhance study and analysis of trends of various risks, ensure their early warning and early-stage identification, anticipate and mitigate major risks, and improve forward-looking, pro-active risk management; second, continue to promote integration of risk management and business operation, ensure the prevention of major risks, enhance the reach and ��teeth�� of risk management via transmission of Risk Upper Limits and KPIs; third, upgrade the Enterprise Risk Management (ERM) system in compliance with regulatory requirements, put in place long-term mechanisms so as to substantially improve the soundness and effectiveness of the risk management system. **Embedded value** **To: China Pacific Insurance (Group) Company Limited** **Board of Directors** **Independent Actuarial Review Opinion on Embedded Value** Towers Watson Management Consulting (Shenzhen) Co. Ltd Beijing Branch (��WTW�� or ��we��) has been engaged by China Pacific Insurance (Group) Company Limited (��CPIC Group��) to review the embedded value information of CPIC Group as of 31 December 2023. This review opinion is addressed solely to CPIC Group in accordance with the terms of our engagement letter, and sets out the scope of our work and our conclusions. To the fullest extent permitted by applicable law, we do not accept or assume any responsibility, duty of care or liability to anyone other than CPIC Group for or in connection with our review work, the opinions we have formed, or for any statement set forth in this report. ***Scope of work*** WTW��s scope of work comprised: if !supportListsn endifa review of the methodology used to develop the embedded value of CPIC Group and the value of one year��s sales of China Pacific Life Insurance Co. Ltd. ("CPIC Life") as of 31 December 2023, in the light of the requirements of the "CAA Standards of Actuarial Practice: Appraisal of Embedded Value" issued by the China Association of Actuaries ("CAA") in November 2016; if !supportListsn endifa review of the economic and operating assumptions used to develop CPIC Group��s embedded value and the value of one year��s sales of CPIC Life as of 31 December 2023; if !supportListsn endifa review of the results ofCPIC Group's calculation of the value of in-force business, the value of one year��s sales of CPIC Life, the results of the analysis of movement of embedded value of CPIC Group, and the sensitivity results of the value of in-force business and value of one year��s sales of CPIC Life. ***Opinion*** As a result of our review of the embedded value of CPIC Group as of 31 December 2023 and the value of one year��s sales of CPIC Life prepared by CPIC Group, WTW has concluded that: if !supportListsn endifThe methodology used is consistent with a traditional deterministic discounted cash flow approach, and is consistent with the requirements of the "Appraisal of Embedded Value�� standard issued by the CAA; if !supportListsn endifThe operating assumptions have been set with appropriate regard to past, current and expected future experience; if !supportListsn endifThe economic assumptions have been set with regard to current market information. WTW has performed reasonableness checks and analysis of CPIC Group��s embedded value and value of one year��s sales of CPIC Life as of 31 December 2023, and WTW has concluded that these results have been determined in a manner consistent with the methodology and assumptions described in the Embedded Value Section of CPIC Group��s 2023 annual report and that the aggregate results are reasonable in this context. WTW confirms that the results shown in the Embedded Value section of CPIC Group��s 2023 annual report are consistent with those reviewed by WTW. In carrying out our review we have relied on the accuracy of audited and unaudited data and information provided by CPIC Group. **For and on behalf of WTW** **Sean Deehan, FFA, FASHK** **March****6****th****,****2024** **2023 Embedded Value** **Annual****Report of CPIC Group** **I. Background** In order to provide investors with an additional tool to understand our economic value and business results, we have prepared CPIC Group Embedded Value as at 31 December 2023 in accordance with the disclosure rules set by the China Securities Regulatory Commission (��CSRC��) for publicly listed insurer and the ��CAA Standard of Actuarial Practice: Appraisal of Embedded Value�� issued by the China Association of Actuaries (��CAA��) in 2016 (thereafter referred to as ��Appraisal of Embedded Value�� standard) and have disclosed information relating to our group embedded value in this section. We have engaged Willis Towers Watson, an independent firm of consultants, to review the reasonableness of the valuation methodology, the valuation assumptions as well as the valuation results, and to issue their independent embedded value review report, which is contained in our 2023 annual report. The Group Embedded Value is defined as the sum of the Group Adjusted Net Worth and the value of in force business of CPIC Life attributable to the shareholders of CPIC Group. The value of in force business and the value of one year��s sales of CPIC Life are defined as the discounted value of the projected stream of future after-tax distributable shareholder profits for existing business in force at the valuation date and for one year's sales in the 12 months immediately preceding the valuation date, where distributable shareholder profits are determined based on policy liability, required capital in excess of policy liability and minimum capital requirement quantification standards prescribed by the regulatory. Embedded value does not allow for any value attributable to future new business sales. The value of in force business and the value of one year��s sales of CPIC Life are determined by using a traditional deterministic discounted cash flow methodology. This methodology makes implicit allowance for the risk of investment guarantees and policyholder options, asset/liability mismatch risk, credit risk and the economic cost of capital through the use of a risk-adjusted discount rate. The embedded value and the value of one year��s sales provide valuable information to investors in two aspects. First, the value of in force business of CPIC Life represents the total amount of after-tax distributable shareholder profits in present value terms, which can be expected to emerge over time, in accordance with the assumptions used. Second, the value of one year��s sales of CPIC Life provides an indication of the value created for investors by current new business activity and hence the potential value of the business. However, the information on embedded value and the value of one year��s sales should not be viewed as a substitute of other financial measures on the Company. Investors should not make investment decisions based solely on embedded value and the value of one year��s sales information. The embedded value is an estimation of a component of an insurance company��s economic value using actuarial techniques, based on a series of assumptions. As there is uncertainty in selecting assumptions, estimates of embedded value could vary materially as key assumptions are changed, and future actual experience would differ from assumed valuation assumption. Therefore, special care is advised when interpreting embedded value results. **II. Summary of Embedded Value and Value of One Year��s Sales** The table below shows the Group Embedded Value of CPIC Group as at 31 December 2023, and the value of one year��s sales of CPIC Life in the 12 months to 31 December 2023 at a risk discount rate of 9%. Unit: RMB million | | | | | --- | --- | --- | | **Valuation Date** | **31 December 2023** | **31 December 2022** | | **Group Adjusted Net Worth** | **291,519** | **298,142** | | **Adjusted Net Worth of CPIC Life** | **159,919** | **172,865** | | Value of In Force Business of CPIC Life Before Cost of Required Capital Held | 247,499 | 241,471 | | Cost of Required Capital Held for CPIC Life | (5,391) | (16,144) | | Value of In Force Business of CPIC Life After Cost of Required Capital Held | 242,108 | 225,326 | | CPIC Group��s Equity Interest in CPIC Life | 98.29% | 98.29% | | **Value of In Force Business of CPIC Life After Cost of Required Capital Held attributable to the shareholders of CPIC Group** | **237,974** | **221,479** | | **Group Embedded Value** | **529,493** | **519,621** | | **CPIC Life Embedded Value** | **402,027** | **398,191** | | | | | | | --- | --- | --- | --- | | **Valuation Date** | **31 December 2023** | **31 December 2023** **(Unadjusted)** | **31 December 2022** | | Value of One Year��s Sales of CPIC Life Before Cost of Required Capital Held | 12,672 | 14,691 | 11,380 | | Cost of Required Capital Held | (1,710) | (2,652) | (2,175) | | Value of One Year��s Sales of CPIC Life After Cost of Required Capital Held | **10,962** | **12,039** | **9,205** | Notes: 1: Figures may not be additive due to rounding. 2: Results in column ��31 December 2022�� are those reported in the 2022 annual report. 3. ��Unadjusted�� refers to results before adjusting economic assumptions and evaluation methods by the end of 2023. The Group Adjusted Net Worth represents the shareholder net equity of the Company, inclusive of adjustments of the value of certain assets to market value and adjusted for the relevant differences, such as difference between reserves and policy liabilities valued under ��Appraisal of Embedded Value�� standard published by the CAA. It should be noted that the Group Adjusted Net Worth incorporates the shareholder net equity of the Company as a whole (including CPIC Life and other operations of the Company), and the value of in force business and the value of one year��s sales are of CPIC Life only. The Group Embedded Value also does not include the value of in force business that is attributable to minority shareholders of CPIC Life. **III. Key Valuation Assumptions** In determining the embedded value as at 31 December 2023, we have assumed the Company continues to operate on a going concern basis under the current economic and regulatory environment. Policy liability and required capital have been calculated according to relevant requirements described in ��Appraisal of Embedded Value�� standard published by the CAA. The various operational assumptions are mainly based on the results of experience analyses, together with reference to the overall experience of the Chinese insurance industry, as well as with regard to expected future operating experience. As such, these assumptions represent our best estimate of the future based on information currently available at the valuation date. The following describes the key assumptions used in determining the value of in force business and the value of one year��s sales of CPIC Life as at 31 December 2023: if !supportLists1. endif**Risk Discount Rate** The risk discount rate used to determine the value of in force business and the value of one year��s sales of CPIC Life is 9%. if !supportLists2. endif**Investment Returns** The investment returns for long term business are assumed to be 4.5% in 2023 and 4.5% thereafter. The investment return for short term business is based on the recent one-year bank deposit benchmark interest rate as published by the People��s Bank of China before the valuation date. These assumptions have been derived based on the current capital market environment, our current and expected future asset mix and the assumed investment returns for each major class of assets. if !supportLists3. endif**Mortality** Mortality assumptions have been developed based on China Life Insurance Mortality Table (2010-2013), considering CPIC Life��s mortality experience analysis and expectation of future mortality trends, and varies by product. if !supportLists4. endif**Morbidity** Morbidity assumptions have been developed based on China Life Insurance Morbidity Table, considering CPIC Life��s morbidity experience analysis and expectation of future morbidity trends, taking into considering deterioration of morbidity rates in the long term, and varies by product. if !supportLists5. endif**Lapse and Surrender Rates** Assumptions have been developed based on CPIC Life��s lapse and surrender experience analysis, and expectation of future trends, and assumptions vary by pricing interest rates, product types, premium payment periods and distribution channels. if !supportLists6. endif**Expense** Unit cost assumptions have been developed based on the results of an analysis of CPIC Life��s past non-commission related expenses and future expectations. Future inflation of 2.5% pa in respect of per policy expenses is also assumed. if !supportLists7. endif**Policyholder Dividend** if !supportListsl endifGroup participating annuity business: 80 % of interest surplus; if !supportListsl endifBancassurance participating business: No less than 70% of interest and mortality surplus; if !supportListsl endifOther participating business: 70% of interest and mortality surplus. if !supportLists8. endif**Tax** Tax has been assumed to be payable at 25% of profits. The proportion of investment income assumed to be exempt from income tax is 20% for all future years. The tax exemption assumptions are based on our current and expected future asset mix and assumed investment returns for each major class of assets. In addition, the tax of the accident business is based on related tax regulation. **IV.** **New Business Volumes and Value of One Year��s Sales** The table below shows the volume of new business sold in terms of first year annual premium and value of one year��s sales of CPIC Life after cost of required capital held at a risk discount rate of 9% for year 2023. Unit: RMB million | | | | | | | --- | --- | --- | --- | --- | | | **First Year Annual Premium** **(FYAP)** | | **Value of One Year��s Sales After Cost of Required Capital Held** | | | | **2023** | **2022** | **2023** | **2022** | | **Total** | **82,402** | **79,136** | **10,962** | **9,205** | | Of which:    Agency channel | 30,750 | 26,458 | 9,069 | 8,338 | | Bancassurance channel | 33,291 | 32,140 | 1,854 | 860 | **V****. Analysis of change in embedded value** The following table shows the change in the Group Embedded Value from 31 December 2022 to 31 December 2023. Unit: RMB million | | | | | | --- | --- | --- | --- | | **No.** | **Item** | **Value** | **Comments** | | 1 | **Embedded Value of the life business at 31 December 2022** | **398,191** | | | 2 | Expected Return on Embedded Value | 32,744 | Expected returns on the 2022 embedded value of CPIC Life and the value of one year��s sales of CPIC Life in 2023 | | 3 | Value of One Year��s Sales | 10,962 | Value of one year��s sales in respect of new business written in the 12 months prior to 31 December 2023 | | 4 | Investment Experience Variance | (21,787) | Reflects the difference between actual and assumed investment return in 2023 | | 5 | Operating Experience Variance | 2,850 | Reflects the difference between actual and assumed operating experience | | 6 | Change in methodology, assumptions and models | (22,049) | Reflects assumption and methodology changes, together with model enhancements | | 7 | Diversification effects | 2,275 | Changes in diversification benefits on cost of required capital from new business and different business mix | | 8 | Change in market value adjustment | 4,689 | Reflects the change in value of certain assets not valued on a market value basis | | 9 | Shareholder Dividends | (5,953) | Shareholder dividends distributed to shareholders of CPIC Life | | 10 | Others | 104 | | | 11 | **Embedded Value of the life business at 31 December 2023** | **402,027** | | | 12 | **Adjusted net worth of businesses other than CPIC Life as at** **31 December 2022** | **132,221** | | | 13 | Change in Adjusted Net Worth before payment of shareholder dividends to shareholders of CPIC Group | 15,443 | | | 14 | Shareholder dividends | (9,813) | Dividend distributed to shareholders of CPIC Group | | 15 | Change in market value adjustment | 708 | Reflects the change in value of assets not valued on a market value basis | | 16 | **Adjusted net worth of businesses other than CPIC Life as at** **31 December 2023** | **138,559** | | | 17 | Minority interests relating to equity and market value adjustments | (11,093) | Minority interests on Embedded Value as at 31 December 2023 | | 18 | **Group Embedded Value as at 31 December 2023** | **529,493** | | | 19 | **Embedded Value as at 31 December 2023 per share (RMB)** | **55.04** | | Note: Figures may not be additive due to rounding. **VI****Sensitivity Analysis** In consideration of the uncertainties as to future experience, we have evaluated the sensitivity of the value of in force business and the value of one year��s sales of CPIC Life as at 31 December 2023 to changes in key assumptions. In determining the sensitivity results, only the relevant cashflow assumption and risk discount rate assumption has been changed, while all other assumptions have been left unchanged. Alternative sensitivity scenarios are shown for the following: if !supportLists- endifRisk discount rate ��+ / - 50 basis points�� if !supportLists- endifInvestment return ��+ / - 50 basis points�� if !supportLists- endifMortality ��+ / - 10%�� if !supportLists- endifMorbidity ��+10%�� if !supportLists- endifLapse and surrender rates ��+ / - 10%�� if !supportLists- endifExpenses ��+10%�� The following table shows the sensitivity results of the value of in force business and the value of one year��s sales after cost of required capital held. Unit: RMB million | | | | | --- | --- | --- | | | **Value of In Force Business After Cost of Required Capital Held** | **Value of One Year��s Sales After Cost of Required Capital Held** | | **Base** | **242,108** | **10,962** | | Risk discount rate ��+50 basis points�� | 232,994 | 10,362 | | Risk discount rate ��-50 basis points�� | 252,019 | 11,615 | | Investment return ��+50 basis points�� | 293,364 | 14,929 | | Investment return ��-50 basis points�� | 191,226 | 6,982 | | Mortality ��+10%�� | 240,738 | 10,837 | | Mortality ��-10%�� | 243,476 | 11,090 | | Morbidity ��+10%�� | 233,834 | 10,670 | | Lapse and surrender rates ��+10%�� | 244,122 | 10,844 | | Lapse and surrender rates ��-10%�� | 239,987 | 11,096 | | Expenses ��+10%�� | 238,589 | 10,395 | **Corporate governance** **Report of the Board of Directors and significant events** **I.** **Results and distributions** The net profit attributable to shareholders of the parent for the year 2023 included in the audited consolidated financial statements, prepared in accordance with the PRC GAAP, was RMB27.257 billion. The net profit for the year 2023 included in the audited financial statements of parent company, prepared in accordance with the PRC GAAP, was RMB10.980 billion. According to the Articles of Association and other applicable regulations, if the cumulative amount of statutory surplus reserves reaches 50% and above of the Company��s registered capital, no net profit shall be set aside as surplus reserves for the following years. The retained profits at the end of 2023 included in the financial statements of the parent company, prepared in accordance with the PRC GAAP, were RMB46.114 billion. Therefore, the profit distribution for 2023 is made based on the audited financial statements of the parent company. The Company intends to declare annual cash dividend of RMB1.02 per share (tax included). Based on the total share capital of 9,620,341,455 shares, the amount of dividend in aggregate will be RMB9,812,748,284.10 The remaining retained profits will be carried forward to 2024. No capital reserve was transferred to the share capital during the year. After cash dividend distribution, there will be no significant impact on the Group��s solvency ratio, and still meeting the requirements of regulators. No capital reserve was transferred to the share capital during any of the last three years. The above profit distribution proposal is subject to shareholders�� approval at the general meeting. Dividend distributions for the past three years are as follows: | | | | | | | --- | --- | --- | --- | --- | | **Year of dividend distribution** | **Cash dividend per share (including tax)****note****(1)** (RMB) | **Cash dividend (including tax)****note****(2)** (RMB million) | **Net profit attributable to the dividend distribution year****note****(3)** (RMB million) | **Payout ratio (%)** **(4) = (2)/(3)** | | 2023 | 1.02 | 9,813 | 27,257 | 36.0 | | 2022 | 1.02 | 9,813 | 24,609 | 39.9 | | 2021 | 1.00 | 9,620 | 26,834 | 35.9 | Note: Attributable to shareholders of the parent. Under the Articles of Association, the Company is committed to providing reasonable returns to its shareholders. Its profit distribution policy should be consistent and stable. The Company may make interim profit distribution, and gives first priority to cash dividend. The Articles of Association also stipulates that the accumulated cash dividend pay-outs in the recent 3 years shall not be less than 30% of the accumulated profits of the Company during the same period except when 1) the Company��s solvency adequacy ratio fails to meet NAFR minimum requirement, 2) wars or natural catastrophes have a major impact on its business performance and financial results, 3) there are major changes in its operating environment which have a major impact on its business performance and financial results, 4) there are significant adverse developments in the Company��s operation, or 5) laws, regulations and ordinances stipulate otherwise. The Company may adjust its profit distribution policy. Any such adjustment shall be proposed as a resolution of the board of directors on the basis of prudent studies and deliberations, with the issuance of opinions by independent directors, before being submitted as a special resolution to the general meeting for approval. The board of directors and the general meeting should hear and give full consideration of the opinions of the Company��s independent directors and investors, ensuring diverse channels of communication with them and readily subject themselves to their oversight on this matter. The Company��s cash dividend policy complies with the Articles of Association, contains clear and specific standards and pay-out ratios, and was formulated on the basis of proper decision-making procedures and mechanisms, considering opinions of the Company��s independent directors and offering protection of the legitimate rights and interests of its minority shareholders. The conditions for and the procedures of the amendments to the Company��s profits distribution policy are also transparent and compliant. Pursuant to the applicable provisions of the Enterprise Income Tax Law of the People��s Republic of China (PRC), in respect of the dividends received by eligible investors who invest in the Company��s GDRs listed on LSE, the Company will withhold and pay income tax at the rate of 10%. Citibank and National Association, as the nominal holders of domestic underlying A Shares corresponding to GDRs, receive the cash dividends distributed by the Company. If the dividend incomes obtained by GDR Investors are entitled to the treatment as stipulated/agreed in relevant tax treaties, applications for tax credit can be submitted on their own to the competent tax authorities according to regulations. **II. Fulfillment of the undertakings** During the reporting period, there were no undertakings the Company was required to disclose. **I****I****I. Appointment of auditors** Pursuant to the resolution of the 2022 annual general meeting, Ernst & Young Hua Ming LLP was engaged by the Company as the auditor of the financial statements and the auditor for the internal control for 2023, whilst undertaking duties required of auditors in accordance with Hong Kong Listing Rules. The year 2023 was the 2nd consecutive year when Ernst & Young Hua Ming LLP served as the Company��s auditor. The financial statements prepared in accordance with PRC GAAP (A share and H share) have been audited by Ernst & Young Hua Ming LLP. The engagement partner is Mr. GUO Hangxiang and the certified public accountants signing the report are Mr. GUO Hangxiang and Mr. WANG Ziqing. The year 2023 was the 2nd consecutive year when Mr. GUO Hangxiang served as the engagement partner and the certified public accountant signing the report. The year 2023 was the 2nd consecutive year when Mr. WANG Ziqing served as the certified public accountant signing the report. The remuneration paid to the auditors for provision of annual financial statements auditing service and internal control auditing service for 2023 was RMB23.5150 million and RMB2.5300 million, respectively. **I****V****.** **Change in accounting policies** The Ministry of Finance of the People's Republic of China promulgated and revised Accounting Standard for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, Accounting Standard for Business Enterprises No. 23 - Transfer of Financial Assets, Accounting Standard for Business Enterprises No. 24 - Hedge Accounting and Accounting Standard for Business Enterprises No. 37 ?C Presentation of Financial Instruments (collectively hereinafter referred to as the ��new financial instruments standards��) and Accounting Standard for Business Enterprises No. 25 - Insurance Contracts (hereinafter referred to as the "new insurance standard") in 2017 and 2020 sequentially. The Company adopted the new insurance standard and the new financial instruments standards from 1 January 2023 according to requirements. For detail information, please refer to Note IV of the Financial Report. **V. Material litigations and arbitrations** During the reporting period, the Company did not engage in any material litigation or arbitration which was required to be disclosed. **VI. Penalties and subsequent rectification** During the reporting period, there were no penalties or subsequent rectification the Company was required to disclose. **VII. Fulfilment of obligations** During the reporting period, the Company had no outstanding obligations such as unfulfilled obligations under rulings by courts of laws or payment in arrears involving large amounts. ### if !supportListsendif**VIII.** **Capital occupation** During the reporting period, there was no non-operating occupation of capital of the Company by controlling shareholders or other related parties. ### if !supportListsendif**IX.** **G****uarantee****contracts** During the reporting period, the Company did not enter into any guarantee contract that violated laws, administrative regulations or the external guarantee resolution procedures prescribed by the CSRC. ### if !supportListsendif**X.****Share option scheme** During the reporting period, the Company did not have any share option scheme, employee stock ownership plan, or other employee incentive measure which required disclosure. ### if !supportListsendif**XI. R****elated****party Transactions** **D****aily****related party transactions** In the ordinary course of business, at fair market price, the Company and its holding subsidiaries conducted daily transactions related to the fund utilization and the sales of financial products such as bond trading, securities investment funds, bond pledge-type repurchase, trust products, asset management products with multiple counterparties as well as daily related party transactions related to reinsurance business with Swiss Reinsurance Company Ltd. (��Swiss Reinsurance Company��). The 21th meeting of the 9th board of directors approved daily related party transactions related to fund utilization, financial products sales business and reinsurance business under the 2023 annual estimated cap of the Company and its holding subsidiaries with the related parties, and each single transaction was not required to be submitted separately to the board of directors or the shareholders�� general meeting for consideration and approval any more. The categorized summary of the daily related party transactions related to fund utilization, financial products sales business, and reinsurance business in 2023 was as follows: Unit: RMB million | | | | | | | | --- | --- | --- | --- | --- | --- | | **No.** | **Related Parties** | **Content of Transaction** | **Estimated Cap of Daily Related Party Transactions in 2023** | **Actual Amount as of 31 December 2023** | **Percentage (%) of the Amount of Transactions of the Same Type** | | 1 | Hwabao WP Fund Management Co., Ltd. | Fund subscription & redemption | 2,000 | 151 | 0.05% | | 2 | Orient Securities Company Limited | Bond Trading | 500 | 410 | 0.04% | | 3 | Hwabao Trust Co., Ltd. | Sales of Financial products | 1,500 | 58 | 0.01% | | 4 | Swiss Reinsurance Company | Reinsurance Business | 10,400 | 3,163 | 11.77% | The above-mentioned related party transactions related to daily operations were settled in cash, which were carried out by the Company in the ordinary course of business in accordance with normal commercial terms, and would not affect the independence of the Company. The above-mentioned daily related party transactions did not exceed the amount approved by the board of directors, and were disclosed in the annual report of the Company pursuant to the Listing Rules of the SSE and other regulatory provisions. **XII. Material contracts** **Entrusted investment management**. Investment is one of the main businesses of the Company, and the Company adopts a model of entrusted investment management. At present, a diversified entrusted investment management structure has been developed which is based on the internal managers within CPIC and supplemented by external managers. The internal investment managers mainly include CPIC AMC, Changjiang Pension and CPIC Capital; external investment managers include professional investment management agencies such as fund companies and securities firms and asset management companies. The Company selects investment managers based on the investment objectives and risk characteristics of a specific account or asset class, as well as investment manager's capabilities, and appropriately mitigates risks through the diversification and decentralization of asset types, investment strategies, and investment managers. The Company signs an entrusted investment management agreement with the investment managers, and guide their investment behaviour through investment guidelines, dynamic tracking communication, performance evaluation and other measures, and take targeted risk management measures based on the profile of investment assets. Save as disclosed above, during the reporting period, the Company did not have any material contracts which were required to be disclosed. **XIII. Performance of duties by the Board of Directors** Details of the performance of duties by the board of directors and its special committees during the reporting period are set out in the Section ��Corporate governance�� of this report. **XIV. Principal business** We are a leading comprehensive insurance group in the PRC, providing, through our subsidiaries, a broad range of life insurance, property and casualty insurance, specialised health insurance and pension products and services to individual and institutional customers throughout the country. We also manage and deploy our insurance funds as well as third party assets through our subsidiaries. **XV. Reserves** Details for reserves (including general reserves, other comprehensive income and retained profits) are shown in notes VII-33,34,35,36 and 54 to the financial statements. **XVI. Property and equipment and investment properties** Details for property and equipment and investment properties are shown in notes VII-17, 18 and 16 to the financial statements. **XVII. Financial summary** Summary of financial information is shown in the section ��Highlights of accounting and operation data�� of this report. **XVIII. Use of Proceeds Received from Issuance of GDRs** The GDRs issued by the Company were listed on the London Stock Exchange plc (the "Initial Offering") on 22 June 2020, and additional GDRs were issued due to the exercise of over-allotment option (the ��Over-allotment��) on 9 July 2020. A total of 111,668,291 GDRs were issued through the Initial Offering and Over-allotment at USD17.60 per GDR, raising a total proceeds of USD1,965,361,921.60. The differences between the beginning and ending balance of proceeds unused are mainly the proceeds used during the reporting period and the interest income generated by the raised funds. As of the end of the reporting period, the use of proceeds was as stated in the prospectus. As of the end of the reporting period, details of use of the above-said proceeds are as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | **Total proceeds** **raised** | **Proceeds** **unused as at the** **beginning of the** **reporting period** | **The intended use of proceeds raised** | **Proceeds** **used during** **the reporting** **period** | **Proceeds** **unused at the end of** **the reporting** **period** | **Plan for** **use of the** **unused** **funds** | | USD 1,965,361,921.60 | USD 1,013,761,418.89 | (1) 70% or more of the net proceeds will be used for gradually developing the Group��s businesses overseas, in the form of equity investments, partnerships and alliances, and mergers and acquisitions in both developed and emerging markets, supporting core insurance business growth; | - | USD597,014,298.54 and RMB 1,905,446,167.76note | (i) Less than USD127.5 million will be used to subscribe to the fund interests of HTCP CAPITAL LPF (̩���¾������޺ϻ����)�� (ii) Approximately RMB0.7 billion will be used for the establishment of a new company ( �Ϻ��н������Ϸ�չ�����ţ����޹�˾)  conducting health and retirement business;  (iii) Less than RMB0.432 billion will be used to subscribe for shares in Nanjing CPIC Phase II Health Care Industry Fund Management Partnership (Limited Partnership) (�Ͼ�̫�����ڴ󽡿���ҵ��������ϻ���ҵ�����޺ϻ) (iv) Less than RMB0.75 billion will be used to subscribe for shares in CPIC Health Industry Private Investment Fund (Shanghai) Partnership (Limited Partnership) ̫���󽡿���ҵ˽ļͶ�ʻ����Ϻ����ϻ���ҵ�����޺ϻ) (v) The remaining will be used in line with the Company's business development and market situation. | | (2) Up to 30%, or the remainder of the net proceeds, will be used for developing an overseas investment platform to invest in innovative businesses, such as healthcare, elderly care, and technology, leveraging CPIC's offshore investment capabilities; | Approximately USD22,500,000.00 (about 1.14% of the total proceeds) be used to subscribe to the fund interests of HTCP CAPITAL LPF (̩���¾������޺ϻ����). | | If the Company deems that the plan in any particular areas described above to be unachievable, the corresponding intended portion of the proceeds will be used to replenish its capital and for general corporate purposes. | (i)Approximately USD 64,747,533.15 (RMB 467 million, or 3.29% of the total proceeds), has been used to subscribe for shares in Nanjing CPIC Phase II Health Care Industry Fund Management Partnership (Limited Partnership) (�Ͼ�̫�����ڴ󽡿���ҵ��������ϻ���ҵ�����޺ϻ) (ii) Approximately USD 91,734,035.11 (RMB 662 million, or 4.67% of the total proceeds), has been used for general purposes. | Note: RMB1,905,446,167.76 is the balance of the raised funds that have been settled and not yet used. **XIX. Events after the balance sheet date** Events after the balance sheet date are shown in note XVII to the financial statements. **XX. Bank borrowings** The Company had no bank borrowings other than the bond issued by CPIC P/C and CPIC Life, and securities sold under agreements to repurchases of its investment business. For details of the bond issuance, please refer to note VII-28, 37 to the financial statements. **XXI. Charitable and other donations** During the reporting period, the Company made charitable and other donations totalling approximately RMB65.9843 million. **XXII. Share capital and sufficient public float** The changes in the Company��s share capital are shown in the Section ��Changes in the share capital and shareholders�� profile�� of this report. Based on the information that is publicly available and within the knowledge of the directors as at the latest practicable date prior to the printing of this report, since 12 January 2011, not less than 25% of the total issued share capital of the Company was held in public hands and not less than 15% of the H share capital of the Company was held in public hands, which is consistent with the requirements under Hong Kong Listing Rules to maintain a minimum public float. **XXIII. Management contract** During the reporting period, the Company did not enter into any management contract by which a person or entity undertakes the management and administration of the whole or any substantial part of any business of the Company. **XXIV. Directors, supervisors and senior management** Biographies of the Company��s current directors, supervisors and senior management are shown in the Section ��Directors, supervisors, senior management and employees�� of this report. **XXV. Directors�� and supervisors�� interests in competing business** As far as the Company is aware, during the reporting period, none of the Company��s directors or supervisors has any interests in businesses which, directly or indirectly, compete with the Company��s businesses. **XXVI. Directors�� and supervisors�� service contracts and remunerations** None of the Company��s directors or supervisors has entered into any service contract with the Company or its subsidiaries which is not terminable within one year, or terminable only when receiving compensation other than the statutory compensation. Details for the directors�� and supervisors�� remunerations are shown in the Section ��Directors, supervisors, senior management and employees�� of this report. **XXVII. Special committees of the board of directors** The board of directors of the Company established five special committees, namely the Strategic and Investment Decision-Making & ESG Committee, the Audit Committee, the Nomination and Remuneration Committee, the Risk Management and Related Party Transactions Control Committee, and the Technological Innovation and Consumer Rights Protection Committee. See the Section ��Corporate governance�� of this report for details of the special committees of the board of directors. **XXVIII. Directors�� and supervisors�� interests in material transactions, arrangements or contracts** As far as the Company is aware, during the reporting period, the directors and supervisors (and/or its connected entities) of the Company did not have any material interest, whether directly or indirectly, in any transaction, arrangement or contract which was significant to the Company��s business and which was entered into by the Company or any of its subsidiaries. None of the directors or supervisors of the Company has entered into any service contract which is not terminable by the Company within one year without payment of compensation (other than statutory compensation). **XXIX. Directors�� and supervisors�� rights to subscribe for shares or bonds** The Company did not grant to any directors, supervisors or their respective spouses or children under 18 years of age any rights to subscribe for or to acquire shares or bonds of the Company or its subsidiaries. **XXX. Interest****s****and short positions of directors, supervisors and senior management in shares****, underlying shares or debentures** So far as the directors of the Company are aware, as at 31 December 2023, the following directors, supervisors or senior management of the Company had an interest or short position in shares, underlying shares or debentures of the Company which was required, pursuant to Section 352 of the SFO, to be entered in the register maintained by the Company or which was required to be notified to the Company and SEHK pursuant to the Model Code for Securities Transactions. | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | **Name** | **Position** | **Capacity** | **Type of shares** | **Number of shares** | **Percentage of shareholdings in the class of shares issued (%)** | **Percentage of the total shares issued (%)** | | KONG Qingwei | Chairman and an executive directornote1 | Beneficial owner | H shares | 21,800 (L) | 0.00 (L) | 0.00 (L) | | Beneficial owner | A shares | 28,800 (L) | 0.00 (L) | 0.00 (L) | | FU Fan | Executive director and presidentnote 2 | Beneficial owner | H shares | 175,000 (L) | 0.01 (L) | 0.00 (L) | (L) denotes a long position Notes: 1. On 26 January, 2024, in light of his age, Mr. KONG Qingwei resigned from his position as executive director of the Company, and ceased to serve as the chairman of the Board. 2. On 26 January, 2024, due to work adjustment, Mr. FU Fan resigned from his position as president of the Company. At the Board meeting held on 11 December 2023, the Board agreed to appoint Mr. FU Fan as the chairman of the Board and his appointment qualification was approved by the NAFR in January 2024. The term of office of Mr. FU Fan as the chairman of the Board commenced on 26 January 2024. The detailed shareholdings of directors, supervisors and senior management are set out in the section ��Directors, Supervisors and Senior Management�� of this report. Save as disclosed in this report, as at 31 December 2023, the directors of the Company were not aware that there was any directors, supervisors or senior management of the Company who had any interest or short position in shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which was required, pursuant to Section 352 of the SFO, to be entered in the register maintained by the Company or which was required to be notified to the Company and SEHK pursuant to the Model Code for Securities Transactions. **XXXI. Interests and short positions of substantial shareholders and other persons in the shares and underlying shares** So far as the directors of the Company are aware, as at 31 December 2023, the following persons (excluding the directors, supervisors or senior management of the Company) had an interest or short position in the shares or underlying shares of the Company which shall be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which, pursuant to Section 336 of the SFO, shall be entered in the register maintained by the Company: | | | | | | | | --- | --- | --- | --- | --- | --- | | **Name of substantial shareholders** | **Capacity** | **Type of shares** | **Number of shares** | **Percentage of shareholdings in the class of shares issued (%)**note 1 | **Percentage of the total shares issued (%)**note 1 | | Schroders PLCnote 2 | Investment manager | H shares | 388,238,352 (L) | 13.99(L) | 4.04(L) | | JPMorgan Chase & Co.note 3 | Interest of corporation controlled by JPMorgan Chase & Co. | H shares | 17,144,345(L) 18,244,530(S) | 0.62(L) 0.65(S) | 0.18(L) 0.19(S) | | Investment manager | H shares | 124,852,800(L) | 4.50(L) | 1.30(L) | | Approved lending agent | H shares | 74,452,244(L) 74,452,244(P) | 2.68(L) 2.68 (P) | 0.77(L) 0.77(P) | | �Ϻ�???H��?F���޹�˾note 4 | Beneficial owner | H shares | 192,068,400 (L) | 6.92 (L) | 2.00 (L) | | Interest of corporation controlled by�Ϻ�???H��?F���޹�˾ | H shares | 6,428,400 (L) | 0.23 (L) | 0.07(L) | | BlackRock, Inc.note 5 | Interest of corporation controlled by BlackRock, Inc. | H shares | 164,011,239(L) 226,000 (S) | 5.91 (L) 0.01(S) | 1.70(L) 0.00(S) | (L) denotes a long position; (S) denotes a short position; (P) denotes a lending pool Notes: 1. As at 31 December, 2023, the Company issued a total of 9,620,341,455 shares, including 6,845,041,455 A shares and 2,775,300,000 H shares. 2. Pursuant to Part XV of the SFO, as at 31 December 2023, Schroders PLC is deemed or taken to be interested in a total of 388,238,352 H shares (long position) of the Company. The details of the shareholding interests of the companies directly or indirectly controlled by Schroders PLC are set out below: | | | | --- | --- | | **Name of controlled****company** | **Number of shares** | | Schroder Administration Limited | 388,238,352 (L) | | Schroder International Holdings Limited | 388,238,352 (L) | | Schroder Investment Management (Hong Kong) Limited | 117,572,618 (L) | | Schroder Investment Management (Singapore) Ltd. | 109,262,400 (L) | | Schroder Investment Management Limited | 111,930,600 (L) | | Schroder Investment Management Limited | 49,472,734 (L) | | Schroder Investment Management North America Limited | 49,472,734 (L) | (L) denotes a long position 3. Pursuant to Part XV of the SFO, as at 31 December 2023, JPMorgan Chase & Co. is deemed or taken to be interested in a total of 216,449,389 H shares (long position), 18,244,530 H shares (short position) and 74,452,244 H shares (lending pool) of the Company. The details of the shareholding interests of the company directly or indirectly controlled by JPMorgan Chase & Co. are set out below: | | | | --- | --- | | **Name of controlled** **company** | **Number of shares** | | JPMorgan Asset Management (China) Company Limited | 610,600 (L) | | JPMorgan Asset Management (Taiwan) Limited | 4,083,400 (L) | | J.P. Morgan SE | 1,240 (L) | | J.P. Morgan Securities LLC | 818,196 (L) 818,196 (S) | | JPMORGAN CHASE BANK, N.A. - LONDON BRANCH | 74,452,244 (L) | | JPMORGAN ASSET MANAGEMENT (UK) LIMITED | 1,543,800 (L) | | J.P. Morgan Investment Management Inc. | 8,766,200 (L) | | J.P. Morgan Prime Inc. | 14,800 (L) 14,800 (S) | | JPMorgan Chase Bank, National Association | 3,818,184 (L) 895,984 (S) | | JPMorgan Asset Management (Asia Pacific) Limited | 106,925,400 (L) | | J.P. MORGAN SECURITIES PLC | 15,415,325 (L) 16,515,550 (S) | | JPMorgan Asset Management Holdings Inc. | 121,929,400 (L) | | JPMorgan Chase Holdings LLC | 122,762,396 (L) 832,996 (S) | | JPMorgan Asset Management (Asia) Inc. | 111,008,800 (L) | | J.P. Morgan International Finance Limited | 15,416,565 (L) 16,515,550 (S) | | JPMorgan Chase Bank, National Association | 89,868,809 (L) 16,515,550 (S) | | J.P. Morgan Broker-Dealer Holdings Inc. | 832,996 (L) 832,996 (S) | | JPMORGAN ASSET MANAGEMENT INTERNATIONAL LIMITED | 1,543,800 (L) | | J.P. Morgan Securities LLC | 14,800 (L) 14,800 (L) | | J.P. MORGAN CAPITAL HOLDINGS LIMITED | 15,415,325 (L) 16,515,550 (S) | (L) denotes a long position 4. Pursuant to Part XV of the SFO, as at 31 December 2023, �Ϻ����ʼ������޹�˾ is deemed or taken to be interested in a total of 198,496,800 H shares (long position) of the Company. The details of the shareholding interests of the company directly or indirectly controlled by �Ϻ����ʼ������޹�˾are set out below: | | | | --- | --- | | **Name of controlled** **company** | **Number of shares** | | �Ϻ�???H��?F����ۣ����޹�˾ | | | | --- | | 6,428,400 (L) | | 5. Pursuant to Part XV of the SFO, as at 31 December 2023, BlackRock, Inc. is deemed or taken to be interested in a total of 164,011,239 H shares (long position) and 226,000 H shares (short position) of the Company. The details of the shareholding interests of the companies directly or indirectly controlled by BlackRock, Inc. are set out below: | | | | --- | --- | | **Name of controlled****company** | **Number of shares** | | Trident Merger, LLC | 2,914,400 (L) | | BlackRock Investment Management, LLC | 1,009,600 (L) | | BlackRock Investment Management, LLC | 1,904,800 (L) | | BlackRock Holdco 2, Inc. | 161,096,839 (L) 226,000 (S) | | BlackRock Financial Management, Inc. | 150,908,273 (L) 132,400 (S) | | BlackRock Financial Management, Inc. | 10,188,566 (L) 93,600 (S) | | BlackRock Holdco 4, LLC | 100,671,861 (L) 132,400 (S) | | BlackRock Holdco 6, LLC | 100,671,861 (L) 132,400 (S) | | BlackRock Delaware Holdings Inc. | 100,671,861 (L) 132,400 (S) | | BlackRock Institutional Trust Company, National Association | 39,960,461 (L) 132,400 (S) | | BlackRock Fund Advisors | 60,711,400 (L) | | BlackRock Capital Holdings, Inc. | 103,000 (L) | | BlackRock Advisors, LLC | 103,000 (L) | | BlackRock International Holdings, Inc. | 50,133,412 (L) | | BR Jersey International Holdings L.P. | 50,133,412 (L) | | BlackRock Lux Finco S.à r.l. | 3,016,083 (L) | | BlackRock Japan Holdings GK | 3,016,083 (L) | | BlackRock Japan Co., Ltd. | 3,016,083 (L) | | BlackRock Holdco 3, LLC | 42,666,545 (L) | | BlackRock Canada Holdings LP | 633,000 (L) | | BlackRock Canada Holdings ULC | 633,000 (L) | | BlackRock Asset Management Canada Limited | 633,000 (L) | | BlackRock Australia Holdco Pty. Ltd. | 1,186,400 (L) | | BlackRock Investment Management (Australia) Limited | 1,186,400 (L) | | BlackRock (Singapore) Holdco Pte. Ltd. | 6,280,467 (L) | | BlackRock HK Holdco Limited | 5,350,667 (L) | | BlackRock Asset Management North Asia Limited | 2,334,584 (L) | | BlackRock Cayman 1 LP | 42,033,545 (L) | | BlackRock Cayman West Bay Finco Limited | 42,033,545 (L) | | BlackRock Cayman West Bay IV Limitied | 42,033,545 (L) | | BlackRock Group Limited | 42,033,545 (L) | | BlackRock Finance Europe Limited | 20,526,773 (L) | | BlackRock (Netherlands) B.V. | 150,800 (L) | | BlackRock (Netherlands) B.V. | 9,186,680 (L) | | BlackRock Advisors (UK) Limited | 411,226 (L) | | BlackRock International Limited | 462,913 (L) | | BlackRock Group Limited-Luxembourg Branch | 21,043,859 (L) | | BlackRock Luxembourg Holdco S.à r.l. | 21,043,859 (L) | | BlackRock Investment Management Ireland Holdings Limited | 20,836,259 (L) | | BlackRock Asset Management Ireland Limited | 20,836,259 (L) | | BLACKROCK (Luxembourg) S.A. | 172,000 (L) | | BlackRock Investment Management (UK) Limited | 6,858,255 (L) | | BlackRock Investment Management (UK) Limited | 3,919,812 (L) | | BlackRock (Netherlands) B.V. ?C German Branch ?C Frankfurt BlackRock | 150,800 (L) | | BlackRock Asset Management Deutschland AG | 150,800 (L) | | BlackRock Fund Managers Limited | 6,858,255 (L) | | BlackRock Life Limited | 462,913 (L) | | BlackRock (Singapore) Limited | 929,800 (L) | | BlackRock UK Holdco Limited | 35,600 (L) | | BlackRock Asset Management Schweiz AG | 35,600 (L) | | EG Holdings Blocker, LLC | 1,009,600 (L) | | Amethyst Intermediate, LLC | 1,009,600 (L) | | Aperio Holdings, LLC | 1,009,600 (L) | | Aperio Holdings, LLC | 1,009,600 (L) | | Aperio Group, LLC | 1,009,600 (L) | (L) denotes a long position; (S) denotes a short position Save as disclosed above, as at 31 December 2023, the directors of the Company were not aware that there was any other person (other than the directors, supervisors or senior management of the Company) who had interests or short positions in the shares or underlying shares of the Company which were required, pursuant to Section 336 of the SFO, to be entered in the register maintained by the Company. Specifics on the shareholdings by the Company��s top ten shareholders are set out in the section ��Changes in the Share Capital and Shareholders�� Profile�� of this report. **XXXII. Purchase, redemption or sale of the Company��s** **listed****securities** During the reporting period, neither the Company nor its subsidiaries purchased, sold or redeemed any listed securities of the Company. **XXXIII. P****re****-emptive rights** According to the relevant PRC laws and under the Articles of Association, none of the Company��s shareholders have any pre-emptive rights, and the Company does not have any arrangement in respect of share options. **XXXIV. Permitted indemnity provisions** During the reporting period and up to the date of this annual report, the Company has undertaken and maintained a collective liability insurance policy covering, among others, all directors of the Company. **XXXV. Business View** A fair review of the business of the Company, the principal risks and uncertainties facing the Company, particulars of important events affecting the Company and the outlook of the Company��s business are provided in Sections ��Chairman��s statement��, ��Operation overview��, ��Review and analysis of operating results�� and the relevant notes to financial statements in the Section ��Financial report�� of this report. In addition, more details regarding the Company��s performance by reference to financial key performance indicators, compliance with relevant laws and regulations which have a significant impact on the Company, as well as relationships with major stakeholders are provided in Sections ��Chairman��s statement��, ��Operation overview��, ��Review and analysis of operating results��, ��Directors, supervisors, senior management and employees�� and ��Corporate governance�� of this report. **Changes in the share capital and shareholders�� profile** **I. C****hanges****in share capital** The table below shows the Company��s share capital as at the end of the reporting period: Unit: share | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | **Before change** | | **Increase or decrease (+ or -)** | | | | | **After change** | | | | **Amount** | **Percentage (%)** | **New shares issued** | **Bonus shares** | **Transfer from reserve****s** | **Others** | **Sub-total** | **Amount** | **Percentage (%)** | | 1. Shares with selling restrictions | | | | | | | | | | | (1) State-owned shares | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | | (2) State-owned enterprises shares | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | | (3) Other domestic shares | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | | held by | | | | | | | | | | | legal entities | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | | natural persons | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | | (4) Foreign shares | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | | held by | | | | | | | | | | | legal entities | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | | natural persons | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | | Total | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | ?C | | 2. Shares without selling restrictions | | | | | | | | | | | (1) Ordinary shares denominated in RMB | 6,845,041,455 | 71.15 | - | - | - | - | - | 6,845,041,455 | 71.15 | | (2) Domestically listed foreign shares | - | - | - | - | - | - | - | - | - | | (3) Overseas listed foreign shares (H share) | 2,775,300,000 | 28.85 | - | - | - | - | - | 2,775,300,000 | 28.85 | | (4) Others | - | - | - | - | - | - | - | - | - | | Total | 9,620,341,455 | 100.00 | - | - | - | - | - | 9,620,341,455 | 100.00 | | 3. Total number of shares | 9,620,341,455 | 100.00 | - | - | - | - | - | 9,620,341,455 | 100.00 | **II. Shareholders** **(I) Number of shareholders and their shareholdings** As at the end of the reporting period, the Company had no shares with selling restrictions. Unit: share | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Total number of shareholders as at the end of the reporting period: 125,563 (including121,556 A shareholders and 4,007 H shareholders) Total number of shareholders as at the end of February 2024: 114,561 (including 110,564 A shareholders and 3,997 H shareholders) | | | | | | | | | **Shares held by top 10 shareholders****as at the end of the reporting perio****d** | | | | | | | | | **Name of shareholders** | **Nature of shareholders** | **Percentage of the shareholding** | **Total number of shares held** | **Increase or decrease (+ or -) of shareholding during the reporting period** | **N****umber of shares held with selling restriction** | **Number of shares subject to pledge or lock-up period** | **Type of shares** | | HKSCC Nominees Limited | Overseas legal entity | 28.82% | 2,772,583,107 | +52,880 | - | - | H Share | | Shenergy (Group) Co., Ltd. | Domestic legal entity | 14.05% | 1,352,129,014 | - | - | - | A Share | | Hwabao Investment Co., Ltd. | Domestic legal entity | 13.35% | 1,284,277,846 | - | - | - | A Share | | Shanghai State-Owned Assets Operation Co., Ltd. | Domestic legal entity | 6.34% | 609,929,956 | - | - | - | A Share | | Shanghai Haiyan Investment Management Company Limited | Domestic legal entity | 4.87% | 468,828,104 | -�� | - | - | A Share | | China Securities Finance Co., Ltd. | Others | 2.82% | 271,089,843 | -�� | - | - | A Share | | HKSCC | Others | 2.46% | 236,525,992 | +38,416,359 | - | - | A Share | | Shanghai International Group | Domestic legal entity | 1.66% | 160,000,000 | - | - | - | A Share | | Yunnan Hehe (Group) Co., Ltd. | State-owned legal person | 0.95% | 91,868,387 | -�� | - | - | A Share | | Shanghai Jiushi (Group) Co., Ltd. | State-owned legal person | 0.93% | 89,737,760 | -1,141,900 | - | - | A Share | | Description of the stock repurchase accounts of the top 10 shareholders | None. | | | | | | | | Description of the aforesaid shareholders' proxy voting rights, entrusted voting rights, and waiver of voting rights | Entrusted by its parent company, China Baowu Steel Group, Hwabao Investment Co., Ltd. exercises the voting rights corresponding to 68,818,407 ordinary shares (A share) of China Baowu Steel Group. Apart from this, the Company is not aware of any other proxy voting rights, entrusted voting rights, and waiver of voting rights of the aforesaid shareholder. | | | | | | | | Description of related relations or concerted actions among the aforesaid shareholders | HKSCC Nominees Limited and HKSCC are related, as the former is a wholly-owned subsidiary of the latter. Shanghai State-Owned Assets Operation Co., Ltd. is a wholly-owned subsidiary of Shanghai International Group, they act in concert. As was confirmed by relevant shareholders regarding the Company��s inquiry, the Company is not aware of any other related relations or concerted actions among the above-mentioned shareholders. | | | | | | | | Description of securities margin trading and refinancing business by top 10 shareholders and top 10 shareholders without selling restrictions. | As at the beginning of the reporting period, the number of shares held by Shanghai Jiushi (Group) Co., Ltd. was 90,879,660, a shareholding percentage of 0.94%, and the number of shares lent and yet to be returned by Shanghai Jiushi was 69,800, representing 0.0007% of the total share capital of the Company. As at the end of the reporting period, the number of shares lent and yet to be returned by Shanghai Jiushi (Group) Co., Ltd. was 1,211,700, making up 0.01% of the Company's total share capital. Thus, the shares held by and those lent by Shanghai Jiushi totalled 90,949,460 shares, accounting for 0.95% of the Company's total share capital. | | | | | | | Notes: 1. As at the end of the reporting period, the Company did not issue any preferred shares. 2. The shareholding of the top 10 shareholders is based on the lists of registered shareholders provided by China Securities Depository and Clearing Corporation Limited Shanghai Branch (A share) and Computershare Hong Kong Investor Services Limited (H share) respectively. The nature of A shareholders is the same as the nature of their accounts registered with China Securities Depository and Clearing Corporation Limited Shanghai Branch. 3. The shares held by HKSCC Nominees Limited are held on behalf of its clients. As SEHK does not require such shareholders to disclose to HKSCC Nominees Limited whether the shares held by them are subject to pledge or lock-up period, HKSCC Nominees Limited is unable to calculate, or make available such data. Pursuant to Part XV of the SFO, a Substantial Shareholder is required to give notice to SEHK and the Company on the occurrence of certain events including a change in the nature of its interest in shares such as the pledging of its shares. As at the end of the reporting period, the Company is not aware of any such notices from Substantial Shareholders under Part XV of the SFO. 4. HKSCC is the nominal holder of shares traded through Shanghai-Hong Kong Connect Programme. **(II)****Controlling shareholders or de facto controllers** The ownership structure of the Company is diversified. The ultimate controllers of the Company��s major shareholders do not exercise control over the Company and the Company has no controlling shareholder, nor de facto controllers. **(III) Particulars of shareholders with a shareholding percentage higher than 5%** As at the end of the reporting period, the following are the shareholders with a shareholding percentage higher than 5%: 1. Shenergy (Group) Co., Ltd. Shenergy Group Co., Ltd. was established on 18 November 1996 with a registered capital of RMB280 billion. Its legal representative is HUANG Dinan. Its main businesses include investment in, development and management of electricity and energy industries, investment in natural gas resources, investment in urban gas pipeline networks, investment and management of high-tech industries, real industry investment, asset operation, and domestic trade (excluding special provisions). 2. Hwabao Investment Co., Ltd. Hwabao Investment Co., Ltd. was established on 21 November 1994 and has a registered capital of RMB9.369 billion, with HU Aimin as its legal representative. Its main businesses include investment and investment management in the metallurgy industry and relevant industries, investment consulting, business consulting service (excluding brokerage) and property title brokerage. Hwabao Investment Co., Ltd. is a wholly owned subsidiary of China Baowu Steel Group Corporation. 3. Shanghai State-Owned Assets Operation Co., Ltd. Shanghai State-Owned Assets Operation Co., Ltd. was established on 24 September 1999 with a registered capital of RMB5.5 billion. Its legal representative is GUAN Wei. Its main businesses include entrepreneurial investments, capital operations, acquisition, enhancement and transfer of assets, enterprise and asset custody, debt restructuring, property title brokerage, real estate agency, financial consultancy, investment consultancy, and consulting services related to its scope of businesses, as well as the provision of guarantee related to its asset management and capital operation businesses. The following chart sets forth the connection between the Company and the ultimate controllers of our substantial shareholders as at the end of the reporting period: ![]() Notes: 1. China Baowu Steel Group Corporation and its subsidiary, Hwabao Investment Co., Ltd., hold in aggregate 1,353,096,253 A Shares in the Company, representing 14.06% of the entire share capital of the Company. 2. Shanghai State-Owned Assets Operation Co., Ltd. and its subsidiary, Shanghai Guoxin Investment and Development Co., Ltd., both under control of Shanghai International Group Co., Ltd., hold in aggregate 802,954,107 A Shares in the Company, representing 8.35% of the entire share capital of the Company. **Directors, supervisors, senior management and employees** **I.****Directors, supervisors and senior management** **(****I) Summary** Unit: RMB 10,000 | | | | | | | | --- | --- | --- | --- | --- | --- | | **Name** | **Position** | **Gender** | **Date of birth** | **Term of office** | **Total Remuneration** **payable** **from the Company (****before** **tax)****during the reporting period** | | **Incumbent Directors, Supervisors and Senior Management** | | | | | | | FU Fan | Chairman | M | Oct. 1964 | Since Jan. 2024 | 138.8 | | Executive director | Since Jun. 2020 | | HUANG Dinan | Non-executive director and vice chairman | M | Dec. 1966 | Since Jun. 2019 | Note 7 | | WANG Tayu | Non-executive director | M | Oct. 1970 | Since Jun. 2017 | 30 | | CHEN Ran | Non-executive director | M | Jan. 1984 | Since Jan. 2021 | 30 | | ZHOU Donghui | Non-executive director | M | Apr. 1969 | Since Jan. 2021 | Note 7 | | LU Qiaoling | Non-executive director | F | Mar. 1966 | Since Mar. 2021 | 30 | | John Robert Dacey | Non-executive director | M | May. 1960 | Since Mar. 2021 | Note 7 | | LIU Xiaodan | Independent non-executive director | F | Jun. 1972 | Since Jan. 2021 | 35 | | LAM Tyng Yih, Elizabeth | Independent non-executive director | F | Oct. 1964 | Since Jul. 2019 | 35 | | LO Yuen Man, Elaine | Independent non-executive Director | F | Jan. 1954 | Since Jul. 2023 | 12.5 | | CHIN Hung I, David | Independent non-executive Director | M | Jun. 1968 | Since Feb. 2024 | - | | JIANG Xuping | Independent non-executive director | M | May. 1955 | Since Aug. 2019 | 35 | | ZHU Yonghong | Chairman of board of supervisors and shareholder representative supervisor | M | Jan. 1969 | Since Jul. 2018 | Note 7 | | LU Ning | Shareholder representative supervisor | M | Sept. 1968 | Since Jul. 2018 | Note 7 | | GU Qiang | Employee representative supervisor | M | Jan. 1967 | Since Jan. 2021 | 235.6 | | ZHAO Yonggang | President | M | Nov.1972 | Since Jan. 2024 | - | | YU Bin | Vice president | M | Aug. 1969 | Since Oct. 2018 | 127.6 | | MA Xin | Vice president | M | Apr. 1973 | Since Dec. 2018 | 128.6 | | ZHANG Yuanhan | Finance responsible person | M | Nov. 1967 | Since Jun. 2019 | 488.4 | | Chief actuary | Since Jan. 2013 | | ZHANG Weidong | Chief compliance officer | M | Oct. 1970 | Since Jun. 2016 | 312.2 | | General counsel | Since Oct. 2018 | | Interim chief risk officer | Since Oct. 2023 | | CHEN Wei | Chief administrative officer | M | Apr. 1967 | Since Nov. 2021 | 334.7 | | SU Shaojun | Board secretary | M | Feb. 1968 | Since Mar.2021 | 298.5 | | SU Gang | Chief investment officer | M | Sept.1973 | Since Jan. 2022 | 428.8 | | ZHOU Xiaonan | Chief internal auditor | M | Apr. 1966 | Since Jul. 2022 | 339.3 | | Internal auditing responsible person | Since Oct. 2022 | | ZHANG Yuhua | Market development director | M | Nov. 1967 | Since Jul. 2023 | 145.9 | | **Departed** **Directors, Supervisors and Senior Management** | | | | | | | KONG Qingwei | Chairman and executive director | M | Jun. 1960 | Jun. 2017 - Jan. 2024 | 122.9 | | FU Fan | President | M | Oct. 1964 | Mar.2020 - Jan. 2024 | as abovementioned | | WU Junhao | Non-executive director | M | Jun. 1965 | Jul. 2012 ?C Feb. 2024 | Note 7 | | WOO Ka Biu, Jackson | Independent non-executive Director | M | Sept.1962 | Mar. 2021 ?C Jul. 2023 | 17.5 | | CHEN Jizhong | Independent non-executive director | M | Apr. 1956 | Jul. 2019-Feb.2024 | Note 7 | | JI Zhengrong | Employee representative supervisor | M | Dec. 1963 | Apr. 2019-Feb. 2024 | 114.4 | | Vice chairman of the board of supervisors | Aug. 2019-Feb. 2024 | | SUN Peijian | Chief risk officer | M | Sept.1963 | Mar.2021-Oct. 2023 | 332.5 | | SHENG Yafeng | Director of Greater Bay Area development | M | Jul. 1965 | May. 2021-Jan. 2024 | - | | **Total** | **3,773.2** | | | | | Notes: if !supportLists1. endifTotal remuneration payable (before tax) listed in this table includes basic salaries, bonuses, allowances, subsidies, employee welfare and various insurance premiums, provident funds, annuities, and other forms of remuneration received from the Company payable in 2023. According to*Provisional Guidelines on Compensation Management of Insurance Companies* (Bao Jian Fa (2012) No. 63) and relevant policies and rules of the Company, performance-related remuneration of the Company��s senior management takes the form of deferred payment, which is included in total remuneration payable (before tax) listed in this table. if !supportLists2. endifThe Nomination and Remuneration Committee of the 10th Board of Directors of the Company held the second meeting of 2024 on 28 March 2024, deliberated and passed the Proposal on the Results of the 2023 Annual Performance Appraisal, and submitted it to the second meeting of the 10th Board of Directors of the Company for consideration on 28 March 2024. if !supportLists3. endifThe directors of the Company recused themselves from the discussion of their remuneration at the board meeting. if !supportLists4. endifEach director and supervisor of the Company is appointed for a term of 3 years and is eligible for re-election and re-appointment. Each independent non-executive director is not allowed to serve a consecutive term of more than 6 years. if !supportLists5. endifAccording to relevant policies, the final amounts of remunerations of the chairman, president, vice chairman of the board of supervisors, and vice presidents are yet to be reviewed and approved. The final remuneration will be disclosed when confirmed. In accordance with the requirements of relevant policies, and after assessment and confirmation by the competent authorities, the supplemental disclosure of the remuneration of the above personnel during the relevant tenure in the Company in 2022, excluding the amount disclosed in 2022 annual report, is as follows: Mr. KONG Qingwei RMB734,000, Mr. FU Fan RMB2.716 million, Mr JI Zhengrong RMB 632,000, Mr. YU Bin RMB2.355 million, Mr. MA Xin RMB2.275 million. if !supportLists6. endifThe compensation for the Company's directors, supervisors and senior management was calculated based on their actual term of office during the reporting period. if !supportLists7. endifMr. HUANG Dinan, Mr. WU Junhao, Mr. ZHOU Donghui, Mr. John Robert Dacey, Mr. ZHU Yonghong, and Mr. LU Ning do not take any allowances from the Company. Mr. CHEN Jizhong does not take any allowances from the Company for the time being. if !supportLists8. endifDuring the reporting period, Mr. HUANG Dinan and Mr. WU Junhao received remuneration from Shenergy (Group) Co., Ltd.; Mr. WANG Tayu received remuneration from Shanghai International Group Co., Ltd.; Mr. CHEN Ran received remuneration from Hwabao Investment Co., Ltd.; Mr. ZHOU Donghui received remuneration from Shanghai Tobacco Group Company Limited; Ms. LU Qiaoling received remuneration from China Baowu Steel Group Corporation Limited; Mr. John Robert Dacey received remuneration from Swiss Reinsurance Company Ltd; Ms. LIU Xiaodan received remuneration from Chenyi Investment (Beijing) Co., Ltd.; Mr. WOO Ka Biu, Jackson received remuneration from Kailey Enterprises Limited; Ms. LO Yuen Man, Elaine received remuneration from Jingtian & Gongcheng LLP; and Mr. ZHU Yonghong received remuneration from China Baowu Steel Group Corporation Limited. if !supportLists9. endifIn December 2023, the Company held the 29th session of the 9th Board of Directors, at which the Resolution in relation to the Election of Mr. FU Fan as Chairman of the 9th Board of Directors of China Pacific Insurance (Group) Co., Ltd. was considered and passed. In accordance with relevant regulatory provisions, the qualification of Mr. FU Fan as chairman of the Board of Directors of the Company shall take effect upon the approval by the NAFR, and Mr. KONG Qingwei will continue to perform the duties of chairman of the Board of Directors of the Company until the qualification of Mr. Fu Fan is approved by the NAFR. In January 2024, Mr FU Fan's qualification to serve as chairman of the Company was approved by the NAFR, and on the same day, Mr KONG Qingwei ceased to serve as chairman of the Board of Directors and Executive Director, and Mr. FU Fan ceased to serve as president of the Company. if !supportLists10. endifIn January 2024, Mr. ZHAO Yonggang's qualification to serve as president of the Company was approved by the NAFR. In February 2024, Mr. ZHAO Yonggang was elected at the first extraordinary general meeting of 2024 as Director of the 10th Board of Directors of the Company, and Mr. ZHAO's qualification to serve as Director of the Company is yet to be approved by the NAFR. if !supportLists11. endifIn March 2023, Mr. WOO Ka Biu, Jackson resigned from his position as Independent Non-executive Director of the Company due to work arrangement. Given the fact that Mr. WOO's resignation would result in the number of independent directors of the Company falling below the number required by relevant regulatory requirements and the Articles of Association of the Company, Mr. WOO continued to perform his duties until the qualification of the new independent director is approved by the NAFR. In July 2023, the qualification of Ms. LO Yuen Man, Elaine to serve as Independent Director of the Company was approved by the NAFR, and Ms. LO succeeded Mr. WOO as Independent Non-executive Director of the 9th Board of Directors of the Company. On the same day, Mr. WOO Ka Biu, Jackson ceased to serve as Director of the Company. if !supportLists12. endifIn October 2023, Mr. CHEN Jizhong resigned from his position as Independent Non-executive Director of the Company due to personal reasons. In view of the fact that Mr. CHEN's resignation would result in the number of independent directors of the Company falling below the number required by relevant regulatory requirements and the Articles of Association of the Company, Mr. CHEN Jizhong continued to perform his duties until the qualification of the new independent director is approved by the NAFR. In February 2024, the qualification of Mr. CHIN Hung I, David to serve as Independent Director of the Company was approved by the NAFR. Mr. CHIN succeeded Mr. CHEN Jizhong as Independent Non-executive Director of the 9th Board of Directors the Company. On the same day, Mr. CHEN Jizhong ceased to serve as Director of the Company. if !supportLists13. endifIn July 2023, the qualification of Mr. ZHANG Yuhua was approved by the NAFR. In October 2023, due to his age, Mr. SUN Peijian ceased to hold the position of chief risk officer of the Company and Mr. ZHANG Weidong was designated to perform the role of interim chief risk officer. In January 2024, due to job changes, Mr. SHENG Yafeng ceased to serve as Director of Greater Bay Area Development of the Company. In February 2024, Mr. JI Zhengrong ceased to serve as vice chairman of the Board of Supervisors and Employee Representative Supervisor of the Company due to his age. **(II)** **Share****holdings** Unit: share | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | **Name** | **Position** | **Type of shares** | **Shareholding at the beginning of the reporting period** | **Increase in shareholding during the reporting period** | **Decrease in shareholding during the reporting period** | **Shareholding at the end of the reporting period** | **Reason for the change** | | FU Fan | President, executive director | H share | 107,400 | 67,600 | - | 175,000 | Secondary market transaction | | ZHAO Yonggang | President | A share | 17,200 | - | 4,300 | 12,900 | Secondary market transaction | | YU Bin | Vice President | A share | 5,900 | - | - | 5,900 | - | | H share | 115,200 | 10,600 | - | 125,800 | Secondary market transaction | | MA Xin | Vice President | A share | 15,000 | - | - | 15,000 | - | | H share | 95,000 | 5,000 | - | 100,000 | Secondary market transaction | | ZHANG Yuhua | Director of Market Development | A share | 14,400 | - | 14,400 | - | Secondary market transaction | | **Departed Directors, Supervisors and Senior Management** | | | | | | | | | KONG Qingwei | Chairman, executive director | A share | 28,800 | - | - | 28,800 | | | H share | 21,800 | - | - | 21,800 | | | SUN Peijian | Chief Risk Officer | A share | 20,125 | - | - | 20,125 | - | | SHENG Yafeng | Director of Greater Bay Area Development | A share | 10,800 | - | - | 10,800 | - | Notes: 1. In January 2024, Mr. FU Fan's qualification to serve as chairman of the board of the Company was approved by the NAFR, and on the same day, Mr. FU Fan ceased to serve as president of the Company. 2. Following his appointment at 29th session of the 9th Board of Directors of the Company and the approval by the NAFR, Mr. ZHAO Yonggang formally assumed his duties as president of the Company in January 2024, and the changes in the shareholdings of Mr. ZHAO as set out in the above table occurred prior to his formal assumption of duties. 3. Following his appointment at the 23rd session of the 9th Board of Directors of the Company and the approval by the NAFR, Mr. ZHANG Yuhua formally assumed his duties in July 2023, and the changes in the shareholding of Mr. ZHANG as set out in the above table occurred before he formally assumed duties. 4. In October 2023, due to his age, Mr. SUN Peijian ceased to serve as chief risk officer of the Company. In January 2024, due to his age, Mr. KONG Qingwei ceased to serve as chairman and Executive Director of the Board of Directors of the Company. In January 2024, due to job changes, Mr. SHENG Yafeng ceased to serve as Director of Greater Bay Area Development of the Company. **(III) Professional background and biographies** **1. Direct****ors** The biographies of the incumbent directors of the Company are as follows: Mr. FU Fan currently serves as chairman and executive director of the Company, and director of CPIC AMC. Previously, Mr. FU served as deputy general manager of Shanghai Investment Corporation, deputy general manager of China International Fund Management Co., Ltd., general manager and vice chairman of Shanghai International Trust Co., Ltd., chairman of Shanghai State-owned Assets Operation Co., Ltd., director and general manager of Shanghai International Group Co., Ltd., and president of the Company. Mr. FU holds a master��s degree. Mr. HUANG Dinan currently serves as vice chairman and non-executive director of the Company, and chairman of Shenergy Group Co., Ltd. Previously, Mr. HUANG was consecutively research fellow, deputy head of the No.3 Research Team, assistant director and vice director of the Research Institute of Shanghai Turbine Plant; assistant general manager, deputy general manager and general manager of Shanghai Turbine Plant; assistant president, head of the President��s Office, vice president and president of Shanghai Turbine Company Limited; vice president, president, and vice chairman of Shanghai Electric (Group) Corporation; president, vice chairman and chairman of Shanghai Electric Group Company Limited, a company listed on SSE and SEHK (SSE stock code: 601727, SEHK stock code: 02727), president of China Society of Power Engineering, and president of Shanghai Society for Electrical Engineering. Mr. HUANG holds a master��s degree and a title of Senior Engineer (professor level). Mr. WANG Tayu currently serves as non-executive director of the Company, investment director of Shanghai International Group Co., Ltd., chairman of Shanghai International Group Asset Management Co., Ltd., chairman of GP Capital, chairman of Shanghai Guohe Modern Service Industry Equity Investment Management Co., Ltd., chairman of Shanghai Guofang Private Equity Fund Management Co., Ltd., director of Shanghai Fintech Co., Ltd.. Previously, Mr. WANG served as assistant president and vice president of Shanghai State-owned Assets Operation Co., Ltd., chairman of Shanghai Guoxin Investment and Development Co., Ltd., vice chairman of Shanghai Guotai Junan Investment Management Co., Ltd., director of Shanghai Rural Commercial Bank Co., Ltd., director and general manager of Shanghai Xieyi Asset Management Co., Ltd., director of Shanghai Data Exchange Co., Ltd., director of AVIC Investment Holdings Co., Ltd., and director of J-Yuan Trust Co., Ltd.. Mr. WANG has a master's degree. Mr. CHEN Ran currently serves as non-executive director of the Company, senior deputy general manager of Baowu Intelligent Equipment Co., Ltd., chairman of Shanghai Ouyeel Financial Information Service Co., Ltd., and director of China United SME Guarantee Corporation. Previously, Mr. CHEN served as vice president of Hwabao Investment Co., Ltd., executive director of Easternpay Information & Technology Co., Ltd., chairman of Shanghai Ouyeel Pawn Co., Ltd., president of Shanghai Ouyeel Financial Information Service Co., Ltd., and deputy general manager of Shanghai Ouyeel Financial Information Service Co., Ltd. Mr. CHEN holds a bachelor��s degree. Mr. ZHOU Donghui currently serves as non-executive director of the Company, director of the Division of Internal Monopoly Management and Supervision of Shanghai Tobacco Monopoly Administration, non-executive director of Orient Securities Company Limited listed on both SSE and SEHK (SSE stock code: 600958, SEHK stock code: 03958),  vice chairman and director of Shanghai Jieqiang Tobacco Sugar & Liquor (Group) Chain Co., Ltd., vice chairman and director of Shanghai Deqiang Industrial Co., Ltd., and supervisor of China Aviation Development Commercial Aviation Engine Co., Ltd. Previously, Mr. ZHOU was deputy manager and manager of the Financial Department of Shanghai Import and Export of China Tobacco Co., Ltd., deputy director of the Investment Management Department of Shanghai Tobacco Group Co., Ltd., deputy director of the Financial Department, deputy head of the Fund Management Centre, deputy director and director of the Investment Management Department of Shanghai Tobacco Group Co., Ltd., deputy general manager, executive deputy general manager and general manager of Shanghai Haiyan Investment Management Co., Ltd., vice chairman and director of Shanghai Tobacco Machinery Co. , Ltd. and non-executive director of Haitong Securities Co., Ltd., a company listed on both SSE and SEHK (SSE stock code: 600837, SEHK stock code: 06837). Mr. ZHOU holds a bachelor��s degree and the title of Senior Accountant. Ms. LU Qiaoling currently serves as non-executive director of the Company, general manager of the Industry and Finance Development Centre and the Capital Operation Department of China Baowu Steel Group Corporation Limited, director of Hwabao Trust Co., Ltd., director of Hwabao (Shanghai) Equity Investment Fund Management Co., Ltd., and supervisor of Xinyu Iron & Steel Group Co., Ltd.. Previously, Ms. LU was chief accountant of Hebei Petrochemical Supply and Marketing Corporation, deputy director of the Industry Guidance Department and deputy director of the Administration Office of the Audit Bureau of the Ministry of Chemical Industry, assistant inspector of the State Council��s Audit Commissioner, and full-time supervisor for state-owned medium- and large-sized enterprises under the CPC Central Enterprise Working Committee, deputy director and director of the Internal Audit Department of Baosteel Group Co., Ltd., director of the Internal Audit Department of Baoshan Iron and Steel Co., Ltd., deputy general manager of Baosteel Engineering Technology Group Co., Ltd, director of Baosteel Group Finance Co., Ltd., general manager of the Financial Department of China Baowu Steel Group Corporation Limited, and director of Baowu Group Zhongnan Iron and Steel Co., Ltd. Ms. LU holds a master��s degree, and has the title of senior accountant, certified public accountant, and auditor. Mr. John Robert DACEY, an American citizen, currently serves as non-executive director of the Company, and chief financial officer, a member of the Executive Committee of Swiss Re, director of FWD Group Holdings Ltd, FWD Group Ltd, and FWD Ltd respectively. Mr. DACEY was a consulting partner of McKinsey & Company, chief strategy officer and a member of the Executive Committee of Winterthur Insurance as well as vice chairman and a member of the Executive Committee of the Asia-Pacific Regional Office of AXA and chief executive officer of AXA Japan and Asia-Pacific Regional Headquarters. Mr. DACEY also served as a non-executive director of New China Life Insurance Company Limited (SSE stock code: 601336, SEHK stock code: 01336). Mr. DACEY holds a master��s degree. Ms. LIU Xiaodan currently serves as independent non-executive director of the Company, general manager of Chenyi Investment (Beijing) Co., Ltd. and chairman of Chenyi Fund Management (Beijing) Co., Ltd. Previously, Ms. LIU was president and chairman of Huatai United Securities Co., Ltd. and chairman of Asset Mark Financial Holdings, Inc., a company listed on the New York Stock Exchange (stock code: AMK). Previously, Ms. LIU worked at Peking University. She also served as a member of the 4th and 5th Committees for Mergers, Acquisitions, and Restructuring of China Securities Regulatory Commission. Ms. LIU holds a master��s degree. Ms. LAM Tyng Yih, Elizabeth, currently serves as independent non-executive director of the Company, independent non-executive director of Fobon Bank (Hong Kong), and director and honorary treasurer of HK Agency for Volunteer Service. Previously, Ms. LAM served as consultant and partner of Ernst & Young. Ms. LAM holds a bachelor��s degree in business administration and a master��s degree in accounting and is a member of the Hong Kong Institute of Certified Public Accountants. Ms. LO Yuen Man, Elaine, currently serves as independent non-executive director of the Company, and chief managing partner of Jingtian & Gongcheng LLP in Hong Kong. She also serves as non-executive director of Urban Renewal Authority in Hong Kong and chairman of its Land, Rehousing and Compensation Committee. Ms. LO served as chief managing partner of Mayer Brown in Hong Kong and chairman of the board of directors in Asia region, independent non-executive director of HSBC Provident Fund Trustee (Hong Kong) Limited and chairman of its Audit and Risk Committee. She has been appointed by the Chief Executive of the Hong Kong Special Administrative Region several times  as a member to a number of advisory committees and statutory bodies, including the Advisory Committee on Post-Office Employment for Former Chief Executives and Politically Appointed Officials of the Hong Kong Special Administrative Region, the Executive Council of the Hong Kong Special Administrative Region, the Independent Commission on Remuneration for Members of the Legislative Council and Officials under the Political Appointment System, the Independent Commission on Remuneration for Members of the District Councils of the Hong Kong Special Administrative Region, the Standing Commission on Civil Service Salaries and Conditions of Service of the Hong Kong Special Administrative Region, the Hong Kong Women��s Commission, the Working Group on Professional Services of the Hong Kong Economic Development Board. Ms. LO was awarded the Order of Merit by the Government of the Hong Kong Special Administrative Region in July 2021. Ms. LO holds a university degree in law, a Bachelor of Laws degree with Honours, and is qualified to practise as a solicitor in Hong Kong, the United Kingdom, Australia and Singapore. She is also a China-appointed notary public appointed by the Ministry of Justice of the People��s Republic of China. Mr. CHIN Hung I, David, currently serves as independent non-executive director of the Company. He previously held positions as head of UBS AG Investment Bank Asia Pacific and the China Country Head of UBS AG, as well as head of Investment Banking Division of UBS AG Asia. Mr. CHIN also served as a non-executive director of Postal Savings Bank of China Co., Ltd. (SSE Stock Code: 601658, HKSE Stock Code: 01658), a company listed on SSE and HKSE. Prior to that, Mr. Chin served at S.G. Warburg and Price Waterhouse London office. Mr. CHIN holds the qualification of chartered accountant in the UK. Mr. CHIN graduated from the University of Cambridge with a Master of Arts degree. Mr. JIANG Xuping currently serves as independent non-executive director of the Company, professor with the Department of Marketing of the School of Economics and Management, Tsinghua University, research fellow at the Research Centre for Contemporary Management, Tsinghua University, and research fellow at the Centre for Corporate Governance of Tsinghua University. Mr. JIANG also serves pro bono as dean of the School of Internet Marketing and Management of Guizhou Forerunner College. Previously, Mr. JIANG served as lecturer, associate professor, professor of the School of Economics and Management of Tsinghua University. Mr. JIANG holds a master��s degree and the title of professor. **2. Supervisors** The biographies of the incumbent supervisors of the Company are as follows: Mr. ZHU Yonghong currently serves as chairman of the board of supervisors of the Company, chief accountant and board secretary of China Baowu Steel Group Corporation Limited. Mr. ZHU also is chairman of Baowu Group Finance Co., Ltd., and chairman of the board of supervisors of Baoshan Iron and Steel Co., Ltd., a company listed on SSE (stock code: 600019). Mr. ZHU previously worked as chairman of Wuhan Iron and Steel (Group) Finance Co., Ltd., CFO and head of the Planning and Finance Department, deputy chief accountant and chief accountant of Wuhan Iron and Steel (Group) Company, director of Wuhan Iron and Steel Company Limited, a company listed on SSE (stock code: 600005), vice chairman of Hebi Fuyuan Refined Coal Co., Ltd., director of Hankou Banking Co., Ltd., director of Beibu Gulf Property & Casualty Insurance Co., Ltd., chairman of the board of supervisors of Changjiang Property & Casualty Insurance Co., Ltd., director of Hubei United Development & Investment Co., Ltd, chairman of Hwabao Trust Co., Ltd., chairman of Hwabao Investment Co., Ltd., chairman of Wuhan Iron and Steel (Group) Kunming Iron and Steel Co., Ltd., chairman of Hwabao WP Fund Management Co., Ltd., and director of Hwabao Trust Co., Ltd. Mr. ZHU holds a Phd degree and the title of senior accountant. Mr. LU Ning currently serves as shareholder representative supervisor of the Company, and chairman of Jiangsu Tobacco Jinsili Leasehold Co., Ltd. Mr. LU previously worked as chairman of Shanghai Hongta Hotel Co., Ltd., chairman of Yunnan Hongta Hotel Co., Ltd., chairman of Yunnan Honghe Investment Co., Ltd., chairman of Kunming Hongta Building Co., Ltd., chairman of Kunming Hongta Building Property Management Co., Ltd., and director of Yunnan Hongta Sports Centre Co., Ltd., director of Yunnan Zhongwei Hotel Management Co., Ltd., director of Kunming Wanxing Real Estate Development Co., Ltd., deputy general manager of Yunnan Tobacco Group Xingyun Co., Ltd., general manager of Kunming Wanxing Real Estate Development Co., Ltd., head of the Hotel Property Department of Yunnan Hehe (Group) Co., Ltd., director of Yunnan Tobacco Xingyun Investment Co., Ltd., chairman of Yunnan Hongta Real Estate Development Company, chairman of Zhongshan Hongta Property Development Co., Ltd., director of Hongta Innovation Investment Co., Ltd., head of the Financial Assets Department of Yunnan Hehe (Group) Co., Ltd., director of Yunnan Horticulture Industrial Investment Management Co., Ltd., and director of Yunnan Tourism Co., Ltd.. Mr. LU holds a bachelor��s degree. Mr. GU Qiang currently serves as employee representative supervisor and deputy chief internal auditor of the Company, chairman of the board of supervisors of CPIC AMC, CPIC Health and Changjiang Pension, respectively. Mr. GU formerly served as deputy chief accountant, CFO, finance responsible person and deputy general manager of CPIC P/C, director of CPIC AMC, director of CPIC HK, director, vice president and CFO of CPIC Anxin Agricultural. Prior to joining the Company, Mr. GU was a lecturer at the Department of Finance and Insurance of Shanghai University of Finance and Economics, senior auditor of Pricewaterhouse Da Hua Certified Public Accountants, deputy manager of Integrated Planning Department and manager of the International Business Department of Wanguo Securities Co., Ltd., vice president and CFO of Shanghai Branch of American International Underwriters. Mr.GU holds a master��s degree and the title of Senior Accountant. **3. Senior management** Mr. FU Fan currently serves as chairman of the Company. Please refer to the Section ��1. Directors�� above for details of his biography. The biographies of the rest of the senior managements of the Company are as follows: Mr. ZHAO Yonggang currently serves as president of the Company. Mr. ZHAO served as head of the Party and Masses Affairs Department of the Company, director of the Strategic Transformation Office of CPIC Life, general manager of Heilongjiang Branch and Henan Branch, chairman of the Trade Union and human resources director of CPIC Life, chairman of the Trade Union and vice president of the Company, and vice chairman of the board of supervisors and director of Haitong Securities Co., Ltd., a company listed on both SSE and SEHK (SSE stock code: 600837, SEHK stock code: 06837). Mr. ZHAO holds a bachelor��s degree. Mr. YU Bin currently serves as vice president of the Company, chairman of CPIC Technology and director of CPIC P/C. Mr. YU previously served consecutively as deputy general manager of the Non-marine Insurance Department and Underwriting & Claims Department of CPIC P/C, general manager of the Market R&D Centre and the Market Department of CPIC P/C, chief marketing officer and deputy general manager of CPIC P/C, and assistant president of the Company. Mr. YU has a master��s degree. Mr. MA Xin currently serves as vice president of the Company, chairman of CPIC Health, and director of CPIC Life. Mr. MA previously worked as general manager of CPIC Life Shaanxi Branch, director of the Strategic Transformation Office, general manager of Strategic Planning Department, director on transformation matters, board secretary of the Company, and director of CPIC P/C and Changjiang Pension respectively. Mr. MA has a master��s degree. Mr. ZHANG Yuanhan is chief actuary and finance responsible person of the Company, and director of CPIC P/C, CPIC Life and CPIC Health respectively. Mr. ZHANG previously served as the chief actuary, deputy general manager and vice president of MetLife Insurance Company Limited, chief actuary of Sino Life Insurance Co., Ltd., deputy general manager, CFO and chief actuary of Sun Life Everbright Life Insurance Co., Ltd., director of Sun Life Everbright Asset Management Co., Ltd., director of CPIC AMC, and chief actuary of CPIC Health. Mr. ZHANG has a master��s degree and is a director of China Association of Actuaries and a member of the Society of Actuaries and American Academy of Actuaries. Mr. ZHANG Weidong currently serves as compliance responsible person and chief legal councilor, interim chief risk officer of the Company, chairman of board of supervisors of CPIC P/C, director of CPIC AMC, CPIC Health and Changjiang Pension respectively. Mr. ZHANG previously served as general manager of the Legal & Compliance Department, head of the Board Office of the Company, board secretary and director of CPIC P/C, board secretary and director of CPIC Life and board secretary of CPIC AMC, risk & compliance officer, general manager of the Risk Management Department and chief risk officer of the Company. Mr. ZHANG holds a bachelor��s degree. Mr. CHEN Wei currently serves as chief administrative officer of the Company. Previously, Mr. CHEN served as chief representative of the Company's London Representative Office, director and general manager of CPIC HK, board secretary and general manager of the Strategic Planning Department of the Company, internal audit director, internal audit responsible person, chief internal auditor of the Company, board secretary of CPIC Life, chairman of the board of supervisors of CPIC AMC, and general manager and director of CPIC Health. Mr. CHEN holds a master's degree and the title of senior engineer, and is a member of the ACII. Mr. SU Shaojun currently serves as board secretary of the Company, and director of CPIC P/C, CPIC Life respectively. Previously, he served as assistant general manager and deputy general manager of the Underwriting Department, deputy general manager and general manager of Beijing Branch, general manager of Development Planning Department, head of the Board Office, head of the Office of the Board of Supervisors, general manager of the Telemarketing Department of CPIC P/C, and head of the Strategic Research Department, deputy transformation director of the Company. Mr. SU holds a PhD degree and title of senior engineer. Mr. SU Gang currently serves as chief investment officer of the Company and director of CPIC AMC. Previously, Mr. SU served as head of the Investor Relations Department of the Company, head of project investments, deputy general manager & general manager of the Alternative Investment Management Centre of CPIC AMC, deputy general manager of CPIC Life, general manager and chairman of Changjiang Pension. Before joining the Company, Mr. SU served as general manager of the Fixed Income Department and deputy general manager of the Investment Banking Headquarters of Shenyin Wanguo Securities Company. Mr. SU holds a PhD degree. Mr. ZHOU Xiaonan currently serves as chief internal auditor and internal audit responsible person of the Company. Previously, Mr. ZHOU served as assistant general manager, deputy general manager, deputy general manager (in charge of work), and general manager of CPIC Life Henan Branch, general manager of CPIC Life Guangdong Branch, and deputy general manager, chief digital officer, compliance responsible person, and chief risk officer of CPIC Life. Mr. ZHOU holds a master��s degree. Mr. ZHANG Yuhua currently serves as market development director of the Company. Previously, he served as deputy general manager of CPIC P/C Shenzhen Branch, general manager of CPIC P/C Sichuan Branch, deputy general manager and director of CPIC P/C. Prior to that, Mr. ZHANG worked at the Administration Department of the Hong Kong and Macao Affairs Office of the State Council, CPC Heze Municipal Party Committee, and the Heze Municipal Government. He received university education and holds a master��s degree. **(IV) Positions in corporate shareholders** | | | | | | --- | --- | --- | --- | | **Name** | **S****hareholder** | **Position held** | **Term** | | HUANG Dinan | Shenergy (Group) Co., Ltd. | Chairman | Since 2018 | | CHEN Ran | Hwabao Investment Co., Ltd. | Vice president | 2021-Jan. 2024 | | LU Qiaoling | China Baowu Steel Group Corporation | General manager of the Industry and Finance Development Centre, General manager of the Capital Operation Department | Since 2021 | | ZHU Yonghong | China Baowu Steel Group Corporation | Chief accountant | Since 2016 | | China Baowu Steel Group Corporation | Board secretary | Since 2018 | **(V) Positions in other entities** | | | | | | --- | --- | --- | --- | | **Name** | **O****ther entities** | **Position held** | **Term** | | WANG Tayu | Shanghai International Group Co., Ltd. | Investment director | Since 2021 | | Shanghai International Group Asset Management Co., Ltd. | Chairman | Since 2021 | | Shanghai Xieyi Asset Management Co., Ltd. | Director, general manager | 2017 - 2023 | | GP Capital | Chairman | Since 2021 | | Shanghai Guohe Modern Service Industry Equity Investment Management Co., Ltd | Chairman | Since 2021 | | Shanghai Guofang Private Equity Fund Management Co., Ltd., | Chairman | Since 2021 | | AVIC Capital Co., Ltd. | Director | 2019 - 2023 | | Shanghai Fintech Co., Ltd. | Director | Since 2021 | | Shanghai Data Exchange Co., Ltd. | Director | 2021 - 2023 | | J-Yuan Trust Co. Ltd. | Director | | | | --- | | Since 2022 | | | CHEN Ran | Baowu Intelligent Equipment Technology Co. Ltd. | Senior vice president | Since Jan. 2024 | | Shanghai Ouyeel Financial Information Service Co., Ltd. | Chairman | Since 2021 | | Shanghai Ouyeel Financial Information Service Co., Ltd. | Director | Since 2018 | | Easternpay Information & Technology Co., Ltd. | Executive Director | 2019-2023 | | China United SME Guarantee Corporation | Director | Since 2018 | | ZHOU Donghui | Shanghai Tobacco Monopoly Bureau | Director of Internal Monopoly Supervision Department | Since 2022 | | Orient Securities Company Limited | Non-executive director | Since 2020 | | Haitong Securities Co., Ltd. | Non-executive director | Since 2020 | | Shanghai Tobacco Machinery Co. , Ltd. | Vice chairman, director | Since 2015 | | Shanghai Jieqiang Tobacco Sugar & Liquor (Group) Chain Co., Ltd. | Vice chairman, director | Since 2015 | | Shanghai Deqiang Industrial Co., Ltd. | Vice chairman, director | Since 2015 | | China Aviation Development Commercial Aviation Engine Co., Ltd. | Supervisor | Since 2015 | | LU Qiaoling | Hwabao Trust Co., Ltd. | Director | Since 2021 | | Hwabao (Shanghai) Equity Investment Fund Management Co., Ltd. | Director | Since 2021 | | Xinyu Iron & Steel Group Co. Ltd. | Supervisor | Since 2023 | | John Robert Dacey | Swiss Reinsurance Company Ltd | Chief financial officer | Since 2018 | | Swiss Reinsurance Company Ltd | Member of the Executive Committee | Since 2012 | | FWD Group Holdings Ltd | Director | Since 2022 | | FWD Group Ltd | Director | Since 2022 | | FWD Ltd | Director | Since 2022 | | LIU Xiaodan | Chenyi Investment (Beijing) Co., Ltd. | General manager | Since 2019 | | Chenyi Fund Management (Beijing) Co., Ltd. | Chairman | Since 2019 | | LAM Tyng Yih, Elizabeth | HK Agency for Volunteer Service | Director, Honorary Treasurer | Since 2012 | | Fobon Bank (Hong Kong) | Independent non-executive director | Since 2021 | | LO Yuen Man, Elaine | Jingtian & Gongcheng LLP | Chief managing partner in Hong Kong | Since 2018 | | HSBC Provident Fund Trustee (Hong Kong) Limited | Independent non-executive director  & chairman of  Audit and Risk  Committee | 2016-2023 | | Hong Kong Urban Renewal Authority | Non-executive director and chairman of Land, Rehousing and Compensation Committee | Since 2019 | | JIANG Xuping | Tsinghua University | Professor, Department of Marketing, School of Economics and management | Since 2002 | | Research fellow at the Research Centre for Contemporary Management | Since 2003 | | Research fellow at the Centre for Corporate Governance | Since 2007 | | Guizhou Forerunner College | Dean of the School of Internet Marketing and Management(pro bono) | Since 2012 | | ZHU Yonghong | Baowu Group Finance Co., Ltd. | Chairman | Since 2018 | | Baoshan Iron and Steel Co., Ltd. | Chairman of the board of supervisors | Since 2017 | | LU Ning | Jiangsu Tobacco Jinsili Leasehold Co., Ltd. | Chairman | Since 2021 | | Yunnan Tourism Co., Ltd. | Director | 2019-2023 | **(VI) Determination and basis for determination of remuneration** The remuneration of directors and supervisors is determined by the SGM, while the remuneration of senior management is determined by Nomination and Remuneration Committee of the Board, subject to approval of the board of directors. The Company determines the remuneration of its directors, supervisors and senior management based on factors such as the Company��s business results, the line-up of positions, risk management and performance appraisal results while considering market remuneration benchmarks provided by human resources consulting service. **II. Employees** As at the end of the reporting period, the basic information on the employees of the Company and its major subsidiaries is summarised as below: | | | | --- | --- | | Headcount of employees of the Company | 999 | | Headcount of employees of its major subsidiaries | 97,733 | | Total number of employees | 98,732 | | Headcount of retirees for whom the Company or its major subsidiaries bear expenses | 9,514 | Their expertise and educational background are set out below: **(I) E****xpertise** | | | | | --- | --- | --- | | **Expertise** | **Head count** | **Percentage** | | Management | 7,666 | 7.76% | | Professional | 36,597 | 37.07% | | Marketing | 54,469 | 55.17% | | Total | 98,732 | 100.00% | **(II) Education background** | | | | | --- | --- | --- | | **Education** **b****ackground** | **Head count** | **Percentage** | | Master��s degree | 5,945 | 6.02% | | Bachelor��s degree | 62,126 | 62.92% | | Bachelor��s degree or under | 30,661 | 31.06% | | Total | 98,732 | 100.00% | **(III)** **Gender distribution** | | | | | --- | --- | --- | | **Gender** | **Head count** | **Percentage** | | Female | 50,942 | 51.60% | | Male | 47,790 | 48.40% | | Total | 98,732 | 100.00% | **(IV) Remuneration policies and training programs for employees** The Company has established a marketed-based remuneration system that is position-specific, performance-oriented, and risk-linked, with reference to market benchmarks. The basic remuneration of our employees is determined based on their positions, professional competence and work experience. Performance-based remuneration is linked to the overall business performance of the Company and individual performance of employees, with mechanisms of deferred payment and claw-backs for those having a material bearing on risk exposure of the Company. The Company also provides its employees with benefits and allowance according to applicable regulations of China and industry standards. The Company strives to empower the front line via digital innovations in in-house learning, delivered by on-line, smart platforms and aiming to support sales of grassroots branch offices, market nurturing and business management. CPIC Learning, a dedicated platform for such purposes, has made big strides in delivery of on-line and off-line courses owned by various branch offices and diversification of application scenarios; it has achieved a meaningful on-line presence, with multiple channels of content-generation, such as independent development, cooperation and ecosystem building; it has made substantial progress in the building of intelligent platforms, with breakthrough smart applications in live streaming and examinations, such as preparing test questions, invigilation, scoring, analysis and generation of live stream subtitles, which enhanced efficiency in training. CPIC Learning has become a favourite platform for branch offices at grass-root levels in their sales activities. It offers programmes of morning sessions, evening sessions, orientation training for new recruits, empowerment training of manager-level agents, and has become a useful tool for day-to-day agency force management; it helped with market nurturing via innovative means of insurance education and  publicity, such as CPIC MR Live Stream for Huiminbao, and Live Stream of Police and Insurers, which enabled us to better shoulder our corporate social responsibility; it empowered business management, integrating digital means into daily business management, including conducting communications on business strategies, organising celebratory activities and campaigns of professional skillsets via CPIC Live Stream, supporting remote, look-through and real-time management. **Corporate governance** **I.** **Corporate governance** In 2023, in strict compliance with Company Law of the PRC, Securities Law of the PRC, Insurance Law of the PRC and other applicable laws of the PRC, relevant government ordinances and regulations, and drawing on international best practices, the Company continued to improve the centralised management structure based on realignment of resources and enhanced interaction with the capital market, and strengthen internal and external supervision to improve the soundness, effectiveness and transparency of management, putting in place a sound corporate governance with effective coordination and a reliable system of checks and balances. The board of directors is committed to continuous improvement of the Company��s corporate governance by enhancing the integrated management mechanisms and systems. While maintaining the right of self-management of its subsidiaries as independent legal entities, the Group also promoted the centralisation of governance of the Company��s subsidiaries at the group level, given that the Company was listed as a group. The subsidiaries of the Company have also established a system structure that satisfies the requirements of the Company's operations and has formulated unified and consistent governance systems that meet various of needs. Through the classification of subsidiaries, the Company has adopted differentiated management of its subsidiaries, fully covering the corporate governance structure under the Group. The SGM, board of directors, board of supervisors and the senior management fulfilled their respective functions independently, exercised their rights respectively in accordance with the Articles of Association, coordinating and balancing among each other to ensure the smooth operation of the Company. The SGM is composed of all shareholders. The board of directors implements the resolutions made by the SGM and exercises the decision-making power of the Company, responsible for the overall leadership of the Group; while the senior management, under the leadership of the president, is responsible for the day-to-day management of the Company��s businesses and implementation of the strategies approved by the board of directors. The board of supervisors is responsible to the SGM, and exercises the duties of supervising the directors and senior executives and reviewing the financials of the Company. The Company also put in place mechanisms to ensure smooth communication between the board of directors, the supervisory board and the management, creating an enabling environment for the board of directors and the board of supervisors to perform their duties and keep abreast of the Company��s situation. During the reporting period, the Company has fully complied with CSRC Code of Governance for Listed Companies ([http://www.csrc.gov.cn/csrc/c101864/c1024585/content.shtml](javascript:void())), CBIRC Code of Corporate Governance for Banking and Insurance Institutions (http://www.cbirc.gov.cn/cn/view/pages/ItemDetail.html?docId=989061&itemId=928) and all code provisions of the Corporate Governance Code contained in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ([https://en-rules.hkex.com.hk/sites/default/files/net\_file\_store/HKEX4476\_3828\_VER10.pdf](javascript:void())) (and substantially all of the recommended governance best practices applied over and above that code). **(I) Shareholders and the SGM** Shareholders are the investors of the Company. To equally safeguard shareholder��s rights, the Company sets out detailed provisions on shareholder��s rights and how to realise them in the Articles of Association, and takes seriously the dividend policy, shareholders�� investment return and their right to earnings. The Company also focused on communication with shareholders to help them make informed decisions. Under the Articles of Association, the main responsibilities of the SGM are, among others, to formulate the Company��s strategic direction and investment plans, elect and replace directors and supervisors other than those who are also the Company��s employees and decide their remuneration, consider and approve the annual budgets and accounts, profit distribution plans and loss compensation plans of the Company, adopt proposals regarding any increase or decrease in the registered capital of the Company and any merger, separation, dissolution or liquidation or change of corporate form of the Company, consider and approve the listing of all or any part of the shares on any stock exchange as well as any proposed issuance of bonds or other securities of the Company, adopt proposals regarding the appointment and dismissal of the accountant of the Company, which conduct statutory audit of the Company��s financial reports on a regular basis, and amend the Articles of Association. The Articles of Association and the Procedural Rules for the SGM also contain detailed rules for convening extraordinary sessions and specific procedures for putting forward proposals at such meetings. Under Article 98(1) of the Articles of Association and Article 6(3) and Article 7 of the Procedural Rules for SGM, shareholders holding 10% or above of total voting shares issued by the Company individually or jointly may sign and submit a request in writing to the Board of Directors for an extraordinary general meeting or a classified SGM. Upon receipt of such a request, the Board of Directors shall decide whether to convene a general meeting or a classified SGM based on the actual situation according to the laws, administrative regulations and the Articles of Association. Pursuant to Articles 68(12) and 73 of the Articles of Association and Articles 12 and 13 of the Procedural Rules for SGMs, shareholders holding 3% or above (including 3%) of the total voting shares issued by the Company individually or jointly may put forward temporary proposals, but they must submit the proposal to the convener in writing ten days prior to the holding of general meeting. If the shareholder entitled to submit proposals has any objection towards the decision of the Board for not including his/her proposal in the agenda of the general meeting, he/she may request a separate extraordinary general meeting according to the procedures as set out in the Procedural Rules for SGMs. The contact information for shareholders�� enquiry regarding the affairs of Company is set out in the Section ��Corporate information and definitions�� of this report. In 2023, the Company held 2 shareholders�� general meetings: On 26 May 2023, the Company held the 2022 annual general meeting in Shanghai, at which resolutions including The Resolution in Relation to the Report of the Board of Directors of China Pacific Insurance (Group) Co., Ltd. for 2022 were considered and approved (for details please refer to the announcements published on the websites of SSE, SEHK, LSE and the Company). The shareholders attending the meeting held a total of 6,150,973,702 voting shares, accounting for 63.94% of the Company's total voting shares. All the resolutions of this meeting were passed. On 27 November 2023, the first extraordinary general meeting of 2023 was held in Shanghai, at which resolutions including The Resolution in Relation to High-quality Development Plan 2023-2025 of China Pacific Insurance (Group) Co., Ltd. were considered and approved (for details please refer to the announcements published on the websites of SSE, SEHK, LSE and the Company). The shareholders attending the meeting held a total of 6,031,658,809 voting shares, accounting for 62.70% of the Company's total voting shares. All the resolutions of this meeting were passed. The attendance of directors in 2023 was as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | **N****ames of directors** | **No. of****general****m****eetings****convened** | | **Attendance in person** | **Percentage of attendance****(%)** | **Remarks** | | **E****xecutive Directors** | | | | | | | FU Fan | 2 | | 2 | 100 | | | **Non-executive****Directors** | | | | | | | HUANG Dinan | 2 | | 2 | 100 | | | WANG Tayu | 2 | | 2 | 100 | | | CHEN Ran | 2 | | 2 | 100 | | | ZHOU Donghui | 2 | | 2 | 100 | | | LU Qiaoling | 2 | | 2 | 100 | | | John Robert Dacey | 2 | | 1 | 50 | Unable to attend the first Extraordinary General Meeting of Shareholders of 2023 due to other business arrangements. | | **Independent Non-executive Directors** | | | | | | | LIU Xiaodan | 2 | | 2 | 100 | | | LAM Tyng Yih, Elizabeth | 2 | | 2 | 100 | | | LO Yuen Man, Elaine | 1 | | 1 | 100 | | | CHIN Hung I, David | 0 | | 0 | - | | | JIANG Xuping | 2 | | 2 | 100 | | | **Departing Directors** | | | | | | | KONG Qingwei | 2 | | 2 | 100 | | | WU Junhao | 2 | | 2 | 100 | | | CHEN Jizhong | 2 | | 2 | 100 | | | WOO Ka Biu, Jackson | 1 | | 1 | 100 | | Notes: 1. On 23 March 2023, Mr. WOO Ka Biu, Jackson resigned as Independent Non-executive Director of the Company, member of the board Audit Committee, and member of the board Risk Management and Related Party Transactions Control Committee. On 26 May 2023, Ms. LO Yuen Man, Elaine was elected as an Independent Non-executive Director of the 9th Board of Directors at the 2022 annual general meeting. In July 2023, Ms. LO 's appointment qualification for the appointment was approved by the NAFR, and Mr. WOO Ka Biu, Jackson ceased to serve as Independent Non-executive Director of the 9th Board of Directors of the Company. 2. On 26 October 2023, Mr. CHEN Jizhong resigned as Independent Non-executive Director of the Company, chairman of the board Risk Management and Related Party Transactions Control Committee, and member of the Nomination and Remuneration Committee of the Board. On 27 November 2023, Mr. CHIN Hung I, David was elected as Independent Non-executive Director of the Company at the first extraordinary general meeting of 2023. In February 2024, Mr. CHIN��s appointment qualifications was approved by the NAFR, and Mr CHEN Jizhong ceased to serve as Independent Non-executive Director of the Company, chairman of the board Risk Management and Related Party Transactions Control Committee and member of the board Nomination and Remuneration Committee. 3. On 11 December 2023, Mr. FU Fan was elected as chairman of the Board of Directors of the Company at the 29th session of the 9th Board of Directors. In January 2024, Mr. KONG Qingwei resigned as Executive Director of the Company and chairman of the Board of Directors of the Company. In January 2024, Mr. FU Fan��s appointment qualification was approved by the NAFR, and Mr. KONG Qingwei ceased to serve as Executive Director, and chairman of the Board of Directors of the Company. 4. In Feburary 2024, Mr. WU Junhao ceased to serve as Non-executive Director of the Company due to the expiration of the term of office. The notification, convening, and proceeding of the general meetings and the procedures followed for voting were in compliance with the Company Law of the PRC, the Articles of Association and applicable regulations. The SGM has set up an effective communication channel with the shareholders so that their voices can be heard and their advice heeded, ensuring shareholders�� rights to information, participation and voting in respect of any significant issues of the Company. This created a positive atmosphere for the shareholders to take part in the decision-making process of the Company and exercise their rights equally. In strict compliance with regulatory rules and requirements on corporate governance and the protection of retail investors, the Company continued to improve its corporate governance and investor communication mechanisms to fulfil its responsibilities to shareholders. To better protect the interests of retail investors, we added stipulations on voting rights to select independent directors to the Articles of Association, and fully adopted measures such as online voting in shareholders�� general meetings, and the separate vote counting and public disclosure for retail investors. **(II) Directors, board of directors and committees of the board of directors** At present, the Board consists of 12 directors. Among them, there is 1 executive director: Mr. FU Fan; 6 non-executive directors: Mr. HUANG Dinan, Mr. WANG Tayu, Mr. CHEN Ran, Mr. ZHOU Donghui, Ms. LU Qiaoling, and Mr. John Robert DACEY; 5 independent non-executive directors: Ms. LIU Xiaodan, Ms. LAM Tyng Yih, Elizabeth, Ms. LO Yuen Man, Elaine, Mr. CHIN Hung I, David, and Mr. JIANG Xuping. (On 23 March 2023, Mr. WOO Ka Biu, Jackson resigned as Independent Non-executive Director of the Company, member of the Audit Committee, and member of the Risk Management and Related Party Transactions Control Committee of the Board. On 26 May 2023, Ms. LO Yuen Man, Elaine was elected as an Independent Non-executive Director of the 9th Board of Directors at the 2022 annual general meeting. In July 2023, Ms. LO's appointment qualification was approved by the NAFR, and Mr. WOO Ka Biu, Jackson ceased to serve as Independent Non-executive Director of the 9th Board of Directors of the Company. On 26 October 2023, Mr. CHEN Jizhong resigned as Independent Non-executive Director of the Company, chairman of the Risk Management and Related Party Transactions Control Committee, and member of the Nomination and Remuneration Committee of the Board. On 11 December 2023, Mr. FU Fan was elected as chairman of the Board of Directors of the Company at the 29th session of the 9th Board of Directors. In January 2024, Mr. KONG Qingwei resigned as Executive Director of the Company and chairman of the Board of Directors of the Company. In January 2024, Mr. FU Fan��s appointment qualification was approved by the NAFR, and Mr. KONG Qingwei ceased to serve as Executive Director, and chairman of the Board of Directors of the Company. On 27 November 2023, Mr. CHIN Hung I, David was elected as Independent Non-executive Director of the Company at the first extraordinary general meeting of 2023. In February 2024, Mr. CHIN��s appointment qualification was approved by the NAFR, and Mr CHEN Jizhong ceased to serve as Independent Non-executive Director of the Company. On 29 February 2024, Mr. ZHAO Yonggang was elected as Executive Director of the Company at the first extraordinary general meeting of 2024. Mr ZHAO��s appointment qualification is pending approval by the NAFR. In February 2024, Mr. WU Junhao ceased to serve as Non-executive Director of the Company due to the expiration of the term of office.) The number of independent non-executive directors on the Board exceeds one-third of the number of all directors. The number of directors and composition of the Board complies with applicable regulatory requirements as well as requirements of the Articles of Association of the Company. Under the Articles of Association, the board of directors shall be accountable to the SGM and exercise, among others, the following powers: to convene SGMs, implement their resolutions, determine the business and operation plans and investment plans of the Company, formulate annual financial budget and final accounting plans, formulate profit distribution and loss compensation plans, formulate the proposals for increases or decreases in the registered share capital and issue and listing of other securities of the Company, appointment or dismissal of president, appointment or dismissal of board secretary based on chairman��s nomination, appointment or dismissal of chief internal auditor and head of audit based on chairman or Audit Committee��s nomination, appointment, dismissal and remuneration of vice president, chief actuary, chief legal councillor, chief risk officer, chief technology officer, chief investment officer, CFO, chief compliance officer and other senior executives based on president��s nomination and develop the basic policies and systems of the Company. So far as the Company is aware, no financial, business, family or other material/relevant relationship exists among its board members. In particular, there are none between chairman and president. During the reporting period, Mr. KONG Qingwei served as chairman of the Board, and Mr. FU Fan served as president of the Company. The chairman is responsible for presiding over the general meeting of shareholders and the board of directors and performing other duties as delegated by the board of directors, while the president is responsible to the board of directors, and preside over the management of the company. The division of responsibilities between the chairman and president of the Company is stated in the Articles of Association. **1.****Attendance of board meetings** In 2023, the Board held 9 meetings. All directors duly performed their duties and attended the meetings in person or by proxy. They made informed decisions to safeguard the interests of the Company and their shareholders as a whole. The attendance of directors is as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | **Names of directors** | **No. of b****oard** **m****eetings****convened** | **Attendance in person** | **Attendance by proxy** | **Absence** | **Remarks** | | **E****xecutive Directors** | | | | | | | FU Fan | 9 | 9 | 0 | 0 | | | **Non-executive Directors** | | | | | | | HUANG Dinan | 9 | 9 | 0 | 0 | | | WANG Tayu | 9 | 9 | 0 | 0 | | | CHEN Ran | 9 | 9 | 0 | 0 | | | ZHOU Donghui | 9 | 9 | 0 | 0 | | | LU Qiaoling | 9 | 9 | 0 | 0 | | | John Robert Dacey | 9 | 8 | 1 | 0 | Unable to attend the 27th session of the 9th Board of Directors due to other business arrangements, and he delegated in writing to Mr. KONG Qingwei, Chairman of the Board of Directors, to attend and vote at the Meeting. | | **Independent****Non-executive Directors** | | | | | | | LIU Xiaodan | 9 | 9 | 0 | 0 | | | LAM Tyng Yih, Elizabeth | 9 | 9 | 0 | 0 | | | LO Yuen Man, Elaine | 5 | 5 | 0 | 0 | | | CHIN Hung I, David | 0 | 0 | 0 | 0 | | | JIANG Xuping | 9 | 9 | 0 | 0 | | | **Departing Directors** | | | | | | | KONG Qingwei | 9 | 9 | 0 | 0 | | | WU Junhao | 9 | 9 | 0 | 0 | | | CHEN Jizhong | 9 | 9 | 0 | 0 | | | WOO Ka Biu, Jackson | 4 | 4 | 0 | 0 | | Notes: 1. On 23 March 2023, Mr. WOO Ka Biu, Jackson resigned as Independent Non-executive Director of the Company, member of the board Audit Committee, and member of the Risk Management and Related Party Transactions Control Committee of the Board. On 26 May 2023, Ms. LO Yuen Man, Elaine was elected as an Independent Non-executive Director of the 9th Board of Directors at the 2022 annual general meeting. In July 2023, Ms. LO's appointment qualification was approved by the NAFR, and Mr. WOO Ka Biu, Jackson ceased to serve as Independent Non-executive Director of the 9th Board of Directors of the Company. 2. On 26 October 2023, Mr. CHEN Jizhong resigned as Independent Non-executive Director of the Company, chairman of the board Risk Management and Related Party Transactions Control Committee, and member of the Nomination and Remuneration Committee of the Board. On 27 November 2023, Mr. CHIN Hung I, David was elected as Independent Non-executive Director of the Company at the first extraordinary general meeting of 2023. In February 2024, Mr. CHIN��s appointment qualification was approved by the NAFR, and Mr CHEN Jizhong ceased to serve as Independent Non-executive Director of the Company, chairman of the board Risk Management and Related Party Transactions Control Committee and member of the board Nomination and Remuneration Committee of the Board. 3. On 11 December 2023, Mr. FU Fan was elected as chairman of the Board of Directors of the Company at the 29th session of the 9th Board of Directors. In January 2024, Mr. KONG Qingwei resigned as Executive Director of the Company and chairman of the Board of Directors of the Company. In January 2024, Mr. KONG Qingwei resigned as Executive Director of the Company and chairman of the Board of Directors of the Company. In January 2024, Mr. FU Fan��s appointment qualification was approved by the NAFR, and Mr. KONG Qingwei ceased to serve as Executive Director, and chairman of the Board of Directors of the Company. 4. In February 2024, Mr. WU Junhao ceased to served as Non-executive Director of the Company due to the expiration of the term of office. **2.****Board meetings and resolutions** The Board held 9 meetings in 2023: (1) On 6 January 2023, the Company held the 22nd session of the 9th Board of Directors in Shanghai, at which resolutions including The Resolution in Relation to the 2021 Annual Performance Appraisal Results of Professional Managers of China Pacific Insurance (Group) Co., Ltd. for 2021 were considered and approved. (2) On 24 March 2023, the Company held the 23rd session of the 9th Board of Directors in Shanghai, at which resolutions including The Resolution in Relation to the Report of the Board of Directors of China Pacific Insurance (Group) Co., Ltd. for 2022 were considered and approved. (3) On 27 April 2023, the Company held the 24th session of the 9th Board of Directors in Dali, at which resolutions including The Resolution on the First Quarter Report for 2023 of China Pacific Insurance (Group) Co., Ltd. were considered and approved. (4) On 23 May 2023, the Company held the 25th session of the 9th Board of Directors in Shanghai, at which reports including the Report on the 2023 Annual Financial Budget Plan of China Pacific Insurance (Group) Co., Ltd. were heard. (5) On 3 August 2023, the Company held the 26th session of the 9th Board of Directors by circulation, at which resolutions including The Resolution of China Pacific Insurance (Group) Co., Ltd. on the Appointment of Ms. LO Yuen Man, Elaine as Member of the Audit Committee and the Risk Management and Related Party Transactions Control Committee of the 9th Board of Directors of the Company were considered and approved. (6) On 25 August 2023, the Company held the 27th session of the 9th Board of Directors in Shanghai, at which resolutions including The Resolution on the 2023 Interim Report of China Pacific Insurance (Group) Co., Ltd. were considered and approved. (7) On 27 October 2023, the Company held the 28th session of the 9th Board of Directors in Shanghai, at which resolutions including The Resolution on the Third Quarter Report for 2023 of China Pacific Insurance (Group) Co., Ltd. were considered and approved. (8) On 11 December 2023, the Company held the 29th session of the 9th Board of Directors in Shanghai, at which resolutions including The Resolution on the Revision of the Articles of Association of China Pacific Insurance (Group) Co., Ltd. were considered and approved. (9) On 29 December 2023, the Company held the 30th session of the 9th Board of Directors by circulation, at which resolutions including The Resolution of China Pacific Insurance (Group) Co., Ltd. on Daily Related Party Transactions were considered and approved. **3. Implementation of the resolutions of the SGM by the board of directors** In 2023, all the Company��s board members fully implemented the resolutions passed by the SGM including those on profit distribution plan for 2022, and the engagement of external auditors for 2023, performed duties delegated and accomplished tasks assigned by the SGM with due diligence and in compliance with relevant laws and regulations and the provisions under the Articles of Association. The Company distributed a cash dividend of RMB 1.02 per share (including tax) in accordance with the Resolution on Profit Distribution Plan for the year 2022 approved at the 2022 AGM. The implementation of this distribution plan was completed in June 2023. **4. Corporate governance functions of the board of directors** The board of directors is responsible for determining the policy for the corporate governance of the Company and performing the corporate governance duties as below: (1) To develop and review the Company��s policies and practices on corporate governance and make recommendations; (2) To review and monitor the training and continuous professional development of directors and senior management; (3) To review and monitor the Company��s policies and practices on compliance with all legal and regulatory requirements; (4) To develop, review and monitor the code of conduct applicable to the employees and directors of the Company; (5) To review the Company��s compliance with Corporate Governance Code and disclosure requirements in the Corporate Governance Report; and (6) To review and monitor the Company��s risk management and internal control systems. During the reporting period, the Board fulfilled the above corporate governance functions. In accordance with regulations such as the Company Law and the Code of Corporate Governance for Insurance Institutions and the Guidelines for the Articles of Association of Listed Companies and based on its actual situation, the Company revised relevant documents including the Articles of Association, the Rules of Procedures for Shareholders�� Meeting, the Rules of Procedures for Board Meetings and the Rules of Procedures for Board of Supervisors Meetings. The Company took the initiative to step up communication with directors and supervisors, including information filing on a regularly basis or whenever circumstances require, so that they can have a full, timely understanding of the business management status of the Company. In accordance with the Provisions on Performance Evaluation and Accountability of Directors and Supervisors, it implemented open, transparent and stringent evaluation of its directors and supervisors, with requirements for high ethical standards, to further improve their performance of duties. The directors and supervisors have independence necessary for performance of duties and abide by high ethical standards irrespective of control or interference of substantial shareholders, promote fair treatment of all shareholders by the Company, protection of legitimate rights of all stakeholders, and fulfilment of its corporate social responsibility. The Company has put in place relevant mechanisms to ensure access to independent views and opinions by the Board of Directors, including but not limited to a review, from time to time, of independent non-executive directors to ensure that they are in possession of necessary qualifications and professional expertise, and that they have committed enough time for the Company. All independent non-executive directors shall submit annually a written confirmation of their independence and independence of their immediate family members. Internal policies of the Company, such as the Articles of Association, Rules of Procedures for Board of Directors Meetings, Work Rules on the Nomination and Compensation Committee, Work Rules on Independent Directors, specified policies of nomination for board directors, roles and responsibilities of the Nomination and Compensation Committee, and criteria for appointment of directors. Board chairman will hold at least one meeting with independent non-executive directors in the absence of executive directors every year. All directors have the right to engage third-party consulting service. Independent directors can also access information on business operation of the Company and industry development via multiple channels including information reporting, seminars and field trips. All these ensured access to independent views and opinions by the board. The Company reviews the effectiveness and implementation of the aforementioned system annually. During the reporting period, all directors and supervisors of the Company can express their opinions independently based on sufficient knowledge of the business operation of the Company when performing their duties. The Board has completed the annual review of the effectiveness of the Company's risk management and internal control systems for the year ended 31 December 2023 (including those of the Company��s key subsidiaries), and continuously oversees the issuers�� risk management and internal control systems, including financial monitoring, operational monitoring and compliance monitoring. In this regard, the board of directors has obtained confirmation from the management on the effectiveness and completeness of the Company��s risk management and internal control systems and procedures. (For details of the risk management & internal control and inside information control of the Company, please refer to the corresponding sections of this chapter.) The Board had reviewed the Company��s risk management and internal control systems, and considered them to be effective and sufficient. **5****.****Performa****n****ce of duties by the** **s****pecial committees under the board of directors** At the end of the reporting period, the Board had 5 special committees, namely, the Strategic and Investment Decision-Making & ESG Committee, the Audit Committee, the Nomination and Remuneration Committee, the Risk Management and Related Party Transactions Control Committee, and the Technological Innovation and Consumer Rights Protection Committee, each of which conducts in-depth studies on specific issues and submits their recommendations to the Board for consideration. **(1)****Performa****n****ce of duties by the Strategic and Investment Decision-Making** **& ESG****Committee****of the Board of Directors** The primary duties of the Strategic and Investment Decision-Making & ESG Committee are, among others, to study and advise on the long-term development strategies of the Company and its subsidiaries; review the investment decision-making procedures and delegation mechanism as well as the management of insurance funds; study and advise on material investments decisions or proposals, material capital management projects and asset management projects; identify the Company's ESG risks, study and plan the Company's ESG strategy, set out the Company's ESG goals, plans, management policies, performance appraisals, etc., and supervise their implementation. In 2023, the Strategic and Investment Decision-Making & ESG Committee held 6 meetings, with details as follows: | | | | | --- | --- | --- | | Time of the meeting | Name of the meeting | Reports heard or resolutions reviewed | | 23 March 2023 | The 1st meeting of the Strategic and Investment Decision-Making & ESG Committee of the 9th Board of Directors in 2023 | Reviewed resolutions including The Resolution on the Proposed Plan for Profit Distribution for 2022 of China Pacific Insurance (Group) Co., Ltd. | | 26 April 2023 | The 2nd meeting of the Strategic and Investment Decision-Making & ESG Committee of the 9th Board of Directors in 2023 | Reviewed resolutions including The Resolution on the 2023-2025 Capital Plan of China Pacific Insurance (Group) Co., Ltd. | | 23 May 2023 | The 3rd meeting of the Strategic and Investment Decision-Making & ESG Committee of the 9th Board of Directors in 2023 | Heard reports including the Report on the 2023 Annual Financial Budget Plan of China Pacific Insurance (Group) Co., Ltd. | | 24 August 2023 | The 4th meeting of the Strategic and Investment Decision-Making & ESG Committee of the 9th Board of Directors in 2023 | Reviewed resolutions including The Resolution on the 2023-2025 High-quality Development Plan of China Pacific Insurance (Group) Co., Ltd. | | 26 October2023 | The 5th meeting of the Strategic and Investment Decision-Making & ESG Committee of the 9th Board of Directors in 2023 | Reviewed resolutions including The Resolution on Equity Share Transfer of China Pacific Insurance Co., (H.K.) Limited to China Pacific Property Insurance Co., Ltd. | | 11 December 2023 | The 6th meeting of the Strategic and Investment Decision-Making & ESG Committee of the 9th Board of Directors in 2023 | Reviewed resolutions including The Resolution on The Revision of the Articles of Association of China Pacific Insurance (Group) Co., Ltd. | The composition and attendance of the members of the Strategic and Investment Decision-Making & ESG Committee are as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | **Name of members** | **Position** | **No. of c****ommittee meetings****convened** | **Attendance in person** | **Attendance by proxy** | **Absence** | | LIU Xiaodan | Independent non-executive director | 6 | 6 | 0 | 0 | | HUANG Dinan | Non-executive director | 6 | 6 | 0 | 0 | | LU Qiaoling | Non-executive director | 6 | 6 | 0 | 0 | | **Depart****ing member** | | | | | | | KONG Qingwei (former committee chairman) | Board chairman, executive director | 6 | 6 | 0 | 0 | Note: In January 2024, Mr. KONG Qingwei resigned as Executive Director and chairman of the Board of Directors of the Company. **(2)****Performance of duties by the Audit Committee of the Board of Directors** The primary duties of the Audit Committee are, among other things, to nominate external auditors; review the Company��s basic internal audit systems and to make recommendations to the board; approve the Company��s annual audit plan and budget; supervise the independence of the Company��s internal audit department; review the financial information of the Company and its disclosure; evaluate the completeness and effectiveness of the Company��s internal control system on a regular basis; hear the reports and assess the performance of the Internal Audit Responsible Person regularly and make recommendations to the board of directors; and review accounting policies and practices of the Company and its subsidiaries. The primary duties of the Audit Committee are, among other things, to evaluate the completeness and effectiveness of the Company��s internal control system on a regular basis to ensure the effective operation of the internal control system. The Audit Committee hears the annual internal control assessment report from the chief internal auditor every year, obtains assurance from the management on the effectiveness and completeness of the Company's internal control system, and reviews the effectiveness of the internal control system. Meanwhile, members of the Audit Committee, from time to time, communicate with the chief Internal Auditor and other senior managers on the internal control situation, and through participation in relevant meetings of the audit centre, keep close contact with the audit centre, to continuously monitor the completeness and effectiveness of the internal control system. In 2023, the Audit Committee held 8 meetings, with details as follows: | | | | | --- | --- | --- | | Time of the meeting | Name of the meeting | Reports heard or resolutions reviewed | | 20 February 2023 | The 1st meeting on the Preparation of the 2022 Annual Report of the Audit Committee and Independent Directors of the 9th Board of Directors | Made a preliminary review of the Company's unaudited 2022 Financial Statements | | 13 March 2023 | The 2nd meeting on the Preparation of the 2022 Annual Report of the Audit Committee and Independent Directors of the 9th Board of Directors | Communicated with the external auditors of the Company on the preliminary audit opinions of the annual audit | | 13 March 2023 | The 1st meeting of the Audit Committee of the 9th Board of Directors in 2023 | Heard Report on Assessment of Service Quality of 2022 Annual External Auditors | | 23 March 2023 | The 2nd meeting of the Audit Committee of the 9th Board of Directors in 2023 | Reviewed The Resolution on 2022 Annual Report of China Pacific Insurance (Group) Co., Ltd. | | 26 April 2023 | The 3rd meeting of the Audit Committee of the 9th Board of Directors in 2023 | Reviewed The Resolution on the 2023 First Quarter Report of China Pacific Insurance (Group) Co., Ltd. | | 24 August 2023 | The 4th meeting of the Audit Committee of the 9th Board of Directors in 2023 | Reviewed The Resolution on 2023 Interim Report of China Pacific Insurance (Group) Co., Ltd. | | 27 October 2023 | The 5th meeting of the Audit Committee of the 9th Board of Directors in 2023 | Reviewed The Resolution on the 2023 Third Quarter Report of China Pacific Insurance (Group) Co., Ltd. | | 29 December 2023 | The 6th meeting of the Audit Committee of the 9th Board of Directors in 2023 | Reviewed The Resolution on the Report of Incumbent Audit for FU Fan, President of China Pacific Insurance (Group) Co., Ltd. | The composition and the attendance of the members of the Audit Committee are as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | **Name of members** | **Position** | **No. of Committee meetings convened** | **Attendance in person** | **Attendance by proxy** | **Absence** | | LAM Tyng Yih, Elizabeth (Chairman) | Independent Non-executive Director | 8 | 8 | 0 | 0 | | WU Junhao | Non-executive Director | 8 | 8 | 0 | 0 | | LO Yuen Man, Elaine | Independent Non-executive Director | 3 | 3 | 0 | 0 | | ZHOU Donghui | Non-executive Director | 8 | 8 | 0 | 0 | | JIANG Xuping | Independent Non-executive Director | 8 | 8 | 0 | 0 | | **Departing****member** | | | | | | | WOO Ka Biu, Jackson | Independent Non-executive Director | 5 | 5 | 0 | 0 | Notes: 1. In February 2024, Mr. WU ceased to serve as Non-executive Director of the Company due to the expiration of the term of office. 2. On 3 August 2023, Ms. LO Yuen Man, Elaine was elected as member of the Audit Committee and Risk Management and Related Party Transaction Control Committee of the 9th Board of Directors at the 26th session of the 9th Board of Directors. Mr. WOO Ka Biu, Jackson no longer served as member of the Audit Committee and Risk Management and Related Party Transactions Control Committee of the 9th Board of Directors. The Audit Committee reviewed the quarterly, interim and annual financial reports and business performance announcements of the Company to ensure the completeness, transparency and consistency of financial disclosure. Given requirements for preparation of annual reports, it discussed with the external auditors and the management, and agreed on the schedule, guiding principle and methodology for the auditing of the Company��s financial statements, and paid particular attention to key items in the report. The Audit Committee discussed with the external auditors and agreed on the schedule for the auditing of the Company��s financial statements based on the plan for the preparation of the Company��s annual report. It held a meeting to review the financial statements prepared by the Company and issued its opinions in writing prior to the commencement of the audit by the external auditors, and maintained adequate and timely communication with the auditors during the process. The committee also convened to review the financial statements of the Company after the external auditors issued their preliminary opinions, and issued its opinions in writing. At its 2nd meeting of 2023, it formed a resolution on the submission of the Company��s annual report to the board of directors for approval. In 2023, the Audit Committee oversaw the performance of duties by the external accountants, examined the independence, compensation and others matters, submitted a report on the work review of annual auditing by external auditors for the year 2022 to the Board of Directors. In this report, it expressed satisfaction with the overall performance of the accounting firm. An opinion was formed at the second meeting of the Audit Committee in 2023, agreeing to submit the resolution to engage external auditors to the Board of Directors for consideration. The committee pays close attention to the internal control of the Company, confirms the annual internal control assessment plan of the Company, reviews amendments to relevant IA policies and other material matters, and objectively assesses the Company's financial position and internal control procedures through two independent communications with external auditors each year, and hear the responses from the managements. It also provides guidance in relation to the Company��s internal audit and takes part in the appraisal and evaluation of the annual performance of the internal audit department. At the same time, the Audit Committee enhanced its guidance for internal audit of the Company, approved the annual internal audit plan, reviewed relevant work in internal audit on a quarterly basis, and participated in the annual performance appraisal of internal audit departments. Besides, the committee hears reports on major risks faced by the Company and management of whistleblowing, with tracking of developments in a timely manner. **(3)****Performance of duties by the Nomination and Remuneration Committee of the Board of Directors** The primary duties of the Nomination and Remuneration Committee are, among others, to provide recommendations to the board with respect to the remuneration and performance management policy and structures for directors and senior management; conduct examination and evaluation of the performance of duties and annual performance of the directors and the senior management; review the selection and appointment system for the directors and senior management and provide recommendations to the board; evaluate candidates of senior management positions nominated by the president; and review the policy on diversity of board members. In the Articles of Association, the Company has clarified the nomination policy for board directors: the Nomination and Remuneration Committee of the Board of Directors and the shareholders who hold more than 3% of the Company's shares individually or collectively are entitled to nominating candidates for non-independent directors. The independent directors may be nominated by the Nomination and Remuneration Committee, the board of supervisors, and shareholders who hold more than 1% of the Company's shares individually or collectively, or by other means as determined by NAFR. According to the Work Rules of the Nomination and Remuneration Committee, the procedures for nominating board directors mainly include: the Nomination and Remuneration Committee consolidates a list of candidates for directors, collects detailed information including their occupation, education, title, work experience and part-time jobs and creates written documents based on that; the committee solicits the nominee��s consent to the nomination, convenes a committee meeting, and conducts qualification review of relevant candidates based on director��s appointment requirements; the committee submits its appointment recommendations and other relevant materials to the Board of Directors, and follows up on it as per the Board��s resolutions and feedback. The Company has complied with the above policy during the nomination process for directors. The Company also focuses on the diversity of board members. The Company believes that diversity of board members has brought a wider perspective and a richer and high-level professional experience to the Company, which is conducive to promoting decision-making and improving corporate governance. For that, the Company has incorporated the diversity policy into the terms of reference of the Nomination and Remuneration Committee. In assessing the Board composition, the Nomination and Remuneration Committee and the Board would take into account various aspects, including but not limited to gender, age, cultural and educational background, professional qualifications, skills, knowledge and industry and regional experience. The Nomination and Remuneration Committee would discuss and agree on measurable objectives for achieving diversity on the Board where necessary, and recommend them to the Board for adoption. The Company has complied with requirement set out in the Corporate Governance Code regarding the diversity of board members and is focused on building a professional, diversified and balanced high-quality board to further improve its decision-making capabilities in different professional fields. During the reporting period, the Company's board of directors was diversified in terms of gender, region, and professional background: there were 10 male directors and 4 female directors (female directors represented around 28.6% of the board); there was at least one senior position on the board held by a female director; female directors represented less than 40% of the board and the Company will gradually increase the proportion of female directors in accordance with the actual situation; there were 11 directors from mainland China and 3 from Hong Kong or overseas; there were 3 directors with accounting background, 1 with legal background, and 10 with professional backgrounds in finance, management, and new technologies, etc. As to ethnics, the board had at least one director from an ethnic minority background. Percentage of directors by gender/gender identity | | | | | | | | --- | --- | --- | --- | --- | --- | | | Number of directors | Percentage of the board (%) | Number of senior positions on the board (President, Senior independent non-executive directors, and Chairman) | Number of senior management | Percentage of senior management (%) | | Male | 10 | 71.4 | 4 | 12 | 100.0 | | Female | 4 | 28.6 | 3 | 0 | 0 | | Not specified/prefer not to say | - | - | - | - | - | Note: The information in this table was collected directly from the individual directors concerned. Percentage of directors by ethnicity | | | | | | | | --- | --- | --- | --- | --- | --- | | | Number of directors | Percentage of the board (%) | Number of senior positions on the board (President, Senior independent non-executive directors, and Chairman) | Number of senior mangement | Percentage of senior management(%) | | White British or other whites (including minority-white groups) | 1 | 7.1 | - | - | - | | Mixed/multi-ethnic groups | - | - | - | - | - | | Asian/Asian British | 13 | 92.9 | 7 | 12 | 100.0 | | Black/African/Caribbean/Black British | - | - | - | - | - | | Other ethnic group (including Arabs) | - | - | - | - | - | | Not specified/prefer not to say | - | - | - | - | - | Note: The information in this table was collected directly from the individual directors concerned. In 2023, the Nomination and Remuneration Committee held 4 meetings, with details as follows: | | | | | --- | --- | --- | | Time of the meeting | Name of the meeting | Reports heard or resolutions reviewed | | 5 January 2023 | The 1st meeting of the Nomination and Remuneration Committee of the 9th Board of Directors in 2023 | ReviewedThe Resolution in Relation to the 2021 Annual Performance Appraisal Results of Professional Managers of China Pacific Insurance (Group) Co., Ltd.. | | 23 March 2023 | The 2nd meeting of the Nomination and Remuneration Committee of the 9th Board of Directors in 2023 | Reviewed The Resolution on the 2022 Annual Performance Appraisal Results of China Pacific Insurance (Group) Co., Ltd. | | 26 October 2023 | The 3rd meeting of the Nomination and Remuneration Committee of the 9th Board of Directors in 2023 | Heard reports including The Report onAdjustment to 2023 Annual Budgets - Performance Appraisal Plan of China Pacific Insurance (Group) Co., Ltd. | | 11 December 2023 | The 4th meeting of the Nomination and Remuneration Committee of the 9th Board of Directors in 2023 | Reviewed resolutions including TheResolution on the Nomination of Mr. FU Fan as Chairman of the 9th Board of Directors of China Pacific Insurance (Group) Co., Ltd. | The composition and attendance of the members of the Nomination and Remuneration Committee are as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | **Name of members** | **Position** | **No. of c****ommittee meetings** **convene****d** | **Attendance in person** | **Attendance by proxy** | **Absence** | | LIU Xiaodan (Chairman) | Independent non-executive director | 4 | 4 | 0 | 0 | | CHIN Hung I, David | Independent non-executive director | 0 | 0 | 0 | 0 | | JIANG Xuping | Independent non-executive director | 4 | 4 | 0 | 0 | | John Robert Dacey | Non-executive Director | 4 | 4 | 0 | 0 | | **Departing members** | | | | | | | CHEN Jizhong | Independent non-executive director | 4 | 4 | 0 | 0 | **(****4)** **Performance of duties by the Risk Management** **and Related Party Transactions Control** **Committee of the Board of Directors** The primary duties of the Risk Management and Related Party Transactions Control Committee are, among others, to make recommendations to the board with respect to the overall objective, basic policies and work rules of risk management; make recommendations to the board of directors with respect to the risk evaluation for major decisions and solutions for significant risks; review the management system for insurance funds management; advise the board of directors on the SAA plan, annual investment plan and investment guidelines and their adjustments; make recommendations to the board of directors with respect to the coordination mechanisms for product design, sales and investment and their performance; discuss risk management system with the management to ensure that effective risk management system is established; conduct research on important findings of risk management issues; conduct solvency management; conduct risk management for subsidiaries; identify and maintain relations with related parties, manage, review, approve related party transactions, conduct risk control of related party transactions; verify material related party transactions; and carry out regular filing of general related party transactions, etc. The Company's Risk Management and Related Party Transactions Control Committee hears a quarterly risk assessment report by the chief risk officer, obtains assurance at the time of annual reporting from the management on the effectiveness and completeness of the Company's risk management system, and reviews the effectiveness of the risk management system. Meanwhile, the committee, from time to time, communicates with the chief risk officer and other senior managers on the major risks of the Company and its subsidiaries to monitor the effectiveness of the risk management system. In addition, the Company has established a mechanism for reporting to the Board's Risk Management and Related Party Transactions Control Committee major risk events such as solvency early warning. In case of significant risk, the Risk Management and Related Party Transactions Control Committee of the Board will be notified in a timely manner. In 2023, the Risk Management and Related Party Transactions Control Committee held 5 meetings as follows: | | | | | --- | --- | --- | | Time of the meeting | Name of the meeting | Resolutions reviewed | | 23 March 2023 | The 1st Meeting of the Risk Management and Related Party Transactions Control Committee of the 9th Board of Directors in 2023 | Reviewed resolutions including The Resolution on the 2022 Solvency Report of China Pacific Insurance (Group) Co., Ltd. | | 26 April 2023 | The 2nd Meeting of the Risk Management and Related Party Transactions Control Committee of the 9th Board of Directors in 2023 | Reviewed resolutions including The Resolution on the 2022 Solvency Stress Test Report of China Pacific Insurance (Group) Co., Ltd. | | 24 August 2023 | The 3rd Meeting of the Risk Management and Related Party Transactions Control Committee of the 9th Board of Directors in 2023 | Reviewed resolutions including The Resolution on the Solvency Report for the First Half of 2023 of China Pacific Insurance (Group) Co., Ltd. | | 26 October 2023 | The 4th Meeting of the Risk Management and Related Party Transactions Control Committee of the 9th Board of Directors in 2023 | Reviewed resolutions including The Resolution on the Risk Assessment Report for the Third Quarter of 2023 of China Pacific Insurance (Group) Co., Ltd. | | 29 December 2023 | The 5th Meeting of the Risk Management and Related Party Transactions Control Committee of the 9th Board of Directors in 2023 | Reviewed resolutions including The Resolution on the 2023 Fraud Risk Management Work Report of China Pacific Insurance (Group) Co., Ltd. | The composition of the Risk Management and Related Party Transactions Control Committee and attendance of its members are as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | **Name of members** | **Position** | **No. of c****ommittee meetings** **convened** | **Attendance in person** | **Attendance by proxy** | **Absence** | | WANG Tayu | Non-executive Director | 5 | 5 | 0 | 0 | | LAM Tyng Yih, Elizabeth | Independent Non-executive Director | 5 | 5 | 0 | 0 | | LO Yuen Man, Elaine | Independent Non-executive Director | 3 | 3 | 0 | 0 | | FU Fan | Executive Director | 5 | 5 | 0 | 0 | | **Departing members** | | | | | | | CHEN Jizhong (former chairman) | Independent Non-executive Director | 5 | 5 | 0 | 0 | | WOO Ka Biu, Jackson | Independent Non-executive Director | 2 | 2 | 0 | 0 | Note: On 3 August 2023, Ms. LO Yuen Man, Elaine was elected as member of the Audit Committee and member of the Risk Management and Related Party Transactions Control Committee of the 9th Board of Directors at the 26th session of the 9th Board of Directors of the Company. Mr. WOO Ka Biu, Jackson ceased to serve as member of the Audit Committee and member of the Risk Management and Related Party Transactions Control Committee of the 9th Board of Directors. **(****5) Performance of duties by the** **Technological Innovation and Consumer Rights Protection****Committee of the Board of Directors** The primary duties of the Technological Innovation and Consumer Rights Protection Committee are, among others, to review the Company��s technological innovation and data management strategy and plans, and overall work objectives; encourage the Company��s management to establish an effective technological innovation operation system; guide and supervise the establishment and improvement of the consumer rights protection work management system; carry out research on major issues in the field of technological innovation and consumer rights protection. In 2023, the Technological Innovation and Consumer Rights Protection Committee held 3 meetings, with details as follows: | | | | | --- | --- | --- | | Time of the meeting | Name of the meeting | Resolutions reviewed | | 23 March 2023 | The 1st meeting of the Technological Innovation and Consumer Rights Protection Committee of the9th Board of Directors in 2023 | Reviewed resolutions including The Resolution on the Consumer Rights Protection Management Policy of China Pacific Insurance (Group) Co., Ltd. | | 24 August 2023 | The 2nd meeting of the Technological Innovation and Consumer Rights Protection Committee of the9th Board of Directors in 2023 | Reviewed resolutions including The Resolution in Relation to the Report of 2023-2025DiTP Plan of China Pacific Insurance (Group) Co., Ltd. | | 26 October 2023 | The 3rd meeting of the Technological Innovation and Consumer Rights Protection Committee of the9th Board of Directors in 2023 | Reviewed resolutions including The Resolution in Relation to the Report on Regulatory Evaluation of Consumer Rights Protection for 2022 of China Pacific Insurance (Group) Co., Ltd. | The composition of the Technological Innovation and Consumer Rights Protection Committee and attendance of its members are as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | **Name of members** | **Position** | **No. of c****ommittee meetings** **convened** | **Attendance in person** | **Attendance by proxy** | **Absence** | | JIANG Xuping (chairman) | Independent Non-executive Director | 3 | 3 | 0 | 0 | | CHEN Ran | Non-executive Director | 3 | 3 | 0 | 0 | | FU Fan | Executive Director | 3 | 3 | 0 | 0 | | **Departing members** | | | | | | | WU Junhao | Non-executive Director | 3 | 3 | 0 | 0 | Note: In February 2024, Mr. WU Junhao ceased to serve as Non-executive Director of the Company due to the expiration of the term of office. **(III)****Supervisors and the Board of Supervisors** Currently, the Company has 3 supervisors, including 2 shareholder representative supervisors (Mr. ZHU Yonghong and Mr. LU Ning) and 1 employee representative supervisor (Mr. GU Qiang). Their biographies are set out in the section ��Directors, supervisors, senior management and employees�� of this report. Mr. ZHU Yonghong serves as chairman of the 9th Board of Supervisors. (On 28 February 2024, Mr. JI Zhengrong ceased to serve as vice chairman of the Board of Supervisors and Employee Representative Supervisor of the Company due to his age). Under the Articles of Association, the board of supervisors is vested by law to exercise the following rights and powers: examine the finances of the Company; monitor the behaviours of directors, president, vice presidents and other senior management during their performance of duties; review the financial information including financial reports, operation reports and profit distribution plans to be submitted to the SGM; propose to convene extraordinary session of the SGM and propose resolutions to it; and conduct investigation when there is any major abnormality in the Company��s operation. **1. Attendance of supervisors** In 2023, the board of supervisors held 8 meetings. Their attendance is as follows: | | | | | | | | --- | --- | --- | --- | --- | --- | | **Supervisor****s** | **No. of** **meetings** **convened** | **Attendance in person** | **Attendance by proxy** | **Absence** | **Remarks** | | **Incumbent supervisors** | | | | | | | ZHU Yonghong | 8 | 7 | 1 | 0 | Unable to attend the 16th session of the 9th Board of Supervisors due to work arrangement, and delegated in writing to JI Zhengrong to attend and vote. | | GU Qiang | 8 | 8 | 0 | 0 | | | LU Ning | 8 | 8 | 0 | 0 | | | **Departing supervisor** | | | | | | | JI Zhengrong | 8 | 8 | 0 | 0 | | Note: On 28 February 2024, Mr. JI Zhengrong ceased to serve as vice chairman of the Board of Supervisors and Employee Representative Supervisor of the Company due to his age. During the reporting period, the Board of Supervisors did not find any risks in the Company, and raised no issues with matters under its supervision. **2.****Meetings of the Board of Supervisors and resolutions** The Board of Supervisors held 8 meetings in 2023. (1) On 6 January 2023, the Company held the 15th session of the 9th Board of Supervisors in Shanghai, at which The Resolution in Relation to the 2021 Annual Performance Appraisal Results of Professional Managers of China Pacific Insurance (Group) Co., Ltd. for 2021 were considered and approved. (2) On 24 March 2023, the Company held the 16th session of the 9th Board of Supervisors in Shanghai, at which resolutions including The Resolution in Relation to the Report of the Board of Supervisors for 2022 of China Pacific Insurance (Group) Co., Ltd. were considered and approved. (3) On 27 April 2023, the Company held the 17th session of the 9th Board of Supervisors in Dali, at which resolutions including The Resolution in Relation to the First Quarter Report for 2023 of China Pacific Insurance (Group) Co., Ltd. were considered and approved. (4) On 23 May 2023, the Company held the 18th session of the 9th Board of Supervisors by circulation, at which reports including the Report on the 2023 Annual Financial Budget Plan of China Pacific Insurance (Group) Co., Ltd. (5) On 25 August 2023, the Company held the 19th session of the 9th Board of Supervisors by circulation, at which resolutions including The Resolution on the 2023 Interim Report of China Pacific Insurance (Group) Co., Ltd. were considered and approved. (6) On 27 October 2023, the Company held the 20th session of the 9th Board of Supervisors in Shanghai, at which resolutions including The Resolution in Relation to the Third Quarter Report for 2023 of China Pacific Insurance (Group) Co., Ltd. were considered and approved. (7) On 11 December 2023, the Company held the 21st session of the 9th Board of Supervisors by circulation, at which resolutions including The Resolution in Relation to Revision of Rules of Procedures for Board of Supervisors Meetings of China Pacific Insurance (Group) Co., Ltd. were considered and approved. (8) On 29 December 2023, the Company held the 22nd session of the 9th Board of Supervisors by circulation, at which resolutions including The Resolution in Relation to the Report on Incumbent Audit for Mr. FU Fan, President of China Pacific Insurance (Group) Co., Ltd. were considered and approved. **(IV)** **Discussions****h****eld****and research made by directors and supervisors** During the reporting period, given the changes in the business environment, regulatory policies, customer behaviours and technology advancement, the Board of Directors and Board of Supervisors stayed focused on value growth and pursued value management and sound business operation to drive healthy and sustainable development of the Company. In 2023, the Board of Directors and the Board of Supervisors pointed out that CPIC Life should deepen the Changhang Transformation to restore growth in new business value; CPIC P/C should seize opportunities of the New Development Pattern, consolidate its competitive advantage, improve asset-liability management, and enhance risk prevention and control in key areas. In addition, the Board of Directors and the Board of Supervisors requested the Company to enhance awareness, strengthen management so as to ensure the smooth implementation of the New Accounting Standards, continue to deepen the implementation of the 3 Key Strategies, i.e., health care, regional integrated development, and digital empowerment, so as to continuously boost service capabilities. During the reporting period, the directors and supervisors put the new development concept into practice in the light of the Company's realities and future plans, and heard reports on the measures of CPIC Life to boost growth of core agents, enhance recruitment and training, business development of bancassurance, and team development under the ��product + service�� system, as well as reports on development of corporate/institutional clients, measures to solidify agricultural insurance business, government-sponsored non-auto business development, and changes to the auto insurance market, etc., of CPIC P/C. The directors and supervisors held in-depth discussions about key issues in the Company��s business operation, came up with solutions, and recognised the Company��s effort and progress in institutional reform, product and service innovation, adaptation to new regulatory environment, fulfilling social responsibilities, and serving national strategies. The directors and supervisors of the Company participated in internal and external training to familiarise themselves with the latest regulatory developments and best corporate governance practices through various channels. During the reporting period, they held a number of seminars, and inspected CPIC Home retirement communities in Dali, Putuo and Chongming for immersive experience of high-quality health and elderly care services. **(V)****Training for directors and supervisor** To improve their performance of duties, professional skills and knowledge of insurance policies and regulations, the directors and supervisors of the Company participated in various online training sessions held by the regulators as well as ones by the Company. Most of the external training sessions this year were held online. Among them, Ms. LO Yuen Man, Elaine, an independent non-executive director of the Company, attended the second session of orientation training for independent non-executive directors of listed companies organised by the SSE in 2023; and Ms. LAM Tyng Yih, Elizabeth and Mr. JIANG Xuping, independent non-executive directors of the Company, attended the follow-up training of the first training session for independent non-executive directors of listed companies organised by the SSE in 2023. Mr. KONG Qingwei, an executive director of the Company, Mr. John Robert Dacey, a non-executive director of the Company, and Mr. JIANG Xuping, an independent non-executive director of the Company, attended the 2023 annual training for directors held by Shanghai State-owned Assets Supervision and Administration Commission. Mr. KONG Qingwei and Mr. FU Fan, executive directors of the Company, Mr. WANG Tayu, Mr. Wu Junhao, Mr. HUANG Dinan, Mr. CHEN Ran, Mr. ZHOU Donghui, Ms. LU Qiaoling, Mr. John Robert Dacey, non-executive directors of the Company, Ms. LIU Xiaodan, Mr. CHEN Jizhong, Ms. LAM Tyng Yih, Elizabeth, Mr. WOO Ka Biu, Jackson, Mr. JIANG Xuping, independent non-executive directors of the Company, and Mr. ZHU Yonghong, Mr. LU Ning, Mr. GU Qiang, and Mr. JI Zhenrong, supervisors of the Company, attended online training held by China Association for Public Companies including sessions on "Reform of Independent Non-executive Director System", "Strict Compliance Requirements, Diligent Performance of Duties and Responsibilities, and Jointly Promoting High-quality Development of Listed Companies in Shanghai", "Supervision on Compliance-based Operation of Listed Companies", "Regulatory Concepts and Practices of Information Disclosure of Listed Companies", "Corporate Governance and Proper Performance of Directors and Supervisors", and "Training on Key Points of CSRC Regulatory Accounting Report on Annual Reports of Listed Companies". Moreover, the Company held special training for all its directors and supervisors in response to new regulations issued by the CSRC, NAFR, SSE, and SEHK. Directors and supervisors also carefully studied the latest laws, regulations and regulatory rules released from time to time by the regulators through other means. All of that helped with their performance of duties. The Company also encouraged all its directors and supervisors to attend training, at the cost of the Company. Since 2012, all the directors have been required to provide their records of training to the Company. **(VII) Auditors�� remuneration** Information on auditors�� remuneration is set out in the ��Report of the Board of Directors and significant events��. **(VIII) Investor relations** In 2023, the Company continued to abide by relevant regulations such as the Investor Relations Management Measures and its implementation rules and the Shareholder Communication Regulations to improve the reach and efficiency of two-way investor interaction. After reviewing the implementation of the above rules and regulations, and in view of measures taken to optimise channels of investor communication and their feed-back, the Company concluded that its policies on shareholder communication have been effectively enforced during the reporting period. The Company carried out IR activities in an orderly manner by means of live video streaming, telephone conference, etc. To respond to investors�� inquiries in a timely manner and help them better understand its value, the Company proactively managed market expectations and improved communication with the capital market based on the latest developments in regulatory requirements, the industry and the Company��s business operation. During the reporting period, it held the 2022 Annual/2023 Interim/2023 Q3 Results Announcement, New Accounting Standards Forum, and Investor Open Day on Changhang Transformation of life insurance business, sustainable development of P/C insurance and insurance technology etc.; conducted non-deal roadshows covering both domestic and international capital markets; and hosted nearly a hundred IR events such as reception day, strategy meetings, investor communication meetings, and visits from investors. During the reporting period, the Company responded to investors' needs in a timely and pragmatic manner, focusing on market priorities and key issues, and guiding investors towards a proper understanding of the value of the Company through effective and efficient investor relations activities. The Company adheres to fair treatment of all types of investors and the protection of retail investors, and constantly uses technology and digital measures to improve its communication channels. In compliance with regulatory requirements, it publicly solicited questions from investors before holding results announcements, which were answered by management during the events. Meanwhile, retail investors can access such events via video links. They may also raise questions by posting messages online and receive a reply within the same day. Moreover, to better meet investors�� needs and enhance two-way communication with investors, the Company assigned personnel for IR hotline, fax, email box, and the IR column on its official website to handle investors�� questions, suggestions and comments, etc. In the year, it continued to produce monthly Investor Newsletters in both Chinese and English with a total of 12 issues published, and responded to 50 investor questions on the E-communication platform of the SSE. At the same time, to fully leverage IR programmes as a channel of two-way communication, the Company actively relays the voice of the capital market to management by means of monthly Investor��s Newsletter, special reports and thematic meetings to help with decision-making and continuously improve market value management. **(IX) Information disclosure and inside information management** The Company attaches great importance to listing rules of the stock exchanges where its securities are traded, and continuously improves transparency through efficient, compliant and orderly disclosure of information. During the reporting period, it strictly abided by the principle of ��truthfulness, accuracy, completeness, timeliness and fairness��, and released regular reports and provisional announcements in strict accordance with regulatory requirements; as an insurance company simultaneously listed in Shanghai, Hong Kong and London, the Company focused on investor��s needs, emulated industry best practices, continued to expand the scope of voluntary information disclosure, innovated ways of non-financial information disclosure and dissemination, ensured continuity and consistency in information disclosure, maintained a clear and concise presentation and combined it with characteristics of the industry to fully, concisely, and effectively communicate its business results and corporate social responsibility efforts including sustainable development to investors and other stakeholders, greatly improving the relevance and effectiveness of information disclosure. During the reporting period, it continued to enhance compliance responsibility by all employees to ensure efficiency and compliance in inside information management. The Company has established and has been continuously reviewing an inside information management system. Measures including promoting, risk warning, special training were taken to ensure the effective implementation of external regulatory policies and internal rules for inside information management. The Company regulates the handling and dissemination of inside information through disclosure policies so that inside information remains confidential until their disclosure is duly approved, and such information can be published effectively and consistently. It also paid close attention to new industry policies and regulatory developments, and based on the latest corporate governance and information disclosure requirements for insurance groups, enriched the information disclosure content. During the reporting period, the Company effectively performed its information disclosure obligations with zero penalties from the regulators and zero major errors or omissions in information disclosure. It was rated A by SSE for information disclosure for 10 consecutive years. **II.** **Performance of duties by** **independent non-executive directors** During the reporting period, the Company��s 9th Board of Directors consists of 5 independent non-executive directors comprising professionals in accounting, finance, auditing and legal affairs, and independent non-executive directors exceed one-third of all the board members, in compliance with applicable regulatory requirements and the provisions of the Articles of Association. The Company��s independent non-executive directors have the required expertise and experience and are able to perform their duties strictly in accordance with the requirements of applicable laws and regulations, regulatory documents, the Articles of Association and Provisions on Performance of Duties by Independent Non-executive Directors. They have provided comments and suggestions on, among other things, corporate governance, business operation, risk management and internal control. Independent non-executive directors have played a meaningful role in the Company��s decision making process, offering an independent and impartial perspective and safeguarding the interests of the Company and of the shareholders as a whole, and in doing so, the interests of minority shareholders as well. In 2023, all the independent non-executive directors attended meetings of the Board as scheduled. They took the initiative to better understand the operating situation of the Company, doing research, making inquiries, and obtaining necessary materials and information for decision-making. They provided independent and unqualified opinions on matters of the Company such as changes of significant accounting estimates, election of board members, appointment of senior management members, related party transactions, and remuneration policy for and the performance appraisal of senior management. In 2023, all independent non-executive directors and the chairman held separate communication meetings in Shanghai without the participation of other directors and senior management, and conducted in-depth communication on the optimisation of corporate governance, business management, and risk and compliance management, etc. In 2023, the independent non-executive directors of the Company conducted a self-examination of independence and submitted the results to the Board of Directors. The Board of Directors was of the view that all independent non-executive directors were able to perform their duties independently, without being subject to influence of the Company or its major shareholders, de facto controllers or other entities or individuals, and that there were no circumstances under which they were not permitted to act as independent non-executive directors. **(I) Attendance of independent non-executive directors at the SGM** In 2023, the Company��s independent non-executive directors actively attended the SGM, details of which are as follows: | | | | | | --- | --- | --- | --- | | **Names of independent****non-executive directors** | **N****o.****of SGMs conven****ed** | **Attendance****in person** | **Absence** | | **Incumbent** **independent****non-executive director****s** | | | | | LIU Xiaodan | 2 | 2 | 0 | | LAM Tyng Yih, Elizabeth | 2 | 2 | 0 | | LO Yuen Man, Elaine | 1 | 1 | 0 | | CHIN Hung I, David | 0 | 0 | 0 | | JIANG Xuping | 2 | 2 | 0 | | **Departing** **independent****non-executive director****s** | | | | | CHEN Jizhong | 2 | 2 | 0 | | WOO Ka Biu, Jackson | 1 | 1 | 0 | **(II) Attendance by independent non-executive directors of board meetings** In 2023, independent non-executive directors actively attended the meetings of the Board of Directors and the attendance of each of the independent non-executive directors is as follows: | | | | | | | --- | --- | --- | --- | --- | | **Names of independent****non-executive directors** | **N****o.****of b****oard meetings****conven****ed** | **Attendance****in person** | **Attendance****by proxy** | **Absence** | | **Incumbent** **independent****non-executive directors** | | | | | | LIU Xiaodan | 9 | 9 | 0 | 0 | | LAM Tyng Yih, Elizabeth | 9 | 9 | 0 | 0 | | LO Yuen Man, Elaine | 5 | 5 | 0 | 0 | | CHIN Hung I, David | 0 | 0 | 0 | 0 | | JIANG Xuping | 9 | 9 | 0 | 0 | | **Departing** **independent****non-executive director****s** | | | | | | CHEN Jizhong | 9 | 9 | 0 | 0 | | WOO Ka Biu, Jackson | 4 | 4 | 0 | 0 | **(III) Objections by the independent non-executive directors on relevant matters of the Company** No objections were raised by independent non-executive directors on relevant matters of the Company and there were no such cases where proposals by the independent non-executive directors were not adopted. **III. Independence of the Company from its controlling shareholders in asset, personnel, finance, organisation and business** The ownership structure of the Company is diversified and there is no controlling shareholder or de facto controller. As a wholly-listed comprehensive insurance group company, the Company is fully independent in the following five aspects: assets, personnel, finance, organisation and business. **IV. Appraisal and incentive programmes for the senior management** The performance management of the Company��s senior management primarily comprises of formulation of performance appraisal plan, performance tracking, performance appraisals and application of the appraisal results. The annual performance appraisal plan will be determined by the Board based on the long-term and medium-term development strategies and the operation plan for the year. The Company takes regular follow-up actions on the fulfilment of various appraisal indicators regularly. At the end of the year, the Board will assess the performance based on the fulfilment of the operational objectives for the entire year. The results of appraisal are linked to the compensation for the senior management. The Company has put in place a remuneration policy based on the position and performance of the employee and market conditions. It also adopts measures such as deferred bonus and compensation recovery and clawback mechanisms for the senior management as an incentive to create long-term value for the Company. In the event of any violations of discipline or regulations or abnormal exposure of risk losses within duties, the Company will re-assess the performance remuneration of the person in question for the relevant year, and deduct, recover and stop payment of the performance remuneration for the corresponding period and deferred payment based on the severity of the offence. Leveraging remuneration schemes for professional managers, the Company took a market-oriented approach towards the remuneration and exit mechanisms for the president and vice president to improve incentives and accountability, and focusing on market-based selection and recruitment. Their employment contracts include clearly defined roles and responsibilities and duration of the positions, differentiated remuneration, detailed remuneration structure and appraisal terms, terms of contract renewal and termination. **V. Risk management** Risk management is a core element of the business operation and management of CPIC Group. The aim of its risk management is to establish a risk management system aligned with its strategic goals and to ensure the adequacy and stability of its solvency in the process of achieving its strategic targets, reduce the uncertainty in achieving its business objectives, and maximise value with risks under control. **(I) Risk governance structure** The Company established a holistic risk management organisational system with the board shouldering the ultimate responsibility, the management responsible for direct stewardship, risk management departments providing coordination, the ��3 lines of defences�� working together and each player performing their respective duties. The boards of the Company and its subsidiaries are the top decision-making body in risk management, and bear the ultimate responsibility for their respective risk management systems and status of operation. The board established the Risk Management & Related Party Transactions Committee, which is vested by the board to perform risk management functions. In 2023, the committee convened 5 sessions, reviewing relevant risk-related items and reports. The Management Committee of the Company is responsible for organising risk management implementation. It introduced the position of Group Chief Risk Officer, which reports risk management status and risk profile to the board Risk Management & Related Party Transactions Committee on a quarterly basis. Under the Management Committee there is the Risk Management and Audit Work Commission, a cross-cutting professional decision-making body responsible for review of risk management programmes and policies, promotion and supervision of key tasks and general coordination. The Risk Management Centre was set up at Group headquarters, consisting of the Department of Risk Management and the Department of Legal Affairs and Compliance, responsible for coordinating daily work in risk management, legal and compliance, and internal control. All insurance and asset management member companies of the Group have set up independent risk management departments, charged with coordinating implementation of management decisions in risk management, including organising, supervising, and guiding other departments in daily risk management as per decisions of the management. Other functional departments and branch offices have all designated Risk Responsible Person and Risk Management Personnel, performing their duties as within their scope of responsibilities and responsible for communications with risk management departments. The Group Internal Audit Centre audits, on an annual basis, the status and results of operation of the Group solvency-aligned risk management system, as well as the status of implementation of risk management policies, and reports to the board. **(II) Risk management strategy and procedure** if !supportLists1. endif**Risk management strategy** The overall risk management strategy of the Company is: in view of its development objectives, organisational structure and business characteristics, support and promote fulfillment of business objectives and strategic planning of the Company via a sound risk management system, stringent risk management processes, and scientific risk management mechanisms and tools. if !supportLists2. endif**Risk appetite** The Company adopts a ��prudent�� risk appetite, and cautiously manages various risks in business operation. The Company and its insurance subsidiaries maintain a sufficient level of solvency, and pursue stable profitability and sustained value growth while maintaining appropriate liquidity, maintain a sound risk management status and market image. It continuously upgrades the risk control system compatible with its status as a listed company in SSE, SEHK, and LSE, integrates ESG requirements into its ERM system, with leadership in promoting healthy and stable development of the industry. The Company's risk tolerance system includes five core dimensions: maintaining adequate capital, pursuing stable profitability, achieving sustained value growth, maintaining proper liquidity, and ensuring sound risk status and a good market image. The Company has set overall risk limits at the Group level which also apply to its subsidiaries. Based on their own business characteristics and needs, each subsidiary further breaks down the limits for various risks and applies them in daily business decisions, risk monitoring and early warning to achieve healthy coordination and balance between risk management and business development. if !supportLists3. endif**Risk management procedure** The Company��s key risk management procedure includes: formulation of objectives, collection of information, risk identification & assessment, risk handling, risk reporting, supervision and rectification. The Company uses a set of risk management tools, such as risk management information system, comprehensive budgeting, ALM, capital planning and stress testing, to manage various risks faced by the Group and its key member companies as within their respective business scopes. It has established and continuously improves mechanisms in early warning, emergency response and crisis management to enhance its capacity to prevent and mitigate major risks and to tackle emergencies. **(III) Risk management performance** In 2023, the Company promoted risk management via the upgrading of C-ROSS II solvency-aligned risk management system, centring on implementation of its strategies and business priorities, and bench-marked against SARMRA evaluation standards. In order to do this, the Company did the following: the rectification of gaps and establishment of long-term mechanisms in risk management; enhanced the control of group specific risks; strengthened the handling and early-warning of major risks in key areas; pushed for the improvement of risk management systems of non-insurance member companies; and continued to optimise IT systems and tools in risk management so as to improve the effectiveness of Group risk management system in an all-around way. **(IV)** **Key r****isk****s** In 2023, the Company was exposed to various risks, including insurance risk, market risk, credit risk, liquidity risk, operational risk, reputational risk, strategy risk, capital management risk and group specific risks. For details of the insurance risk, market risk, credit risk, liquidity risk, operational risk, and capital management risk, please refer to note XIII ��Risk management�� to the financial statements. Status of other risks is as follows: if !supportLists1. endif**Reputational risk** Reputational risk is caused by actions of insurance institutions, practitioners, or external events, which may lead to adverse comments on insurance institutions by stakeholders, the public, the media, etc., thereby damaging their brand value, hurting their business, and even affecting market and social stability. In compliance with the latest rules and requirements concerning reputational risk management of insurance groups, the Company continuously optimises governance structure and work process, improves full-process management and mechanisms, enhances Group-wise, all-around reputational risk management, ensures close coordination of the ��3 lines of defences��, with effective control of the risk. It conducts annual evaluation of the status of the reputational risk, and the operation of relevant risk management mechanisms, and submits special reports to senior management, the board of directors and the board of supervisors. In 2023, the Company amended reputational risk management rules of CPIC Group to consolidate the  foundation of the risk management; promoted relevant training, emergency drills, risk screening, cultural cultivation and team building, to further enhance the reputational risk prevention and control system; explored the building of a smart platform for risk management to improve efficiency in risk handling; organised interviews with experts and promoted on-line publicity to increase visibility and influence. In 2023, it maintained a stable status in reputational risk management with no major reputational risk incidents. In May of the same year, the Group was elected chairman of the 2nd Special Committee on Reputational Risk Management of the IAS (Insurance Association of China), continuously contributing to the reputational risk management of the industry. if !supportLists2. endif**Strategy risk** Strategy risk refers to the risk that the strategy does not match the market environment or the Company��s reality due to an ineffective process of strategy formulation and implementation or changes in the business environment. The Company has established an organisational structure and work procedures for strategy risk management and formulates its strategic plans based on factors such as the Company��s market environment, risk appetite, and capital position. It evaluates the implementation of strategic planning on a regular basis, adjusts and improves its plans in response to changes to the environment and its own realities. In accordance with C-ROSS II requirements, it put in place rules and policies of strategy risk management, strengthened coordination, stepped up identification, analysis, monitoring and reporting of strategy risks of the Group and its member companies, and reports, on a regular basis, to senior management on evaluation and status of strategy risk management. The Group monitors, on a regular basis, the status of implementation of the strategic planning of its key member companies to ensure its alignment with the strategic planning and progress of implementation of the Group. In 2023, there was no major strategy risk incidents, or breach of risk limits. if !supportLists3. endif**Group specific risks** Group specific risks faced by the Company include risk contagion, risk of opaque organisational structure, concentration risk, and non-insurance risks. **(1) Risk contagion** Risk contagion means the risk of one member company spreading to other member companies of the Group through internal transactions or other means, thus causing unexpected losses to the Group or its member companies. The Company strictly controls related party transactions (RPT) with an effective management mechanism for risk quarantine to minimise risk contagion. Measures taken in 2023 and their implementation status are as follows: In term of related party transaction management, as per relevant regulatory requirements, the Company has in place, and continuously improves long-term mechanisms for RPT management, strengthens internal control and risk management to curb intra-Group risk contagion resulting from RPTs, pushes forward the building of RPT management systems, minimises errors and enhances data-processing capacity of the entire RPT management process, in a bid to improve the IT-driven, full-process management.  The Company formulated Regulations on Related Party Transactions and Implementation Rules, established the board Risk Management and Related Party Transactions Control Committee, set up the cross-departmental Office of Related Party Transactions, and defined its management roles and responsibilities. During the reporting period, the Company revised indicators for limits on major RPTs, further improved its standard practice for filing of standardised RPT data, defined the route of data filing so as to enhance the management of RPT data management. As for risk quarantine, in strict conformity with regulatory requirements, the Company formulated risk quarantine rules, set up risk firewalls in areas such as corporate management, financial management, capital management, business operation, information management, personnel management, as well as brand publicity, information disclosure, related party transactions and guarantee management; identified risk contagion routes, established and implemented prudent risk quarantine management mechanisms and measures.  During the reporting period, the Company reviewed relevant business regulations and operational processes, updated its rules on financial management and guarantee management, and continued to optimise the risk quarantine management system; clarified policies on outsourcing management, established dedicated rules in relation to IT outsourcing, formulated outsourcing strategies and conducted key decision-making, carried out technology outsourcing activities in accordance with laws and regulations. **(2) Risk of opaque organizational structure** It refers to the risk that an insurance group��s shareholding structure, management structure, operational process, business types, etc. are excessively complex and opaque, which may cause losses to the Group. In strict compliance with regulatory requirements, the Company further defined its management mechanisms and regular assessment system for the risk of opaque organisational structure. The status of risk of opaque organisational structure in 2023 is as follows: CPIC is a listed insurance holding group and maintains a clear shareholding structure, without any cross-shareholding or illegal subscription of capital instruments between its members and its associated companies, or between its member companies. Based on their strategic planning and business development needs, each member company has established compatible organisational structures with clear boundaries, well-defined responsibilities and powers. This helped to avoid either overlapping or gaps of functions, or over-centralisation of authority and powers, and thus formed a working mechanism with clear definition of roles and responsibilities, good coordination and checks and balances. **(3) Concentration risk** Concentration risk refers to the risk of unexpected losses for an insurance group when individual risks or risk portfolios of its member companies are concentrated at the group level. In accordance with relevant regulatory requirements, CPIC formulates regulations on concentration risk management, regularly identifies, evaluates, monitors and reports on different types of concentration risks of the Group and its member companies along 4 dimensions, i.e., transaction counter-parties, investment assets, customers and business, and their sub-dimensions, to prevent or mitigate material adverse effects of concentration risk on the solvency or liquidity of the Group. CPIC has a risk limit indicators system for concentration risk, covering all the four dimensions and their sub-dimensions, and uses the system to regularly evaluate the concentration risk on each dimension. During the reporting period, the overall concentration risk status was comfortable, and there was no breach of limits nor any concentration risk which posed a material threat to the solvency or liquidity of the Company. Based on realities of its business operation and its risk profiles, the Company focuses on the concentration risk relating to its investment counter-parties, and regularly assesses the concentration of investment assets with credit risk exposure, as well as the credit risk and financial situation of its major counter-parties. During the reporting period, the Company��s major investment counter-parties maintained stable ratings, with related concentration risk under control. **(4) Non-insurance risk** The Company��s non-insurance business and investments are predicated on the Group��s strategic positioning as ��a pure insurance player��, which helps to contain the magnitude and impact of non-insurance risks. The Company strictly complies with relevant regulations, prudently manages investment activities in non-insurance fields, and constantly monitors, prevents the adverse effects of operating activities of non-insurance member companies on the solvency of the Group and its insurance member companies. In terms of investment by non-insurance member companies, CPIC has established an equity investment management system for non-insurance areas based on equity shareholding and corporate governance system. It has set up an investment decision-making committee under its Assets and Liabilities Management Committee to organise and coordinate major equity investments of its member companies, which helps to ensure that the Company��s shareholding structure remains clear and that those investments are aligned with CPIC��s risk appetite and limits. In management of its non-insurance business, CPIC strictly complies with relevant regulations, and evaluates the risk exposure of non-insurance investments regularly, with results reported to the board. It also enhances equity management and risk monitoring of its member companies, as well as timely assessment and adjustment of the development strategies of its non-insurance business. The Company has also set up asset and liquidity quarantine mechanisms between its insurance and non-insurance member companies to ensure that investments in non-insurance member companies will not harm the interests of policyholders. In 2023, the Company focused on enhancing management of its non-insurance member companies, particularly management based on consolidation of financial statements, differentiated management of member companies, non-insurance equity management, and non-insurance capital management. It upgraded its non-insurance management system step by step via strengthened mechanisms, policies, processes, defined of responsibilities, and supportive tools. **VI. Internal control** The Company has always been committed to improving its internal control and adopted sound internal control systems as per regulatory requirements to help achieve sustainable growth and fulfill internal control objectives such as reasonable assurance of compliance and legality of its operation, safety of assets, truthfulness and completeness of financial reports and relevant information, improved business efficiency and performance, and successful execution of business strategies. The board of the Company is responsible for establishing and improving internal control and its effective implementation, reviewing the organisational structure and important policies of internal control, reviewing the handling of major risk events, as well as regularly assessing the soundness, rationality and effectiveness of the Company��s internal control. The internal control system can only provide reasonable, not absolute warrant against material misrepresentations or losses. The purpose of formulating an internal control system is to manage, not to eliminate, the risk of not being able to meet business objectives. The Board further clarifies that the abovementioned systems were established to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide a reasonable but not absolute assurance against material misstatement or loss. The Board of Supervisors is responsible for oversight of the establishment and implementation of the Company��s internal control by the board. The Management Committee is responsible for establishing and improving the organisational structure of the Company, improving the internal control system, as well as for managing the daily operation of the internal control system as per decisions of the board. In 2023, the Company continued to optimise its internal control system by focusing on the key projects and key tasks, promoted full integration of internal control into business management to ensure that the system is complete, fully controlled, and effectively implemented. We coordinated self-assessment of risk management and internal control of the Group and its subsidiaries, proactively identified and assessed risks in key management processes, and completed a special evaluation of the IT-driven control of key processes. We defined boundaries, fulfilled our responsibilities of Group-level control, and organised relevant departments to further improve the Group��s governance framework, systems, processes, standards and other internal control mechanisms in compliance with the Measures for Supervision and Administration of Insurance Groups, while ensuring clear boundaries between the Group and its subsidiaries. We implemented the Operational Risk Management Measures, clarified the organisational structure and duties of operational risk management of the Group, as well as the corresponding requirements for its subsidiaries, and organised training on operational risk control for key internal control personnel of the subsidiaries. In development of digital risk management systems, the Company pushed forward the application of smart risk control tools in front-line business such as smart online verification of contracts, texts, and videos, reaping tangible benefits from the use of smart tools and data sharing. In 2024, under the guidance of the Central Work Meeting on Financial Services, we will deepen our understanding of high-quality development of the financial services sector, implement the decisions of the Group's Party Committee and the Board of Directors, meet "risk control requirements", pro-actively identify and prevent new types of risks, and continue to consolidate and improve our integrated risk control to better prevent and resolve risks. Pursuant to the Internal Audit Working Rules for Insurance Institutions (CIRC [2015] No. 113), Regulations on Internal Audit of the National Audit Office of China (CNAO [2018] No. 11), and its Articles of Association, the Company implements an internal audit system under the direct leadership of the Group��s Party Committee and Board of Directors and under the guidance and oversight of the Audit Committee of the Board of Directors. It adopts centralised management of internal audit and has set up an Internal Audit Centre at its headquarters with full-time personnel performing internal auditing of both the Group and subsidiaries. Therefore, subsidiaries no longer have needs for internal audit departments or positions. The Party secretary and board chairman of CPIC Group are in charge of internal audits; Chief Internal Auditor of the Group is also the Internal Audit Responsible Person of the Group, responsible for organising its internal audit work. In 2023, the Party Committee of CPIC Group set up the Internal Audit Steering Committee and Office to further strengthen its leadership on internal auditing. The Internal Audit Centre of the Company implemented the 3-Year Action Plan for High Quality Development of Internal Audit (2023-2025) of CPIC, and ensured effective roll-out of relevant actions and campaigns. It enhanced rules and regulations, operational management, technological empowerment and team competence in internal audit to support high-quality development of the Company; studied and implemented the requirements of NAFR as well as strategic decisions of the Group, coordinated internal audit projects, innovated internal audit mode, and completed the audit plan for the whole year. The Centre detected no major systemic deficiencies affecting business operation of the Company, with major risks under control; developed a new generation of internal audit operating system and Digital Internal Auditors to enhance smart internal audit. On 5 December, the Centre was awarded "Outstanding Internal Audit Centre from 2020 to 2022" by the China Institute of Internal Audit. In accordance with the Basic Standards for Enterprise Internal Control and its supplementary guidelines as well as other applicable rules and regulations, the internal control system and evaluation methods of the Company, and on top of their daily supervision as well as ad hoc supervision of internal control, the internal audit departments of the Company led the assessment of the effectiveness of the Company��s internal control as at 31 December 2023 (the baseline date for internal control assessment report). Based on findings of the assessment, as of the baseline date there were no major deficiencies in the Company��s internal control for financial reporting. The Board of Directors believes that the Company maintained effective internal control for financial reporting in all major aspects as per requirements of the internal control system and relevant regulations. Based on findings of the assessment, as of the baseline date there were no major deficiencies in the Company��s internal control for non-financial reporting. There were no factors which may affect these conclusions regarding the internal control effectiveness between the baseline date and the date of the issuance of the internal control assessment report. The Company��s external auditors also issued an audit report on the Company��s internal control, which is of the opinion that as of 31 December 2023, the Company has maintained effective internal control in all major aspects for financial reporting in compliance with the Basic Standards for Enterprise Internal Control and the supplementary guidelines as well as other applicable rules and regulations. For details please refer to the 2023 Annual Internal Control Assessment Report and the 2023 Annual Internal Control Audit Report issued by the external auditor as disclosed on the website of SSE (www.sse.com.cn). **VII. Management and control of subsidiaries** Guided by Group strategic goals, we strengthened strategic management and control of subsidiaries in 2023. While maintaining the autonomy of our subsidiaries as independent legal entities, we continued to improve relevant policies and working mechanisms based on their respective strategic positioning and business realities, and gradually built a suitable and highly-efficient management model. As per strategic positioning and responsibilities of CPIC Group and its subsidiaries, each subsidiary carries out business operation under the guideline of optimising Group resource allocation, creating synergies and promoting the development of the core insurance business. We adhered to Group-coordinated development, intensified effort to cascade Group strategies down the organisation, clearly defined business strategies and key tasks of each subsidiary with follow-ups on a regular basis in light of the priorities and paths of Group strategic control; leveraged the Group KPI system to ensure the fulfillment of the Group's overall strategic goals and business targets of subsidiaries. In compliance with regulatory guidelines on solvency supervision of insurance groups and insurance companies, we continued to maintain de facto control by the Group over key business areas and major decisions of key subsidiaries, further enhanced equity management and continuously improved the integrated risk management system to boost our risk management capabilities. **VII****I****.** **Changes to Articles of Association** In accordance with regulations such as the Company Law and the Code of Corporate Governance for Insurance Institutions, and the Guidelines for the Articles of Association of Listed Companies and taking into consideration its actual situation, the Company amended relevant documents including the Articles of Association, the Rules of Procedures for Shareholders�� Meeting, the Rules of Procedures for Board Meetings and the Rules of Procedures for Board of Supervisors Meetings. On 29 February 2024, the Company held the first extraordinary general meeting of 2024, at which the afore-mentioned amendments were considered and approved. The afore-mentioned amendments shall take effect upon approval of the regulatory authorities. These amendments will take effect pending regulatory approval. **IX. Corporate culture** We are committed to fostering an enabling, consistent corporate culture that supports China��s national development strategies and priorities, puts people first and facilitates their pursuit of a better life. We are fully aware that corporate culture is the ��soul�� of a company, a sustained driver of development and a bond of unity and cohesion. We have put in place a complete system of corporate culture along multiple dimensions such as mission, vision and core values. Our mission is to become ��A responsible insurance company��; our vision is ��Industry leadership for healthy and steady development��; our core values can be summarised as ��Integrity, Prudence, Pursuit of Excellence, Innovation & Win-win Outcome��; we uphold the philosophy of ��Shouldering responsibilities for the country, the people and the society�� in corporate social responsibility; our branding catchphrase is ��Contribute a drop of water everyday and you can receive an ocean of help in times of need��. We make sustained efforts in advocacy of corporate culture, with on-the-ground practice by all employees. That helps with our strategic transformation and empowers our sustainable, high-quality development. We put statements into practice and integrated corporate culture into our day-to-day business operation. For details please refer to chapters of ��Chairman��s statement�� and ��Business overview��. **Environmental and social responsibility** Fully leveraging its insurance expertise, CPIC continued to innovate the supply of green financial products and services to help with the green and low-carbon transformation of the economy and society. **I****. Promoting green development** **(I). Innovating green insurance products** We make sustained efforts in areas such as tackling climate change, environmental pollution control, clean energy, green transport and carbon market development to promote a steady, step-by-step green and low-carbon transformation. As of the end of 2023, the cumulative SA on green insurance we underwrote around RMB109.2 trillion. We rolled out 27 industry-first products such as the carbon asset repurchase performance guarantee insurance. **(1) Catastrophe insurance** We explored local, customised protection models for urban and rural areas, including different catastrophe insurance solutions: for relief assistance, innovation-driven and index-based ones. As at the end of 2023, we offered cover against catastrophe risks of about RMB895 billion in total SA. **(2) Environmental pollution liability insurance** We engaged third-party environmental risk assessors and techniques to provide sound risk-control recommendations and promote risk-reduction management. We underwrote a total of RMB12 billion in SA of environmental pollution liability insurance for about 5,000 businesses. Our innovative "Shui Zhi Wu You" insurance programme offers environmental risk management services such as early warning and financial compensation to help polluters with limited financial means to pay for environmental damages. **(3) Clean energy insurance** We provide cover against various types of natural disasters and accidents during the construction and operation of green energy projects in fields such as hydro-power, photovoltaic power generation, and offshore wind power. By the end of 2023, we underwrote over RMB2.9 trillion in SA for clean energy projects. **(4) New energy vehicle auto insurance** We promoted new energy vehicle insurance and advocated green life and green consumption among customers. In 2023, we offered a total of approximately RMB7.7 trillion in SA for 3.1 million new energy vehicles. **(5) Ecological carbon sink insurance** We launched a series of innovative ecological carbon sink insurance products, covering forests, grassland and wetland, etc., to improve ecological well-being with the power of insurance. In 2023, cumulative SA on ecological carbon sink insurance totalled about RMB65 million. **(6) Carbon asset-related insurance** We launched a series of innovative carbon asset-related insurance products including carbon asset impairment loss insurance, carbon-emission-quota-pledged loan guarantee insurance, insurance against carbon loss caused by malfunction of emission reduction equipment, and carbon asset repurchase performance guarantee insurance, issued first such insurance policies in the industry, thus helping key emission-control enterprises to make good financial use of their carbon assets. **(II). Further implementing green investment** We actively innovated green investment products, focusing on energy conservation, environmental protection, clean production, clean energy, ecological environment, green upgrading of infrastructure, etc., to ensure steady progress in green investment. Our total green investment exceeded RMB200 billion. **(1) Clean energy** The registered size of the Lushan Yuneng Debt Investment Scheme is RMB5 billion, and RMB2 billion had been invested by the end of 2023 for the construction of the Lushan Water Pump & Storage Power Station Project in Henan Province, which, when operational, will reduce the annual consumption of standard coal equivalents by 140,200 metric tons, equal to reducing the emission of carbon dioxide by 309,800 metric tons. **(2) Upgrading green infrastructure** The registered size of the CPIC-Wuhan Metro Infrastructure Debt Investment Plan (Phase II) is RMB3 billion. By the end of 2023, RMB600 million had been invested, and the plan obtained (the highest) G1 green certification from Lianhe Equator Environmental Assessment, Co., Ltd. The registered size of the CPIC-Chengdu Railway Infrastructure Debt Investment Plan (Phase II) is RMB6.5 billion, which supports the construction of a rail transport network for mega cities to improve energy-saving and emission reduction. It also obtained (the highest) G1 green certification from Lianhe Equator Environmental Assessment, Co., Ltd. **(3)** **Water conservation** We continued to leverage the ongoing Changjiang Pension-Guizhou Water Investment Infrastructure Debt Investment Plan to support and improve the quality of local urban and rural water supply. **(4) Living environment** Promoting inclusive finance in rural areas, we continued to help finance shantytown renovation and infrastructure-building, with outstanding debt investment products in this field exceeding RMB10 billion. **II****. Eco-friendly operation** **(I). Innovating carbon management mechanism****s** We pushed forward mechanisms for low-carbon operation in an all-around way, established supporting systems for physical assets in six major categories related to carbon emissions, and created an industry-first, multi-dimensional management model. Meanwhile, we built a demonstration park for green low-carbon operation to reduce and control workplace energy consumption through renovation of energy-saving equipment. In 2023, we carried out a Group-wide carbon accounting verification on the operation side, developed and put in use an ESG carbon footprint management platform, which is capable of visualised presentation of carbon emission data, with breakdown by branch, period and energy consumption. In addition, CPIC P/C introduced an innovative internal carbon tax for guidance, which, drawing on carbon market prices, can calculate carbon tax for guidance on carbon emissions generated by employee��s business travel, so as to encourage them to travel in a low-carbon manner. **(II). Developing carbon inclusive management system (CIMS)** In June 2023, the CPIC Carbon Inclusive Platform was officially launched. It uses ��internet + big data + carbon finance�� technologies to make low-carbon behaviours measurable, perceptible and rewardable. By establishing customer carbon accounts, building insurance-relevant low-carbon scenarios, and offering incentives to customers to reduce carbon emissions, the platform promotes green and low-carbon behaviours among customers. It has been rolled out in 10 CPIC branch offices, such as those in Shanghai, Zhejiang, Beijing, Jiangxi, Guangxi, Wuxi, Ningbo, and Gansu, with more than 250,000 users by the end of 2023. **(III). Advocating green office** We released the Guidelines for Green Operation Management of Self-Use Headquarters Premises, promoted the construction of smart buildings, green technology upgrading and green operation initiatives and processes. We also set up indicators to improve energy saving and accelerate green transformation. | | | | --- | --- | | Energy saving | if !supportListsØ endifBuilt an energy-efficiency monitoring platform of electromechanical integrated systems for buildings to monitor real time energy use, strengthened analysis of key energy-using equipment, and formulated energy-saving measures if !supportListsØ endifAdopted technologies such as smart air-conditioning, frequency conversion regulation, cold storage air-conditioning and heat recycling to optimise energy-saving operation and management if !supportListsØ endifMade full use of natural light for lighting, installed energy-saving lamps, adopted both centralised and localised lighting control, improved illuminance and lighting time control, and promoted the use of LED and energy-saving lamps if !supportListsØ endifOptimised layout of elevator systems, with centralised control to optimise elevator operation ?C use frequency conversion, power feedback, drive dormancy, and smart management to reduce energy consumption. if !supportListsØ endifEvaluated relevant equipment/products as per the Elimination of Energy-consuming and Outdated Electromechanical Equipment (Products) to phase out and replace high energy-consuming and outdated equipment. | | Water saving | if !supportListsØ endifInstalled water-saving appliances and equipment, for example water-saving toilets, faucets, shower-heads, high-pressure flushing nozzles, etc. if !supportListsØ endifInstalled hot water recycling facilities in the water supply system, and set up water meters to ensure proper usage if !supportListsØ endifUtilised non-traditional water sources such as recycled water and rainwater. | | Waste disposal | if !supportListsØ endifPractised garbage classification, formulated and implemented garbage management system, and set up collection facilities. if !supportListsØ endifTook measures to ensure air-tightness to contain the spread of odour and dust to prevent secondary pollution | The Company is not a high-pollution enterprise. In 2023, it received neither penalties due to violation of environmental rules nor any environmental complaints. **III. Supporting rural and agricultural development and contributing to rural invigoration** CPIC continued to explore long-term mechanisms to boost rural invigoration in key areas including rural development, rural construction and rural governance. **(I). Assistance to rural areas** **(1) Medical assistance** We promoted the Healthy China Initiative in rural areas, as well as government-sponsored critical illness and long-term care insurance programmes in remote rural areas to help reduce poverty or return to poverty due to illnesses. **(2) Send****ing****employees to** **rural** **villages** We set up rural invigoration steering committees led by branch-level general managers and CPIC Service Officers, who regularly visited designated villages to better offer help. As of the end of 2023, 270 employees were stationed in villages in 24 provinces, autonomous regions and municipalities directly under the central government. **(3) Help****ing****to sell farm produc****e** To increase their income, we helped farmers sell farm produce by various means - targeted purchasing by the Company, live streaming, guaranteed sales, and purchase by employees. **(II). Agricultural insurance** **(1) Support****ing****food security** We strived to improve the quality and efficiency of agricultural insurance, developed nearly 4,000 agricultural insurance products covering agriculture, forestry, animal husbandry and fishery. In 2023, CPIC provided more than RMB780 billion in various types of agricultural protection to nearly 23 million farming households, and paid out about RMB14.4 billion in 5.77 million claims. **(2) Explor****ing****insurance for supply****chain****, industry** **chain** **and value chain** We rolled out customised lychee traceability insurance in Guangdong, thus building a new model to protect farmers�� income that integrates the supply chain, industry chain, value chain, and digital ecosystem for agricultural products. It generated an extra income of over RMB3 million to 130 farmers. In Suzhou, we underwrote the first commercial freshwater fish income insurance policy in Jiangsu Province. **(3) Offer****ing****comprehensive risk protection** In Zhejiang, we offered new agricultural comprehensive insurance to 330 entities, with total SA of more than RMB600 million. In Shanghai, we created a four-party model (engaging governments, banks, guarantors and insurers" to provide ��green-channel�� financing and credit-enhancing service to various types of agricultural businesses. **(4) Digitalis****ing****agricultural insurance claims handling** We continued to improve the catastrophe emergency response mechanisms for agricultural insurance integrating "protection + prevention + rescue + compensation" and the supporting system, launched E-agricultural Insurance V9.0, and strengthened prevention-focused risk management by using big data, artificial intelligence, Internet of Things, satellites and infrared detection technologies. CPIC has not yet fully complied with the requirements of LR 14.3.27R as it has not included climate-related financial disclosures consistent with the TCFD recommendations and recommended disclosures within its annual report. However, similar to the approach taken last year, we will be publishing CPIC's Sustainability Report for 2023 by the end of April 2024 which will include CPIC's climate-related disclosures consistent with the TCFD recommendations, as well as a more comprehensive overview of its climate strategy and progress. This allows CPIC to provide more detailed information to its stakeholders in a more accessible format as well as ensuring that its climate-related financial disclosures are as compliant and full as they can be. The Sustainability Report will provide further information on CPIC's compliance with LR 14.3.27R and will be available at https://www.cpic.com.cn/gdr/gdrggen/ by the end of April 2024. **Documents available for inspection** **I.** **Sealed financial statements signed by the legal representative, principal in charge of accounting and head of accounting department** **II.** **O****riginal** **auditor's report signed by the auditors** **III. A****nnual reports disclosed in other security markets.** **CHINA PACIFIC INSURANCE (GROUP) CO., LTD.** **FINANCIAL STATEMENTS** **FOR THE YEAR ENDED 31 DECEMBER 2023** **Contents** Pages I AUDITOR��S REPORT1-7 II FINANCIAL STATEMENTS Consolidated balance sheet 8-9 Consolidated income statement 10-11 Consolidated statement of changes in equity 12-13 Consolidated cash flow statement 14-15 Company balance sheet 16 Company income statement 17 Company statement of changes in equity 18 Company cash flow statement 19 Notes to the financial statements 20-229 APPENDIX: SUPPLEMENTARY INFORMATION TO THE FINANCIAL STATEMENTS Net asset return and earnings per share     A1 **Independent auditor��s report** **To the shareholders of China Pacific Insurance (Group) Co., Ltd.** (Incorporated in the People��s Republic of China with limited liability) **Opinion** We have audited the financial statements set out on pages 8 to 229, which comprises the consolidated and company balance sheets of China Pacific Insurance (Group) Co., Ltd. (hereinafter ��CPIC��) as at 31 December 2023, consolidated and company income statements, the consolidated and company statements of changes in equity and the consolidated and company cash flow statements for the year then ended, and the notes to the financial statements, including a summary of significant accounting policies and other explanatory information. In our opinion, the accompanying financial statements give a true and fair view of the consolidated and company��s financial position of CPIC as at 31 December 2023, and the consolidated and company��s financial performance and cash flows for the year then ended in accordance with Accounting Standards for Business Enterprises ("CASs"). **Basis for opinion** We conducted our audit in accordance with International Standards on Auditing (��ISAs��) issued by the International Auditing and Assurance Standards Board (the ��IAASB��). Our responsibilities under those standards are further described in the *Auditor��s responsibilities for the audit of the financial statements* section of our report. We are independent of CPIC in accordance with the International Ethics Standards Board for Accountants�� *International Code of Ethics for Professional Accountants* *(including International Independence Standards)* (the ��IESBA Code��) and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. **Key audit matters** Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. **Independent auditor��s report (continued)** **To the shareholders of China Pacific Insurance (Group) Co., Ltd.** (Incorporated in the People��s Republic of China with limited liability) **Key audit matters (continued)** We have fulfilled the responsibilities described in the *Auditor��s responsibilities for the audit of the financial statements* section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements. | | | | --- | --- | | **Key audit matter** | **How our audit addressed the key audit matter** | | *Valuation of insurance contract liabilities* | | | As at 31 December 2023, the carrying amount of CPIC��s insurance contract liabilities was RMB 1,872.6 billion, representing 90% of the total liabilities. We identified the valuation of insurance contract liabilities as a key audit matter, as it requires significant estimations and judgements. The valuation of insurance contract liabilities involves significant judgements and estimates over the level of aggregation of insurance contracts, the appropriateness of the measurement approach, the determination of coverage units and the uncertain future cash flows. | With the support of our internal experts, we performed relevant audit procedures, which mainly included the following: if !supportLists• endifReviewed CPIC��s accounting policies in relation to the valuation of insurance contract liabilities, including tests of significant insurance risk, the level of aggregation, recognition and valuation of insurance contracts, and transition, etc. if !supportLists• endif Understood, evaluated and tested the management��s design and operating effectiveness of relevant internal controls over the valuation of insurance contract liabilities, including the internal controls over determination and approval of key assumptions, data collection and analysis, the IT systems, IT general controls, data transmission between systems and computation, etc. in relation to the valuation of insurance contract liabilities. if !supportLists• endif Tested the completeness and accuracy of the underlying data used in the valuation of insurance contract liabilities. | **Independent auditor��s report (continued)** **To the shareholders of China Pacific Insurance (Group) Co., Ltd.** (Incorporated in the People��s Republic of China with limited liability) **Key audit matters (continued)** | | | | --- | --- | | **Key audit matter** | **How our audit addressed the key audit matter** | | *Valuation of insurance contract liabilities**(continued)* | | | The valuation of insurance contract liabilities also involves the application of complex actuarial models, and a high degree of judgement and estimation is used by management in determining assumptions as well. Key assumptions used in measuring insurance contract liabilities include mortality, morbidity, surrender rates, discount rates, expenses assumptions, loss ratios, policy dividends assumptions and risk adjustment for non-financial risk, etc. Relevant disclosures are included in Note III 21, Note III 31, Note VII 29 and Note XIII 1 of the consolidated financial statements. | if !supportLists• endif Evaluated key assumptions used in the valuation of insurance contract liabilities by comparison with CPIC��s historical data and applicable industry experiences and considering the reasonableness of the relevant management��s judgements. if !supportLists• endif Assessed the appropriateness of the valuation approaches of insurance contract liabilities, reviewed by performing procedures such as independent recalculation of insurance contract liabilities of selected major typical insurance products or groups of insurance contracts. if !supportLists• endifEvaluated the overall reasonableness of the insurance contract liabilities by analysing the movements of insurance contract liabilities during the reporting period and assessing the impact of key changes. | **Independent auditor��s report (continued)** **To the shareholders of China Pacific Insurance (Group) Co., Ltd.** (Incorporated in the People��s Republic of China with limited liability) **Key audit matters (continued)** | | | | --- | --- | | **Key audit matter** | **How our audit addressed the key audit matter** | | *Valuation of level 3 investments measured at fair value* | | | As at 31 December 2023, the carrying amount of CPIC��s level 3 investments measured at fair value was RMB 591.9 billion, representing 25% of the total assets. We identified the valuation of level 3 investments measured at fair value as a key audit matter, as they were measured based on valuation models and inputs and assumptions that are not directly observable. The valuation involved significant management judgement and the inherent risk in relation to the valuation of level 3 investments measured at fair value was considered significant. Relevant disclosures are included in Note III 29, Note III 31 and Note XVI to the consolidated financial statements. | We performed relevant audit procedures which mainly included the following: if !supportLists• endifUnderstood, evaluated and tested the key controls over the investment valuation process including management��s determination and approval of assumptions and methodologies used in model-based calculations, controls over data integrity and choice for internally operated valuation models and management��s review of valuation inputs provided by data vendors. if !supportLists• endifThe audit procedures related to the measurement of level 3 investments measured at fair value: if !supportLists− endif Assessed valuation model methodologies against industry practice and valuation guidelines; if !supportLists− endif Compared assumptions used against appropriate public third party pricing sources such as public stocks price and bond yields; if !supportLists− endif Performed independent check of the valuation results of selected illiquid investments by using inputs from external sources that were not directly observable. | **Independent auditor��s report (continued)** **To the shareholders of China Pacific Insurance (Group) Co., Ltd.** (Incorporated in the People��s Republic of China with limited liability) **Other information included in the Annual Report** The management of CPIC is responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our auditor��s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. **Responsibilities of the****management and those charged with governance****for the financial statements** The management of CPIC is responsible for the preparation of the financial statements that give a true and fair view in accordance with in accordance with CASs, and for such internal control as the management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the management is responsible for assessing CPIC��s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless the management either intends to liquidate CPIC or to cease operations or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing CPIC��s financial reporting process. **Independent auditor��s report (continued)** **To the shareholders of China Pacific Insurance (Group) Co., Ltd.** (Incorporated in the People��s Republic of China with limited liability) **Auditor��s responsibilities for the audit of the financial statements** Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor��s report that includes our opinion. Our report is made solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: if !supportLists· endifIdentify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. if !supportLists· endifObtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group��s internal control. if !supportLists· endifEvaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management. if !supportLists· endifConclude on the appropriateness of the management��s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the CPIC��s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor��s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor��s report. However, future events or conditions may cause CPIC to cease to continue as a going concern. if !supportLists· endifEvaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. **Independent auditor��s report (continued)** **To the shareholders of China Pacific Insurance (Group) Co., Ltd.** (Incorporated in the People��s Republic of China with limited liability) **Auditor��s responsibilities for the audit of the financial statements** **(continued)** if !supportLists· endifObtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within CPIC to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor��s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partner on the audit resulting in this independent auditor��s report is Guo Hangxiang. Ernst & Young Hua Ming LLP Certified Public Accountants Beijing, the People��s Republic of China 28 March 2024 | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | **ASSETS** | | **Note VII** | | **31** **D****ecember** **2****023** | | **31** **D****ecember** **2****022** | | **1 January** **2****022** | | | | | | | | **(****Restated)** | | **(****Restated)** | | | | | | | | | | | | Cash at bank and on hand | | 1 | | 31,455 | | 33,134 | | 32,545 | | Financial assets at fair value through profit or loss | | 2 | | - | | 26,560 | | 12,353 | | Derivative financial assets | | 3 | | 17 | | 197 | | 259 | | Securities purchased under agreements to resell | | 4 | | 2,808 | | 21,124 | | 13,432 | | Interest receivables | | 5 | | - | | 19,656 | | 18,597 | | Term deposits | | 6 | | 165,501 | | 204,517 | | 196,519 | | Available-for-sale financial assets | | 7 | | - | | 715,085 | | 645,381 | | Held-to-maturity financial assets | | 8 | | - | | 514,250 | | 396,428 | | Investments classified as loans and receivables | | 9 | | - | | 397,270 | | 406,276 | | Financial investments: | | | | 2,009,336 | | - | | - | | Financial assets at fair value through profit or loss | | 10 | | 581,602 | | - | | - | | Financial assets at amortised cost | | 11 | | 82,334 | | - | | - | | Debt investments at fair value through other comprehensive income | | 12 | | 1,247,435 | | - | | - | | Equity investments at fair value through other comprehensive income | | 13 | | 97,965 | | - | | - | | Insurance contract assets | | 29 | | 335 | | 305 | | 245 | | Reinsurance contract assets | | 30 | | 39,754 | | 33,205 | | 31,983 | | Long-term equity investments | | 14 | | 23,184 | | 25,829 | | 26,984 | | Restricted statutory deposits | | 15 | | 7,105 | | 7,290 | | 7,428 | | Investment properties | | 16 | | 10,667 | | 11,202 | | 7,514 | | Fixed assets | | 17 | | 18,925 | | 17,465 | | 17,504 | | Construction in progress | | 18 | | 2,459 | | 2,291 | | 1,714 | | Right-of-use assets | | 19 | | 3,365 | | 3,030 | | 3,475 | | Intangible assets | | 20 | | 7,117 | | 6,666 | | 5,509 | | Goodwill | | 21 | | 1,357 | | 1,372 | | 1,372 | | Deferred income tax assets | | 22 | | 7,076 | | 19,661 | | 11,379 | | Other assets | | 23 | | 13,501 | | 11,227 | | 12,108 | | | | | | | | | | | | **TOTAL ASSETS** | | | | 2,343,962 | | 2,071,336 | | 1,849,005 | The accompanying notes form an integral part of these financial statements. | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | **LIABILITIES AND EQUITY** | **Note VII** | | **31** **D****ecember** **2****023** | | **31** **D****ecember** **2****022** | | **1 January** **2****022** | | | | | | | **(****Restated)** | | **(****Restated)** | | | | | | | | | | | Derivative financial liabilities | 3 | | 21 | | 8 | | 1 | | Securities sold under agreements to repurchase | 25 | | 115,819 | | 119,665 | | 73,441 | | Premium received in advance | | | 17,026 | | 17,891 | | 19,219 | | Employee benefits payable | 26 | | 9,247 | | 8,635 | | 7,386 | | Taxes payable | 27 | | 3,536 | | 5,166 | | 4,138 | | Interest payable | | | - | | 469 | | 517 | | Bonds payable | 28 | | 10,285 | | 9,999 | | 9,995 | | Insurance contract liabilities | 29 | | 1,872,620 | | 1,664,848 | | 1,486,435 | | Reinsurance contract liabilities | 30 | | - | | 809 | | 744 | | Commission and brokerage payable | | | 5,861 | | 4,639 | | 3,695 | | Insurance premium reserves | | | 251 | | 316 | | 207 | | Lease liabilities | | | 3,095 | | 2,718 | | 3,105 | | Deferred income tax liabilities | 22 | | 1,119 | | 568 | | 1,553 | | Other liabilities | 31 | | 37,378 | | 33,933 | | 39,806 | | | | | | | | | | | **Total liabilities** | | | 2,076,258 | | 1,869,664 | | 1,650,242 | | | | | | | | | | | Issued capital | 32 | | 9,620 | | 9,620 | | 9,620 | | Capital reserves | 33 | | 79,950 | | 79,665 | | 79,662 | | Other comprehensive income | | | 7,992 | | (11,581) | | 13,304 | | Surplus reserves | 34 | | 5,114 | | 5,114 | | 5,114 | | General reserves | 35 | | 25,462 | | 21,071 | | 16,852 | | Retained profits | 36 | | 121,448 | | 92,588 | | 69,046 | | | | | | | | | | | Equity attributable to shareholders of the parent | | | 249,586 | | 196,477 | | 193,598 | | Non-controlling interests | 37 | | 18,118 | | 5,195 | | 5,165 | | | | | | | | | | | **Total equity** | | | 267,704 | | 201,672 | | 198,763 | | | | | | | | | | | **TOTAL LIABILITIES AND EQUITY** | | | 2,343,962 | | 2,071,336 | | 1,849,005 | The financial statements are signed by the persons below: | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | FU Fan | | ZHANG Yuanhan | | | XU Zhen | | | Legal representative | Principal in charge of accounting | | | Head of accounting department | | | The accompanying notes form an integral part of these financial statements. | | | | | | | | --- | --- | --- | --- | --- | --- | | | **Note VII** | | **2023** | | **2022** | | | | | | | **(****Restated)** | | | | | | | | | **Operating income** | | | 323,945 | | 332,140 | | Insurance revenue | 38 | | 266,167 | | 249,745 | | Interest income | 39 | | 58,262 | | - | | Investment income | 40 | | 7,053 | | 77,510 | | Including: Share of (losses)/profits of associates and joint ventures | | | (386) | | 401 | | Other income | | | 251 | | 183 | | Losses arising from changes in fair value | 41 | | (11,712) | | (61) | | Exchange gains | | | 159 | | 1,085 | | Other operating income | 42 | | 3,742 | | 3,654 | | Gains on disposal of assets | 43 | | 23 | | 24 | | | | | | | | | **Operating expenses** | | | (291,885) | | (289,600) | | Insurance service expenses | | | (231,023) | | (213,988) | | Allocation of reinsurance premiums | | | (15,838) | | (15,427) | | Less: Recoveries of insurance service expenses from reinsurers | | | 14,399 | | 12,609 | | Insurance finance expenses for insurance contracts issued | 44 | | (46,741) | | (58,074) | | Less: Reinsurance finance income for reinsurance contracts held | 44 | | 1,174 | | 1,108 | | Changes in insurance premium reserves | | | 35 | | (109) | | Interest expenses | 45 | | (2,628) | | (2,752) | | Commission and brokerage expenses | | | (7) | | - | | Taxes and surcharges | 46 | | (445) | | (424) | | Operating and administrative expenses | 47 | | (7,397) | | (6,204) | | Impairment losses on financial assets | 48 | | (2,013) | | - | | Impairment losses on other assets | | | (253) | | - | | Asset impairment losses | 49 | | - | | (5,303) | | Other operating expenses | 50 | | (1,148) | | (1,036) | | | | | | | | | **Operating profit** | | | 32,060 | | 42,540 | | Add: Non-operating income | 51 | | 136 | | 147 | | Less: Non-operating expenses | 52 | | (195) | | (204) | | | | | | | | | **P****rofit before tax** | | | 32,001 | | 42,483 | | Less: Income tax | 53 | | (4,090) | | (4,261) | | | | | | | | | **N****et Profit** | | | 27,911 | | 38,222 | | | | | | | | | Classified by continuity of operations: | | | | | | | Net profit from continuing operations | | | 27,911 | | 38,222 | | Net profit from discontinued operations | | | - | | - | | | | | | | | | Classified by ownership of the equity: | | | | | | | Attributable to shareholders of the parent | | | 27,257 | | 37,381 | | Non-controlling interests | | | 654 | | 841 | The accompanying notes form an integral part of these financial statements. | | | | | | | | --- | --- | --- | --- | --- | --- | | | **Note VII** | | **2023** | | **2022** | | | | | | | **(****Restated)** | | | | | | | | | **Other comprehensive income/(loss)** | 54 | | | | | | Other comprehensive income/(loss) that will not be reclassified to profit or loss: | | | 400 | | - | | Changes in the fair value of equity investments at fair value through other comprehensive income | | | 1,089 | | - | | Insurance finance income/(expenses) for insurance contracts issued that will not be reclassified to profit or loss | | | (689) | | - | | | | | | | | | Other comprehensive income/(loss) that will be reclassified to profit or loss: | | | 1,152 | | (25,353) | | Share of other comprehensive income/(loss) that will be reclassified to profit or loss of investees accounted for using the equity method | | | (54) | | (47) | | Changes in the fair value of debt instruments at fair value through other comprehensive income | | | 36,592 | | - | | Changes in provisions for credit risks of debt instruments at fair value through other comprehensive income | | | 925 | | - | | Exchange differences on translation of foreign operations | | | 15 | | 46 | | Insurance finance income/(expenses) for insurance contracts issued that will be reclassified to profit or loss | | | (36,321) | | (1,344) | | Insurance finance income/(expenses) for reinsurance contracts held that will be reclassified to profit or loss | | | (5) | | - | | Changes of fair value of available-for-sale financial assets | | | - | | (32,052) | | Income tax impact relating to available-for-sale financial assets | | | - | | 8,044 | | | | | | | | | Other comprehensive income/(loss) | | | 1,552 | | (25,353) | | | | | | | | | **Total comprehensive income** | | | 29,463 | | 12,869 | | | | | | | | | Attributable to shareholders of the parent | | | 28,785 | | 12,496 | | | | | | | | | Attributable to non-controlling interests | | | 678 | | 373 | | | | | | | | | **Earnings per share** | 55 | | | | | | | | | | | | | Basic earnings per share (RMB per share) | | | 2.83 | | 3.89 | | | | | | | | | Diluted earnings per share (RMB per share) | | | 2.83 | | 3.89 | The accompanying notes form an integral part of these financial statements. | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | **2023** | | | | | | | | | | | | | | | | | | | | **Attributable to shareholders of the parent** | | | | | | | | | | | | | | | | | | | | **Issued** **capital** | | **Capital reserves** | | **Other comprehensive income** | | **Surplus** **reserves** | | **General reserves** | | **Retained** **profits** | | **Sub-total** | | **Non-controlling interests** | | **Total equity** | | | | | | | | | | | | | | | | | | | | | | Balance at the end of the previous year | | 9,620 | | 79,665 | | 6,368 | | 5,114 | | 22,474 | | 105,205 | | 228,446 | | 5,682 | | 234,128 | | Add: Changes in accounting policies (Note IV) | | - | | - | | 102 | | - | | 218 | | 1,563 | | 1,883 | | 28 | | 1,911 | | | | | | | | | | | | | | | | | | | | | | Balance at the beginning of year | | 9,620 | | 79,665 | | 6,470 | | 5,114 | | 22,692 | | 106,768 | | 230,329 | | 5,710 | | 236,039 | | | | | | | | | | | | | | | | | | | | | | Movements in the current year | | - | | 285 | | 1,522 | | - | | 2,770 | | 14,680 | | 19,257 | | 12,408 | | 31,665 | | Net profit | | - | | - | | - | | - | | - | | 27,257 | | 27,257 | | 654 | | 27,911 | | Other comprehensive income/(loss) (Note VII 54) | | - | | - | | 1,528 | | - | | - | | - | | 1,528 | | 24 | | 1,552 | | | | | | | | | | | | | | | | | | | | | | Total comprehensive income | | - | | - | | 1,528 | | - | | - | | 27,257 | | 28,785 | | 678 | | 29,463 | | Other equity changes caused by equity method accounting | | - | | 285 | | - | | - | | - | | - | | 285 | | 6 | | 291 | | Capital invested and reduced by holders | | - | | - | | - | | - | | - | | - | | - | | 11,998 | | 11,998 | | Capital invested by holders of equity investments at fair value through other comprehensive income | | - | | - | | - | | - | | - | | - | | - | | 11,998 | | 11,998 | | Profit distribution | | - | | - | | - | | - | | 2,770 | | (12,583) | | (9,813) | | (274) | | (10,087) | | Appropriations to general reserves | | - | | - | | - | | - | | 2,770 | | (2,770) | | - | | - | | - | | Profit distribution to shareholders | | - | | - | | - | | - | | - | | (9,813) | | (9,813) | | (274) | | (10,087) | | Transfer of other comprehensive income to retained profits | | - | | - | | (6) | | - | | - | | 6 | | - | | - | | - | | | | | | | | | | | | | | | | | | | | | | Balance at the end of year | | 9,620 | | 79,950 | | 7,992 | | 5,114 | | 25,462 | | 121,448 | | 249,586 | | 18,118 | | 267,704 | As at 31 December 2023, the balance of retained profits of the Group included RMB 3,055 million of the surplus reserves appropriated by the subsidiaries during the year and attributable to the parent. The accompanying notes form an integral part of these financial statements. | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | **2022 (Restated)** | | | | | | | | | | | | | | | | | | | | **Attributable to shareholders of the parent** | | | | | | | | | | | | | | | | | | | | **Issued** **capital** | | **Capital reserves** | | **Other comprehensive income** | | **Surplus** **reserves** | | **General reserves** | | **Retained** **profits** | | **Sub-total** | | **Non-controlling interests** | | **Total equity** | | | | | | | | | | | | | | | | | | | | | | Balance at the end of the previous year | | 9,620 | | 79,662 | | 19,655 | | 5,114 | | 19,521 | | 93,169 | | 226,741 | | 5,664 | | 232,405 | | Add: Changes in accounting policies | | - | | - | | (6,351) | | - | | (2,669) | | (24,123) | | (33,143) | | (499) | | (33,642) | | | | | | | | | | | | | | | | | | | | | | Balance at the beginning of year | | 9,620 | | 79,662 | | 13,304 | | 5,114 | | 16,852 | | 69,046 | | 193,598 | | 5,165 | | 198,763 | | | | | | | | | | | | | | | | | | | | | | Movements in the current year | | - | | 3 | | (24,885) | | - | | 4,219 | | 23,542 | | 2,879 | | 30 | | 2,909 | | Net profit | | - | | - | | - | | - | | - | | 37,381 | | 37,381 | | 841 | | 38,222 | | Other comprehensive income/(loss) (Note VII 54) | | - | | - | | (24,885) | | - | | - | | - | | (24,885) | | (468) | | (25,353) | | | | | | | | | | | | | | | | | | | | | | Total comprehensive income | | - | | - | | (24,885) | | - | | - | | 37,381 | | 12,496 | | 373 | | 12,869 | | Impact of capital injection to subsidiaries, etc. | | - | | (5) | | - | | - | | - | | - | | (5) | | 48 | | 43 | | Other equity changes caused by equity method accounting | | - | | 8 | | - | | - | | - | | - | | 8 | | - | | 8 | | Profit distribution | | - | | - | | - | | - | | 4,219 | | (13,839) | | (9,620) | | (391) | | (10,011) | | Appropriations to general reserves | | - | | - | | - | | - | | 4,219 | | (4,219) | | - | | - | | - | | Profit distribution to shareholders | | - | | - | | - | | - | | - | | (9,620) | | (9,620) | | (391) | | (10,011) | | | | | | | | | | | | | | | | | | | | | | Balance at the end of year | | 9,620 | | 79,665 | | (11,581) | | 5,114 | | 21,071 | | 92,588 | | 196,477 | | 5,195 | | 201,672 | As at 31 December 2022, the balance of retained profits of the Group included RMB 4,168 million of the surplus reserves appropriated by the subsidiaries during the year and attributable to the parent. The accompanying notes form an integral part of these financial statements. | | | | | | | | --- | --- | --- | --- | --- | --- | | | **Note VII** | | **2023** | | **2022** | | | | | | | **(****Restated)** | | | | | | | | | **Cash flows from operating activities** | | | | | | | Cash received from premium of insurance contracts issued | | | 452,282 | | 416,072 | | Net cash received from reinsurance contracts issued | | | 485 | | 4,797 | | Net decrease in policy loans | | | 1,778 | | 753 | | Refund of taxes and surcharges | | | 21 | | 124 | | Cash received relating to other operating activities | | | 6,848 | | 8,867 | | | | | | | | | **Sub-total of cash inflows** | | | 461,414 | | 430,613 | | | | | | | | | Cash paid for claims under insurance contracts issued | | | (180,230) | | (153,331) | | Net cash paid under reinsurance contracts held | | | (6,542) | | (2,928) | | Cash paid for commission and brokerage expenses | | | (33,701) | | (27,566) | | Cash paid to and on behalf of employees | | | (26,623) | | (25,507) | | Payments of taxes and surcharges | | | (11,756) | | (11,560) | | Cash paid relating to other operating activities | 56 | | (64,699) | | (61,057) | | | | | | | | | **Sub-total of cash outflows** | | | (323,551) | | (281,949) | | | | | | | | | **Net cash flows from operating activities** | 58 | | 137,863 | | 148,664 | | | | | | | | | **Cash flows from investing activities** | | | | | | | Cash received from disposal of investments | | | 557,301 | | 489,390 | | Cash received from returns on investments and interest income | | | 73,860 | | 74,860 | | Net cash received from disposal of subsidiaries and other business entities | | | 2,559 | | 2,424 | | Net cash received from disposal of fixed assets, intangible assets and other long-term assets | | | 181 | | 109 | | | | | | | | | **Sub-total of cash inflows** | | | 633,901 | | 566,783 | | | | | | | | | Cash paid to acquire investments | | | (788,828) | | (725,655) | | Net cash paid to acquire subsidiaries and other business entities | | | (1,269) | | (1,690) | | Cash paid to acquire fixed assets, intangible assets and other long-term assets | | | (3,988) | | (9,097) | | Cash paid relating to other investing activities | | | (1,173) | | (77) | | | | | | | | | **Sub-total of cash outflows** | | | (795,258) | | (736,519) | | | | | | | | | **Net cash flows** **used in****investing activities** | | | (161,357) | | (169,736) | The accompanying notes form an integral part of these financial statements. | | | | | | | | --- | --- | --- | --- | --- | --- | | | **Note VII** | | **2023** | | **2022** | | | | | | | **(****Restated)** | | | | | | | | | **Cash flows from financing activities** | | | | | | | Cash received from capital contributions | | | 11,998 | | 43 | | Cash received from bonds issued | | | 9,998 | | - | | Increase in securities sold under agreements to repurchase, net | | | - | | 46,316 | | Cash received relating to other financing activities | 56 | | 10,649 | | 12,518 | | | | | | | | | **Sub-total of cash inflows** | | | 32,645 | | 58,877 | | | | | | | | | Cash repayments of borrowings | | | (10,782) | | (12,875) | | Cash payments for distribution of dividends, profits or interest expenses | | | (12,444) | | (15,835) | | Decrease in securities sold under agreements to repurchase, net | | | (4,145) | | - | | Cash paid relating to other financing activities | 56 | | (1,980) | | (1,686) | | | | | | | | | **Sub-tot****al of cash outflows** | | | (29,351) | | (30,396) | | | | | | | | | **Net****cash flows from financing** **activities** | | | 3,294 | | 28,481 | | | | | | | | | **Effects of exchange rate changes on cash and cash** **equivalents** | | | 131 | | 773 | | | | | | | | | **Net** **(****decrease)/****increase in cash and cash equivalents** | 58 | | (20,069) | | 8,182 | | Add: Cash and cash equivalents at the beginning of year | 57,58 | | 53,809 | | 45,627 | | | | | | | | | **Cash and cash equivalents at the end of** **year** | 57,58 | | 33,740 | | 53,809 | The accompanying notes form an integral part of these financial statements. | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | **ASSETS** | | **Note IX** | | **31** **D****ecember** **2023** | | **31** **D****ecember** **2022** | | | | | | | | | | Cash at bank and on hand | | 1 | | 6,286 | | 6,610 | | Financial assets at fair value through profit or loss | | 2 | | - | | 2 | | Interest receivables | | | | - | | 562 | | Term deposits | | 3 | | 5,457 | | 8,999 | | Available-for-sale financial assets | | 4 | | - | | 37,692 | | Investments classified as loans and receivables | | 5 | | - | | 15,543 | | Financial Investments: | | | | 55,550 | | - | | Financial assets at fair value through profit or loss | | 6 | | 17,255 | | - | | Financial assets at amortised cost | | 7 | | 12,644 | | - | | Debt investments at fair value through other comprehensive income | | 8 | | 23,140 | | - | | Equity investments at fair value through other comprehensive income | | 9 | | 2,511 | | - | | Long-term equity investments | | 10 | | 71,250 | | 69,900 | | Investment properties | | 11 | | 3,123 | | 3,274 | | Fixed assets | | | | 1,035 | | 924 | | Construction in progress | | | | 3 | | 3 | | Right-of-use assets | | | | 371 | | 364 | | Intangible assets | | | | 237 | | 233 | | Deferred income tax assets | | | | 64 | | - | | Other assets | | 12 | | 470 | | 564 | | | | | | | | | | **Total assets** | | | | 143,846 | | 144,670 | | | | | | | | | | **LIABILITIES AND EQUITY** | | | | | | | | | | | | | | | | Securities sold under agreements to repurchase | | 13 | | 2,026 | | 3,919 | | Employee benefits payable | | | | 244 | | 282 | | Taxes payable | | | | 103 | | 34 | | Interest payable | | | | - | | 2 | | Lease liabilities | | | | 416 | | 404 | | Deferred income tax liabilities | | | | - | | 59 | | Other liabilities | | 14 | | 778 | | 886 | | | | | | | | | | **Total liabilities** | | | | 3,567 | | 5,586 | | | | | | | | | | Issued capital | | | | 9,620 | | 9,620 | | Capital reserves | | 15 | | 79,312 | | 79,312 | | Other comprehensive income | | | | 423 | | 546 | | Surplus reserves | | | | 4,810 | | 4,810 | | Retained profits | | | | 46,114 | | 44,796 | | | | | | | | | | **Total equity** | | | | 140,279 | | 139,084 | | | | | | | | | | **TOTAL LIABILITIES AND EQUITY** | | | | 143,846 | | 144,670 | The accompanying notes form an integral part of these financial statements. | | | | | | | | --- | --- | --- | --- | --- | --- | | | **Note IX** | | **2023** | | **2022** | | | | | | | | | **Operating income** | | | 13,028 | | 15,662 | | Interest income | | | 2,027 | | - | | Investment income | 16 | | 10,605 | | 14,141 | | Including: Share of losses of associates and joint ventures | | | (26) | | - | | Other income | | | 4 | | 5 | | Losses arising from changes in fair value | | | (434) | | - | | Exchange gains | | | 130 | | 738 | | Other operating income | | | 696 | | 778 | | | | | | | | | **Operating expenses** | | | (1,856) | | (2,185) | | Interest expenses | | | (27) | | (29) | | Taxes and surcharges | | | (80) | | (79) | | Operating and administrative expenses | | | (1,594) | | (1,858) | | Impairment losses on financial assets | | | 60 | | - | | Asset impairment losses | | | - | | (57) | | Other operating expenses | | | (215) | | (162) | | | | | | | | | **Operating profit** | | | 11,172 | | 13,477 | | Add: Non-operating income | | | 20 | | 10 | | Less: Non-operating expenses | | | (51) | | (34) | | | | | | | | | **Profit before tax** | | | 11,141 | | 13,453 | | Less: Income tax | | | (161) | | (433) | | | | | | | | | **Net profit** | | | 10,980 | | 13,020 | | | | | | | | | Classified by continuity of operations: | | | | | | | | | | | | | | Net profit from continuing operations | | | 10,980 | | 13,020 | | | | | | | | | Net profit from discontinued operations | | | - | | - | | | | | | | | | **Other comprehensive income/(loss)** | 17 | | | | | | Other comprehensive income/(loss) that will not be reclassified to profit or loss: | | | (54) | | - | | Changes in the fair value of equity investments at fair value through other comprehensive income | | | (54) | | - | | | | | | | | | Other comprehensive income/(loss) that will be reclassified to profit or loss: | | | 97 | | (808) | | Changes in the fair value of debt instruments at fair value through other comprehensive income | | | 145 | | - | | Changes in provisions for credit risks of debt instruments at fair value through other comprehensive income | | | (48) | | - | | Changes of fair value of available-for-sale financial assets | | | - | | (1,077) | | Income tax impact relating to available-for-sale financial assets | | | - | | 269 | | | | | | | | | Other comprehensive income/(loss) | | | 43 | | (808) | | | | | | | | | **Total comprehensive income** | | | 11,023 | | 12,212 | The accompanying notes form an integral part of these financial statements. | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | **2023** | | | | | | | | | **Issued capital** | **Capital reserves** | **Other comprehensive income** | **Surplus** **reserves** | **Retained profits** | **Total equity** | | | | | | | | | | | Balance at the end of the previous year | | 9,620 | 79,312 | 546 | 4,810 | 44,796 | 139,084 | | Add: Changes in accounting policies | | - | - | (157) | - | 142 | (15) | | | | | | | | | | | Balance at the beginning of year | | 9,620 | 79,312 | 389 | 4,810 | 44,938 | 139,069 | | | | | | | | | | | Movements in the current year | | - | - | 34 | - | 1,176 | 1,210 | | Net profit | | - | - | - | - | 10,980 | 10,980 | | Other comprehensive income/(loss)  (Note IX 17) | | - | - | 43 | - | - | 43 | | | | | | | | | | | Total comprehensive income | | - | - | 43 | - | 10,980 | 11,023 | | Profit distribution | | - | - | - | - | (9,813) | (9,813) | | Profit distribution to shareholders | | - | - | - | - | (9,813) | (9,813) | | Transfer of other comprehensive income to retained profits | | - | - | (9) | - | 9 | - | | | | | | | | | | | Balance at the end of year | | 9,620 | 79,312 | 423 | 4,810 | 46,114 | 140,279 | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | | **2022** | | | | | | | | | **Issued capital** | **Capital reserves** | **Other comprehensive income** | **Surplus** **reserves** | **Retained profits** | **Total equity** | | | | | | | | | | | Balance at the beginning of year | | 9,620 | 79,312 | 1,354 | 4,810 | 41,396 | 136,492 | | Movements in the current year | | - | - | (808) | - | 3,400 | 2,592 | | Net profit | | - | - | - | - | 13,020 | 13,020 | | Other comprehensive income/(loss)  (Note IX 17) | | - | - | (808) | - | - | (808) | | | | | | | | | | | Total comprehensive income | | - | - | (808) | - | 13,020 | 12,212 | | Profit distribution | | - | - | - | - | (9,620) | (9,620) | | Profit distribution to shareholders | | - | - | - | - | (9,620) | (9,620) | | | | | | | | | | | Balance at the end of year | | 9,620 | 79,312 | 546 | 4,810 | 44,796 | 139,084 | The accompanying notes form an integral part of these financial statements. | | | | | | | | --- | --- | --- | --- | --- | --- | | | **Note IX** | | **2023** | | **2022** | | | | | | | | | **Cash flows from operating activities** | | | | | | | Cash received relating to other operating activities | | | 1,006 | | 1,430 | | | | | | | | | **Sub-total of cash inflows** | | | 1,006 | | 1,430 | | | | | | | | | Cash paid to and on behalf of employees | | | (703) | | (902) | | Payments of taxes and surcharges | | | (319) | | (576) | | Cash paid relating to other operating activities | | | (971) | | (518) | | | | | | | | | **Sub-total of cash outflows** | | | (1,993) | | (1,996) | | | | | | | | | **Net cash flows used in operating activities** | 18 | | (987) | | (566) | | | | | | | | | **Cash flows from investing activities** | | | | | | | Cash received from disposal of investments | | | 28,147 | | 22,899 | | Cash received from returns on investments and interest income | | | 12,629 | | 13,963 | | Net cash received from disposal of subsidiaries and other business entities | | | - | | 171 | | Net cash received from disposal of fixed assets, intangible assets and other long-term assets | | | 24 | | 14 | | | | | | | | | **Sub-total of cash inflows** | | | 40,800 | | 37,047 | | | | | | | | | Cash paid to acquire investments | | | (26,587) | | (24,954) | | Net cash paid to acquire subsidiaries and other business entities | | | (1,377) | | (3,459) | | Cash paid to acquire fixed assets, intangible assets and other long-term assets | | | (482) | | (328) | | | | | | | | | **Sub-total of cash outflows** | | | (28,446) | | (28,741) | | | | | | | | | **Net cash flows from investing activities** | | | 12,354 | | 8,306 | | | | | | | | | **Cash flows from financing activities** | | | | | | | Increase in securities sold under agreements to repurchase, net | | | - | | 2,799 | | | | | | | | | **Sub-total of cash inflows** | | | - | | 2,799 | | | | | | | | | Cash payments for distribution of dividends, profits or interest expenses | | | (9,826) | | (9,647) | | Decrease in securities sold under agreements to repurchase, net | | | (1,894) | | - | | Cash paid relating to other financing activities | | | (70) | | (59) | | | | | | | | | **Sub-total of cash outflows** | | | (11,790) | | (9,706) | | | | | | | | | **Net cash flows used in financing activities** | | | (11,790) | | (6,907) | | | | | | | | | **Effects of exchange rate changes on cash and cash equivalents** | | | 99 | | 506 | | | | | | | | | **Net (decrease)/increase in cash and cash equivalents** | 18 | | (324) | | 1,339 | | Add: Cash and cash equivalents at the beginning of year | 18 | | 6,610 | | 5,271 | | | | | | | | | **Cash and cash equivalents at the end of** **year** | 18 | | 6,286 | | 6,610 | The accompanying notes form an integral part of these financial statements. **I.****GENERAL INFORMATION** China Pacific Insurance (Group) Co., Ltd. (the ��Company��) was restructured from China Pacific Insurance Co., Ltd. in October 2001 pursuant to the approval of the State Council of the People��s Republic of China (the PRC) and Circular [2001] No. 239 issued by the former China Insurance Regulatory Commission (the ��CIRC��). After the restructuring, the Company obtained a business licence (No. 1000001001110) on 24 October 2001 newly issued by the former State Administration for Industry and Commerce of the PRC, and had an original issued capital of RMB 2,006.39 million, with its registered address and headquarters in Shanghai. The Company increased its issued capital to RMB 6,700 million through issuance of new shares to its then existing shareholders and new shareholders in 2002 and from February to April 2007. In December 2007, the Company conducted a public offering of 1,000 million A shares on the Shanghai Stock Exchange to increase its issued capital to RMB 7,700 million. On 25 December 2007, the Company��s A shares were listed and traded on the Shanghai Stock Exchange. In December 2009, the Company conducted a global offering of overseas listed foreign shares (��H shares��). Upon the completion of the H share offering, the issued capital was increased to RMB 8,600 million. On 23 December 2009, the Company��s H shares were listed and traded on the Hong Kong Stock Exchange. In November 2012, the Company conducted a non-public offering of 462 million H shares. Upon completion of the H share offering, the issued capital was increased to RMB 9,062 million, and the Company received the approval from the former CIRC in December 2012 for the change of its registered capital. The Company obtained the business licence (registration No. 100000000011107) on 5 February 2013. The Company renewed its business licence on 15 December 2015, and its unified social credit code is No. 91310000132211707B. In June 2020, the Company issued 102,873,300 Global Depositary Receipts (��GDRs��) on the London Stock Exchange (the ��LSE��) and became listed on the LSE. In July 2020, the Company further issued 8,794,991 GDRs. Each GDR represents five A shares of the Company. After the GDR issuance, the issued capital of the Company was increased to approximately RMB 9,620 million. The authorised business scope of the Company includes investing in insurance enterprises; supervising and managing the domestic and overseas reinsurance businesses of subsidiaries and their utilisation of funds; and participating in approved international insurance activities. The principal activities of the Company and its subsidiaries (the ��Group�� or ��CPIC Group��) are property and casualty insurance businesses, life and health insurance businesses, pension and annuity insurance businesses, as well as investments with insurance funds, etc. Major subsidiaries included in the consolidation scope in the current year are detailed in Note VI. **II.****BASIS OF PREPARATION** The financial statements have been prepared in accordance with the Accounting Standard for Business Enterprises - Basic Standard, and the specific accounting standards and other relevant regulations issued by the Ministry of Finance on 15 February 2006 and in subsequent periods (hereafter collectively referred to as ��the Accounting Standards for Business Enterprises�� or ��CASs��), and in accordance with the disclosure requirements set out in the Preparation Convention of Information Disclosure by Companies Offering Securities to the Public No. 15 - General Rules on Financial Reporting issued by the China Securities Regulatory Commission (the ��CSRC��), Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. The financial statements have been prepared on a going concern basis. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES** Statement of compliance with the Accounting Standards for Business Enterprises The financial statements are in compliance with the Accounting Standards for Business Enterprises, and truly and completely present the financial position of the Group and the Company as of 31 December 2023, and their financial performance, cash flows and other information for the year then ended. Financial information in the financial statements of the Company and the Group for the year ended 31 December 2023 are prepared in accordance with the following significant accounting policies and accounting estimates as determined under the Accounting Standards for Business Enterprises. The Group determines its accounting policies and accounting estimates that best reflect its operating characteristics, mainly in relation to the recognition and measurement of financial instruments (Note III 17), the recognition and measurement of insurance contracts (Note III 21), and recognition of revenue (Note III 24). Details of the Group's critical judgements used in determining significant accounting policies are set forth in Note III 31. 1.Accounting year The Group adopts the calendar year as its accounting year, i.e., from 1 January to 31 December. 2. Reporting currency The Company, its subsidiaries, joint ventures and associates in Mainland China selected RMB as their reporting currency. The subsidiaries of the Company incorporated in other countries or regions outside Mainland China selected their reporting currencies based on the primary economic environment where they operate and convert their presentation currencies into RMB for the preparation of the Group��s financial statements. The presentation currency of the Group is RMB. All amounts are expressed in RMB million unless otherwise specified. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 3. Basis of accounting and measurement bases The financial statements have been prepared on an accrual basis using the historical cost as the basis of measurement, except for certain financial instruments and insurance contracts. If assets are impaired, provisions for asset impairments are accrued in accordance with relevant requirements. When the Company��s subsidiaries China Pacific Property Insurance Co., Ltd. (��CPIC Property��) and China Pacific Life Insurance Co., Ltd. (��CPIC Life��) were established, the assets and liabilities invested into these subsidiaries by the Company and those they acquired from the Company were recorded at amounts determined by the state-owned asset administration authority. For the purpose of the consolidated financial statements, the Group has adjusted with the valuation amounts of these assets to their historical costs. 4. Determination and selection of materiality The Group determines the materiality of financial information in terms of the nature and amount in accordance with the specific environment in which it operates. When determining the materiality from the nature of the transaction, the Group mainly considers whether the transaction operates daily or significantly affects the Group��s financial position, operating results, and cash flows, etc. When determining the materiality of the amount of the transaction, the Group considers the proportion of the amount of the transaction to total assets, total liabilities, total owners�� equity, total operating income, total operating expense, net profit, total comprehensive income, or the proportion of the amount of items listed separately in the statement. 5. Business combinations A business combination is a transaction or event that brings together two or more separate entities into one reporting entity. Business combinations include those involving enterprises under common control and those involving enterprises not under common control. Business combinations involving enterprises under common control Business combinations are classified as business combinations involving enterprises under common control when the enterprises involved are ultimately controlled by the same party or parties both prior and subsequent to the combination and the control is not temporary. For a business combination involving entities under common control, the party that, on the combination date, obtains control of another entity participating in the combination is the acquirer, while that other entity participating in the combination is the acquiree. The ��combination date�� refers to the date on which the acquirer actually obtains control over the acquiree. Assets and liabilities that are obtained by the acquirer in a business combination are measured at their carrying amounts at the combination date as recorded by the acquiree. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or the aggregate face value of shares issued as consideration) is applied to the capital reserves to adjust the share premium or applied to retained earnings if the capital reserves is not sufficient to absorb the difference. Direct costs incurred by the acquirer for the purpose of the business combination are expensed as incurred in the current period. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 5. Business combinations (continued) Business combinations involving enterprises not under common control Business combinations involving enterprises not under common control is a business combination in which all combining enterprises are not ultimately controlled by the same party or the same parties both prior and subsequent to the business combination. In a business combination involving enterprises not under common control, the enterprise which obtains control over the other enterprise on the acquisition date is the acquirer, and the other enterprise is the acquiree. The ��acquisition date�� refers to the date on which the acquirer obtains effective control over the acquiree. For a business combination involving enterprises not under common control, the cost of combination refers to the assets paid, liabilities incurred or assumed and the fair value of the equity securities issued by the acquirer to acquire the control over the acquiree at the acquisition date. The expenses of audit, legal services, valuation consulting and other administration fees incurred by acquirer for the purpose of business combination are charged to current profit or loss as incurred. The fee and commission expenses of equity securities or debt securities issued as the consideration for business combination are included in the initial recognition of the equity or debt securities. Where business combinations are accomplished through multiple transactions in phases, they are accounted for differently in the separate financial statements and the consolidated financial statements: (1) For the purpose of the separate financial statements, the initial investment cost is the sum of the carrying amount of the equity investment in the acquiree before the acquisition date and the additional investment cost incurred on the acquisition date; where the equity interest in the acquiree before the acquisition date involves other comprehensive income components, the relevant other comprehensive income components shall be transferred to investment income for the current period upon disposal of such investment; (2) For the purpose of the consolidated financial statements, the equity interest in the acquiree held before the date of acquisition should be remeasured at fair value at the acquisition date, with the difference between the fair value and its carrying amount included in the investment income for the current period. Where the equity interest in the acquiree before the acquisition date involves other comprehensive income components, the relevant other comprehensive income components shall be recycled to current investment income arising on the acquisition date. The acquirer shall consider the contingent consideration as agreed in the combination agreement as part of the consideration for the business combination and include it at its fair value on the acquisition date in the combination cost of the business combination. If, within 12 months of the acquisition date, there is any new or further evidence in connection with a condition existing on the acquisition date that requires adjustments to the contingent consideration, the adjustments shall be recognised, and the amount included in the consolidated goodwill shall be adjusted accordingly. With respect to changes and adjustments to the contingent consideration under other circumstances, if the contingent consideration is recognised as an asset or a liability, the subsequent changes in fair value are recorded in profit or loss for the current period or other comprehensive income; if the contingent consideration is classified as equity, it is not required to be subsequently measured at fair value, and its subsequent settlement is recorded in equity. The acquiree��s identifiable assets, liabilities and contingent liabilities acquired in a business combination are measured at their fair values at the acquisition date. Identifiable assets and liabilities acquired by the acquirer on the acquisition date shall be classified and designated in light of the contract terms, business policies, M&A policies and other related factors existing on the acquisition date, mainly including the classification of acquiree��s financial assets and financial liabilities, designation of a hedging relationship, and the separation of embedded derivatives, among others. However, where the combination involves a lease contract or an insurance contract and the contract terms are modified at the acquisition date, the contract shall be reclassified in light of the modified terms and other factors. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 5. Business combinations (continued) Business combinations involving enterprises not under common control (continued) The difference by which the combination cost exceeds the fair value of the net identifiable assets acquired from the acquiree is recognised as goodwill. If the combination cost is lower than the fair value of the net identifiable assets acquired from the acquiree, the acquirer shall first review the fair value of the individual identifiable assets, liabilities and contingent liabilities acquired from the acquiree and the measurement of the combination cost, and if the reviewed combination cost is still lower than the fair value of the net identifiable assets acquired from the acquiree, the difference is recorded in profit or loss for the current period. In a business combination, the deductible temporary differences acquired by the acquirer are not recognised as deferred income tax assets if they do not meet the recognition criteria on the acquisition date. If, within 12 months after the acquisition date, there is new or further information to indicate the existence of relevant circumstances at the acquisition date that the economic benefits is expected to be realised by the deductible temporary differences of the acquiree on the acquisition date, the relevant deferred income tax assets shall be recognised with goodwill being reduced by the same amount; and if goodwill is lower than the recognised amount, the difference shall be recognised in profit or loss in the current period. In all other circumstances, the deferred income tax assets related to business combination are recognised in profit or loss in the current period. 6. Consolidated financial statements The scope of consolidated financial statements is determined based on control and the consolidated financial statements comprise the financial statements of the Company and its subsidiaries for the year ended 31 December 2023. A subsidiary is an entity (including structured entities) over which the Company has control. Structured entities are entities where voting rights or other similar rights are not used as factors to determine the controlling party, such as when voting rights only relate to administrative tasks while related operation activities are arranged according to contractual agreements. Structured entities include trust products, debt investment plans, equity investment plans, project asset-backed plans, and wealth management products issued by financial institutions. Trust products, equity investment plans and project asset-backed plans are managed by related or unrelated trust companies or asset managers, and the funds raised are invested in loans to or equity interests in other companies. Wealth management products issued by financial institutions are managed by related or unrelated asset managers, and the funds raised are invested in agreement deposits, funds, stocks, and bonds, among others. Debt investment plans are managed by related or unrelated asset managers and are mainly invested in infrastructure projects and real estate fund backed projects. To finance their operations, the relevant trust products, debt investment plans, equity investment plans, project asset-backed plans, and wealth management products issued by institutions enter into product contracts with and grant product holders the right to receive profits, as agreed, from the trust products, debt investment plans, equity investment plans, project asset-backed plans, and wealth management products issued by financial institutions. The Group has entered into product contracts for all its trust products, debt investment plans, equity investment plans, project asset-backed plans, and wealth management products issued by financial institutions. All trust products, debt investment plans, equity investment plans, project asset-backed plans, and wealth management products issued by institutions are not consolidated structured entities if they are not under the control of the Group. For the purpose of preparing consolidated financial statements, the subsidiaries adopt the same accounting period and accounting policies as the Company. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 6. Consolidated financial statements (continued) All significant intra-group balances, transactions and unrealised profits are eliminated in the consolidated financial statements. The subsidiaries�� shareholders�� equity, net profit or loss of the period, and the portion in their comprehensive income not attributable to the Company are presented separately as non-controlling interests, net profit attributable to non-controlling interests, and total comprehensive income attributable to non-controlling interests in the consolidated financial statements under equity, net profits and total comprehensive income respectively. However, a liability is recognised to reflect the corresponding shares of net assets in the consolidated entity when non-controlling interests arise from the structured entities they have invested in. Unrealised profits and losses resulting from the sale of assets by the Company to its subsidiaries are fully eliminated against net profit attributable to owners of the parent. Unrealised profits and losses on internal transactions resulting from the sale of assets by a subsidiary to the Company are allocated and offset between net profit attributable to shareholders of the parent and the net profit or loss attributable to non-controlling interests in accordance with the allocation ratio between the parent and the subsidiary. Unrealised profits and losses resulting from the sale of assets by one subsidiary to another are allocated and offset between the net profit attributable to shareholders of the parent and net profit or loss attributable to non-controlling interests in accordance with the allocation ratio between the parent and the selling subsidiary. If the accounting treatments of a transaction are inconsistent in the financial statements at the Group level and at the Company or its subsidiary level, adjustments regarding the transaction will be made from the perspective of the Group. For a subsidiary acquired through a business combination involving an enterprise not under common control, the financial performance and cash flows of the acquiree are included in the scope of the consolidated financial statements from the day the Group obtains control over the subsidiary until the Group ceases to control the subsidiary. In preparing the consolidated financial statements, the financial statements of the subsidiaries are adjusted based on the fair value of the identifiable assets, liabilities and contingent liabilities on the acquisition dates. For a subsidiary acquired through a business combination involving an enterprise under common control, the financial performance and cash flows of the acquiree are included in the scope of the consolidated financial statements from the beginning of the period in which the combination takes place. In preparing the comparative consolidated financial statements, the related items on the financial statements of prior periods are adjusted as if the reporting entity formed after combination had existed since the ultimate controlling party started to exert control. When changes in relevant facts and circumstances cause changes to one or more of the control elements, the Group reassesses whether it still controls the investee. In the consolidated financial statements, when the amount of loss in the current period attributable to the non-controlling interests of a subsidiary exceeds their share of equity in the subsidiary at the beginning of the period, the excess shall be still allocated against the non-controlling interests. Purchases of equity interests by the Group from the non-controlling interests of a subsidiary are accounted for using the following methods: (1) Long-term equity investments arising from the purchases of non-controlling interests by the parent from the subsidiary are accounted for in accordance with the accounting policies applicable to long-term equity investments. (2) For the purpose of the consolidated financial statements, the difference between the long-term equity investments newly acquired from the non-controlling interests and the parent��s share, as per additional shareholding, of the net assets of the subsidiary calculated on an ongoing basis from the acquisition date (or combination date) is applied to adjust the shareholders�� equity (capital reserves), and if the capital reserves is lower than the difference, the remaining balance is applied against retained earnings. Subsidiaries included in the consolidation scope are detailed in Note VI. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 6. Consolidated financial statements (continued) If control over a subsidiary is lost due to partial disposal of equity investment or other reasons, relevant accounting treatments are applied differently in the separate financial statements and consolidated financial statements: (1) In the separate financial statements, the remaining equity is recognised as long-term equity investments or other related financial assets at the carrying amount; if, after partial disposal of equity investment, the remaining equity interest enables the Group to exercise joint control or significant influence over the original subsidiary, the equity investment is accounted for using the equity method in accordance with the relevant requirements for change of the accounting method from the cost method; (2) In the consolidated financial statements, the remaining equity is remeasured at the fair value at the date when the control is lost; the difference between the sum of the consideration obtained from the disposal of equity and the fair value of the remaining equity and the portion of net assets calculated continuously from the acquisition date of the original subsidiaries based on the original shareholding proportion is recognised as investment income for the current period in which the control is lost; and other comprehensive income related to the original subsidiaries�� equity investment is transferred into investment income for the period in which the control is lost. 7. Cash equivalents Cash equivalents comprise short-term, highly liquid investments, which are readily convertible into known amounts of cash, subject to an insignificant risk of changes in value and have a short maturity of generally within three months from the date of purchase. 8. Foreign currency transactions Foreign currency transactions are converted into the reporting currency. Foreign currency transactions are translated into the reporting currency on initial recognition using the spot exchange rates prevailing at the dates of the transactions. At the balance sheet date, monetary items denominated in foreign currencies are translated into the reporting currency using the spot exchange rates on the balance sheet date, which creates exchange differences. Exchange differences are included in profit or loss for the current period or recorded in other comprehensive income, except for those attributable to foreign currency borrowings that have been taken out specifically for the acquisition or construction of qualifying assets, which are capitalised as part of the cost of those assets. Non-monetary items denominated in foreign currencies that are measured at historical costs are translated using the spot exchange rates prevailing at the dates of the transactions, without changing their amounts in the reporting currency. Non-monetary items denominated in foreign currencies at fair value are translated using the spot exchange rates at the dates on which their fair values are determined, and the exchange differences arising therefrom are included into profit or loss for the current period or other comprehensive income. For foreign operations, the Group translates its functional currency into RMB for the purpose of the financial statements: assets and liabilities on the balance sheet are translated using the spot exchange rates at the balance sheet date; the equity items, excluding ��retained profits��, are translated using the spot exchange rates at the dates the transactions take place; and the income and expense items on the income statement are translated using the average exchange rates on the transaction dates. Exchange differences arising from translation of foreign currency financial statements as described above are recognised as other comprehensive income. In accounting for the disposal of a foreign operation, the exchange difference arising from the translation of foreign currency financial statements in connection with the foreign operation is recognised in the profit or loss for the period in which the disposal takes place, and in the case of partial disposals, the exchange difference is calculated proportionately. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 8. Foreign currency transactions (continued) Foreign currency cash flows and cash flows of overseas operations are translated using the average exchange rates of the period when the cash flows occur. The effect of exchange rate changes on cash is separately presented as a reconciling item on the cash flow statement. 9. Securities purchased under agreements to resell and securities sold under agreements to repurchase Securities purchased under agreements to resell refer to funds duly lent to finance repurchase transactions, and are recorded at the actual cost of the securities purchased, with income from securities purchased under agreements to resell accrued using the effective interest method over the period from the acquisition date to the maturity date and recognised in profit or loss for the current period. The Group does not take physical possession of securities purchased under agreements to resell. In case of default by the counterparty to repay the loan, the Group has the right to the underlying securities. Securities sold under agreements to repurchase refer to funds duly borrowed to enter into repurchase transactions, and are recorded at the actual amount received from the sale of the securities, with an expense for securities sold under agreements to repurchase accrued using the effective interest method over the period from the selling date to the maturity date and recognised in profit or loss for the current period. The Group may be required to provide additional collateral based on the fair value of the underlying securities and such collateral assets continue to be presented on the balance sheet. 10. Long-term equity investments Long-term equity investments include equity investments where an investor has control of, or significant influence over, an investee, as well as equity investments in joint ventures. Long-term equity investments are measured at initial investment cost on acquisition. Long-term equity investments with which the Company is able to exercise control over the investee shall be accounted using the cost method in the individual financial statement. Control means having power over an investee, enjoying variable returns through involvement in relevant activities of the investee, and being able to impact the amount of such variable returns by using the power over the investee. When the Company directly or indirectly holds half or less of the voting rights or similar rights of the investee, the Group comprehensively considers all relevant facts and circumstances to judge whether the investor has power over the investee, including: (1) Contractual arrangements with other holders of voting rights of the investee; (2) The power of other contractual arrangements; and (3) Voting rights and potential voting rights of the Group. For long-term equity investments accounted for using the cost method, long-term equity investments are measured at initial investment cost, and cash dividends or profits distribution declared by the investee are recognised as investment income for the current period. The Group recognises the cash dividends or profits distributed to the investee in accordance with the above provisions and considers whether the long-term equity investments are impaired. Considering whether the long-term equity investments are impaired, the Group shall pay attention to whether the carrying amount of the long-term equity investment is higher than the share of the carrying amount of the net assets (including relevant goodwill) of the investee and other situations. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 10. Long-term equity investments (continued) Long-term equity investments are accounted under the equity method as the investee over which the Group has joint control or significant influence. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. In determining whether to exercise joint control or significant influence over the investee, based on the voting shares of the investee hold directly or indirectly by the Group, the Group takes into account of the impact of assuming that conversion of the current executable potential voting rights held by the Group and other parties to equity in the investee. For long-term equity investments accounted for using the equity method, where the initial investment cost of a long-term equity investment exceeds the Group��s share of the fair value of the investee's identifiable net assets at the acquisition date, the long-term equity investment is measured at the initial investment cost; where the initial investment cost is less than the Group��s share of the fair value of the investee's identifiable net assets at the acquisition date, the difference is included in profit or loss and the cost of the long-term equity investment is adjusted upwards accordingly. Under the equity method, after the Company has acquired a long-term equity investment, it will recognise its share of the investee��s net profits or losses as investment income or losses and adjust the carrying amount of the long-term investment accordingly. The Group recognises its share of the investee��s net profits or losses after making appropriate adjustments to the investee��s net profits or losses based on the fair value of the investee��s identifiable assets at the acquisition date, using the Group��s accounting policies and periods, and eliminating the portion of the profits or losses arising from internal transactions with its associates and joint ventures, attributable to the investing entity according to its share ratio (but impairment losses for assets arising from internal transactions are recognised in full). The carrying amount of the long-term equity investment is reduced by the Group��s share of the profit distribution or cash dividends declared by the investees. The Group does not recognise further losses when the carrying amounts of the long-term equity investment together with any long-term interests that, in substance, form part of the Group��s net investment in investees are reduced to zero. However, the Group��s obligations for additional losses are not included. The changes of the equity other than those arising from the net profit or loss, other comprehensive income and profit distribution, are recognised in equity with a corresponding adjustment to the carrying amounts of the long-term equity investment and are transferred to profit or loss for the current period on pro rata basis when disposing of this investment. For disposed long-term equity investment, the difference between its carrying amount and the actual proceeds received is recognised in profit or loss for the current period. For disposal of long-term equity investment accounted for using the equity method, the portion previously included in other comprehensive income is accounted for on pro rata basis using the same basis as that used by the investee for disposal of relevant assets or liabilities. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 11. Investment properties An investment property is real estate property held with the intention of earning a return on the investment either through rental income or capital appreciation, or both. Investment properties are initially measured at cost. Subsequent expenditures incurred in relation to an investment property are included in the cost of the investment property when it is probable that the associated economic benefits will flow to the Group and their costs can be reliably measured. Otherwise, the expenditures are recognised in profit or loss for the current period in which they are incurred. Investment properties are subsequently measured using the cost model. Investment properties are depreciated using the straight-line method. The useful lives, the estimated net residual values and the annual depreciation rates of investment properties are as follows: | | | | | | --- | --- | --- | --- | | Category | Useful lives | Estimated net residual values | Annual depreciation rates | | | | | | | Buildings | 30-50 years | 3% | 1.94% to 3.23% | The useful lives, estimated net residual values and depreciation methods of investment properties are reviewed and adjusted as appropriate at least at each year-end. The transfer from/to investment properties are recognised only when there is conclusive evidence that the use of the investment properties has changed. 12. Fixed assets Fixed assets are tangible assets that are held for rendering of services, leasing or operational management, and have useful lives of more than one accounting year. Fixed assets are recognised when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when meeting the criteria for recognition; or are included in the profit or loss for the current period. Fixed assets are initially measured at cost. The cost of purchasing fixed assets comprises the purchase price, related taxes, and any directly attributable expenditure before the assets are ready for their intended use. Fixed assets are depreciated using the straight-line method. The useful lives, the estimated net residual values and the annual depreciation rates of fixed assets are as follows: | | | | | | --- | --- | --- | --- | | Category | Useful lives | Estimated net residual values | Annual depreciation rates | | | | | | | Buildings | 24-70 years | 0%-3% | 1.39% to 4.04% | | Transportation equipment | 3-12 years | 0%-10% | 8.08% to 32.33% | | Other equipment | 3-12 years | 0%-10% | 8.33% to 33.33% | The useful lives, estimated net residual values and depreciation methods of fixed assets are reviewed and adjusted as appropriate at least at each year-end. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 13. Construction in progress The cost of construction in progress is determined based on actual project expenditure, including all necessary construction expenditures incurred during the construction period, borrowing costs to be capitalised before the project becomes ready for its intended use, and other related expenses. Construction in progress is transferred to fixed assets when it is ready for its intended use. 14. Intangible assets Intangible assets of the Group are initially measured at cost. The useful lives of intangible assets are determined as the period that the assets are expected to generate economic benefits for the Group, and when there is no foreseeable limit on the period of time over which the asset is expected to generate economic benefits for the Group, the intangible assets are regarded as having indefinite useful life. License is regarded as an intangible asset with indefinite useful life as there is no foreseeable limit on the period of time over which it is expected to generate economic benefits for the Group. The useful lives of major intangible assets are as follows: | | | | --- | --- | | Category | Useful lives | | | | | Land use rights | 30-50 years | | Software use rights | 1-10 years | | License | Uncertain | The land use rights acquired by the Group are generally accounted for as intangible assets. If the costs paid for the land use rights and the buildings located thereon cannot be reasonably allocated between the land use rights and the buildings, all of the costs are recognised as fixed assets. Intangible assets with finite useful lives are amortised on a straight-line basis over the useful period. The useful lives and amortisation method of the intangible assets with finite useful lives are reviewed by the Group at least at each financial year-end and adjusted as appropriate. Intangible assets with an indefinite useful life are not amortised and need to be tested annually for impairment. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 14. Intangible assets (continued) The internal research and development expenses are classified as research phase expense and development phase expense. Expenditure on research phase is recognised in profit or loss in the period in which it is incurred. Development phase expense can be capitalised only when an entity can demonstrate all of the following: (a) The technical feasibility of completing the intangible asset so that it will be available for use or for sale; (b) Its intention to complete the intangible asset and use or sell it; (c) How the intangible asset will generate probable future economic benefits. Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or for the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset; (d) The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; (e) Its ability to measure reliably the expenditure attributable to the intangible asset during its development. The development phase expenses that do not meet above conditions are recognised in profit or loss when incurred. 15. [Long-term deferred expenses](https://www.baidu.com/link?url=jklWcNk3tRgh7NViPmhYXUXjV_pkFTRCcYm6SJyO6GT_wIOWhoINhA1d3gFGdikHMMwsRW8SjbFhPBETmHwEDtw1YTdN6DAAT1y3BNI0ztyoN6aDMdbd78ycka3NY9tJk0zSe-s0nbbtmc7R7lmIiq&wd=&eqid=8d5f2375000295a10000000462a94364) Long-term deferred expenses are amortised by straight lines, with the amortisation period as follows: | | | | --- | --- | | Category | Amortisation period | | | | | Lease Improvement | Contracted lease term or 5 years (whichever is shorter) | 16. Debt assets Debt assets refer to the physical possession of a borrower, a guarantor or a third party that compensate the Group in the exercise of creditor's rights or security interests. Debt assets are accounted for at the fair value at the time of acquisition. The difference between the carrying amount of the restructured debts and the fair value of the acquired debt assets is offset against the provision for impairment of the restructured debts with the net change recognised in profit or loss for the current period. The debt assets are not depreciated or amortised. The recoverable amount of debt assets is assessed at the balance sheet date, tested for impairment, and adjusted as appropriate. The recoverable amount of a debt asset is the higher of an asset's fair value less costs of disposal and the present value of the estimated future cash flow expected to be derived from the asset. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 17. Financial instruments (applicable from 1 January 2023) A financial instrument is a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Recognition and derecognition of financial instruments The Group recognises a financial asset or a financial liability when it becomes a party to the contractual provisions of the financial instrument. Financial assets (or, where applicable, a part of a financial asset or part of a group of similar financial assets) are derecognised, when: (1) the contractual rights to receive the cash flows from the financial assets have expired; or (2) the financial assets have been transferred and (a) the Group transfers substantially all the risks and rewards of ownership of the financial assets, or (b) the Group neither transfers nor retains substantially all the risks and rewards of the assets, but the Group has not retained control of the financial assets. A financial liability is derecognised when the contractual obligation under the financial liability is fulfilled, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such a replacement or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference is recognised in profit or loss for the current period. All purchases or sales of financial assets in regular ways are recognised and derecognised using trade date accounting. Regular way purchases or sales are purchases or sales of financial assets under contracts whose terms require delivery within the time frame generally established by regulation or convention in the marketplace concerned. Trade date is the date that the Group committed to purchasing or selling the financial assets. Classification and measurement of financial assets The classification of financial assets at initial recognition depends on the Group��s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets: financial assets at fair value through profit or loss, financial assets at amortised cost, and financial assets at fair value through other comprehensive income. When, and only when the Group changes its business model for managing financial assets, all affected related financial assets could be reclassified. Financial assets are measured at fair value on initial recognition, but accounts receivable or notes receivable arising from the sale of goods or rendering of services that do not contain significant financing components or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component due within one year, are initially measured at the transaction price. For financial assets at fair value through profit or loss, relevant transaction costs are directly recognised in profit or loss, and transaction costs relating to other financial assets are included in the initial recognition amounts. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 17. Financial instruments (applicable from 1 January 2023) (continued) Classification and measurement of financial assets (continued) The subsequent measurement of financial assets depends on their classification as follows: *Debt investments measured at amortised cost* Financial assets are classified as financial assets measured at amortised cost if both of the following conditions are met: the financial assets are held for collection of contractual cash flows; the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, and the financial assets are not designated as measured at fair value through profit or loss. Interest income is recognised using the effective interest rate method, and any gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. *Debt investments at fair value through other comprehensive income* Financial assets are classified as financial assets at fair value through other comprehensive income if both of the following conditions are met: the financial assets are held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, and that such financial assets are not designated as at fair value through profit or loss. Interest income is recognised using the effective interest rate method. The interest income, impairment losses and foreign exchange revaluation are recognised in profit or loss. The remaining fair value changes are recognised in other comprehensive income. Upon derecognition of these financial assets, the accumulated gains or losses previously included in other comprehensive income are transferred and recognised in profit or loss. *Equity investments at fair value through other comprehensive income* The Group can elect to irrevocably designate its equity investments which are not held for trading as equity investments at fair value through other comprehensive income. Only the relevant dividend income (excluding the dividend income explicitly recovered as part of the investment cost) is recognised in profit or loss. Subsequent changes in the fair value are included in other comprehensive income, and no provision for impairment is required. When the financial asset is derecognised, the accumulated gains or losses previously included in other comprehensive income are transferred from other comprehensive income to retained profits. *Financial assets at fair value through profit or loss* Financial assets that do not meet the criteria for amortised cost and financial assets at fair value through other comprehensive income are measured at financial assets at fair value through profit or loss. Such financial assets are subsequently measured at fair value with net changes in fair value recognised in profit or loss. At initial recognition, the Group designates certain financial assets at fair value through profit or loss in order to eliminate or significantly reduce accounting mismatches. Once made such designation cannot be revoked. Other financial assets also cannot be re-designated as financial assets at fair value through profit or loss after initial recognition. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 17. Financial instruments (applicable from 1 January 2023) (continued) Classification and measurement of financial liabilities The Group��s financial liabilities are, at initial recognition, classified at fair value through profit or loss, or amortised cost. For financial liabilities at fair value through profit or loss, relevant transaction costs are directly recognised in profit or loss, and for financial liabilities measured at amortised cost, transaction costs are included in the initial recognition amounts. *Financial liabilities at fair value through profit or loss* Financial liabilities at fair value through profit or loss include financial liabilities held for trading (including derivative instruments attributable to financial liabilities) and financial liabilities designated upon initial recognition at fair value through profit or loss. Financial liabilities held for trading (including derivative instruments attributable to financial liabilities) are subsequently measured at fair value, and the changes in fair value of such financial liabilities are recognised in profit or loss. Financial liabilities designated at fair value through profit or loss are subsequently measured at fair value and gains or losses are recognised in profit or loss, except for the gains or losses arising from the Group��s own credit risk which are presented in other comprehensive income. If recognition of gains or losses arising from the Group��s own credit risk to other comprehensive income would create or enlarge an accounting mismatch in profit or loss, the Group shall include the entire fair value changes (including the amount arising from the changes in the Group��s own credit risk) of such financial liabilities in profit or loss. *Financial liabilities measured at amortised cost* Financial liabilities measured at amortised cost are measured at amortised cost using the effective interest rate method. Impairment of financial assets Based on the expected credit losses (��ECLs��), the Group recognises an allowance for ECLs for the financial assets measured at amortised cost, and debt investments at fair value through other comprehensive income. For accounts receivable and contract assets that do not contain a significant financing component, the Group applies the simplified approach to recognise a loss allowance based on lifetime ECLs. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 17. Financial instruments (applicable from 1 January 2023) (continued) Impairment of financial assets (continued) Except for financial assets which apply the simplified approach as mentioned above, the Group assesses whether the credit risk on a financial asset has increased significantly since initial recognition at each balance sheet date. If the credit risk has not increased significantly since initial recognition (stage 1), the loss allowance is measured at an amount equal to 12-month ECLs by the Group and the interest income is calculated according to the gross carrying amount and the effective interest rate; if the credit risk has increased significantly since initial recognition but are not credit-impaired (stage 2), the loss allowance is measured at an amount equal to lifetime ECLs by the Group and the interest income is calculated according to the gross carrying amount and the effective interest rate; if such financial assets are credit-impaired after initial recognition (stage 3), the loss allowance is measured at an amount equal to lifetime ECLs by the Group and the interest income is calculated according to the amortised cost and the effective interest rate. If the credit risk of financial assets is low at the balance sheet date, the Group assumes that the credit risk has not increased significantly since initial recognition. A purchased or originated credit-impaired financial asset is an asset that is credit-impaired at initial recognition. For such assets, the Group recognises the cumulative changes in lifetime ECLs since the initial recognition of the asset. Information regarding the Group's criteria for determining a significant change in credit risk, the definition of credit-impaired assets, and parameters of the measurement of ECLs, is disclosed in Note XIII 3. The Group shall measure ECLs of financial assets in a way that reflects: an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; the time value of money; and reasonable and supportable information that is available without undue cost or effort at the balance sheet date about past events, current conditions and forecasts of future economic conditions. When the Group has no reasonable expectation of recovering entire or a portion of the contractual cash flows on a financial asset, the Group directly writes down the gross carrying amount of the financial asset. Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts; and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. Derivative financial instruments Derivative financial instruments are initially recognised at fair value on the date on which the derivative contracts are entered into and are subsequently measured at fair value. All derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. The gains or losses arising from changes in fair value of derivatives are recognised directly in profit or loss for the current period. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 17. Financial instruments (applicable from 1 January 2023) (continued) Transfer of financial assets A financial asset is derecognised when the Group has transferred substantially all the risks and rewards of the asset to the transferee. A financial asset is not derecognised when the Group retains substantially all the risks and rewards of the financial asset. When the Group has neither transferred nor retained substantially all the risks and rewards of the financial asset, it either (i) derecognises the financial asset and recognises the assets and liabilities created in the transfer when it has not retained control of the asset; or (ii) continues to recognise the transferred asset to the extent of the Group's continuing involvement, in which case, the Group also recognises an associated liability. Continuing involvement that takes the form of a guarantee over the transferred financial asset is measured at the lower of the original carrying amount of the financial asset and the amount guaranteed. The amount guaranteed is the maximum amount of consideration that the Group could be required to repay. 18. Financial instruments (only applicable for 2022) Financial instruments are contracts which become one enterprise��s financial assets, and at the same time become other undertaking��s financial liabilities or equity instruments. Recognition and derecognition of financial instruments The Group recognises a financial asset or a financial liability when it becomes a party to the contractual provisions of the financial instrument. A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised, when: (1) the contractual rights to receive the cash flows from the financial assets have expired; (2) the financial asset has been transferred and (a) the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee; or (b) the Group has not retained control of the financial asset, although the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset. If the Group has transferred the right to collect the cash flow of the financial assets or signed a ��pass-through�� arrangement, but has neither transferred or retained the majority of risks and returns of the asset, nor transferred the control of the asset, the asset will be recognised to the extent the Group is involved in the asset. In the above circumstances, the Group recognises the relevant liabilities accordingly. The assets and liabilities are measured based on the rights and obligations retained by the Group. If the Group continues to be involved by providing a guarantee for the transferred assets, it is measured by the original book value or the cap of the consideration amount that might be repayable by the Group, whichever is less. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 18. Financial instruments (only applicable for 2022) (continued) Recognition and derecognition of financial instruments (continued) A financial liability is derecognised when the contractual obligation under the financial liability is fulfilled, cancelled or expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such a replacement or modification is treated as a derecognition of the original liability and the recognition of a new liability and the difference is recognised in profit or loss for the current period. All purchases or sales of financial assets in regular ways are recognised and derecognised using trade date accounting. Purchases or sales of financial assets in regular ways refer to receipt or delivery of financial assets within the period generally established by regulation or convention in the marketplace in accordance with contractual terms. Trade date is the date that the Group is committed to purchasing or selling the financial assets. Classification and measurement of financial assets The Group classifies its financial assets into four categories at initial recognition: financial assets at fair value through profit or loss, held-to-maturity investments, loans and receivables and available-for-sale financial assets. The Group determines the classification of its financial assets at initial recognition. The financial assets are measured at fair value at initial recognition. In case of financial assets at fair value through profit or loss, the related transaction costs are directly recognised in profit or loss for the current period. For other categories of financial assets, transaction costs are included in their initially recognised amounts. *Financial assets at fair value through profit or loss* Financial assets at fair value through profit or loss include financial assets held for trading and those designated at fair value through profit or loss at initial recognition. Financial assets held for trading refer to financial assets satisfying one of the following conditions: the financial assets are acquired with the intention to sell in the near future; they belong to a part of identifiable financial instruments group under the centralised management, and there is objective evidence that the Group has recently managed the financial instruments group using short-term profit method; they belong to derivative instruments, excluding the derivative instruments that are designated with effective hedging, and those belong to financial guarantee contract, as well as the derivative instruments that are linked to equity instrument investments that are not quoted in an active market and whose fair value cannot be reliably measured, and has to be settled by delivery of such equity instruments. These financial assets are subsequently measured using fair value, and all realised (such as dividends or interest income, etc.) and unrealised profits or losses are recorded in profit or loss for the current period. *Held-to-maturity financial assets* Held-to-maturity financial assets are non-derivative financial assets with fixed maturity and fixed or determinable payments that the Group has the positive intention and ability to hold to maturity. These financial assets are subsequently measured at amortised cost using the effective interest method, with gains or losses arising from derecognition, impairment or amortisation recognised in profit or loss. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 18. Financial instruments (only applicable for 2022) (continued) Classification and measurement of financial assets (continued) *Loans and receivables* Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables mainly include various types of receivables, policy loans, term deposits, refundable capital deposits, securities purchased under agreements to resell, and investments classified as loans and receivables, etc. These financial assets are subsequently measured at amortised cost using the effective interest method, with gains or losses arising from derecognition, impairment or amortisation recognised in profit or loss. *Available-for-sale financial assets* Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories at initial recognition. This type of financial assets is subsequently measured at fair value. The discount or premium on available-for-sale investments in debt instruments is amortised using the effective interest method and included in interest income. Gains or losses arising from change in fair value of available-for-sale financial assets are recognised as other comprehensive income, except for impairment losses and foreign exchange differences arising from translation of monetary financial assets. When such financial assets are derecognised or impaired, the cumulative gains or losses previously recognised in other comprehensive income are recycled into profit or loss for the current period. Interests on available-for-sale debt investments calculated using the effective interest method during the period in which such investments are held, and cash dividends declared by the investee on available-for-sale investments in equity instruments are recognised in profit or loss for the current period as investment income. Classification and measurement of financial liabilities The Group��s financial liabilities are classified into two categories at initial recognition: financial liabilities at fair value through profit or loss and other financial liabilities. The Group determines the classification of its financial liabilities at initial recognition. In the case of financial liabilities at fair value through profit or loss, the related transaction costs are recognised directly in profit or loss for the current period. For other financial liabilities, the related transaction costs are included in their initially recognised amounts. *Financial liabilities at fair value through profit or loss* Financial liabilities at fair value through profit or loss consist of financial liabilities held for trading and those designated at fair value through profit or loss. Financial liabilities held for trading refer to financial liabilities satisfying one of the following conditions: the financial liabilities are assumed with the intention to repurchase in the near future; they belong to a part of identifiable financial instruments group under the centralised management, and there is objective evidence that the Group has recently managed the financial instruments group using short-term profit method; they belong to derivative instruments, excluding the derivative instruments that are designated with effective hedging, and those belong to financial guarantee contract, as well as the derivative instruments that are linked to equity instrument investments that are not quoted in an active market and whose fair value cannot be reliably measured and has to be settled by delivery of such equity instruments. These financial liabilities are subsequently measured at fair value, and all realised and unrealised profit or loss are recorded in profit or loss for the current period. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 18. Financial instruments (only applicable for 2022) (continued) Classification and measurement of financial liabilities (continued) *Other financial liabilities* Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Charges, transaction costs and premiums or discounts that are paid or collected by parties to the financial liability contracts and attributable to effective interest rate are considered when determining effective interest rate. Transaction costs refer to incremental expenses that are directly attributable to the purchase, issuance, or disposal of financial instruments, that is, expenses that would otherwise not occur. Derivative financial instruments Derivative financial instruments are initially measured at fair value on the date when a derivative contract is entered into and are subsequently measured at their fair value. Gains or losses arising from changes in fair value that do not meet the hedge accounting requirements are recognised directly in profit or loss. The derivative financial instrument with a positive fair value is recognised as an asset, otherwise, it is recognised as a liability. However, derivative financial instruments are measured at cost if they are linked to and should be settled through the delivery of equity instruments, of which quoted price is not available in an active market and fair value cannot be reliably measured. Impairment of financial assets The carrying amounts of financial assets (other than those at fair value through profit or loss) are reviewed at balance sheet date to determine whether there is objective evidence of impairment. If any such evidence exists, an impairment loss is recognised. Objective evidence indicating impairment of financial assets refers to the matter that actually occurs after the initial recognition of financial assets and will affect estimated future cash flows of financial assets, and whose impact can be reliably measured. The objective evidences used to determine whether impairment exists are as follows: if !supportLists· endif  significant financial difficulty of the issuer or debtor; if !supportLists· endifa breach of contract by the debtor, such as a default or delinquency in interest or principal payments; if !supportLists· endifthe creditor, for economic or legal reasons relating to the debtor's financial difficulty, grants to the debtor a concession; if !supportLists· endifthe debtor is likely to go bankrupt or face other financial restructuring; if !supportLists· endifthe disappearance of an active market for that financial asset because of financial difficulties faced by the issuer; if !supportLists· endifit cannot be identified or confirmed if the cash flow of an asset in a group of financial assets has decreased. However, after the overall assessment based on the data on the market, the estimated future cash flow of the group of the financial assets, subsequent to its initial recognition, has decreased and can be measured, for example, the debtor's ability to pay gradually deteriorates, or the unemployment rate of the country or region where the debtor locates at increases, the price of the collateral in its region drops rapidly and the industry is depressed, etc.; if !supportLists· endifthe equity instrument investors may not be able to recover investment cost due to material adverse changes in technological, market, economic or legal environment where the equity instrument issuer operates; if !supportLists· endifsignificant or prolonged decline in fair value of equity investment; and if !supportLists· endifother objective evidences indicating financial assets are impaired. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 18. Financial instruments (only applicable for 2022) (continued) Impairment of financial assets (continued) *Financial assets at amortised cost* If there is objective evidence that an impairment loss on financial assets has been incurred, the carrying amount of the financial asset is reduced to the present value of estimated future cash flows (excluding future credit losses that have not been incurred). The amount of reduction is recognised in profit or loss for the current period. The present value of estimated future cash flows shall be calculated with the financial asset��s original effective interest rate (i.e., the prevailing effective interest rate calculated at initial recognition or prescribed in the contract in case of floating rate) and the related collateral value shall also be taken into account. For a financial asset that is individually significant, the Group assesses the asset individually for objective evidence of impairment. For a financial asset that is not individually significant, the Group assesses the asset individually or collectively for objective evidence of impairment. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether the financial asset is individually significant or not, the financial asset is included in a group of financial assets with similar credit risk characteristics and collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a group of financial assets with similar credit risk characteristics and collectively assessed for impairment. If, subsequent to the recognition of impairment loss of financial assets measured at amortised cost, there is objective evidence that the value of the financial asset is recovered and the recovery is related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed, and the amount of reversal is recognised in profit or loss. However, the carrying amount of the financial asset after reversal shall not exceed what the amortised cost would have been had the impairment not been recognised at the date when the impairment was reversed. *Available-for-sale financial assets* If objective evidence of impairment exists for available-for-sale financial assets, the cumulative loss arising from the decrease in fair value and previously recognised in other comprehensive income is reclassified to profit or loss and is measured at the initiation acquisition cost (net of any principal repayment and amortisation, the current fair value, and any impairment loss on that financial asset previously recognised in profit or loss). The Group uses the weighted average method to calculate the initial investment cost of available-for-sale equity investments. A provision for impairment is made for available-for-sale equity investments when there has been a significant or prolonged decline in the fair value below its cost or where other objective evidence of impairment exists. The determination of what is ��significant�� or ��prolonged�� requires judgement. The Group collectively considers the magnitude of the decline in fair value relative to the cost, volatility, and the duration of the decline in evaluating whether a decline in fair value is significant. The Group considers the period and consistency of the decline in evaluating whether a decline in fair value is prolonged. The Group usually considers a significant decline to be one in which the fair value is below the weighted average cost by more than 50% or a prolonged decline to be one in which fair value is below the weighted average cost for a continuous period of more than twelve months. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 18. Financial instruments (only applicable for 2022) (continued) Impairment of financial assets (continued) *Available-for-sale financial assets (continued)* For available-for-sale debt instrument on which the impairment loss has been recognised, if, in a subsequent accounting period, its fair value increases and the increase can be objectively related to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss for the current period. Impairment losses of available-for-sale equity investment are not reversed through profit or loss. Increases in their fair value subsequent to impairment losses are recognised directly in other comprehensive income. Transfer of financial assets The financial assets are derecognised when the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee; the financial assets are not derecognised when the Group retains substantially all the risks and rewards of ownership of the financial asset. If the Group neither transfers nor retains substantially all risks and rewards of ownership of the financial asset, the Group will account for the following situations in different ways: (i) if the Group does not retain the control over the financial asset, the financial asset is derecognised and related assets and liabilities occurred hereby are recognised; or (ii) if the Group retains the control over the financial asset, related financial assets and liabilities are recognised to the extent of the Group��s continuing involvement in the transferred financial asset. Offsetting of financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount is presented in the consolidated balance sheet if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. 19. Asset impairment The Group determines the impairment of assets (except for deferred income tax assets, financial assets, insurance contract assets, and reinsurance contract assets which have been described in their respective accounting policies) in the following methods: The Group assesses at each balance sheet date whether there is objective evidence that assets are impaired. Where there is objective evidence, the Group estimates the recoverable amount and tests for impairment. For goodwill acquired from business combination and intangible assets with indefinite useful life not ready for intended use, no matter there is objective evidence of impairment or not, impairment should be tested at each year-end. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 19. Asset impairment (continued) The recoverable amount is the higher of an asset's fair value less costs of disposal and the present value of the estimated future cash flow expected to be derived from the asset. The Group estimates the recoverable amount on the basis of individual asset. When it is difficult to estimate the recoverable amount individually, the recoverable value of the cash generating units which the asset belongs to will be estimated. The recognition of an asset group is based on whether the main cash flow generated by the asset group is independent from those generated by other assets or groups of assets. When recoverable amounts of assets or groups of assets are lower than their carrying amounts, the Group decreases the carrying amount to recoverable amount. The decreased amounts are recognised in profit or loss and corresponding provisions are made. For impairment test of goodwill, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units, or groups of cash-generating units when being unable to be allocated to each of the cash-generating units. Cash-generating units or groups of cash-generating units refer to those that can benefit from the synergies of the combination and are not larger than the reportable segment determined by the Group. When performing impairment test for the (groups of) cash-generating unit to which goodwill is allocated, if there is indication of impairment, the Group firstly tests the (groups of) cash-generating unit excluding goodwill, calculates the recoverable amount and recognises relevant impairment losses. The Group then tests the (groups of) cash-generating units including goodwill and compares the carrying amount and recoverable amount. If the carrying amount exceeds the recoverable amount, the amount of impairment loss is firstly deducted from the carrying amount of goodwill allocated to the (groups of) cash-generating unit, and then from the carrying amount of each of other assets (other than goodwill) within the (groups of) cash-generating unit, on pro rata basis. Once the above asset impairment loss is recognised, it will not be reversed in the subsequent periods. 20. Insurance security fund The Group draws insurance security funds in accordance with the Administrative Measures for Insurance security funds. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts 21.1 Definition of insurance contracts An insurance contract is a contract under which the issuer of the contract accepts significant insurance risk from the policyholder by agreeing to compensate the policyholder if a specified insured event adversely affects the policyholder. An insured event is an uncertain future event covered by an insurance contract that creates insurance risk. An insurance risk is a risk, other than financial risk, transferred from the policyholder to the issuer of a contract. The accounting policies of insurance contract apply to the following contracts of the Group: if !supportLists• endifInsurance contracts, including reinsurance contracts, the Group issues; if !supportLists• endifReinsurance contracts the Group holds; if !supportLists• endifInsurance contracts the Group acquired in a transfer of insurance contracts or in a business combination involving enterprises not under common control; if !supportLists• endifInvestment contracts with discretionary participation features the Group issues. A reinsurance contract is an insurance contract under which the reinsurer (the issuer) agrees to compensate the cedant for claims incurred by the cedant arising from underlying insurance contracts. An investment contract with discretionary participation features is a financial instrument that provides a particular investor with the contractual right to receive guaranteed and additional amounts. The additional amounts are subject to the returns on a specified pool of items at the discretion of the issuer, and are expected to be a significant portion of the total contractual benefits. The Group accounts for the investment contract with discretionary participation features issued by the Group applying the accounting treatments for insurance contracts, except for the modifications listed in ��Recognition and measurement of investment contracts with discretionary participation features��. An insurance contract is an insurance contract with direct participation features if all the following conditions are met at the inception of the contract: if !supportLists• endifThe contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items; if !supportLists• endifAn amount equal to a substantial share of the fair value returns on the underlying items is expected to be paid to the policyholder; and if !supportLists• endifA substantial proportion of any change in the amounts to be paid to the policyholder is expected to vary with the change in fair value of the underlying items. 21.2 Identification, combination and separation of insurance contracts Identification of insurance contracts The Group assesses whether the insurance risk of a contract is significant, i.e., performs a test on significant insurance risk, to determine whether the contract is an insurance contract. A contract is an insurance contract only if it transfers significant insurance risk. A contract that meets the definition of an insurance contract at its inception will not be reassessed subsequently. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts (continued) 21.2 Identification, combination and separation of insurance contracts (continued) Identification of insurance contracts (continued) When the Group performs tests on significant insurance risk, it determines that a contract transfers significant insurance risk if the following conditions are met: if !supportLists(a) endifAt least in one scenario that has commercial substance, an insured event specified by the contract could cause the issuer to pay significant additional amounts, even if the insured event is extremely unlikely, or even if the expected present value of the contingent cash flows is a small proportion of the expected present value of the remaining cash flows from the insurance contract. The additional amounts refer to the present value of amounts payable if an insured event occurs that exceed those that would be payable if no insured event had occurred (including claims handling and assessment costs). Absence of discernible effect on the economics indicates lack of commercial substance; if !supportLists(b) endifAt least in one scenario that has commercial substance, an insured event specified by the contract could cause the issuer to incur a loss on a present value basis. A loss is determined to be incurred due to the insured event if such event causes the future cash outflows to exceed inflows, on a present value basis. However, even if a reinsurance contract does not expose the issuer to the possibility of a significant loss, that contract is deemed to transfer significant insurance risk if it transfers to the reinsurer substantially all the insurance risk relating to the reinsured portions of the underlying insurance contracts. Combination of insurance contracts The Group treats a series of insurance contracts with the same counterparty or related counterparties which may achieve an overall commercial effect, as a single contract in order to report the substance of such contracts. Separating components from insurance contracts An insurance contract may contain one or more components, the Group separates the following components: if !supportLists• endifEmbedded derivatives meeting the separation conditions under CAS No. 22 - Recognition and Measurement of Financial Instruments; if !supportLists• endifDistinct investment components, but the investment components that meet the definition of investment contracts with discretionary participation features are still accounted for applying the accounting policies for insurance contracts; if !supportLists• endifPromises to transfer distinct goods or services other than insurance contract services. Investment component is the amount that an insurance contract requires to repay to policyholders regardless of whether an insured event occurs. if !supportLists(a) endif **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts (continued) 21.2 Identification, combination and separation of insurance contracts (continued) Separating components from insurance contracts (continued) An investment component is distinct if both the following conditions are met: if !supportLists(a) endifthe investment component and the insurance component are not highly interrelated. An investment component and an insurance component are highly interrelated if one of the following conditions are met: if !supportLists(i) endifit is unable to measure a component separately, i.e., it is unable to measure one component without considering the other. If the value of one component varies according to the value of the other, the two components are highly interrelated; if !supportLists(ii) endifthe policyholder is unable to benefit from a component separately, and can only benefit when both components are present. Thus, if the lapse or maturity of one component in a contract causes the lapse or maturity of the other, the two components are highly interrelated. if !supportLists(b) endifa contract with equivalent terms is sold, or could be sold, separately in the same market or the same jurisdiction, either by entities that issue insurance contracts or by other parties. Generally, for relevant contracts, the Group determines the non-distinct investment components based on cash surrender values and similar contractual terms. Insurance contract services are the services provided by an entity comprising the coverage for insured events, the investment-return service to the policyholder of the insurance contracts without direct participation features, and the investment-related service as management of underlying items on behalf of the policyholder of the insurance contracts with direct participation features. When an entity separates distinct goods or services other than insurance contract services, it shall not consider activities that an entity must undertake to fulfil a contract unless the entity transfers a good or service other than insurance contract services to the policyholder as those activities occur. A good or service other than an insurance contract service promised to a policyholder is distinct if the policyholder can benefit from the good or service either on its own or together with other resources readily available to the policyholder. A good or insurance service other than an insurance contract service is not distinct if both the following conditions are met: the cash flows and risks associated with the good or service are highly interrelated with the cash flows and risks associated with the insurance components in the contract and the entity provides a significant service in integrating the good or service with the insurance components. The Group allocates contractual cash flows based on separation of insurance contracts. After separating cash flows related to separated embedded derivatives and distinct investment components, contractual cash flows are allocated between insurance components (including embedded derivatives that are not separated, promises to transfer goods or services other than insurance contract services that are not distinct) and promises to transfer distinct goods or services other than insurance contract services. 21.3 Grouping of insurance contracts The Group identifies portfolios of insurance contracts as contracts subject to similar risks and are managed together. The Group further divides portfolios of insurance contracts into groups of insurance contracts and uses groups of insurance contracts as units of account. A group of insurance contracts consists of one or more insurance contracts issued within a period of no longer than one year and with similar levels of profitability. The Group determines the group of contracts to which contracts belong by considering each individual contract. However, if reasonable and supportable information clearly indicates that a set of contracts will all be in the same group, the Group assesses the grouping of contracts based on such set of contracts. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts (continued) 21.3 Grouping of insurance contracts (continued) The Group divides a portfolio of insurance contracts into a minimum of the following groups, without contracts issued more than one year apart being in the same group: if !supportLists• endifof contracts that are onerous at initial recognition; if !supportLists• endifof contracts that, at initial recognition, have no significant possibility of becoming onerous subsequently; if !supportLists• endifof the remaining contracts in the portfolio. 21.4 Recognition of insurance contracts The Group recognises an insurance contract it issues from the earliest of the following: if !supportLists• endifthe beginning of the coverage period; if !supportLists• endifthe date when the first payment from the policyholder becomes due, or the date when the Group receives the first payment if there is no contractual due date; if !supportLists• endifwhen it becomes onerous. When the contracts in the portfolio meet one of the above conditions, the Group assesses the group to which the contracts belong and will not reassess subsequently. Coverage period is the period during which an entity provides insurance contract services to the policyholder. The Group recognises an asset for the insurance acquisition cash flows (paid or payable before the recognition of the relevant groups of contracts) that are allocated to the groups in a systematic and rational way. Insurance acquisition cash flows are cash flows arising from the costs of selling, underwriting and starting a group of contracts (issued or expected to be issued) that are directly attributable to a portfolio of contracts. The Group derecognises an asset for insurance acquisition cash flows relating to the contract when the contract in a portfolio is included in the group of contracts to which it belongs. At each balance sheet date, the Group assesses the recoverable amount of the asset for insurance acquisition cash flows if facts and circumstances indicate the asset may be impaired. If the recoverable amount of the asset for insurance acquisition cash flow is lower than its carrying value, the Group recognises an allowance for asset impairment and an impairment loss in the profit or loss of the period. If the impairment conditions in prior periods no longer exist, the allowance for asset impairment will be reversed and the reversal will be recognised in the profit or loss of the period. 21.5 Measurement of insurance contracts 21.5.1 General model Measurement on initial recognition The Group uses a group of insurance contracts as the unit of account and measures insurance contract liabilities on the initial recognition of a group of insurance contracts at the total of fulfilment cash flows and contractual service margin. The contractual service margin represents the unearned profit the entity will recognise as it provides insurance contract services in the future. The fulfilment cash flows comprise the following: if !supportLists• endifestimates of future cash flows that relate directly to fulfil insurance contracts; if !supportLists• endifan adjustment to reflect the time value of money and the financial risks; and if !supportLists• endifa risk adjustment for non-financial risk. if !supportLists• endif **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts (continued) 21.5 Measurement of insurance contracts (continued) 21.5.1 General model (continued) Measurement on initial recognition (continued) Risk adjustment for non-financial risk is the compensation an entity requires for bearing the uncertainty about the amount and timing of the future cash flows that arises from non-financial risk as the entity fulfils insurance contracts. Estimates of fulfilment cash flows does not take into account the non-performance risk of the entity. The Group may estimate the future cash flows at a higher level of aggregation than groups or portfolios of contracts and then allocate the resulting fulfilment cash flows to individual groups of contracts in a systematic and rational way.The estimates of future cash flows shall be as follows: the estimates of future cash flows should be unbiased probability-weighted mean; the estimates of any relevant market variables should be consistent with observable market prices for those variables; the estimates of future cash flows should be based on currently available information and reflect conditions and assumptions at the measurement date; the estimates of future cash flows should be estimated separately from the adjustment for the time value of money and financial risk, unless the most appropriate measurement technique combines these estimates. The Group takes into account all the future cash flows within the boundary of each contract in a group of insurance contracts when estimating future cash flows. Cash flows are within the boundary of an insurance contract if they arise from the rights that enable the entity to compel the policyholder to pay the premiums or from the substantive obligations under which the entity is required to provide the policyholder with insurance contract services. The entity has no substantive obligation to provide insurance contract services to the policyholder when: if !supportLists• endifthe entity has the practical ability to reassess the risks of the particular policyholder and, as a result, can set a price or level of benefits that fully reflects those risks; or if !supportLists• endifthe entity has the practical ability to reassess the risks of the portfolio of insurance contracts that contains the contract and, as a result, can set a price or level of benefits that fully reflects the risk of that portfolio, and the pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate to periods after the reassessment date. The Group adjusts the fulfilment cash flows with appropriate discount rates to reflect the time value of money and the financial risks related to those cash flows to the extent that the financial risks are not included in the estimates of cash flows. An appropriate discount rate shall meet all of the following requirements: reflects the time value of money, the characteristics of the cash flows and the liquidity characteristics of the insurance contracts; be consistent with observable current market prices for financial instruments with cash flows whose characteristics are consistent with those of the insurance contracts, and exclude the effect of factors that influence such observable market prices but do not affect the future cash flows of the insurance contracts. The Group considers and estimates risk adjustments for non-financial risk separately when estimating fulfilment cash flows to reflect the impact of non-financial risks on fulfilment cash flows. On initial recognition of a group of insurance contracts, the Group measures the total of: if !supportLists• endifthe fulfilment cash flows; if !supportLists• endifthe cash flows related to asset for insurance acquisition cash flows, and any other asset or liability derecognised at that date; if !supportLists• endifcash flows arising from the contracts in the group at that date. If the total represents a net cash inflow, the Group recognises that as a contractual service margin; if it represents a net cash outflow, the Group recognises that as a loss in profit or loss of the period. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts (continued) 21.5 Measurement of insurance contracts (continued) 21.5.1 General model (continued) Subsequent measurement The insurance contract liability is subsequently measured by the Group at each balance sheet date at the total of the liability for remaining coverage and the liability for incurred claims. The liability for remaining coverage includes the fulfilment cash flows related to unexpired coverage period allocated to the group at the balance sheet date and the contractual service margin of the group at that date. The liability for incurred claims includes the fulfilment cash flows related to claims and other related expenses incurred allocated to the group at the balance sheet date. For insurance contracts without direct participation features, the carrying amount of the contractual service margin of a group of contracts at the balance sheet date is determined as the carrying amount at the start of the period as adjusted for the following: if !supportLists(a) endif the effect of contracts added to the group of contracts in the period on the contractual service margin; if !supportLists(b) endifinterest accreted in the period on the carrying amount of contractual service margin, using the weighted average interest rate (applicable to cash flows that do not vary based on the returns on any underlying items) determined when contracts are recognised in that group of contracts; if !supportLists(c) endifthe changes in fulfilment cash flows relating to future service, except to the extent that the increases in the fulfilment cash flows exceed the carrying amount of the contractual service margin, giving rise to a loss or the decreases in the fulfilment cash flows are allocated to the loss component of the liability for remaining coverage; if !supportLists(d) endifthe effect of currency exchange differences in the period on the contractual service margin; and if !supportLists(e) endifthe amortisation of the contractual service margin in the period. The Group rationally determines the coverage units of the group of contracts in each period of the coverage period based on the pattern of provision of insurance contract services, and recognises insurance revenue accordingly over the current and future periods by amortising the carrying amount of the contractual service margin as adjusted for (a) to (d) above. The Group specifies, at inception of the relevant contracts, the basis on which it determines cash flow commitments, e.g. based on a fixed interest rate or on returns that vary based on specified asset returns, in order to disaggregate the changes in discretionary cash flows between those arising from changes in assumptions that relate to financial risk and those arising from discretion. Those arising from discretion are treated as changes in fulfilment cash flows relating to future services which adjust the contractual service margin, while contractual service margin will not be adjusted for those arising from changes in assumptions that relate to financial risk. The Group recognises the reduction in the liability for remaining coverage because of services provided in the period as insurance revenue; The Group recognises the increase in the liability for incurred claims because of claims and other related expenses incurred in the period and related subsequent changes in fulfilment cash flows as insurance service expense. Any investment components in the insurance contracts are excluded when recognising insurance revenue and insurance service expense. The Group amortises the insurance acquisition cash flows related to groups of contracts in a systematic way on the basis of the passage of time, and recognises the amount as insurance service expense in each period during the coverage period and as insurance revenue at the same time to reflect the recovery of portions of the premiums that relate to such cash flows. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts (continued) 21.5 Measurement of insurance contracts (continued) 21.5.1 General model (continued) Subsequent measurement (continued) The Group accounts for the changes in the liability for remaining coverage and the liability for incurred claims arising from the effect of the time value of money and the effect of financial risk as insurance finance income or expenses. Considering the related assets it holds and how it accounts for those assets, the Group makes the following accounting policy choices to portfolios of insurance contracts between: if !supportLists• endifincluding insurance finance income or expenses for the period in profit or loss; or if !supportLists• endifdisaggregating insurance finance income or expenses for the period between those included in profit or loss and those included in other comprehensive income. Over the remaining duration of the group of contracts, the amount included in the profit or loss of each period is determined using a systematic and rational allocation method, and the difference between this amount and the total insurance finance income or expenses for the period is included in other comprehensive income. Insurance finance income or expenses included in the profit or loss, is the insurance finance income or expenses that is included in the profit or loss of the current and subsequent periods. Insurance finance income or expenses included in the profit or loss comprises insurance finance expenses included in the profit or loss from the insurance contracts issued by the Group and reinsurance finance income included in the profit or loss from the reinsurance contracts held. The Group determines the amount of insurance finance income or expenses included in the profit or loss as follows: if !supportLists• endiffor groups of insurance contracts for which changes in assumptions that relate to financial risk do not have a substantial effect on the amounts paid to the policyholders, the Group applies the discount rates determined at the date of initial recognition of a group of contracts, applicable to cash flows that do not vary based on the returns on any underlying items, to determine the amount of the insurance finance income or expenses included in profit or loss; if !supportLists• endiffor groups of insurance contracts for which changes in assumptions that relate to financial risk have a substantial effect on the amounts paid to policyholders, the Group applies the effective yield approach or projected crediting rate approach based on the characteristics of the contracts, to determine the amount of the insurance finance income or expenses included in profit or loss. The Group changes the treatment results of accounting estimates made in interim financial statements in its subsequent interim and annual financial statements within the same annual period. When measuring a group of contracts that generate cash flows in a foreign currency, the Group treats the insurance contract liability as a monetary item, and applies CAS No. 19 - Foreign currency translation. At each balance sheet date, exchange differences on a group of contracts that generate cash flows in a foreign currency shall be included in profit or loss. For portfolios of insurance contracts that disaggregate insurance finance income or expenses between profit or loss and other comprehensive income, the exchange differences related to the amounts recognised in other comprehensive income are included in other comprehensive income. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts (continued) 21.5 Measurement of insurance contracts (continued) 21.5.2 Special measurement approach (��variable fee approach��) for groups of insurance contracts with direct participation features The Group assesses whether an insurance contract is an insurance contract with direct participation features at inception of the contract and does not reassess afterwards. The special measurement approach for insurance contracts with direct participation features is not applicable to reinsurance contracts issued and reinsurance contracts held. The Group estimates the fulfilment cash flows of the groups of insurance contracts with direct participation features at the difference between the fair value of the underlying items and the variable fee. The variable fee reflects the consideration received by the Group for providing investment-related services by managing the underlying items on behalf of the policyholder, and is equal to the Group's share of the fair value of the underlying items less the fulfilment cash flows that do not vary based on the return on the underlying items. For insurance contracts with direct participation features, the carrying amount of the contractual service margin of a group of contracts at each balance sheet date equals the carrying amount at the start of the reporting period adjusted for: if !supportLists(a) endifthe effect of contracts added to the group in the period on the contractual service margin�� if !supportLists(b) endifthe change in the amount of the Group��s share of the fair value of the underlying items, except to the extent that: if !supportLists• endifif the Group mitigates the effect of financial risk using derivatives or reinsurance contracts held, when specified conditions are met, the Group may choose to recognise the related changes in the effect of the time value of money and financial risk on the amount of the Group's share of the underlying items as insurance finance income or expenses included in profit or loss. However, if the Group chooses to disaggregate insurance finance income or expenses of such reinsurance contracts held between profit or loss and other comprehensive income, the insurance finance income or expenses mentioned above should also be disaggregated accordingly; if !supportLists• endifthe decrease in the amount of the Group��s share of the fair value of the underlying items exceeds the carrying amount of the contractual service margin, giving rise to a loss; if !supportLists• endifthe increase in the amount of the Group's share of the fair value of the underlying items reverses the loss component of the liability for remaining coverage. if !supportLists(c) endifthe changes in fulfilment cash flows relating to future service and do not vary based on the returns on underlying items, except to the extent that: if !supportLists• endifif the Group mitigates the effect of financial risk using derivatives, reinsurance contracts held or non-derivative financial instruments measured at fair value through profit or loss, when specified conditions are met, the Group may choose to recognise the related changes in the effect of the time value of money and financial risk on the fulfilment cash flows as insurance finance income or expenses included in profit or loss. However, if the Group chooses to disaggregate insurance finance income or expenses of such reinsurance contracts held between profit or loss and other comprehensive income, the insurance finance income or expenses mentioned above should also be disaggregated accordingly; if !supportLists• endifsuch increases in the fulfilment cash flows exceed the carrying amount of the contractual service margin, giving rise to a loss; if !supportLists• endifsuch decreases in the fulfilment cash flows are allocated to the loss component of the liability for remaining coverage. if !supportLists(d) endifthe currency exchange differences in the period arising on the contractual service margin; **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts (continued) 21.5 Measurement of insurance contracts (continued) 21.5.2 Special measurement approach (��variable fee approach��) for groups of insurance contracts with direct participation features (continued) if !supportLists(e) endifthe amortisation of the contractual service margin in the period. The Group rationally determines the coverage units of the group of contracts in each period of the coverage period based on the pattern of provision of insurance contract services, and recognises insurance revenue accordingly over the current and future periods by amortising the carrying amount of the contractual service margin as adjusted for (a) to (d) above. For insurance contracts with direct participation features for which the Group holds the underlying items, when the Group makes the accounting policy choice of disaggregating insurance finance income or expenses for the period between profit or loss and other comprehensive income, the Group recognises insurance finance income or expenses included in profit or loss at an amount that exactly match the income or expenses included in profit or loss for the underlying items, except for the accounting treatment of the insurance finance income or expenses mentioned in (b) and (c) above. 21.5.3 Special measurement approach for onerous groups of contracts If a group of insurance contracts is onerous at initial recognition, or if onerous contracts in a portfolio of contracts are added to a group of onerous contracts, the Group recognises a loss as part of insurance service expenses in the period and increases the carrying amount of the liability for remaining coverage by the amount of such loss component. At initial recognition, the carrying amount of the insurance contract liability for the onerous group of contracts is equal to its fulfilment cash flows. When one of the following conditions causes a group of insurance contracts to become onerous on subsequent measurement, the Group recognises a loss as part of insurance service expenses in the period and increases the liability for remaining coverage by the amount of such loss component: if !supportLists• endifchanges relating to future service in the fulfilment cash flows arising from changes in estimates of future cash flows or the risk adjustment for non-financial risk exceed the carrying amount of the contractual service margin; or if !supportLists• endiffor a group of insurance contracts with direct participation features, the decreases in the amount of the Group's share of the fair value of the underlying items exceed the carrying amount of the contractual service margin. After the Group has recognised a loss on an onerous group of contracts, the Group allocates the following changes in the carrying amount of liability for remaining coverage on a systematic and rational basis between the loss component of the liability for remaining coverage and the liability for remaining coverage excluding the loss component: if !supportLists(a) endifthe present value of future cash flows released because of incurred insurance service expenses; if !supportLists(b) endifchanges in the risk adjustment for non-financial risk recognised in profit or loss because of the release from risk; if !supportLists(c) endifinsurance finance income or expenses. Any amounts allocated to the loss component shall not be recognised as insurance revenue. After the Group has recognised a loss on an onerous group of insurance contracts, the Group also: if !supportLists• endiffor increases relating to future service in fulfilment cash flows arising from changes in estimates of future cash flows or the risk adjustment for non-financial risk, and decreases in the amount of the Group's share of the fair value of the underlying items for a group of insurance contracts with direct participation features, recognises a loss as part of insurance service expenses in the period and increases the liability for remaining coverage by the amount of such loss component; **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts (continued) 21.5 Measurement of insurance contracts (continued) 21.5.3 Special measurement approach for onerous groups of contracts (continued) if !supportLists• endiffor decreases relating to future service in fulfilment cash flows arising from changes in estimates of future cash flows or the risk adjustment for non-financial risk, and increases in the amount of the Group's share of the fair value of the underlying items for a group of insurance contracts with direct participation features, decreases the loss component of the liability for remaining coverage and reduces the insurance service expenses in the period; the Group adjusts the contractual service margin for any excess of the decrease over the amount of the loss component. 21.5.4 Simplified approach (��premium allocation approach��) for measurement of groups of insurance contracts The Group may simplify the measurement of a group of insurance contracts using the premium allocation approach (��PAA��) if one of the following conditions is met: if !supportLists• endifthe Group reasonably expects that such simplification would produce a measurement of the liability for remaining coverage for the group that would not differ materially from the one that would be produced applying general model as mentioned above. This condition is not met if the fulfilment cash flows are expected to vary significantly during the period before a claim is incurred; if !supportLists• endifthe coverage period of each contract in the group is one year or less. For contracts issued to which the Group applies the premium allocation approach, the Group assumes no contracts in the portfolio are onerous at initial recognition, unless facts and circumstances indicate otherwise. If insurance contracts in the group have a significant financing component, the Group shall adjust the carrying amount of the liability for remaining coverage to reflect the time value of money and the effect of financial risk using the discount rates as determined on initial recognition. Using the premium allocation approach, on initial recognition, the carrying amount of the liability for remaining coverage is the premiums received, minus any insurance acquisition cash flows at that date, and minus (or plus) any amount arising from the derecognition at that date of any asset for insurance acquisition cash flows and any other related asset or liability. At each balance sheet date, the carrying amount of the liability for remaining coverage is the carrying amount at the start of the reporting period  plus the premiums received in the period, minus insurance acquisition cash flows in the period, plus any amounts relating to the amortisation of insurance acquisition cash flows recognised as insurance service expenses and any adjustment to a financing component in the period, minus the amount recognised as insurance revenue for services provided in that period, and minus any investment component paid or transferred to the liability for incurred claims in the period. If at any time during the coverage period, facts and circumstances indicate that a group of contracts are onerous, to the extent that the fulfilment cash flows exceed the carrying amount of the liability for remaining coverage determined in the way as mentioned above, the Group recognises a loss as insurance service expenses in the period and increases the carrying amount of the liability for remaining coverage. The Group measures the liability for incurred claims at the fulfilment cash flows relating to incurred claims and other related expenses. The Group takes into account the time value of money and the effect of financial risk when measuring the related fulfilment cash flows. if !supportLists• endif **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts (continued) 21.5 Measurement of insurance contracts (continued) 21.5.4 Simplified approach (��premium allocation approach��) for measurement of groups of insurance contracts (continued) The Group recognises the insurance revenue in the period at the amount of premiums received and expected to be received (with any investment component excluded and any significant financing component adjusted) allocated to the period. the Group allocates such adjusted premium received and expected to be received on the basis of the passage of time during the coverage period; if the expected pattern of release of risk of the insurance contracts during the coverage period differs significantly from the passage of time, then the allocation will be on the basis of the expected timing of incurred insurance service expenses. 21.6 Recognition and measurement of investment contracts with discretionary participation features The Group accounts for the investment contract with discretionary participation features issued by the Group applying the accounting treatments for insurance contracts, except for the special modifications listed below: if !supportLists• endifthe date of initial recognition is the date the Group becomes a party to the contract; if !supportLists• endifcash flows are within the contract boundary if they result from a substantive obligation of the Group to deliver cash. The Group has no substantive obligation to deliver cash if the Group has the practical ability to set a price for the promise to deliver the cash that fully reflects the amount of cash promised and related risks; if !supportLists• endifthe Group recognises the contractual service margin in profit or loss of the current and future periods over the duration of the group of contracts in a systematic and rational way that reflects the transfer of investment services. 21.7 Recognition and measurement of groups of reinsurance contracts held 21.7.1 Recognition of groups of reinsurance contracts held The above accounting treatment for insurance contracts applies to the recognition and measurement of groups of reinsurance contracts held, except as the modifications as specifically set out in this section (i.e., "Recognition and measurement of groups of reinsurance contracts held"), however, the approaches for measuring groups of onerous contracts do not apply to groups of reinsurance contracts held. The Group recognises a group of reinsurance contracts held from the earlier of the beginning of the coverage period of the group of reinsurance contracts held or the date the Group recognises an onerous group of underlying insurance contracts. However, the Group recognises a group of reinsurance contracts held that provide proportionate coverage from the earlier of the following: the later of the beginning of the coverage period of the group of reinsurance contracts held or the date that any underlying insurance contract is initially recognised; or the date the Group recognises an onerous group of underlying insurance contracts. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts (continued) 21.7 Recognition and measurement of groups of reinsurance contracts held (continued) 21.7.2 Measurement of groups of reinsurance contracts held On initial recognition of a group of reinsurance contracts held, the Group measures the asset for reinsurance contracts held at the total of the fulfilment cash flows and the contractual service margin. The contractual service margin for a group of reinsurance contracts held represents the net cost or net gain from the insurance contract services to be provided to the Group by the reinsurer. When the Group measures the estimates of the present value of the future cash flows for the group of reinsurance contracts held, it uses the assumptions that are consistent with those used in the estimates of the present value of the future cash flows for the group of underlying insurance contracts, and takes into account the effect of any risk of non-performance by the issuer of the reinsurance contract. The Group determines the risk adjustment for non-financial risk based on the amount of risk being transferred by the holder of the group of reinsurance contracts to the issuer of those contracts. On initial recognition of a group of reinsurance contracts held, the Group calculates the total of: if !supportLists• endifthe fulfilment cash flows; if !supportLists• endifthe cash flows related to asset or liability derecognised at that date; if !supportLists• endifany cash flows arising at that date; if !supportLists• endifthe loss-recovery component of the asset for remaining coverage of reinsurance contracts held. The Group recognises the net cost or net gain represented by the above total as a contractual service margin. If the net cost relates to events that occurred before the purchase of the reinsurance contracts, the Group recognises such a cost immediately in profit or loss as an expense. The assets for reinsurance contracts held is subsequently measured by the Group at each balance sheet date at the total of the asset for remaining coverage and the asset for incurred claims. The asset for remaining coverage includes the fulfilment cash flows related to unexpired coverage period allocated to the group of reinsurance contracts held at the balance sheet date and the contractual service margin of the group at that date. The asset for incurred claims includes the fulfilment cash flows related to recovery of claims and other related expenses incurred allocated to the group of reinsurance contracts held at the balance sheet date. If the reinsurance contract held is entered into before or at the same time as the onerous underlying insurance contracts are recognised, when the Group recognises a loss on initial recognition of an onerous group of underlying insurance contracts or on addition of onerous underlying insurance contracts to a group, the Group recognises a loss-recovery component of the asset for remaining coverage for such groups of reinsurance contracts held by multiplying (a) the loss recognised on the underlying insurance contracts; and (b) the percentage of claims on the underlying insurance contracts the Group expects to recover from the group of reinsurance contracts held. The Group recognises the amount calculated above as an adjustment to contractual service margin and simultaneously as recoveries of insurance service expenses from reinsurers in profit or loss of the period. When the Group measures the groups of reinsurance contracts held, it adjusts the loss-recovery component to reflect changes in the loss components of the onerous underlying insurance contracts, with the carrying amount of the loss-recovery component not exceeding the portion of the carrying amount of the loss components of the onerous underlying insurance contracts that the Group expects to recover from the group of reinsurance contracts held. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts (continued) 21.7 Recognition and measurement of groups of reinsurance contracts held (continued) 21.7.2 Measurement of groups of reinsurance contracts held (continued) The Group measures the contractual service margin at each balance sheet date for a group of reinsurance contracts held as the carrying amount determined at the start of the reporting period, adjusted for: if !supportLists(a) endifthe effect of contracts added to the group of contracts in the period on the contractual service margin; if !supportLists(b) endifinterest accreted in the period on the contractual service margin, using the weighted average interest rates (applicable to cash flows that do not vary based on returns on any underlying items) determined when the contracts in the group of contracts are recognised; if !supportLists(c) endifthe loss-recovery component of the asset for remaining coverage recognised on initial recognition of an onerous group of underlying insurance contracts or on addition of onerous underlying insurance contracts to a group, and reversals of a loss-recovery component of the asset for remaining coverage to the extent those reversals are not changes in the fulfilment cash flows of the group of reinsurance contracts held; if !supportLists(d) endifthe changes in the fulfilment cash flows relating to future service, other than the change resulting from a change in fulfilment cash flows allocated to a group of underlying insurance contracts that does not adjust the contractual service margin for the group of underlying insurance contracts, or the change resulting from recognition or reversal of losses from onerous groups of underlying contracts measured applying the premium allocation approach; if !supportLists(e) endifthe effect of any currency exchange differences in the period arising on the contractual service margin; if !supportLists(f) endifthe amortisation of the contractual service margin in the period. The Group rationally determines the coverage units of the group of reinsurance contracts held in each period of the coverage period based on the pattern of receipt of insurance contract services, and recognises profit or loss accordingly over the current and future periods by amortising the carrying amount of the contractual service margin as adjusted for (a) to (e) above. Changes in the fulfilment cash flows that result from changes in the risk of non-performance by the issuer of a reinsurance contract held do not relate to future service and shall not adjust the contractual service margin. The Group recognises the reduction in the asset for remaining coverage because of insurance contract services received from the reinsurer in the period as allocation of reinsurance premiums paid. The Group recognises the increase in the asset for incurred claims because of claims and other related expenses incurred in the period that are expected to be reimbursed and any subsequent related changes in fulfilment cash flows as recoveries of insurance service expenses from reinsurers. The Group treats amounts from the reinsurer that it expects to receive that are not contingent on claims of the underlying contracts as the reduction to the allocation of reinsurance premiums paid. Allocation of reinsurance premiums paid and recoveries of insurance service expenses from reinsurer recognised in profit or loss excludes any investment components of the reinsurance contracts held. The Group may use the premium allocation approach to simplify the measurement of a group of reinsurance contracts held, if one of the following conditions is met: if !supportLists• endifthe Group reasonably expects the measurement result of the group of reinsurance contracts held applying premium allocation approach would not differ materially from the measurement result without applying the premium allocation approach. This condition is not met if significant variability in the fulfilment cash flows is expected during the period before a claim is incurred; if !supportLists• endifthe coverage period of each contract in the group of reinsurance contracts held is one year or less. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 21. Insurance contracts (continued) 21.8 Modification and derecognition If the modification of terms of an insurance contract meets one of the following conditions, the Group derecognises the original contract and recognises the modified contract as a new contract. if !supportLists• endifif the modified terms had been included at contract inception, one of the following situations occurs: if !supportLists(i) endifthe modified contract would have been excluded from the scope of Accounting Standard for Business Enterprises on insurance contracts; if !supportLists(ii) endifthe Group would have separated different components from the host insurance contract, resulting in a different insurance contract to which the Accounting Standard for Business Enterprises on insurance contracts would have applied; if !supportLists(iii) endifthe modified contract would have had a substantially different contract boundary; if !supportLists(iv) endifthe modified contract would have been included in a different group of contracts. if !supportLists• endifthe original contract met the definition of an insurance contract with direct participation features, but the modified contract no longer meets that definition, or vice versa; if !supportLists• endifthe Group applied the premium allocation approach to the original contract, but the modified contract no longer meets the eligibility criteria for the premium allocation approach. If a contract modification meets none of the conditions above, the Group treats changes in cash flows caused by the modification as changes in estimates of fulfilment cash flows. The Group derecognises an insurance contract when the obligation specified in the insurance contract is discharged or cancelled or expires. The Group derecognises an insurance contract by applying the following: if !supportLists• endifthe fulfilment cash flows of the group to which the insurance contract belongs are adjusted to eliminate the present value of the future cash flows and risk adjustment for non-financial risk relating to the rights and obligations that have been derecognised; if !supportLists• endifthe contractual service margin of the group of contracts is adjusted; if !supportLists• endifthe number of coverage units for current and future periods of the group of contracts is adjusted. When the Group modifies the original contract and recognises the new contract, the Group adjusts the contractual service margin of the group from which the original contract has been derecognised for the difference between the change in the fulfilment cash flows of the group of insurance contracts resulting from the derecognition of the original contract, and the premium charged had it entered into a contract with equivalent terms as the new contract at the date of modification, less any additional premium charged for the modification of the contract. The Group measures the group to which the new contract belongs assuming that the Group receives the net premium mentioned above at the date of the modification. When the Group derecognises an insurance contract because it transfers the contract, the Group adjusts the contractual service margin of the group from which the contract has been derecognised for the difference between the change in the fulfilment cash flows of the group of insurance contracts resulting from the derecognition of the contract and the premium charged by the transferee. When the Group derecognises an insurance contract (other than insurance contracts with direct participation features for which the Group holds the underlying items) because of modification or transfer, it reclassifies the balance of the other comprehensive income recognised for the contract in prior periods to profit or loss in that period. 21.9 Presentation If the carrying amount of a portfolio of insurance contracts issued by the Group is a credit (debit) balance, it is presented as an insurance contract liability (asset); If the carrying amount of a portfolio of reinsurance contracts held is a debit (credit) balance, it is presented as a reinsurance contract asset (liability). The carrying amount of the assets for insurance acquisition cash flows at each balance sheet date is included in the carrying amount of the related portfolios of insurance contracts. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 22. Provisions The obligations pertinent to contingencies are recognised as provisions when the following conditions are satisfied concurrently: if !supportLists(1) endifit is a present obligation of the Group; if !supportLists(2) endif it is probable that an outflow of economic benefits will be required to settle the obligation; if !supportLists(3) endifthe amount of the obligation can be measured reliably. When the discounting effect is material, the amount of a provision is the present value at the balance sheet date of the future cash flow expected to be required to settle the obligation. The increase in the discounted present value arising from the passage of time is included in interest expenses. A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors surrounding a contingency, such as the risks, uncertainties and the time value of money, are taken into account as a whole in reaching the best estimate of a provision. The Group reviews the carrying amount of the provisions at the end of the reporting period. If there is substantial evidence that the carrying amount cannot actually reflect the current best estimate, the Group will adjust the carrying amount in accordance with the current best estimate. 23. Dividend distribution The loss compensation and dividend distribution approved by the shareholders�� meeting are recognised in the current period of approval. 24. Revenue Insurance revenue For insurance contracts issued by the Group, the Group uses the groups of contracts as measurement units and recognises insurance revenue in the periods when insurance contract services are provided. Interest income Interest income is determined by using the effective interest method, based on the length of time for which the Group��s cash is used by others. Effective interest rate is applied to discounts the estimated future cash flows through the expected life of the financial asset to the net carrying amount of the financial assets. Management fee income Management fee income is calculated in accordance with the calculation method specified in the contracts on an accrual basis. Management fees are recognised at agreed contractual basis rates if revenue recognition principles and fee accrual criteria are met. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 25. Leases A contract is, or contains, a lease if it conveys the right to control the use of an asset for a period of time in exchange for consideration. As the lessee, the Group shall recognise right-of-use assets and lease liabilities at the commencement date. The only exceptions are short-term leases and leases of low-value assets. Right-of-use assets are the assets that represent the Group��s rights to use an underlying asset for the lease term. The commencement date is the date on which a lessor makes an underlying asset available for use by the Group. The right-of-use assets of the Group are initially measured at cost. The cost of right-of-use asset shall comprise: if !supportLists(1) endifthe amount of the initial measurement of the lease liability; if !supportLists(2) endifany lease payments made at or before the commencement date, less any lease incentives received; if !supportLists(3) endifany initial direct costs incurred by the lessee; and if !supportLists(4) endifan estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. The Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset and the end of the lease term. The Group measures the lease liabilities at the present value of the lease payments that are not paid at the commencement date. Lease payments includes fixed payments and the payments for terminating the lease with an option to terminate the lease, etc. Lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the Group use the incremental borrowing rate. Interest on the lease liability in each period during the lease term shall be the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability and is recognised in profit or loss. Payments related to short-term leases and low-value asset leases are recognised in related asset costs or profit or loss on a straight-line basis over each lease term. Short-term lease is the lease that, at the commencement date, has a lease term of 12 months or less. Lease of low-value asset is the lease for which the individual underlying asset is of low value when it is new. As the lessor, the income from operating lease is recognised as rental income on a straight-line basis over each lease period. **III.****SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 26. Government grants Government grants are recognised when the grants can be received, and the Group can comply with all attached conditions. If a government grant is a monetary asset, it will be measured at the amount received or receivable. If a government grant is a non-monetary asset, it will be measured at its fair value. If it is unable to obtain its fair value reliably, it will be measured at its nominal amount. Government grants for purchasing, building or forming long-term assets in other methods regulated in government documents are recognised as government grants related to assets. Judgements should be made based on the necessary basic conditions for obtaining the government grants when government documents are unclearly stated. Government grants with purchasing, building or forming long-term assets in other methods as basic condition, are recognised, as government grants related to assets, whereas the rest as government grants related to income. Government grants related to income that compensate the future costs, expenses or losses are recorded as deferred income and recognised in profit or loss, or deducted costs against related costs, expenses or losses in the period of recognising the related expenses or costs; government grants related to income that compensate the incurred costs, expenses or losses are recognised in profit or loss, or deducted against related costs directly in the current period. Government grants related to assets are either deducted against the carrying amount of the assets or recorded as deferred income. Government grants related to assets and recorded as deferred income are recognised in profit or loss on a systemic basis over the useful lives of the assets. Government grants measured at their nominal amounts are directly recognised in profit or loss for the current period. Where the related assets are sold, transferred, scraped or destroyed before the end of their useful lives, the undistributed deferred revenue shall be transferred to profit or loss for the period in which the assets are disposed of. Government grants comprising of both assets-related portion and income-related portion are accounted separately, and those difficult to distinguish are classified as income-related as a whole. Government grants related to daily activities of the Group are included in other income or deducted against related costs or expenses in accordance with business nature. Government grants not related to daily activities of the Group are included in non-operating income or expenses. 27. Income tax Income tax comprises current and deferred income tax. Except to the extent that the tax arises from a transaction or event which is recognised directly in equity, all the income tax should be expensed or credited to profit or loss as appropriate. The Group measures the current income tax liabilities or assets formed in the current period and previous periods according to the income tax amount which is required to pay or return expectedly under the regulations of tax law. It is based on tax rates applicable in the countries or regions where the Group operates at the balance sheet date, taking into consideration interpretations and practices prevailing in the countries or regions in which the Group operates. The Group measures deferred income tax using the statement of balance sheet liability method according to the temporary difference between the carrying amount of an asset or liability at the end of the reporting period and its tax base, and the temporary difference between the carrying amount of an item not recognised as an asset or liability at the end of the reporting period and its tax base. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 27. Income tax (continued) Deferred income tax liabilities are recognised for all taxable temporary differences, except: if !supportLists(1) endifWhen the taxable temporary difference arises from the initial recognition of goodwill, or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither accounting profit nor taxable profit or deductible loss and the initial recognition of assets and liabilities does not give rise to equal taxable and deductible temporary differences. (2) In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not be reversed in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, and the carry-forward of unused tax credits and any deductible losses. Deferred income tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and deductible losses can be utilised, except: if !supportLists(1) endifWhen the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affect neither the accounting profit nor taxable profit or deductible loss and the initial recognition of assets and liabilities does not give rise to equal taxable and deductible temporary differences. (2) In respect of deductible temporary differences associated with investments in subsidiaries, associates and joint ventures, deferred income tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the deductible temporary differences can be utilised. At the balance sheet date, the Group measures the deferred income tax assets and deferred income tax liabilities according to tax laws and regulations and based on applicable tax rate occurred in the period when the assets are repossessed or the liabilities are liquidated expectedly, which reflects the influence of the income tax on expectedly repossessed assets or liquidated liabilities at the balance sheet date. At the balance sheet date, the Group reviews the carrying amount of the deferred income tax assets. The carrying amount of deferred income tax assets is reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred income tax asset to be utilised. At the balance sheet date, the Group reassesses the unrecognised deferred income tax assets and recognises deferred income tax assets within the limit that the amount of income tax payable is sufficient to reverse all of or part of deferred income tax assets. If the Group has the legal right to settle current income tax assets and current income tax liabilities through net amount, and the deferred income tax is relevant to the same taxpayer and the same tax collection and administration department, the net amount, obtained after the deferred income tax assets and the deferred income tax liabilities are offset, is presented. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 28. Employee benefits Employee benefits refer to all forms of consideration or compensation given by the Group in exchange for service rendered by employees or for termination of employment relationship. Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits. According to relevant Chinese laws and regulations, all employees of the Group within the territory of China must participate in employee social security plans, including pension schemes, medical insurance, housing fund and other welfare benefits, organised and administered by the governmental authorities. For Hong Kong employees of the Group, the Group participates in the Mandatory Provident Fund Scheme in accordance with the contribution ratio required by corresponding regulations. The Group's obligation to the above social securities is to pay social pooling insurance fees to social insurance authorities in accordance with the prescribed percentage of total wages. The contribution shall be managed and paid to retired employees through labour and social welfare authorities in accordance with the provisions. There are no forfeited contributions in the social security plans. Forfeited contributions by those employees are not used to reduce the existing level of contributions. The Group��s employees in some regions of China have also participated in the employer-sponsored enterprise annuity plan (the ��Annuity Plan��). The Group shall contribute to the Annuity Fund in accordance with agreed base and percentage. Forfeited contributions by those employees who quit the Annuity Plan prior to the full vesting of their contributions are not used to reduce the existing level of contributions but are transferred to the public account of the Annuity Plan to be allocated to the members of the Annuity Plan after fulfilling the approval procedures by the Group. In addition, the Group is not liable for any significant legal obligation or constructive obligation to further pay employee retirement benefits. Above expenses are recognised in profit or loss as incurred. The above retirement benefit plan falls into the defined contribution plan. The Group pays various benefit expenses for employees who accept voluntary retirement before the normal retirement date stipulated by the state as approved by the Group from the month after the early retirement through the normal retirement date stipulated by the state, including the retirement pensions, and various insurance coordination fees to local social insurance authorities, etc. For early retirement benefits qualified for recognition, the salaries and social security contributions to be paid to and for the early retired employees from the off-duty date to the normal retirement date are recognised by the Group as liabilities and charged to profit or loss for the current period. The Group also operates deferred bonus plans for senior management and some of the key employees, which are accrued during the periods when employees provide services and are recognised as liabilities. The bonus is awarded based on the Group's annual performance appraisal indicators for the employees and the enterprises, and the payment is deferred. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 29. Fair value measurement Fair value is the price obtained from selling an asset or paid for transferring a liability in an orderly transaction among market participants on the measurement date. The Group measures relevant assets or liabilities at fair value. It is assumed that the sale of the assets or the transfer of liabilities is carried out in the principal market for the assets or liabilities. In case of no principal market, the Group assumes that the transaction is carried out in the most advantageous market for the assets or liabilities. The principal market (or the most advantageous market) is the trade market that the Group can enter on the measurement date. The Group adopts the assumptions that market participants use to maximise their economic benefits when pricing the assets or liabilities. To measure non-financial assets at fair value, consider the ability of market participants to generate economic benefits by using the asset for optimal purpose, or to sell the asset to other market participants who are able to use it for optimal purpose. The Group adopts the valuation technique that is applicable in the current circumstances and contains sufficient available data and other information supports, chooses inputs with features of assets or liabilities that are consistent with those market participants consider in related transactions of assets or liabilities, and should give priority to relevant observable inputs. Unobservable inputs are adopted only when relevant observable inputs are not available or feasible. 30. Contingent liabilities Contingent liabilities are obligations arising from past events that may require the Group to assume. The Group does not recognise such obligations as they arise from events that cannot be fully controlled by the Group, or the outflow of economic benefits resulted from such obligations cannot be reliably measured. They are recognised as contingent liabilities when the above events that cannot be fully controlled by the Group occur or the outflow of economic benefits of such obligations can be reliably measured. 31. Summary of significant accounting judgements and accounting estimates The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the balance sheet date. However, the uncertainty of these assumptions and estimates may result in outcomes that may require a material adjustment to the carrying amounts of the assets or liabilities affected in the future. Estimates and judgements are continually evaluated by the Group based on historical experience and other factors, including expectations of future events that are deemed to be reasonable under the circumstances. Significant judgements In the process of applying the Group��s accounting policies, the management has made the following judgements, which have significant effect on the amounts recognised in the financial statements: (1) Business models (applicable from 1 January 2023) The classification of financial assets at initial recognition should be based on the Group��s business model for managing the financial assets. When determining the business model, what the Group considers include how the performance of financial assets are evaluated and reported to the key management, the risks affecting the performance of financial assets and the way in which those risks are managed and how the relevant managers of the business are compensated, etc. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 31. Summary of significant accounting judgements and accounting estimates (continued) Significant judgements (continued) (2) Contractual cash flow characteristics (applicable from 1 January 2023) The classification of financial assets at initial recognition should be based on the financial asset��s contractual cash flow characteristics, and the judgements on whether the contractual cash flows are consistent with a basic lending arrangement, which are solely payments of principal and interest on the outstanding principal. For example, when assessing the modification of the time value of money in the contractual cash flows, the judgement is needed to determine whether there is any significant difference from the benchmark cash flows, etc. (3) Provision for impairment of available-for-sale equity financial instruments (only applicable for 2022) The Group determines that provision for impairment of available-for-sale equity financial instruments should be made when there is a significant or prolonged decline in the fair value. The determination of what is significant or prolonged requires judgement by the management. When making such judgement, the Group considers the normal volatility of the security price, the length of the period over which the fair value is lower than cost, the severity of the decline in fair value and the financial position of the investees, etc. (4) Determination of control over structured entities When determining whether the Group controls the structured entities in which it acts as an asset manager, the Group considers all relevant facts and circumstances in assessing whether it is acting as an agent or as a principal to make decisions. If the Group is acting as a principal, it controls the structured entities. In assessing whether the Group is acting as a principal, the Group considers factors such as scope of the asset manager��s decision-making authority in structured entities; substantial rights held by other parties, remuneration to which it is entitled and exposure to variability of returns by holding interest in the structured entities. Once the factors change because of the changes of relevant facts and circumstances, the Group will reassess. if !supportLists(1) endif Level of aggregation and recognition of insurance contracts For insurance contracts issued to which the premium allocation approach is not applied, judgement is needed in assessing whether contracts that are onerous at initial recognition or have no significant possibility of becoming onerous subsequently, including the consideration of: if !supportLists• endifthe likelihood of changes in assumptions which, if they occurred, would result in the contracts becoming onerous; and if !supportLists• endifinformation used to make estimates of the profitability of the products. if !supportLists(2) endifAppropriateness of measurement methods for insurance contracts The Group assesses at inception of the insurance contracts whether they meet the conditions for applying premium allocation approach or variable fee approach. When making such assessments, management��s judgement is needed based on a combined consideration of the contractual characteristics and relevant facts and circumstances. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 31. Summary of significant accounting judgements and accounting estimates (continued) Significant judgements (continued) if !supportLists(3) endifDetermination of the coverage units The Group allocates the contractual service margin to each coverage unit provided in the current period and expected to be provided in the future and recognises the allocated amounts to profit or loss in the current or future periods. The Group determines the number of coverage units in a group of contracts in each period during the coverage period based on the pattern of the provision of insurance contract services properly, i.e., considering the amount or quantity of the benefits provided under each contract and expected coverage period. The Group estimates the amount or quantity of benefits provided by insurance contracts based on the pattern of the provision of insurance coverage service, investment-return service and investment-related service (if applicable) and the consideration of characteristics of the terms and claims of insurance contracts. For contracts providing multiple services, the Group estimates the relative weighting of the services based on the factors related to each service (including the maximum claim amount, investment components, etc). The Group estimates the expected coverage period based on the terms of insurance contracts and the mortality and morbidity, surrender rates etc. as mentioned in the section ��Measurement of fulfilment cash flows of insurance contracts��. Estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial years, are detailed below: (1) Measurement of fulfilment cash flows of insurance contracts As at the balance sheet date, when measuring the insurance contract liabilities, the Group needs to make a reasonable estimate of the fulfilment cash flows within the boundary of each insurance contract. The estimates of the fulfilment cash flows are determined by the possible outcomes and associated possibilities calculated under all circumstances, considering all reasonable and supportable information available at the balance sheet date without undue cost or effort, with consideration of certain non-financial risk. The main assumptions used in measuring fulfilment cash flows include discount rates, insurance incident occurrence rates (mainly including mortality and morbidity), loss ratios, surrender rates, expenses, policy dividend assumptions and risk adjustment for non-financial risk etc. if !supportLists(a) endifDiscount rates For cash flows of insurance contracts that do not vary based on the returns on underlying items, the discount rates are determined by a bottom-up approach, on the basis of considering the impact of the time value of money, the discounted rates assumption is determined by adding comprehensive premiums to the underlying interest rate curve. The comprehensive premiums include taxation impacts, the liquidity, and other relevant factors. The discounted rates assumption adopted as at 31 December 2023 was 2.67% to 4.80% (31 December 2022: 2.48% to 4.80%). **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 31. Summary of significant accounting judgements and accounting estimates (continued) Estimation uncertainty (continued) (1) Measurement of fulfilment cash flows of insurance contracts(continued) if !supportLists(a) endifDiscount rates (continued) For cash flows of insurance contracts that vary based on the returns on underlying items, the discount rates are determined based on expected rate of returns of the corresponding investment portfolio. The assumption of discount rates is affected by uncertain factors, such as future macro-economy, capital market, availability of investment channel of insurance funds, investment strategy and other factors. The Group determines discount rate assumption based on the information available at the balance sheet date. if !supportLists(b) endifMortality and morbidity Mortality assumption is determined based on the Group��s historical mortality experiences as well as current and expected future development trends, etc. The Group presents its mortality assumptions using appropriate percentages of China Life Insurance Mortality Table (2010-2013). Morbidity assumption is determined based on the industry��s morbidity or the Group��s products pricing assumption, analysis of historical morbidity experiences and expectations of current and future developments. The uncertainty of mortality and morbidity are affected by factors, such as national lifestyle changes in the future, future development of medical technologies, continuing advancements in social conditions and other factors. The Group determines mortality and morbidity assumption based on all reasonable and supportable information available at the balance sheet date. if !supportLists(c) endifLoss ratios The Group determines reasonable estimates as loss ratio assumptions based on analysis of its historical claim experience and future development trends. if !supportLists(d) endifSurrender rates Surrender rate assumption is determined based on the Group��s product types, the historical experiences, and estimates on current and future expectations. The surrender rate assumption varies by interest rates, product types and sale channels. The uncertainty of surrender rate is affected by factors, such as future macro-economy and market competition. The Group determines surrender rate assumption based on all reasonable and supportable information available at the balance sheet date. if !supportLists(e) endifExpenses Expense assumption is determined based on the analysis of expense and future expectation, including insurance acquisition cash flows, policy administration and maintenance costs, claim expenses, etc. **III.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)** 31. Summary of significant accounting judgements and accounting estimates (continued) Estimation uncertainty (continued) (1) Measurement of fulfilment cash flows of insurance contracts(continued) if !supportLists(e) endifExpenses (continued) The uncertainty of expenses is affected by factors, such as inflation, and market competition. The Group determines expense assumption based on all reasonable and supportable information available at the balance sheet date. if !supportLists(f) endifPolicy dividend Policy dividend assumption is determined based on expected rate of returns of participating accounts, the Group��s dividend policy, reasonable expectations of policyholders, etc. The uncertainty of policy dividend is affected by the above factors. The Group determines policy dividend assumption based on all reasonable and supportable information available at the balance sheet date. if !supportLists(g) endifRisk adjustment for non-financial risk The Group applies techniques such as confidence level technique to determine the risk adjustment for non-financial risk. As at 31 December 2023, the confidence level for insurance contracts and reinsurance contracts that the Group issued and measured is 75% (the confidence level as at 31 December 2022: 75%). (2) Fair values of financial assets determined using valuation techniques Fair value, in the absence of an active market, is estimated by using valuation techniques, such as reference to prices used in the most recent market transactions between knowledgeable and willing parties, reference to the current fair value of another instrument which is substantially the same, a discounted cash flow analysis and option pricing models. For reference to other financial instruments, the instruments must have similar credit ratings. For a discounted cash flow analysis, estimated future cash flows and discount rates are the best estimations made based on current market information and rates applicable to financial instruments with similar yields, credit quality and maturity characteristics. Estimated future cash flows are influenced by factors such as economic conditions, concentrations in specific industries, types of instruments or currencies, market liquidity and financial conditions of counterparties. Discount rates are influenced by risk-free interest rates and credit risk. (3) Impairment of financial instruments (applicable from 1 January 2023) The Group uses the expected credit loss model to assess the impairment of financial instruments. The Group is required to perform significant judgement and estimation and take into account all reasonable and supportable information, including forward-looking information. When making such judgements and estimates, the Group infers the expected changes in the debtor's credit risk based on historical repayment data combined with economic policies, macroeconomic indicators, industry risks and other factors. **IV.****CHANGE IN ACCOUNTING POLICIES** New financial instruments standards In 2017, the Ministry of Finance issued the revised Accounting Standard for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, Accounting Standard for Business Enterprises No. 23 - Transfer of Financial Assets, Accounting Standard for Business Enterprises No. 24 - Hedge Accounting, Accounting Standard for Business Enterprises No. 37 - Financial Instruments Disclosure (collectively hereinafter referred to as the ��new financial instruments standards��). The Group has adopted the ��new financial instruments standards�� since 1 January 2023. In accordance with the new financial instruments standards, the Group chose not to restate the comparative information, and the Group recognised the adjustments to carrying amounts of financial assets and financial liabilities at the date of initial application in the opening balance of retained earnings or other comprehensive income of the period. The disclosures of related comparative information remain unchanged from the disclosure made in prior years. The implementation of the new financial instruments standards has also resulted in changes in the recognition, classification and measurement of the Group's financial assets and financial liabilities, and in the accounting policies for the impairment of financial assets. Details of accounting policies that the Group applied in the current periods under the new financial instruments standards are disclosed in Note III.17. The following table summarises the impact of the implementation of new financial instruments standards on the Group��s financial statement on 1 January 2023: | | | | | | | | --- | --- | --- | --- | --- | --- | | | 31 December 2022 | | Impacted Amount | | 1 January 2023 | | | | | | | | | **A****SSETS** | 2,071,336 | | 34,410 | | 2,105,746 | | Including: Cash at bank and on hand | 33,134 | | 4 | | 33,138 | | Financial assets at fair value through profit or loss | 26,560 | | (26,560) | | - | | Securities purchased under agreements to resell | 21,124 | | 10 | | 21,134 | | Interest receivables | 19,656 | | (19,656) | | - | | Term deposits | 204,517 | | 6,717 | | 211,234 | | Available-for-sale financial assets | 715,085 | | (715,085) | | - | | Held-to-maturity financial assets | 514,250 | | (514,250) | | - | | Investments classified as loans and receivables | 397,270 | | (397,270) | | - | | Financial investments: | - | | 1,711,596 | | 1,711,596 | | Financial assets at fair value through profit or loss | - | | 415,758 | | 415,758 | | Financial assets at amortised cost | - | | 91,428 | | 91,428 | | Debt investments at fair value through other comprehensive income | - | | 1,119,324 | | 1,119,324 | | Equity investments at fair value through other comprehensive income | - | | 85,086 | | 85,086 | | Restricted statutory deposits | 7,290 | | 313 | | 7,603 | | Deferred income tax assets | 19,661 | | (11,298) | | 8,363 | | Other assets | 11,227 | | (111) | | 11,116 | **IV.****CHANGE IN ACCOUNTING POLICIES (continued)** New financial instruments standards (continued) The following table summarises the impact of the implementation of new financial instruments standards on the Group��s financial statement on 1 January 2023 (continued): | | | | | | | | --- | --- | --- | --- | --- | --- | | | 31 December 2022 | | Impacted Amount | | 1 January 2023 | | | | | | | | | **L****IABILITIES** | 1,869,664 | | 43 | | 1,869,707 | | Including: Securities sold under agreements to repurchase | 119,665 | | 166 | | 119,831 | | Interest payable | 469 | | (469) | | - | | Bonds payable | 9,999 | | 303 | | 10,302 | | Deferred income tax liabilities | 568 | | (63) | | 505 | | Other liabilities | 38,572 | | 106 | | 38,678 | | | | | | | | | **E****QUITY** | 201,672 | | 34,367 | | 236,039 | | Including: Other comprehensive income | (11,581) | | 18,051 | | 6,470 | | General reserves | 21,071 | | 1,621 | | 22,692 | | Retained profits | 92,588 | | 14,180 | | 106,768 | | Non-controlling interests | 5,195 | | 515 | | 5,710 | | | | | | | | **IV.****CHANGE IN ACCOUNTING POLICIES (continued)** New financial instruments standards (continued) The following tables summarise the impact of reclassification and remeasurement on the carrying amount of the Group��s main financial assets and liabilities on the day of adopting to the new financial instruments standards on 1 January 2023: | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | Under the original financial instrument standards 31 December 2022 | | | | Under the new financial instrument standards 1 January 2023 | | | | Measurement categories | Carrying amount | Reclassification | Remeasurement | Measurement categories | Carrying amount | | | | | | | | | | Cash at bank and on hand | Amortised costs | 33,134 | 4 | - | Amortised costs | 33,138 | | Securities purchased under agreements to resell | Amortised costs | 21,124 | 10 | - | Amortised costs | 21,134 | | Restricted statutory deposits | Amortised costs | 7,290 | 315 | (2) | Amortised costs | 7,603 | | | | | | | | | | Term deposits | Amortised costs | 204,517 | 6,148 | 569 | Amortised costs/Fair value through other comprehensive income | 211,234 | | Including: Term deposits at fair value through other comprehensive income | | Not applicable | 163,523 | 592 | Fair value through other comprehensive income | 164,115 | | Term deposits at amortised cost | | 204,517 | (157,375) | (23) | Amortised costs | 47,119 | **IV.****CHANGE IN ACCOUNTING POLICIES (continued)** New financial instruments standards (continued) The following tables summarise the impact of reclassification and remeasurement on the carrying amount of the Group��s main financial assets and liabilities on the day of adopting to the new financial instruments standards on 1 January 2023 (continued): | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Under the original financial instrument standards 31 December 2022 | | | | | Under the new financial instrument standards 1 January 2023 | | | | | Measurement categories | | Carrying amount | Reclassification | Remeasurement | Measurement categories | Carrying amount | | | | | | | | | | | | Financial assets at fair value through profit or loss | | | Not applicable | | 415,696 | 62 | Fair value through  profit or loss | 415,758 | | Transfer from: Financial assets at fair value through profit or loss | | | | | 26,560 | - | | | | Transfer from: Available-for-sale financial assets | | | | | 383,895 | - | | | | Transfer from: Held-to-maturity financial assets | | | | | 1,225 | (15) | | | | Transfer from: Investments classified as loans and receivables | | | | | 3,096 | 77 | | | | Transfer from: Interest receivables | | | | | 920 | - | | | **IV.****CHANGE IN ACCOUNTING POLICIES (continued)** New financial instruments standards (continued) The following tables summarise the impact of reclassification and remeasurement on the carrying amount of the Group��s main financial assets and liabilities on the day of adopting to the new financial instruments standards on 1 January 2023 (continued): | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | Under the original financial instrument standards 31 December 2022 | | | | Under the new financial instrument standards 1 January 2023 | | | | Measurement categories | Carrying amount | Reclassification | Remeasurement | Measurement categories | Carrying amount | | | | | | | | | | Financial assets at amortised cost | | Not applicable | 91,788 | (360) | Amortised costs | 91,428 | | Transfer from: Available-for-sale financial assets | | | 14,591 | (207) | | | | Transfer from: Held-to-maturity financial assets | | | 16,148 | - | | | | Transfer from: Investments classified as loans and receivables | | | 60,260 | (153) | | | | Transfer from: Interest receivables | | | 789 | - | | | | | | | | | | | | Debt investments at fair value through other comprehensive income | | Not applicable | 1,073,774 | 45,550 | Fair value through other comprehensive income | 1,119,324 | | Transfer from: Available-for-sale financial assets | | | 231,513 | - | | | | Transfer from: Held-to-maturity financial assets | | | 496,877 | 42,960 | | | | Transfer from: Investments classified as loans and receivables | | | 333,914 | 2,590 | | | | Transfer from: Interest receivables | | | 11,470 | - | | | **IV.****CHANGE IN ACCOUNTING POLICIES (continued)** New financial instruments standards (continued) The following tables summarise the impact of reclassification and remeasurement on the carrying amount of the Group��s main financial assets and liabilities on the day of adopting to the new financial instruments standards on 1 January 2023 (continued): | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | Under the original financial instrument standards 31 December 2022 | | | | Under the new financial instrument standards 1 January 2023 | | | | Measurement categories | Carrying amount | Reclassification | Remeasurement | Measurement categories | Carrying amount | | | | | | | | | | Equity investments at fair value through other comprehensive income | | Not applicable | 85,086 | - | Fair value through other comprehensive income | 85,086 | | Transfer from: Available-for-sale financial assets | | | 85,086 | - | | | | | | | | | | | | Financial assets at fair value through profit or loss | Fair value through profit or loss | 26,560 | (26,560) | - | | Not applicable | | Transfer to: Financial assets at fair value through profit or loss | | | (26,560) | - | | | | | | | | | | | | Available-for-sale financial assets | Fair value through other comprehensive income | 715,085 | (715,085) | - | | Not applicable | | Transfer to: Financial assets at fair value through profit or loss | | | (383,895) | - | | | | Transfer to: Financial assets at amortised cost | | | (14,591) | - | | | | Transfer to: Debt investments at fair value through other comprehensive income | | | (231,513) | - | | | | Transfer to: Equity investments at fair value through other comprehensive income | | | (85,086) | - | | | **IV.****CHANGE IN ACCOUNTING POLICIES (continued)** New financial instruments standards (continued) The following tables summarise the impact of reclassification and remeasurement on the carrying amount of the Group��s main financial assets and liabilities on the day of adopting to the new financial instruments standards on 1 January 2023 (continued): | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | Under the original financial instrument standards 31 December 2022 | | | | Under the new financial instrument standards 1 January 2023 | | | | Measurement categories | Carrying amount | Reclassification | Remeasurement | Measurement categories | Carrying amount | | | | | | | | | | Held-to-maturity financial assets | Amortised costs | 514,250 | (514,250) | - | | Not applicable | | Transfer to: Financial assets at fair value through profit or loss | | | (1,225) | - | | | | Transfer to: Financial assets at amortised cost | | | (16,148) | - | | | | Transfer to: Debt investments at fair value through other comprehensive income | | | (496,877) | - | | | | | | | | | | | | Investments classified as loans and receivables | Amortised costs | 397,270 | (397,270) | - | | Not applicable | | Transfer to: Financial assets at fair value through profit or loss | | | (3,096) | - | | | | Transfer to: Financial assets at amortised cost | | | (60,260) | - | | | | Transfer to: Debt investments at fair value through other comprehensive income | | | (333,914) | - | | | **IV.****CHANGE IN ACCOUNTING POLICIES (continued)** New financial instruments standards (continued) The following tables summarise the impact of reclassification and remeasurement on the carrying amount of the Group��s main financial assets and liabilities on the day of adapting to the new financial instruments standards on 1 January 2023 (continued): | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | Under the original financial instrument standards 31 December 2022 | | | | Under the new financial instrument standards 1 January 2023 | | | | Measurement categories | Carrying amount | Reclassification | Remeasurement | Measurement categories | Carrying amount | | | | | | | | | | Interest receivables | Amortised costs | 19,656 | (19,656) | | | Not applicable | | Securities sold under agreements to repurchase | Amortised costs | 119,665 | 166 | | Amortised costs | 119,831 | | Bonds payable | Amortised costs | 9,999 | 303 | | Amortised costs | 10,302 | | Interest payable | Amortised costs | 469 | (469) | | | Not applicable | | | | | | | | | **IV.****CHANGE IN ACCOUNTING POLICIES (continued)** New financial instruments standards (continued) The table below summarises the effects on provision for impairment of financial assets on account of reclassification and remeasurement on the day of adopting to new financial instruments standards: | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2022 | | 1 January 2023 | | | | | | | | Available-for-sale financial assets | | 10,221 | | - | | Held-to-maturity financial assets | | 45 | | - | | Investments classified as loans and receivables | | 1,221 | | - | | Financial assets at amortised cost | | - | | 818 | | Debt investments at fair value through other comprehensive income | | - | | 2,684 | | Other financial assets | | 219 | | 443 | | | | | | | | Total | | 11,706 | | 3,945 | The following table reconciles the impairment provisions measured by incurred loss model as at 31 December 2022 to which measured by ECLs under the new financial instruments standards as at 1 January 2023: | | | | | | | --- | --- | --- | --- | --- | | | Impairment provisions 31 December 2022 | Reclassification | Remeasurement | Impairment provisions 1 January 2023 | | | | | | | | Financial assets at amortised cost | Not applicable | 659 | 159 | 818 | | Transfer from: Available- for-sale financial assets | | - | 6 | | | Transfer from: Held-to- maturity financial assets | | 45 | - | | | Transfer from: Investments classified as loans and receivables | | 614 | 153 | | | | | | | | | Debt investments at fair value through other comprehensive income | Not applicable | 2,172 | 512 | 2,684 | | Transfer from: Available- for-sale financial assets | | 1,608 | 65 | | | Transfer from: Held-to- maturity financial assets | | - | 8 | | | Transfer from: Investments classified as loans and receivables | | 564 | 439 | | **IV.****CHANGE IN ACCOUNTING POLICIES (continued)** New insurance standard In 2020, the Ministry of Finance issued the revised Accounting Standard for Business Enterprises No. 25 - Insurance Contracts (hereinafter referred to as the ��new insurance standard��). The Group has adopted the new insurance standard from 1 January 2023, and comparatives information were restated according to requirements of the new insurance standard. The implementation of the new insurance standard resulted in significant changes in the recognition of insurance revenue and insurance service expenses, the measurement of insurance contract liabilities, the presentation in the financial statements, etc. Details of accounting policies related to insurance contracts that the Group applied in accordance with the new insurance standard are disclosed in Note III.21. According to the requirements of the new insurance standard, the Group adopts the retrospective approach for the differences in accounting treatments of insurance contracts that are required by the new insurance standard and those that were applied before the date of initial application, except that for groups of contracts to which the full retrospective approach is impracticable on the transition date, the Group adopts the modified retrospective approach or the fair value approach for transition treatment. In accordance with the new insurance standard, the Group is not required to disclose the amount of the retrospective adjustment for each financial statement line item affected for the current period and each prior period presented. Therefore, the Group has only summarised the impact of the adoption of the new insurance standard on key financial indicators for the comparative period, as disclosed below: | | | | | | | | --- | --- | --- | --- | --- | --- | | | Before changes in accounting policies 31 December 2022 | | Effect of changes in accounting policies | | After changes in accounting policies 31 December 2022 | | | | | | | | | Total assets | 2,176,299 | | (104,963) | | 2,071,336 | | Total liabilities | 1,942,171 | | (72,507) | | 1,869,664 | | Equity attributable to shareholders of the parent | 228,446 | | (31,969) | | 196,477 | **V.** **TAXES** The main types of taxes and tax rates applicable to the Group in China are set out below: | | | | | --- | --- | --- | | Corporate income tax | - | 25% on its taxable income under current tax laws and relevant regulations | | Value-added tax (��VAT��) | - | The taxable value-added amount (Tax payable is calculated using the taxable sales amount multiplied by the applicable tax rate less deductible VAT input of the current period) determined under current tax laws and relevant regulations, applicable tax rates: 3%, 5%, 6%, 9% or 13% | | City maintenance and construction tax | - | 1%, 5% or 7% of the VAT actually paid | | Educational supplementary tax | - | 3% of the VAT actually paid | | Local educational supplementary tax | - | 2% of the VAT actually paid | The main types of taxes and tax rates of payable by the Group with regard to its overseas businesses are paid in accordance with relevant regulations of local tax laws. The taxes to be paid by the Group will be verified by relevant tax authorities. **VI.**   **SCOPE OF CONSOLIDATION** 1.     Particulars of the Company��s incorporated subsidiaries as of 31 December 2023 are as follows: | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Name | Type of legal entity | Business scope and principal activities | Place of incorporation/ registration | Place of operations | Registered capital (RMB thousand, unless otherwise specified) | Issued capital /Paid-up capital (RMB thousand, unless otherwise specified) | Percentage of equity attributable to the Company (%) | | Percentage of voting rights attributable to the Company (%) | Note | | | | | | | | | Direct | Indirect | | | | | | | | | | | | | | | | China Pacific Property Insurance Co., Ltd. (��CPIC Property��) | Joint stock limited company | Property and casualty insurance | Shanghai | The PRC | 19,948,088 | 19,948,088 | 98.50 | - | 98.50 | (1) | | China Pacific Life Insurance Co., Ltd. (��CPIC Life��) | Joint stock limited company | Life and health insurance | Shanghai | The PRC | 8,628,200 | 8,628,200 | 98.29 | - | 98.29 | | | Pacific Asset Management Co., Ltd. (��CPIC Asset Management��) | Limited liability company | Investment management | Shanghai | Shanghai | 2,100,000 | 2,100,000 | 80.00 | 19.67 | 100.00 | | | China Pacific Insurance Co., (H.K.) Ltd. (��CPIC H.K.��) | Limited liability company | Property and casualty insurance | Hong Kong | Hong Kong | HK$ 250,000 thousand | HK$ 250,000 thousand | 100.00 | - | 100.00 | | | Shanghai Pacific Insurance Real Estate Management Co., Ltd. (��CPIC Real Estate��) | Limited liability company | Real estate management | Shanghai | Shanghai | 115,000 | 115,000 | 100.00 | - | 100.00 | | | Changjiang Pension Insurance Co., Ltd. (��Changjiang Pension��) | Joint stock limited company | Pension fund and insurance asset management | Shanghai | Shanghai | 3,000,000 | 3,000,000 | - | 61.10 | 62.16 | | | CPIC Investment Management (H.K.) Company Limited (��CPIC Investment (H.K.)��) | Limited liability company | Investment management | Hong Kong | Hong Kong | HK$ 200,000 thousand | HK$ 200,000 thousand | 12.25 | 87.46 | 100.00 | | | City Island Developments Limited (��City Island��) | Limited liability company | Investment holding | The British Virgin Islands | The British Virgin Islands | US$ 50,000 | US$ 1,000 | - | 98.29 | 100.00 | | | Great Winwick Limited\* | Limited liability company | Investment holding | The British Virgin Islands | The British Virgin Islands | US$ 50,000 | US$ 100 | - | 98.29 | 100.00 | | | Great Winwick (Hong Kong) Limited \* | Limited liability company | Investment holding | Hong Kong | Hong Kong | HK$ 10,000 | HK$ 1 | - | 98.29 | 100.00 | | | Newscott Investments Limited \* | Limited liability company | Investment holding | The British Virgin Islands | The British Virgin Islands | US$ 50,000 | US$ 100 | - | 98.29 | 100.00 | | | Newscott (Hong Kong) Investments Limited \* | Limited liability company | Investment holding | Hong Kong | Hong Kong | HK$ 10,000 | HK$ 1 | - | 98.29 | 100.00 | | **VI.   SCOPE OF CONSOLIDATION (continued)** 1.     Particulars of the Company��s incorporated subsidiaries as of 31 December 2023 are as follows (continued): | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Name | Type of legal entity | Business scope and principal activities | Place of incorporation/ registration | Place of operations | Registered capital (RMB thousand, unless otherwise specified) | Issued capital /Paid-up capital (RMB thousand, unless otherwise specified) | Percentage of equity attributable to the Company (%) | | Percentage of voting rights attributable to the Company (%) | Note | | | | | | | | | Direct | Indirect | | | | | | | | | | | | | | | | Shanghai Xin Hui Property Development Co., Ltd. \* (��Xin Hui Property��) | Limited liability company | Real estate | Shanghai | Shanghai | US$ 15,600 thousand | US$ 15,600 thousand | - | 98.29 | 100.00 | | | Shanghai He Hui Property Development Co., Ltd. \* (��He Hui Property��) | Limited liability company | Real estate | Shanghai | Shanghai | US$ 46,330 thousand | US$ 46,330 thousand | - | 98.29 | 100.00 | | | Pacific Insurance Online Services Technology Co., Ltd. (��CPIC Online Services��) | Limited liability company | Consulting services, etc. | Shandong | The PRC | 200,000 | 200,000 | 100.00 | - | 100.00 | | | Tianjin Trophy Real Estate Co., Ltd. (��Tianjin Trophy��) | Limited liability company | Real estate | Tianjin | Tianjin | 353,690 | 353,690 | - | 98.29 | 100.00 | | | Pacific Insurance Senior Living Investment Management Co., Ltd. (��CPIC Senior Living Investment��) | Limited liability company | Senior living property investment and management, etc. | Shanghai | Shanghai | 5,000,000 | 5,000,000 | - | 98.29 | 100.00 | | | Pacific Health Insurance Co., Ltd. (��CPIC Health��) | Joint stock limited company | Health insurance | Shanghai | The PRC | 3,600,000 | 3,600,000 | 85.05 | 14.69 | 100.00 | | | Pacific Anxin Agricultural Insurance Co., Ltd. (��PAAIC��) | Joint stock limited company | Property and casualty insurance | Shanghai | The PRC | 1,080,000 | 1,080,000 | - | 66.76 | 67.78 | | | Pacific Medical & Healthcare Management Co., Ltd. (��Pacific Medical & Healthcare��) | Limited liability company | Medical consulting services, etc. | Shanghai | Shanghai | 1,000,000 | 1,000,000 | - | 98.29 | 100.00 | | | Pacific Insurance Agency Co., Ltd. (��Pacific Insurance Agency��) | Limited liability company | Insurance agency | Shanghai | Shanghai | 50,000 | 50,000 | - | 100.00 | 100.00 | | | CPIC Fund Management Co., Ltd. (��CPIC Funds��) | Limited liability company | Fund management | Shanghai | Shanghai | 150,000 | 150,000 | - | 50.83 | 51.00 | | | CPIC Senior Living Development (Chengdu) Co., Ltd. (��Chengdu Project Company��) | Limited liability company | Senior living property investment and construction, etc. | Chengdu | Chengdu | 1,000,000 | 987,000 | - | 98.29 | 100.00 | | | CPIC Senior Living Development (Hangzhou) Co., Ltd. (��Hangzhou Project Company��) | Limited liability company | Senior living property investment and construction, etc. | Hangzhou | Hangzhou | 1,200,000 | 1,006,000 | - | 98.29 | 100.00 | (2) | **VI.  SCOPE OF CONSOLIDATION (continued)** 1.    Particulars of the Company��s incorporated subsidiaries as of 31 December 2023 are as follows (continued): | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Name | Type of legal entity | Business scope and principal activities | Place of incorporation/ registration | | | Place of operations | Registered capital (RMB thousand, unless otherwise specified) | | Issued capital /Paid-up capital (RMB thousand, unless otherwise specified) | Percentage of equity attributable to the Company (%) | | Percentage of voting rights attributable to the Company (%) | Note | | | | | | | | | | | | | | Direct | Indirect | | | | | | | | | | | | | | | | | | | | | | | CPIC Senior Living Development (Xiamen) Co., Ltd. (��Xiamen Project Company��) | Limited liability company | Senior living property investment and construction, etc. | | Xiamen | Xiamen | | 900,000 | 900,000 | | - | 98.29 | 100.00 | | | | | Pacific Care Home (Chengdu) Senior Living Service Co., Ltd. (��Pacific Care Home at Chengdu��) | Limited liability company | Seniors care and health  consultation, etc. | | Chengdu | Chengdu | | 60,000 | 43,000 | | - | 98.29 | 100.00 | | | | | CPIC Senior Living Development (Nanjing) Co., Ltd. (��Nanjing Project Company��) | Limited liability company | Senior living property investment and construction, etc. | Nanjing | | | Nanjing | 702,000 | | 348,556 | - | 98.29 | 100.00 | (3) | | | | Pacific Care Home (Dali) Co., Ltd. (��Pacific Care Home at Dali��) | Limited liability company | ��Migrant-style�� senior living, etc. | Dali | | | Dali | 608,000 | | 608,000 | - | 74.70 | 76.00 | (4) | | | | CPIC (Shanghai) Senior Care Development Co., Ltd. (��Shanghai (Putuo) Project Company��) | Limited liability company | Senior living property investment and construction, etc. | Shanghai | | | Shanghai | 250,000 | | 250,000 | - | 98.29 | 100.00 | | | | | Pacific Care Home (Hangzhou) Senior Living Service Co., Ltd. (��Pacific Care Home at Hangzhou��) | Limited liability company | Seniors care and health  consultation, etc. | Hangzhou | | | Hangzhou | 60,000 | | 30,200 | - | 98.29 | 100.00 | (5) | | | | CPIC Senior Living Development (Wuhan) Co., Ltd. (��Wuhan Project Company��) | Limited liability company | Senior living property investment and construction, etc. | Wuhan | | | Wuhan | 980,000 | | 980,000 | - | 98.29 | 100.00 | (6) | | | | CPIC Capital Company Limited. (��CPIC Capital��) | Limited liability company | Private equity investment fund management services | Shanghai | | | Shanghai | 100,000 | | 100,000 | - | 99.67 | 100.00 | | | | | Shanghai Chongming Pacific Care Home Senior Living Service Co., Ltd. (��Pacific Care Home at Shanghai (Chongming)��) | Limited liability company | ��Migrant-style�� senior living, etc. | Shanghai | | | Shanghai | 1,253,000 | | 1,070,000 | - | 98.29 | 100.00 | (7) | | | **VI.   SCOPE OF CONSOLIDATION (continued)** 1.     Particulars of the Company��s incorporated subsidiaries as of 31 December 2023 are as follows (continued): | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Name | Type of legal entity | Business scope and principal activities | Place of incorporation/ registration | Place of operations | Registered capital (RMB thousand, unless otherwise specified) | Issued capital /Paid-up capital (RMB thousand, unless otherwise specified) | Percentage of equity attributable to the Company (%) | | Percentage of voting rights attributable to the Company (%) | Note | | | | | | | | | Direct | Indirect | | | | | | | | | | | | | | | | Shanghai (Putuo) Pacific Care Home Senior Living Service Co., Ltd. (��Pacific Care Home at Shanghai (Putuo)��) | Limited liability company | Seniors care, nursing service and health consultation, etc. | Shanghai | Shanghai | 30,000 | 19,000 | - | 98.29 | 100.00 | (8) | | Beijing Borui Heming Insurance Agency Co., Ltd. (��Borui Heming��) | Limited liability company | Insurance agency | Beijing | The PRC | 52,000 | 52,000 | - | 98.29 | 100.00 | | | China Pacific Life Insurance (H.K.) Company Limited (��CPIC Life (H.K.)��) | Limited liability company | Life and health insurance | Hong Kong | Hong Kong | HK$ 1,000,000 thousand | HK$ 1,000,000 thousand | - | 98.29 | 100.00 | | | CPIC Senior Living Development (Qingdao) Co., Ltd. (��Qingdao Project Company��) | Limited liability company | Elderly service, real estate development and operation, etc. | Qingdao | Qingdao | 227,000 | 193,000 | - | 98.29 | 100.00 | (9) | | Pacific Care Home (Xiamen) Senior Living Service Co., Ltd (��Pacific Care Home at Xiamen��) | Limited liability company | Seniors care and health  consultation, etc. | Xiamen | Xiamen | 40,000 | 20,000 | - | 98.29 | 100.00 | (10) | | CPIC Senior Living Development (Zhengzhou) Co., Ltd. (��Zhengzhou Project Company��) | Limited liability company | Elderly service, real estate development and operation, etc. | Zhengzhou | Zhengzhou | 650,000 | 368,500 | - | 98.29 | 100.00 | (11) | | CPIC Senior Living Development (Beijing) Co., Ltd. (��Beijing Project Company��) | Limited liability company | Elderly service, real estate development and operation, etc. | Beijing | Beijing | 800,000 | 757,000 | - | 98.29 | 100.00 | (12) | | Pacific Insurance Technology Co., Ltd. (��CPIC Technology��) | Limited liability company | Technical services, cloud  computing services, big data services | Shanghai | Shanghai | 700,000 | 700,000 | 100.00 | - | 100.00 | | | Xinbaoyu (Guangzhou) Co., Ltd (��Xinbaoyu��) | Limited liability company | Business service, property management, and lease of non-residential real estate | Guangzhou | Guangzhou | 3,650,000 | 3,649,990 | - | 98.46 | 100.00 | | | Pacific Insurance Technology Services (Wuhan) Co., Ltd. (��CPIC Technology Wuhan��) | Limited liability company | Technical services, technical consulting services | Wuhan | Wuhan | 100,000 | 100,000 | - | 100.00 | 100.00 | | **VI.   SCOPE OF CONSOLIDATION (continued)** 1.     Particulars of the Company��s incorporated subsidiaries as of 31 December 2023 are as follows (continued): | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Name | Type of legal entity | Business scope and principal activities | Place of incorporation/ registration | Place of operations | Registered capital (RMB thousand, unless otherwise specified) | Issued capital /Paid-up capital (RMB thousand, unless otherwise specified) | Percentage of equity attributable to the Company (%) | | Percentage of voting rights attributable to the Company (%) | Note | | | | | | | | | Direct | Indirect | | | | Pacific Health Management (Sanya) Co., Ltd (��Sanya Project Company��) | Limited liability company | Elderly service, real estate development and operation, etc | Sanya | Sanya | 490,000 | 313,880 | - | 98.29 | 100.00 | (13) | | Pacific Care Home (Nanjing) Senior Living Service Co., Ltd (��Pacific Care Home at Nanjing��) | Limited liability company | Elderly services, health consulting services, etc. | Nanjing | Nanjing | 30,000 | 7,000 | - | 98.29 | 100.00 | (14) | | Shanghai (Jing��an) Pacific Care Home Senior Living Service Co., Ltd. (��Pacific Care Home at Shanghai (Jing��an)��) | Limited liability company | ��Migrant-style�� senior  living, etc. | Shanghai | Shanghai | 426,367 | 426,367 | - | 98.29 | 100.00 | (15) | | Pacific Care Home (Wuhan) Senior Living Service Co., Ltd (��Pacific Care Home at Wuhan��) | Limited liability company | Seniors care, nursing service and health  consultation, etc. | Wuhan | Wuhan | 30,000 | 2,500 | - | 98.29 | 100.00 | (16) | | Xiamen Yuanshen Rehabilitation Hospital Co., Ltd. (��Yuanshen Hospital��) | Limited liability company | Medical service, hospital management, etc. | Xiamen | Xiamen | 160,000 | - | - | 98.29 | 100.00 | (17) | \* Subsidiaries of City Island **VI.    SCOPE OF CONSOLIDATION (continued)** 1. Particulars of the Company��s incorporated subsidiaries as of 31 December 2023 are as follows (continued): if !supportLists(1) endifCPIC Property According to the ��Proposal on the conversion of any provident fund into share capital and related party transactions of China Pacific Property Insurance Co., Ltd.�� approved by the shareholders' general meeting of CPIC Property, CPIC Property transferred 478,087,650 shares to all shareholders with discretionary surplus reserve, with a total amount of RMB 1.2 billion. The matter was approved by the former China Banking and Insurance Regulatory Commission on 27 February 2023, and the total share capital after the change is RMB 19.948 billion. if !supportLists(2) endifHangzhou Project Company Hangzhou Project Company, a wholly-owned subsidiary funded by CPIC Life, with registered capital of RMB 1,200 million. As of 31 December 2023, the paid-up investment amount of CPIC Life had increased to RMB 1,006 million. if !supportLists(3) endifNanjing Project Company Nanjing Project Company, a wholly-owned subsidiary funded by CPIC Life, with registered capital of RMB 702 million. As of 31 December 2023, the paid-up investment amount of CPIC Life had increased to approximately RMB 349 million. if !supportLists(4) endifPacific Care Home at Dali Pacific Care Home at Dali, a subsidiary funded by CPIC Senior Living Investment, with registered capital of RMB 608 million. As of 31 December 2023, CPIC Senior Living Investment has paid up all the investment. if !supportLists(5) endifPacific Care Home at Hangzhou Pacific Care Home at Hangzhou, a wholly-owned subsidiary funded by CPIC Senior Living Investment, with registered capital of RMB 60 million. As of 31 December 2023, the paid-up investment amount of CPIC Senior Living Investment had increased to approximately RMB 30 million. if !supportLists(6) endifWuhan Project Company Wuhan Project Company, a wholly-owned subsidiary funded by CPIC Life, with registered capital of RMB 980 million. As of 31 December 2023, CPIC Life has paid up all the investment. if !supportLists(7) endifPacific Care Home at Shanghai (Chongming) Pacific Care Home at Shanghai (Chongming) (originally named as Shanghai Fankun Real Estate Development Co., Ltd.), a wholly-owned subsidiary funded by CPIC Senior Living Investment, with registered capital of RMB 1.253 billion. As of 31 December 2023, the paid-up investment amount of CPIC Senior Living Investment had increased to RMB 1,070 million. if !supportLists(8) endifPacific Care Home at Shanghai (Putuo) Pacific Care Home at Shanghai (Putuo), a wholly-owned subsidiary funded by CPIC Senior Living Investment, with registered capital of RMB 30 million. As of 31 December 2023, the paid-up investment amount of CPIC Senior Living Investment had increased to RMB 19 million. **VI.    SCOPE OF CONSOLIDATION (continued)** 1. Particulars of the Company��s incorporated subsidiaries as of 31 December 2023 are as follows (continued): if !supportLists(9) endifQingdao Project Company Qingdao Project Company, a wholly-owned subsidiary funded by CPIC Senior Living Investment, with registered capital of RMB 227 million. As of 31 December 2023, the paid-up investment amount of CPIC Senior Living Investment had increased to RMB 193 million. if !supportLists(10) endifPacific Care Home at Xiamen Pacific Care Home at Xiamen, a wholly-owned subsidiary funded by CPIC Senior Living Investment, with registered capital of RMB 40 million. As of 31 December 2023, the paid-up investment amount of CPIC Senior Living Investment had increased to RMB 20 million. if !supportLists(11) endifZhengzhou Project Company Zhengzhou Project Company, a wholly-owned subsidiary invested by CPIC Life, with registered capital of RMB 650 million. As of 31 December 2023, the paid-up investment amount of CPIC Life had increased to approximately RMB 369 million. if !supportLists(12) endifBeijing Project Company Beijing Project Company, a wholly-owned subsidiary funded by CPIC Life, with registered capital of RMB 800 million. As of 31 December 2023, the paid-up investment amount of CPIC Life had increased to RMB 757 million. if !supportLists(13) endifSanya Project Company Sanya Service Company, a wholly-owned subsidiary invested by CPIC Life, with registered capital of RMB 490 million. As of 31 December 2023, the paid-up investment amount of CPIC Life had increased to approximately RMB 314 million. if !supportLists(14) endifPacific Care Home at Nanjing Pacific Care Home at Nanjing, a wholly-owned subsidiary funded by CPIC Senior Living Investment, with registered capital of RMB 30 million. As of 31 December 2023, the paid-up investment amount of CPIC Senior Living Investment had increased to RMB 7 million. if !supportLists(15) endifPacific Care Home at Shanghai (Jing��an) In February 2023, CPIC Senior Living Investment entered into a property rights transaction contract with Shanghai Yuanmao Real Estate Co., Ltd. (��Yuanmao Real Estate��), acquiring 100% equity interest in Pacific Care Home at Shanghai (Jing��an) from Yuanmao Real Estate. As of 31 December 2023, the registered capital and paid-in capital of Pacific Care Home at Shanghai (Jing��an) are both approximately RMB 426 million, the unified social credit code is 91310106133028680F. if !supportLists(16) endifPacific Care Home at Wuhan Pacific Care Home at Wuhan, a wholly-owned subsidiary funded by CPIC Senior Living Investment, obtained the business license for the legal entity with unified social credit code 91420105MACL34TR0N in June 2023, with registered capital of RMB 30 million. As of 31 December 2023, CPIC Senior Living Investment has paid up the investment amount of approximately RMB 3 million. **VI.    SCOPE OF CONSOLIDATION (continued)** 1. Particulars of the Company��s incorporated subsidiaries as of 31 December 2023 are as follows (continued): if !supportLists(17) endifYuanshen Hospital CPIC Yuanshen Rehabilitation Equity Investment Fund (Wuhan) Partnership (Limited Partnership) (��Yuanshen Fund��) and Shanghai Yanfu Enterprise Management Consulting Partnership (Limited Partnership) (��Shanghai Yanfu��), which are the two consolidated structured entities of the Group, found the Yuanshen Hospital in together, holding the percentage of equity with 99.94% and 0.06% respectively. Yuanshen obtained the business license for the legal entity with unified social credit code 91350200MAD474TX82 in November 2023, with the registered capital of RMB 0.16 billion. As of December 2023, Yuanshen Fund and Shanghai Yanfu have not paid up the investment. **VI.****SCOPE OF CONSOLIDATION (continued)** 2.          As of 31 December 2023, material consolidated structured entities material to the Group are as follows: | | | | | | --- | --- | --- | --- | | Name | Collective holding by the Group (%) | Product scale (units in RMB thousand) | Nature of business | | | | | | | China Pacific Changhang Equity Investment Fund (Wuhan) Partnership (Limited Partnership) (��China Pacific Changhang��) | 99.98 | 8,501,505 | Investing in equity investments, investment management and asset management activities with private funds (yet subject to related regulations of the Asset Management Association of China (��AMAC��)) (except for projects subject to approval according to law, independently carry out business activities that are not prohibited or restricted by laws and regulations with business license). | | CPIC Zengyu Annually Open Pure Debt Type Launching Securities Investment Fund | 79.26 | 8,426,809 | Investing in financial instruments with high liquidity including national bonds, government bonds, local treasury bonds, financial bonds, enterprise bonds, corporate bonds, Central Bank bills, medium term notes, short-term commercial paper, super short-term commercial paper, SME private debt, asset-backed security, subordinated debt, the debt part of the convertible bonds, bonds repo, bank deposits (including agreement deposits, notice deposits and term deposits), NCDs, money market instrument, treasury bond futures and other financial instruments that laws and regulations or the CSRC allow funds to invest (yet subject to related regulations of the CSRC). | | CPIC Zengfu Annually Open Pure Debt Type Launching Securities Investment Fund | 100.00 | 7,683,713 | Investing in financial instruments with high liquidity including national bonds, government bonds, local treasury bonds, financial bonds, enterprise bonds, corporate bonds, Central Bank bills, medium term notes, short-term commercial paper, super short-term commercial paper, SME private debt, asset-backed security, subordinated debt, the debt part of the convertible bonds, bonds repo, bank deposits (including agreement deposits, notice deposits and term deposits), NCDs, money market instrument, treasury bond futures and other financial instruments that laws and regulations or the CSRC allow funds to invest (yet subject to related regulations of the CSRC). | | Pacific-Shanxi Coking Coal Debt Investment Plan | 69.93 | 7,150,000 | Investing in Shanxi Li-Liu Mining Area Pangpangta Coal Mine Project operated by Shanxi Coking Coal Group Co., Ltd. through a debt investment plan. | | CPIC Health Industry Private Investment Fund (Shanghai) Partnership (Limited Partnership) ("CPIC Health Fund") | 90.90 | 4,951,000 | Investing in equity investments, investment management and asset management activities with private funds (yet subject to related regulations of the AMAC) (except for projects subject to approval according to law, independently carry out business activities that are not prohibited or restricted by laws and regulations with business license). | CPIC Asset Management, CPIC Funds, CPIC Capital etc. are the asset managers of these consolidated structured entities included in the scope of the Group. **VII.****NOTES TO THE FINANCIAL STATEMENTS** 1. Cash at bank and on hand | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2023 | | | | | | | Currency | Original currency | | Exchange rate | | RMB | | | | | | | | | | Cash | RMB | 2 | | 1.00000 | | 2 | | | | | | | | | | | Sub-total | | | | | 2 | | | | | | | | | | Bank deposits | RMB | 24,825 | | 1.00000 | | 24,825 | | | USD | 754 | | 7.08270 | | 5,340 | | | HKD | 208 | | 0.90622 | | 188 | | | Others | | | | | 2 | | | | | | | | | | | Sub-total | | | | | 30,355 | | | | | | | | | | Other cash balances | RMB | 1,098 | | 1.00000 | | 1,098 | | | | | | | | | | | Sub-total | | | | | 1,098 | | | | | | | | | | Total | | | | | | 31,455 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2022 | | | | | | | Currency | Original currency | | Exchange rate | | RMB | | | | | | | | | | Bank deposits | RMB | 23,353 | | 1.00000 | | 23,353 | | | USD | 1,174 | | 6.96460 | | 8,175 | | | HKD | 846 | | 0.89327 | | 756 | | | Others | | | | | 1 | | | | | | | | | | | Sub-total | | | | | 32,285 | | | | | | | | | | Other cash balances | RMB | 849 | | 1.00000 | | 849 | | | | | | | | | | | Sub-total | | | | | 849 | | | | | | | | | | Total | | | | | | 33,134 | As of 31 December 2023, the Group��s cash at bank and on hand deposited overseas amounted equivalent to RMB 884 million (31 December 2022: amounted equivalent to RMB 2,157 million). Under PRC��s foreign exchange regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business after obtaining approval from foreign exchange regulatory authorities. As of 31 December 2023, RMB 808 million in the Group's other cash balances are recorded as minimum settlement deposits (31 December 2022: RMB 825 million). As of 31 December 2023, RMB 549 million are term deposits with original maturity of no more than three months (31 December 2022: RMB 659 million). As of 31 December 2023, RMB 520 million in the Group's cash at bank and on hand balance are restricted for special-purpose use (31 December 2022: RMB 449 million). **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 1. Cash at bank and on hand (continued) Bank deposits comprise current deposits and short-term time deposits. Current deposits earn interest at rates based on daily bank deposit rates. Short-term time deposits are made for varying periods between one day and three months depending on the immediate cash requirements of the Group, and earn interest at respective short-term time deposit rates. The bank balances and deposits are deposited with creditworthy banks with no recent history of default. The carrying amounts of the cash at bank and on hand approximate their fair values. 2. Financial assets at fair value through profit or loss (only applicable for 2022) | | | | | | | --- | --- | --- | --- | --- | | | | | | 31 December 2022 | | | | | | | | Listed | | | | 3,460 | | Unlisted | | | | 23,100 | | | | | | | | Total | | | | 26,560 | | | | | | | | Equity investments | | | | | | - Stocks | | | | 9 | | - Funds and insurance asset management products | | | | 3,725 | | - Wealth management products | | | | 6,502 | | - Other equity investments | | | | 9,813 | | Debt investments | | | | | | - Government bonds | | | | 326 | | - Finance bonds | | | | 3,134 | | - Corporate bonds | | | | 3,018 | | - Wealth management products | | | | 3 | | - Debt investment plans | | | | 30 | | | | | | | | Total | | | | 26,560 | Financial assets at fair value through profit or loss include financial assets designated upon initial recognition as at fair value through profit or loss as at 31 December 2022 amounted to RMB 21,571 million. The rest are trading assets, with no material limitation in realisation. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 3. Derivative financial instruments The contract notional amount and fair value of derivative financial instruments held by the Group are as follows. The contract notional amount of derivative financial instruments is only the basis for comparing the fair value of assets or liabilities recognised in the balance sheet. It does not reflect the future cash flow nor present fair value, therefore cannot reflect the risk faced by the Group. | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2023 | | | | | | | | Nominal amount | | Assets | | Liabilities | | | | | | | | | | Treasury bond futures | | 41 | | - | | - | | Stock index futures | | 7 | | - | | - | | Foreign exchange forward contracts | | 4,475 | | 17 | | 21 | | | | | | | | | | Sub-total | | 4,523 | | 17 | | 21 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2022 | | | | | | | | Nominal amount | | Assets | | Liabilities | | | | | | | | | | Foreign exchange forward contracts | | 3,612 | | 197 | | 8 | 4. Securities purchased under agreements to resell | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Securities - bonds | | | | | | Inter-bank market | | 2,019 | | 17,909 | | Stock exchange | | 789 | | 3,215 | | | | | | | | Sub-total | | 2,808 | | 21,124 | | | | | | | | Less: Impairment provisions | | - | | - | | | | | | | | Total | | 2,808 | | 21,124 | The Group does not sell or re-pledge the collateral underlying the securities purchased under agreements to resell. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 5. Interest receivables (only applicable for 2022) | | | | | | | --- | --- | --- | --- | --- | | | | | | 31 December 2022 | | | | | | | | Interest receivables from debt investments | | | | 13,221 | | Interest receivables from deposits | | | | 6,482 | | Interest receivables from securities purchased under agreements to resell | | | | 10 | | | | | | | | Sub-total | | | | 19,713 | | | | | | | | Less: Provision for bad debts | | | | (57) | | | | | | | | Net value | | | | 19,656 | The account balance does not include any amount attributable to shareholders holding 5% or more of the voting rights of the Company. 6. Term deposits | | | | | | | --- | --- | --- | --- | --- | | Term to maturity | | 31 December 2023 | | 31 December 2022 | | | | | | | | At amortised cost | | | | | | Within 3 months (inclusive) | | 4,664 | | 30,034 | | 3 months to 1 year (inclusive) | | 2,703 | | 47,181 | | 1 to 2 years (inclusive) | | 7,759 | | 47,749 | | 2 to 3 years (inclusive) | | 7,856 | | 23,388 | | 3 to 4 years (inclusive) | | 8,509 | | 27,005 | | 4 to 5 years (inclusive) | | 2,723 | | 29,160 | | | | | | | | Less: Impairment provisions | | (20) | | - | | | | | | | | Fair value through other comprehensive income | | | | | | Within 3 months (inclusive) | | 38,205 | | - | | 3 months to 1 year (inclusive) | | 5,845 | | - | | 1 to 2 years (inclusive) | | 16,585 | | - | | 2 to 3 years (inclusive) | | 28,607 | | - | | 3 to 4 years (inclusive) | | 21,464 | | - | | 4 to 5 years (inclusive) | | 20,101 | | - | | Over 5 years | | 500 | | - | | | | | | | | Including: | | | | | | if !supportLists- endif Amortised cost | | 130,521 | | - | | if !supportLists- endif Accumulated changes in fair value | | 786 | | - | | | | | | | | Total | | 165,501 | | 204,517 | As at 31 December 2023, the impairment provision recognised for term deposits at fair value through other comprehensive income was RMB 56 million. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 7. Available-for-sale financial assets (only applicable for 2022) Available-for-sale financial assets are summarised by category as follows: | | | | | | | --- | --- | --- | --- | --- | | | | | | 31 December 2022 | | | | | | | | Listed | | | | 267,226 | | Unlisted | | | | 447,859 | | | | | | | | Total | | | | 715,085 | | | | | | | | Equity investments | | | | | | - Stocks | | | | 182,173 | | - Funds and insurance asset management products | | | | 83,160 | | - Other equity investments | | | | 138,541 | | - Wealth management products | | | | 757 | | - Preferred shares | | | | 12,335 | | | | | | | | Debt investments | | | | | | - Government bonds | | | | 108,345 | | - Finance bonds | | | | 56,845 | | - Corporate bonds | | | | 129,536 | | - Debt investment plans | | | | 700 | | - Wealth management products | | | | 2,693 | | | | | | | | Total | | | | 715,085 | Related information of available-for-sale financial assets is analysed as follows: | | | | | | --- | --- | --- | --- | | | | | 31 December 2022 | | | | | | | Debt investments | | | | | Fair value | | | 298,119 | | Including: Amortised cost | | | 287,635 | | Accumulated amount recognised in other comprehensive income | | | 12,755 | | Total impairment provisions | | | (2,271) | | | | | | | Equity investments | | | | | Fair value | | | 416,966 | | Including: Cost | | | 423,209 | | Accumulated amount recognised  in other comprehensive income | | | 1,707 | | Total impairment provisions | | | (7,950) | | | | | | | Total | | | | | Fair value | | | 715,085 | | Including: Amortised cost/Cost | | | 710,844 | | Accumulated amount recognised  in other comprehensive income | | | 14,462 | | Total impairment provisions | | | (10,221) | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 8. Held-to-maturity financial assets (only applicable for 2022) | | | | | | --- | --- | --- | --- | | | | | 31 December 2022 | | | | | | | Listed | | | 14,895 | | Unlisted | | | 499,400 | | | | | | | Sub-total | | | 514,295 | | | | | | | Less: Impairment provisions | | | (45) | | | | | | | Net value | | | 514,250 | | | | | | | Debt investments | | | | | - Government bonds | | | 417,053 | | - Finance bonds | | | 41,289 | | - Corporate bonds | | | 55,891 | | - Wealth management products | | | 62 | | | | | | | Sub-total | | | 514,295 | | | | | | | Less: Impairment provisions | | | (45) | | | | | | | Net value | | | 514,250 | As at the balance sheet date, the Group's intention and ability to hold these assets were evaluated by itself and proved unchanged. 9. Investments classified as loans and receivables (only applicable for 2022) | | | | | | | --- | --- | --- | --- | --- | | | | | | 31 December 2022 | | | | | | | | Debt investments | | | | | | Finance bonds | | | | 500 | | Debt investment plans | | | | 241,072 | | Wealth management products | | | | 120,580 | | Preferred shares | | | | 32,000 | | Loans | | | | 4,339 | | | | | | | | Sub-total | | | | 398,491 | | | | | | | | Less: Impairment provisions | | | | (1,221) | | | | | | | | Net value | | | | 397,270 | . **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 10. Financial assets at fair value through profit or loss (only applicable for 2023) | | | | | | | --- | --- | --- | --- | --- | | | | | | 31 December 2023 | | | | | | | | Listed | | | | 198,622 | | Unlisted | | | | 382,980 | | | | | | | | Total | | | | 581,602 | | | | | | | | Bonds | | | | 199,951 | | Government bonds | | | | 2,889 | | Finance bonds | | | | 169,449 | | Corporate bonds | | | | 27,613 | | Stocks | | | | 161,345 | | Funds | | | | 65,817 | | Unlisted equity shares investments | | | | 62,919 | | Debt investment plans | | | | 44,676 | | Investment in wealth management products | | | | 38,720 | | Others | | | | 8,174 | | | | | | | | Total | | | | 581,602 | As at 31 December 2023, there was no financial assets designated upon initial recognition as at fair value through profit or loss. Financial assets at fair value through profit or loss had no material limitation in realisation. 11. Financial assets at amortised cost (only applicable for 2023) | | | | | | | --- | --- | --- | --- | --- | | | | | | 31 December 2023 | | | | | | | | Listed | | | | 3,902 | | Unlisted | | | | 79,809 | | | | | | | | Sub-total | | | | 83,711 | | | | | | | | Less: Impairment provisions | | | | (1,377) | | | | | | | | Net value | | | | 82,334 | | | | | | | | Bonds | | | | 25,688 | | Government bonds | | | | 15,944 | | Corporate bonds | | | | 9,744 | | Debt investment plans | | | | 42,846 | | Investment trust | | | | 11,000 | | Others | | | | 4,177 | | | | | | | | Sub-total | | | | 83,711 | | | | | | | | Less: Impairment provisions | | | | (1,377) | | | | | | | | Net value | | | | 82,334 | . **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 12. Debt investments at fair value through other comprehensive income (only applicable for 2023) | | | | | | | --- | --- | --- | --- | --- | | | | | | 31 December 2023 | | | | | | | | Listed | | | | 60,381 | | Unlisted | | | | 1,187,054 | | | | | | | | Total | | | | 1,247,435 | | | | | | | | Bonds | | | | 937,989 | | Government bonds | | | | 741,151 | | Finance bonds | | | | 64,922 | | Corporate bonds | | | | 131,916 | | Debt investment plans | | | | 186,881 | | Investment trust | | | | 80,073 | | Preferred shares | | | | 33,020 | | Others | | | | 9,472 | | | | | | | | Total | | | | 1,247,435 | | | | | | | | Including: | | | | | | Amortised cost | | | | 1,143,108 | | Accumulated changes in fair value | | | | 104,327 | As at 31 December 2023, the impairment provision for the Group��s debt investment at fair value through other comprehensive income was RMB 3.929 billion. 13. Equity investments at fair value through other comprehensive income (only applicable for 2023) | | | | | | | --- | --- | --- | --- | --- | | | | | | 31 December 2023 | | | | | | | | Stocks | | | | 27,110 | | Preferred shares | | | | 12,597 | | Perpetual bonds | | | | 28,477 | | Others | | | | 29,781 | | | | | | | | Total | | | | 97,965 | | | | | | | | Including: | | | | | | Cost | | | | 95,710 | | Accumulated changes in fair value | | | | 2,255 | The equity instruments at fair value through other comprehensive income, designated by the Group, are non-trading equity investments with the primary objective of being held for a long time or obtaining dividends during the holding period. For the year ended 31 December 2023, the Group disposed equity investments at fair value through other comprehensive income of RMB 9.563 billion because of the optimisation of asset allocation and asset and liability management. Due to the sale of the above equity investments, RMB 5 million transferred from other comprehensive income to retained profits. For the year ended 31 December 2023, the Group has received dividends of RMB 4.769 billion from the above equity investments. Relevant disclosures are included in Note VII.40. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 14. Long-term equity investments | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | | | | | | Investment cost | Opening balance | Increase/ (Decrease) in current year | Share of net profit/(loss) under equity method | Adjustment of other comprehensive income/(loss) | Share of other changes in equity | Dividend distribution | Ending balance | Impairment provision ending balance | | Equity method: | | | | | | | | | | | Joint venture | | | | | | | | | | | Shanghai Ruiyongjing Real Estate Development Co., Ltd. (��Ruiyongjing Real Estate��) | 9,835 | 9,812 | - | (27) | - | - | - | 9,785 | - | | Others | 52 | 64 | (20) | 3 | - | - | - | 47 | - | | Sub-total | 9,887 | 9,876 | (20) | (24) | - | - | - | 9,832 | - | | | | | | | | | | | | | Associate | | | | | | | | | | | Taijiashan Health Industry Equity Investment Fund (Shanghai) LLP. (��Taijiashan��) (Note 1) | 2,662 | 2,870 | 162 | (12) | - | - | (2) | 3,018 | - | | Yangtze River Delta Synergy Industry Investment Fund (��Yangtze River Delta Fund��) | 1,882 | 2,674 | (88) | 157 | - | - | (59) | 2,684 | - | | Shanghai Hi-Tech Park United Development Co., Ltd. (��Hi-Tech��) | 1,856 | 1,873 | - | 37 | - | - | (37) | 1,873 | - | | Shanghai Sci-Tech Innovation Centre Capital II LLP (��Sci-Tech Innovation II��) (Note 2) | 1,197 | 959 | 297 | 72 | - | - | (17) | 1,311 | - | | Shanghai Lingang GLP International Logistics Development Co., Ltd. (��Lingang GLP��) | 1,057 | 1,053 | - | 40 | - | - | (40) | 1,053 | - | | Shanghai Biomedical Industry Equity Investment Fund LLP. (Shanghai Biomedical) | 940 | 964 | - | 2 | - | - | (1) | 965 | - | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 14. Long-term equity investments(continued) | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | | | | | | Investment cost | Opening balance | Increase/ (Decrease) in current year | Share of net profit/(loss) under equity method | Adjustment of other comprehensive income/(loss) | Share of other changes in equity | Dividend distribution | Ending balance | Impairment provision ending balance | | Equity method (continued): | | | | | | | | | | | Associate (continued) | | | | | | | | | | | Jiaxing Yishang Equity Investment LLP (��Jiaxing Yishang ��) | 901 | 941 | - | (2) | - | - | - | 939 | - | | Ningbo Zhilin Investment Management LLP. (��Ningbo Zhilin��) (Note 3) | - | 2,623 | (2,416) | 102 | - | - | (309) | - | - | | Others | 3,279 | 2,270 | 180 | (758) | (73) | 390 | (1) | 2,008 | (499) | | | | | | | | | | | | | Sub-total | 13,774 | 16,227 | (1,865) | (362) | (73) | 390 | (466) | 13,851 | (499) | | | | | | | | | | | | | Total | 23,661 | 26,103 | (1,885) | (386) | (73) | 390 | (466) | 23,683 | (499) | Note 1: In 2023, CPIC Life made an additional capital contribution of approximately RMB 0.162 billion to Taijiashan, and its ownership interest changed to 99.01%. Note 2: In 2023, CPIC Life made an additional capital contribution of approximately RMB 0.297 billion to Sci-Tech Innovation II, and its ownership interest remained as 25.00% Note 3: In July 2023, CPIC Life has recovered its investment of Ningbo Zhilin of approximately RMB 2.416 billion. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 14. Long-term equity investments (continued) As at 31 December 2023, details of joint ventures of the Group are as follows: | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Name | Type of enterprise | Place of registration/Major business location | Legal represent-ative | Nature of business | Registered capital (RMB thousand unless otherwise) | Paid-up capital (RMB thousand unless otherwise) | Unified social credit code | Percentage of equity attributable to the Company (%) | | Percentage of voting rights attributable to the Company (%) | | | | | | | | | | Direct | Indirect | | | | | | | | | | | | | | | Ruiyongjing    Real Estate   (Note 1) | Limited liability company | Shanghai | Ge Qing | Real estate | 14,050,000 | 14,050,000 | 91310000MA1FL5MU6G | - | 68.80 | 57.14 | As at 31 December 2023, details of associates of the Group are as follows: | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Name | Type of enterprise | Place of registration/Major business location | Legal represent-ative | | | Nature of business | | Registered capital (RMB thousand unless otherwise) | | Paid-up capital (RMB thousand unless otherwise) | | Unified social credit code | | Percentage of equity attributable to the Company (%) | | Percentage of voting rights attributable to the Company (%) | | | | | | | | | | | | | | | | Direct | Indirect | | | | | | | | | | | | | | | | | | | | | Taijiashan (Note 2) | Limited liability partnership | Shanghai | | Not applicable | | | Equity investment | Not applicable | | | 2,688,887 | | 91310000MA1FL7MH5H | - | 97.32 | Not applicable | | Yangtze River Delta Fund | Limited liability partnership | Shanghai | | Not applicable | | | Equity investment | Not applicable | | | 6,257,459 | | 91310000MA1FL62E0U | - | 27.28 | Not applicable | | Hi-Tech | Limited liability company | Shanghai | | Xue Han | | | Business services | 453,250 | | | 453,250 | | 913100006072011086 | - | 19.65 | 9.09 | | Sci-Tech Innovation II | Limited liability partnership | Shanghai | | Not applicable | | | Equity investment | Not applicable | | | 4,800,800 | | 91310000MA1FL7X9X1 | - | 24.57 | Not applicable | | Lingang GLP. | Limited liability company | Shanghai | | Zhao Mingqi | | | Real estate | US$ 119,990 thousand | | | US$  119,990 thousand | | 913100007709009105 | - | 19.65 | 12.50 | | Shanghai Biomedical | Limited liability partnership | Shanghai | | | Not applicable | | Equity investment | | Not applicable | | 7,730,036 | | 91310000MA1FL7HY2Y | - | 12.00 | Not applicable | | Jiaxing Yishang (Note 3) | Limited liability partnership | Jiaxing | | | Not applicable | | Equity investment | | Not applicable | | 950,501 | | 91330402MA2BCWUX4C | - | 93.18 | Not applicable | Note 1: CPIC Life holds over 50% of the ownership interest of Ruiyongjing Real Estate. Since CPIC Group cannot unilaterally dominate the relevant activities of Ruiyongjing Real Estate according to the Articles of Association of Ruiyongjing Real Estate, Ruiyongjing Real Estate is accounted under equity method as a joint venture. Note 2: CPIC Life holds over 50% shares of Taijiashan. Since CPIC Group cannot unilaterally dominate the relevant activities of Taijiashan according to the partnership agreement of Taijiashan, Taijiashan is accounted under equity method as an associate. Note 3: CPIC Life holds over 50% shares of Jiaxing Yishang. Since CPIC Group cannot unilaterally dominate the relevant activities of Jiaxing Yishang according to the partnership agreement of Jiaxing Yishang, Jiaxing Yishang is accounted under equity method as an associate. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 14. Long-term equity investments (continued) Summarised financial information for major joint ventures: | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2023 | | | 31 December 2022 | | | | | Total assets | Total liabilities | Net assets | Total assets | Total liabilities | Net assets | | | | | | | | | | Ruiyongjing Real Estate | 19,698 | 5,727 | 13,971 | 18,532 | 4,514 | 14,018 | | | | | | | | | Summarised financial information for other joint ventures: | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2023 | | | 31 December 2022 | | | | | Total assets | Total liabilities | Net assets | Total assets | Total liabilities | Net assets | | | | | | | | | | Others | 2,224 | 1,895 | 329 | 2,358 | 1,944 | 414 | | | | | | | | | Net (loss)/profit of joint ventures: | | | | | | --- | --- | --- | --- | | | | 2023 | 2022 | | | | | | | Net (loss)/profit of joint ventures | | (18) | (12) | For unrecognised commitments in relation to the investments in joint ventures, please refer to Note XII. Summarised financial information for major associates: | | | | | | | --- | --- | --- | --- | --- | | | 31 December 2023 / 2023 | | | | | | Total assets as at 31 December | Total liabilities as at 31 December | Total revenue for the current year | Net profit for the current year | | | | | | | | Taijiashan | 3,001 | 1 | (19) | (80) | | Yangtze River Delta Fund | 9,849 | 175 | 516 | 442 | | Ningbo Zhilin | Not applicable | Not applicable | 93 | 90 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 14. Long-term equity investments (continued) Summarised financial information for other associates: | | | | | | --- | --- | --- | --- | | | 2023 | | 2022 | | | | | | | Net loss | (2,474) | | (3,449) | | Other comprehensive income/(loss) | (718) | | (467) | | | | | | | Total comprehensive loss | (3,192) | | (3,916) | | | | | | | Total comprehensive loss attributable to the Group | (682) | | (302) | | | | | | | Total carrying amount of the Group��s investment as at the year end | 7,650 | | 7,786 | As at 31 December 2023, the Group��s long-term equity investments had impairment of RMB 499 million. (As at 31 December 2022: RMB 274 million). The Group performs impairment tests on long-term equity investments that has objective evidence of impairment. When evaluating impairment of long-term equity investments, the recoverable amount is determined mainly at fair value less estimated costs of disposal and the present value of the estimated future cash flow expected to be derived from the asset. Fair value is primarily based on the fair value of shares issued in the public market and is determined using appropriate valuation techniques. The present value of future cash flow is based on business budget approved by management and adjusted discount rates using the discounted cash flow method. Cash flows beyond the business budget period have been extrapolated using a stable growth rate and terminal value. 15. Restricted statutory deposits | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | | | | | | | CPIC Property | | 3,989 | | 3,894 | | CPIC Life | | 1,726 | | 1,726 | | CPIC Health | | 720 | | 840 | | PAAIC | | 320 | | 230 | | Changjiang Pension | | - | | 600 | | | | | | | | Sub-total | | 6,755 | | 7,290 | | | | | | | | Add: Interest receivables | | 352 | | Not applicable | | Less: Impairment provisions | | (2) | | Not applicable | | | | | | | | Total | | 7,105 | | 7,290 | In accordance with relevant provision of Insurance Law of the PRC, CPIC Property, CPIC Life, CPIC Health and PAAIC should place 20% of its issued capital as restricted statutory deposits, respectively. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 16. Investment properties | | | | | | --- | --- | --- | --- | | | | | Buildings | | | | | | | Cost | | | | | 1 January 2022 | | | 10,543 | | Additions | | | 3,074 | | Transfer from fixed assets, net | | | 1,130 | | Disposal | | | (1) | | | | | | | 31 December 2022 | | | 14,746 | | Transfer to fixed assets, net | | | (79) | | Transfer from intangible assets, net | | | 34 | | Disposal | | | (14) | | | | | | | 31 December 2023 | | | 14,687 | | | | | | | Accumulated depreciation | | | | | 1 January 2022 | | | (3,029) | | Charge for the year | | | (502) | | Transfer from fixed assets, net | | | (13) | | | | | | | 31 December 2022 | | | (3,544) | | Charge for the year | | | (476) | | Transfer to fixed assets, net | | | 2 | | Transfer from intangible assets, net | | | (7) | | Disposal | | | 5 | | | | | | | 31 December 2023 | | | (4,020) | | | | | | | Carrying amount | | | | | 31 December 2023 | | | 10,667 | | | | | | | 31 December 2022 | | | 11,202 | The fair values of investment properties of the Group as at 31 December 2023 amounted to RMB 15,783 million (31 December 2022: RMB 16,100 million), which were estimated by the Group based on the independent appraisers�� valuations. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 17. Fixed assets | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Buildings | | Motor vehicles | | Other equipment | | Total | | | | | | | | | | | | Cost | | | | | | | | | | 1 January 2022 | | 21,032 | | 1,112 | | 5,813 | | 27,957 | | Procurement | | 1,003 | | 53 | | 571 | | 1,627 | | Transfer from construction in progress | | 865 | | - | | - | | 865 | | Transfer to investment properties, net | | (1,130) | | - | | - | | (1,130) | | Decrease | | (16) | | (47) | | (402) | | (465) | | | | | | | | | | | | 31 December 2022 | | 21,754 | | 1,118 | | 5,982 | | 28,854 | | Procurement | | 25 | | 68 | | 510 | | 603 | | Transfer from construction in progress | | 2,150 | | - | | 3 | | 2,153 | | Transfer from investment properties, net | | 79 | | - | | - | | 79 | | Acquisition of subsidiaries | | 22 | | - | | - | | 22 | | Decrease | | (15) | | (83) | | (332) | | (430) | | | | | | | | | | | | 31 December 2023 | | 24,015 | | 1,103 | | 6,163 | | 31,281 | | | | | | | | | | | | Accumulated depreciation | | | | | | | | | | 1 January 2022 | | (5,363) | | (880) | | (4,201) | | (10,444) | | Depreciation charge | | (657) | | (76) | | (648) | | (1,381) | | Transfer to investment properties, net | | 13 | | - | | - | | 13 | | Decrease | | 2 | | 45 | | 385 | | 432 | | | | | | | | | | | | 31 December 2022 | | (6,005) | | (911) | | (4,464) | | (11,380) | | Depreciation charge | | (706) | | (66) | | (609) | | (1,381) | | Transfer from investment properties, net | | (2) | | - | | - | | (2) | | Decrease | | 9 | | 81 | | 326 | | 416 | | | | | | | | | | | | 31 December 2023 | | (6,704) | | (896) | | (4,747) | | (12,347) | | | | | | | | | | | | Provision for impairment loss | | | | | | | | | | 1 January 2022, 31 December 2022, and 31 December 2023 | | (9) | | - | | - | | (9) | | | | | | | | | | | | Carrying amount | | | | | | | | | | 31 December 2023 | | 17,302 | | 207 | | 1,416 | | 18,925 | | 31 December 2022 | | 15,740 | | 207 | | 1,518 | | 17,465 | As at 31 December 2023, the Group��s motor vehicles and other equipment with a cost of approximately RMB 4,174 million (31 December 2022: RMB 3,666 million) are fully depreciated but still in use. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 18. Construction in progress The Group��s construction in progress mainly comprises office building construction projects, and the movements are detailed as follows: | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | | | | | Item | Budget | Opening balance | Increase in current year | Transfer to fixed assets in current year | Transfer to intangible assets in  current year | Transfer to long-term prepaid expenses in current year | Disposal | Ending balance | % of project investment in budget | | | | | | | | | | | | | Shanghai | 2,889 | 762 | 1,089 | (885) | - | (1) | - | 965 | 64% | | Fujian | 1,639 | 717 | 240 | (957) | - | - | - | - | 58% | | Hubei | 1,620 | 272 | 511 | - | - | - | - | 783 | 48% | | Jiangsu | 394 | 234 | 20 | (254) | - | - | - | - | 64% | | Liaoning | 175 | 158 | 6 | (1) | - | - | - | 163 | 94% | | Yunnan | 831 | 59 | 49 | - | - | - | - | 108 | 13% | | Henan | 1,060 | 17 | 206 | - | - | - | - | 223 | 21% | | Guizhou | 35 | 13 | - | - | - | - | - | 13 | 37% | | Hainan | 888 | - | 87 | - | - | - | - | 87 | 10% | | Beijing | 1,330 | 4 | 85 | - | - | - | - | 89 | 7% | | Others | 2,108 | 55 | 117 | (56) | (88) | - | - | 28 | 8% | | | | 2,291 | 2,410 | (2,153) | (88) | (1) | | 2,459 | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2022 | | | | | | | | | | Item | Budget | Opening balance | Increase in current year | Transfer to fixed assets in current year | Transfer to intangible assets in  current year | Transfer to long-term prepaid expenses in current year | Disposal | Ending balance | % of project investment in budget | | | | | | | | | | | | | Shanghai | 1,863 | 466 | 317 | (21) | - | - | - | 762 | 42% | | Fujian | 1,639 | 268 | 449 | - | - | - | - | 717 | 44% | | Hubei | 1,620 | 69 | 203 | - | - | - | - | 272 | 17% | | Jiangsu | 414 | 99 | 150 | (1) | - | - | (14) | 234 | 60% | | Liaoning | 175 | 157 | 1 | - | - | - | - | 158 | 90% | | Yunnan | 831 | 12 | 47 | - | - | - | - | 59 | 7% | | Henan | 1,060 | - | 17 | - | - | - | - | 17 | 2% | | Guizhou | 35 | 13 | - | - | - | - | - | 13 | 37% | | Beijing | 1,330 | - | 4 | - | - | - | - | 4 | 0% | | Zhejiang | 2,010 | 567 | 193 | (759) | - | - | - | 1 | 38% | | Others | 2,895 | 63 | 115 | (84) | (37) | (3) | - | 54 | 6% | | | | 1,714 | 1,496 | (865) | (37) | (3) | (14) | 2,291 | | The capital sources of the Group��s construction in progress are all self-owned funds, and there are no capitalised interest expenses in the balance of construction in progress. There was no such case as the recoverable amount was lower than the carrying amount of the construction in progress at the end of the year, thus no provision for impairment of construction in progress was required. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 19. Right-of-use assets | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Buildings | | Motor vehicles | | Other equipment | | Total | | | | | | | | | | | | Cost | | | | | | | | | | 1 January 2022 | | 6,343 | | 4 | | 20 | | 6,367 | | Increase | | 1,568 | | 4 | | 4 | | 1,576 | | Decrease | | (1,611) | | (3) | | (6) | | (1,620) | | | | | | | | | | | | 31 December 2022 | | 6,300 | | 5 | | 18 | | 6,323 | | Increase | | 2,540 | | 5 | | 10 | | 2,555 | | Decrease | | (1,329) | | (4) | | (1) | | (1,334) | | | | | | | | | | | | 31 December 2023 | | 7,511 | | 6 | | 27 | | 7,544 | | | | | | | | | | | | Accumulated depreciation | | | | | | | | | | 1 January 2022 | | (2,882) | | (4) | | (6) | | (2,892) | | Depreciation charge | | (1,365) | | (3) | | (3) | | (1,371) | | Decrease | | 965 | | 3 | | 2 | | 970 | | | | | | | | | | | | 31 December 2022 | | (3,282) | | (4) | | (7) | | (3,293) | | Depreciation charge | | (1,322) | | (3) | | (3) | | (1,328) | | Decrease | | 439 | | 2 | | 1 | | 442 | | | | | | | | | | | | 31 December 2023 | | (4,165) | | (5) | | (9) | | (4,179) | | | | | | | | | | | | Carrying amount | | | | | | | | | | 31 December 2023 | | 3,346 | | 1 | | 18 | | 3,365 | | | | | | | | | | | | 31 December 2022 | | 3,018 | | 1 | | 11 | | 3,030 | There was no such case as the recoverable amount was lower than the carrying amount of the right-of-use assets at the end of the year, thus no provision for impairment of right-of-use assets was required. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 20. Intangible assets | | | | | | | | --- | --- | --- | --- | --- | --- | | | | Land use rights | Software use rights | License | Total | | | | | | | | | Cost | | | | | | | 1 January 2022 | | 2,127 | 8,298 | 646 | 11,071 | | Increase | | 968 | 1,132 | - | 2,100 | | Transfers from construction in progress | | - | 37 | - | 37 | | | | | | | | | 31 December 2022 | | 3,095 | 9,467 | 646 | 13,208 | | Increase | | 133 | 1,182 | - | 1,315 | | Acquisition of subsidiaries | | 286 | - | - | 286 | | Transfers from construction in progress | | - | 88 | - | 88 | | Transfer to investment properties, net | | (34) | - | - | (34) | | Disposal | | - | (5) | - | (5) | | | | | | | | | 31 December 2023 | | 3,480 | 10,732 | 646 | 14,858 | | | | | | | | | --- | --- | --- | --- | --- | --- | | Accumulated Amortisation | | | | | | | 1 January 2022 | | (97) | (5,465) | - | (5,562) | | Amortisation | | (70) | (910) | - | (980) | | | | | | | | | 31 December 2022 | | (167) | (6,375) | - | (6,542) | | Amortisation | | (83) | (1,113) | - | (1,196) | | Transfer to investment properties, net | | 7 | - | - | 7 | | Disposal | | - | 5 | - | 5 | | | | | | | | | 31 December 2023 | | (243) | (7,483) | - | (7,726) | | | | | | | | | Provision for impairment loss | | | | | | | 1 January 2022 and 31 December 2022 | | - | - | - | - | | Provision for impairment | | - | (15) | - | (15) | | | | | | | | | 31 December 2023 | | - | (15) | - | (15) | | | | | | | | | Carrying amount | | | | | | | 31 December 2023 | | 3,237 | 3,234 | 646 | 7,117 | | 31 December 2022 | | 2,928 | 3,092 | 646 | 6,666 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 21. Goodwill | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | | | | Opening balance | | Increase | | Decrease | | Ending balance | | | | | | | | | | | Changjiang Pension | 149 | | - | | - | | 149 | | City Island | 813 | | - | | - | | 813 | | CPIC Funds | 395 | | - | | - | | 395 | | Borui Heming | 15 | | - | | - | | 15 | | Sub-total | 1,372 | | - | | - | | 1,372 | | Less: Provision for impairment | - | | (15) | | - | | (15) | | Net value | 1,372 | | (15) | | - | | 1,357 | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2022 | | | | | | | | | Opening balance | | Increase | | Decrease | | Ending balance | | | | | | | | | | | Changjiang Pension | 149 | | - | | - | | 149 | | City Island | 813 | | - | | - | | 813 | | CPIC Funds | 395 | | - | | - | | 395 | | Borui Heming | 15 | | - | | - | | 15 | | Sub-total | 1,372 | | - | | - | | 1,372 | | Less: Provision for impairment | - | | - | | - | | - | | Net value | 1,372 | | - | | - | | 1,372 | Provision for impairment of goodwill | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Opening balance | | Increase | | Decrease | | Ending balance | | | | | | Provision | | Disposal | | | | | | | | | | | | | | Borui Heming | | - | | (15) | | - | | (15) | The Group performs impairment test to goodwill annually. The recoverable amounts for asset groups and combinations of asset groups containing goodwill are determined by means of fair value net of expected disposal costs and at the present value of projected future cash flows. Fair value refers to the trading prices of similar assets in the market and is determined using appropriate valuation techniques. The present value of future cash flows is based on business plans approved by management and adjusted discount rates using the discounted cash flow method. Cash flows beyond the period have been extrapolated using a stable growth rate and terminal value. As at 31 December 2023, discount rates used by the Group range from 13% to 15%, and the growth rate is about 2%. As at 31 December 2023, apart from Borui Heming, there was no indication that the recoverable amount of asset groups and combinations of asset groups is less than its carrying amount, thus no impairment loss is recognised. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 22. Deferred income tax assets and liabilities | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2023 | | | 31 December 2022 | | | Deferred income tax assets | | Deferred income tax | Temporary  differences | | Deferred income tax | Temporary differences | | | | | | | | | | Insurance contract liabilities /assets | | 22,300 | 89,200 | | 17,507 | 70,028 | | Changes in fair value of financial instruments | | 184 | 736 | | 52 | 208 | | Commission and brokerage expenses | | 790 | 3,160 | | 522 | 2,088 | | Provision for asset impairment | | 611 | 2,444 | | 3,093 | 12,372 | | Deductible losses | | 3,198 | 12,792 | | 1,383 | 5,532 | | Lease liabilities | | 774 | 3,095 | | 680 | 2,718 | | Others | | 2,215 | 8,860 | | 1,831 | 7,324 | | | | | | | | | | Sub-total | | 30,072 | 120,287 | | 25,068 | 100,270 | | | | | | | | | | Deferred income tax liabilities | | Deferred income tax | Temporary differences | | Deferred income tax | Temporary differences | | | | | | | | | | Changes in fair value of financial instruments | | (22,126) | (88,504) | | (4,144) | (16,576) | | Adjustment in fair value arising from acquisition of subsidiaries | | (797) | (3,188) | | (828) | (3,312) | | Right-of-use assets | | (841) | (3,365) | | (758) | (3,030) | | Others | | (351) | (1,404) | | (245) | (980) | | | | | | | | | | Sub-total | | (24,115) | (96,461) | | (5,975) | (23,898) | Deferred income tax assets and liabilities of the Group set out as the net amount after offsetting: | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2023 | | | 31 December 2022 | | | | | Offsetting amount | Balance after offsetting | | Offsetting amount | Balance after offsetting | | | | | | | | | | Deferred income tax assets | | (22,996) | 7,076 | | (5,407) | 19,661 | | | | | | | | | | Deferred income tax liabilities | | 22,996 | (1,119) | | 5,407 | (568) | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 22. Deferred income tax assets and liabilities (continued) Details of movements in deferred income tax assets and liabilities are as follows: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Insurance contract liabilities /assets | Changes in fair value of financial instruments | Commission and brokerage expenses | Provision for asset impairment | Deductible losses | Adjustment in fair value arising from acquisition of subsidiaries | Others | Total | | | | | | | | | | | | Balance of 31 December 2021 | 3,027 | (6,841) | 360 | 2,289 | - | (858) | 420 | (1,603) | | Changes in accounting policy of new insurance standard | 16,476 | (5,047) | - | - | - | - | - | 11,429 | | | | | | | | | | | | Balance of 1 January 2022 | 19,503 | (11,888) | 360 | 2,289 | - | (858) | 420 | 9,826 | | Recognised in profit or loss | (2,431) | (248) | 162 | 804 | 1,383 | 30 | 1,088 | 788 | | Recognised in equity | 435 | 8,044 | - | - | - | - | - | 8,479 | | | | | | | | | | | | Balance of 31 December 2022 | 17,507 | (4,092) | 522 | 3,093 | 1,383 | (828) | 1,508 | 19,093 | | Changes in accounting policy of new financial instruments standards | - | (8,492) | - | (2,743) | - | - | - | (11,235) | | | | | | | | | | | | Balance of 1 January 2023 | 17,507 | (12,584) | 522 | 350 | 1,383 | (828) | 1,508 | 7,858 | | Recognised in profit or loss | (7,543) | 3,255 | 268 | 569 | 1,815 | 31 | 271 | (1,334) | | Recognised in equity | 12,336 | (12,613) | - | (308) | - | - | 18 | (567) | | | | | | | | | | | | Balance of 31 December 2023 | 22,300 | (21,942) | 790 | 611 | 3,198 | (797) | 1,797 | 5,957 | As at 31 December 2023, the deductible temporary differences and deductible losses not recognised as deferred income tax assets by the Group amounted to RMB 13.2 billion (31 December 2022: RMB 206 million). **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 23. Other assets | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Other receivables | (1) | 9,990 | | 7,877 | | Improvements of right-of-use assets | (2) | 1,052 | | 982 | | Others | | 2,459 | | 2,368 | | | | | | | | Total | | 13,501 | | 11,227 | (1) Other receivables | | | | | | | --- | --- | --- | --- | --- | | | | 31 December  2023 | | 31 December 2022 | | | | | | | | Due from external undertakings | | 2,630 | | 1,558 | | Receivable from securities sold but not settled | | 1,801 | | 732 | | Due from related parties\* | | 1,772 | | 1,775 | | Deposits | | 289 | | 209 | | Due from agents | | 175 | | 134 | | Co-insurance receivables | | 60 | | 65 | | Prepaid tax | | 20 | | - | | Others | | 3,562 | | 3,561 | | | | | | | | Sub-total | | 10,309 | | 8,034 | | Less: Provision for bad debts | | (319) | | (157) | | | | | | | | Net value | | 9,990 | | 7,877 | \* As at 31 December 2023, the payments made by the Group on behalf of Shanghai Binjiang-Xiangrui Investment and Construction Co., Ltd. (��Binjiang-Xiangrui��) for the purchase of land and related taxes and expenses amounted to approximately RMB 1,772 million (31 December 2022: RMB 1,775 million), which accounting for 17% (31 December 2022: 22%) of the total other receivables. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 23. Other assets (continued) (1) Other receivables (continued) The category of other receivables is analysed below: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2023 | | | | | | | | | | Ending balance | | % of total balance | | Provision for bad debts | | Provision Percentage | | | | | | | | | | | | Provisions for impairment considered on the grouping basis | | 10,309 | | 100% | | (319) | | 3% | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2022 | | | | | | | | | | Ending balance | | % of total balance | | Provision for bad debts | | Provision Percentage | | | | | | | | | | | | Amounts that are not individually significant and provisions for impairment considered on the grouping basis | | 5,320 | | 66% | | (142) | | 3% | | Amounts that are not individually significant but provisions for impairment considered on the individual basis | | 2,714 | | 34% | | (15) | | 1% | | | | | | | | | | | | Total | | 8,034 | | 100% | | (157) | | 2% | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 23. Other assets (continued) (1) Other receivables (continued) The aging of other receivables and related provisions for bad debts are analysed as follows: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Aging | | 31 December 2023 | | | | | | | | | | Ending balance | | % of total balance | | Provision for bad debts | | Net value | | | | | | | | | | | | Within 3 months (inclusive) | | 5,700 | | 55% | | (54) | | 5,646 | | 3 months to 1 year (inclusive) | | 1,854 | | 18% | | (15) | | 1,839 | | 1 to 3 years (inclusive) | | 887 | | 9% | | (117) | | 770 | | Over 3 years | | 1,868 | | 18% | | (133) | | 1,735 | | | | | | | | | | | | Total | | 10,309 | | 100% | | (319) | | 9,990 | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Aging | | 31 December 2022 | | | | | | | | | | Ending balance | | % of total balance | | Provision for bad debts | | Net value | | | | | | | | | | | | Within 3 months (inclusive) | | 3,257 | | 41% | | - | | 3,257 | | 3 months to 1 year (inclusive) | | 2,033 | | 25% | | (4) | | 2,029 | | 1 to 3 years (inclusive) | | 860 | | 11% | | (32) | | 828 | | Over 3 years | | 1,884 | | 23% | | (121) | | 1,763 | | | | | | | | | | | | Total | | 8,034 | | 100% | | (157) | | 7,877 | The top five other receivables of the Group are as follows: | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Total amount of the top five other receivables | | 2,572 | | 2,587 | | | | | | | | Total provision for bad debts | | (2) | | - | | | | | | | | % of total other receivables | | 25% | | 32% | The account balance does not include any amount attributable to shareholders holding 5% or more of the voting rights of the Company. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 23. Other assets (continued) (2) Improvement of right-of-use assets | | | | | | --- | --- | --- | --- | | | | | Improvement of right-of-use assets | | | | | | | Cost | | | | | At 1 January 2022 | | | 4,161 | | Additions | | | 450 | | Transfer from construction in progress | | | 3 | | | | | | | At 31 December 2022 | | | 4,614 | | Additions | | | 479 | | Transfer from construction in progress | | | 1 | | | | | | | At 31 December 2023 | | | 5,094 | | | | | | | Accumulated amortisation | | | | | At 1 January 2022 | | | (3,237) | | Amortisation charge | | | (395) | | At 31 December 2022 | | | (3,632) | | Amortisation charge | | | (410) | | | | | | | At 31 December 2023 | | | (4,042) | | | | | | | Carrying amount | | | | | At 31 December 2023 | | | 1,052 | | At 31 December 2022 | | | 982 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 24. Provision for impairment of assets | | | | | | | | --- | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | | Opening balance | Charge for the year | Reversal | Derecognition | Ending balance | | | | | | | | | Impairment provision of term deposits | 92 | 8 | (24) | - | 76 | | Impairment provision of restricted statutory deposits | 2 | - | - | - | 2 | | Impairment provision of debt investments at fair value through other comprehensive income | 2,684 | 1,773 | (449) | (79) | 3,929 | | Impairment provision of financial assets at amortised cost | 818 | 618 | (55) | (4) | 1,377 | | Impairment provision of long-term equity investments | 274 | 225 | - | - | 499 | | Impairment provision of other assets | | | | | | | - Other receivables | 287 | 74 | (7) | (35) | 319 | | - Debt assets | 20 | - | - | - | 20 | | - Others | 62 | 77 | (4) | - | 135 | | Provision for impairment of fixed assets | 9 | - | - | - | 9 | | Provision for impairment of intangible assets | - | 15 | - | - | 15 | | Provision for impairment of other long-term assets | 25 | - | - | - | 25 | | Provision for impairment of goodwill | - | 15 | - | - | 15 | | | | | | | | | Total | 4,273 | 2,805 | (539) | (118) | 6,421 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 24. Provision for impairment of assets (continued) | | | | | | | | --- | --- | --- | --- | --- | --- | | | 31 December 2022 | | | | | | | Opening balance | Charge for the year | Reversal | Derecognition | Ending balance | | | | | | | | | Provision for bad debts | 227 | 20 | (17) | (16) | 214 | | - Interest receivables | 44 | 13 | - | - | 57 | | - Other receivables | 183 | 7 | (17) | (16) | 157 | | Provision for impairment of available-for-sale financial assets | 8,405 | 4,745 | (487) | (2,442) | 10,221 | | - Debt instruments | 1,904 | 871 | (487) | (17) | 2,271 | | - Equity instruments | 6,501 | 3,874 | - | (2,425) | 7,950 | | Provision for impairment of held-to-maturity financial assets | 217 | - | (173) | 1 | 45 | | Provision for impairment of investments classified as loans and receivables | 280 | 1,050 | (109) | - | 1,221 | | Provision for losses on loans | 5 | - | - | - | 5 | | Provision for impairment of long-term equity investments | - | 274 | - | - | 274 | | Provision for impairment of fixed assets | 9 | - | - | - | 9 | | Provision for impairment of debt assets | 20 | - | - | - | 20 | | Provision for impairment of other long-term assets | 25 | - | - | - | 25 | | | | | | | | | Total | 9,188 | 6,089 | (786) | (2,457) | 12,034 | 25. Securities sold under agreements to repurchase | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Securities - bonds | | | | | | Inter-bank market | | 91,646 | | 99,895 | | Stock exchange | | 24,173 | | 19,770 | | | | | | | | Total | | 115,819 | | 119,665 | As at 31 December 2023, the Group��s bonds with par value of approximately RMB 97,966 million (31 December 2022: approximately RMB 111,987 million) were pledged for the inter-bank securities sold under agreements to repurchase. As at 31 December 2023, the Group��s bonds with par value of approximately RMB 24,080 million (31 December 2022: approximately RMB 19,770 million) were pledged for the stock exchange securities sold under agreements to repurchase. Securities sold under agreements to repurchase are generally repurchased within 12 months from the date the securities are sold. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 26. Employee benefits payable | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 1 January 2023 | | Increase | | Decrease | | 31 December 2023 | | | | | | | | | | | | Wages and salaries, bonus, allowances and subsidies | | 6,850 | | 18,715 | | (18,776) | | 6,789 | | Staff welfare | | 12 | | 930 | | (930) | | 12 | | Social security contributions | | 124 | | 4,001 | | (4,018) | | 107 | | Housing funds | | 11 | | 1,375 | | (1,372) | | 14 | | Labour union funds | | 54 | | 367 | | (366) | | 55 | | Employee education funds | | 872 | | 193 | | (100) | | 965 | | Deferred bonus to management | | 53 | | 163 | | (43) | | 173 | | Early retirement benefits | | 659 | | 923 | | (450) | | 1,132 | | | | | | | | | | | | Total | | 8,635 | | 26,667 | | (26,055) | | 9,247 | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 1 January 2022 | | Increase | | Decrease | | 31 December 2022 | | | | | | | | | | | | Wages and salaries, bonus, allowances and subsidies | | 5,789 | | 19,212 | | (18,151) | | 6,850 | | Staff welfare | | 3 | | 918 | | (909) | | 12 | | Social security contributions | | 78 | | 3,816 | | (3,770) | | 124 | | Housing funds | | 9 | | 1,314 | | (1,312) | | 11 | | Labour union funds | | 55 | | 357 | | (358) | | 54 | | Employee education funds | | 737 | | 192 | | (57) | | 872 | | Deferred bonus to management | | 53 | | - | | - | | 53 | | Early retirement benefits | | 662 | | 449 | | (452) | | 659 | | | | | | | | | | | | Total | | 7,386 | | 26,258 | | (25,009) | | 8,635 | The Group had no significant non-monetary benefits and compensation for termination of employment. 27. Taxes payable | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Corporate income tax | | 1,792 | | 3,301 | | Unpaid VAT | | 533 | | 652 | | Withholding individual income tax | | 163 | | 153 | | Others | | 1,048 | | 1,060 | | | | | | | | Total | | 3,536 | | 5,166 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 28. Bonds payable On 23 March 2018, CPIC Property issued a 10-year capital replenishment bond with a total face value of RMB 5 billion in the interbank market. CPIC Property has a conditional option to redeem the bond at the end of the fifth interest-bearing year. The capital replenishment bond pays interests at an initial coupon rate of 5.10% per annum. If CPIC Property does not exercise the early redemption option, the annual coupon rate for the next five years would increase to 6.10%. According to the ��Announcement on the Execution of the Right of Redeeming the First Phase Capital Replenishment Bonds in 2018�� issued by CPIC Property on 16 February 2023, CPIC Property fully redeemed these capital replenishment bonds on 23 March 2023. On 27 July 2018, CPIC Property issued a 10-year capital replenishment bond with a total face value of RMB 5 billion in the interbank market. CPIC Property has a conditional option to redeem the bond at the end of the fifth interest-bearing year. The capital replenishment bond pays interests at an initial coupon rate of 4.99% per annum. If CPIC Property does not exercise the early redemption option, the annual coupon rate for the next five years would increase to 5.99%. According to the ��Announcement on the Execution of the Right of Redeeming the Second Phase Capital Replenishment Bonds in 2018�� issued by CPIC Property on 20 June 2023, CPIC Property fully redeemed these capital replenishment bonds on 27 July 2023. On 9 March 2023, CPIC Property issued a 10-year capital replenishment bond with a total face value of RMB 7 billion in the interbank market. CPIC Property has a conditional option to redeem the bond at the end of the fifth interest-bearing year. The capital replenishment bond pays interests at an initial coupon rate of 3.72% per annum. If CPIC Property does not exercise the early redemption option, the annual coupon rate for the next five years would increase to 4.72%. On 3 April 2023, CPIC Property issued a 10-year capital replenishment bond with a total face value of RMB 3 billion in the interbank market. CPIC Property has a conditional option to redeem the bond at the end of the fifth interest-bearing year. The capital replenishment bond pays interests at an initial coupon rate of 3.55% per annum. If CPIC Property does not exercise the early redemption option, the annual coupon rate for the next five years would increase to 4.55%. | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Issuer | 31 December 2022 | Changes in accounting policies | 1 January 2023 | Issuance | Amortisation of bond premium or discount | Interest accrued in the year | Interest payment/ reimbursement in the year | 31 December 2023 | | | | | | | | | | | | CPIC Property | 9,999 | 303 | 10,302 | 9,998 | 2 | 487 | (10,504) | 10,285 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 29. Insurance contract liabilities/assets | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2023 | | | | | | | | | | Insurance contract assets (excluding assets for insurance acquisition cash flows) | Assets for insurance acquisition cash flows | Insurance contract assets | | Insurance contract liabilities (excluding assets for insurance acquisition cash flows) | Assets for insurance acquisition cash flows | Insurance contract liabilities | | Insurance contracts issued (including reinsurance contracts held�� | | 335 | - | 335 | | 1,872,620 | - | 1,872,620 | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2022 | | | | | | | | | | Insurance contract assets (excluding assets for insurance acquisition cash flows) | Assets for insurance acquisition cash flows | Insurance contract assets | | Insurance contract liabilities (excluding assets for insurance acquisition cash flows) | Assets for insurance acquisition cash flows | Insurance contract liabilities | | Insurance contracts issued (including reinsurance contracts held�� | | 305 | - | 305 | | 1,664,848 | - | 1,664,848 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 29. Insurance contract liabilities/assets (continued) The analysis of liabilities for remaining coverage and liabilities for incurred claims is as follows: | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | | | | | | | | | | | | | Contracts not measured under the premium allocation approach | | | | | Contracts measured under the premium allocation approach | | | | | | | | Liabilities for remaining coverage | | Liabilities for incurred claims | Total | | Liabilities for remaining coverage | | Liabilities for incurred claims | | Total | | | | Excluding loss component | Loss component | | Excluding loss component | Loss component | Estimates of the present value of future cash flows | Risk adjustment for non-financial risk | | Insurance contract liabilities as at 1 January | | 1,510,301 | 6,179 | 29,846 | 1,546,326 | | 44,668 | 7,932 | 64,136 | 1,786 | 118,522 | | Insurance contract assets as at 1 January | | - | - | - | - | | (120) | - | (185) | - | (305) | | **Net liabilities of insurance contracts as at 1 January** | | 1,510,301 | 6,179 | 29,846 | 1,546,326 | | 44,548 | 7,932 | 63,951 | 1,786 | 118,217 | | Contracts under the fair value approach | | (4,776) | - | - | (4,776) | | - | - | - | - | - | | Contracts under the modified retrospective approach | | (65,730) | - | - | (65,730) | | (18) | - | - | - | (18) | | Other contracts | | (12,460) | - | - | (12,460) | | (183,183) | - | - | - | (183,183) | | **Insurance revenue** | | (82,966) | - | - | (82,966) | | (183,201) | - | - | - | (183,201) | | Incurred claims and other expenses | | - | (1,570) | 31,806 | 30,236 | | - | - | 138,547 | 1,089 | 139,636 | | Amortisation of insurance acquisition cash flows | | 21,752 | - | - | 21,752 | | 46,185 | - | - | - | 46,185 | | Losses on onerous contracts and reversals of those losses | | - | 3,550 | - | 3,550 | | - | 194 | - | - | 194 | | Changes in liabilities for incurred claims | | - | - | (1,444) | (1,444) | | - | - | (8,122) | (964) | (9,086) | | **Insurance service expenses** | | 21,752 | 1,980 | 30,362 | 54,094 | | 46,185 | 194 | 130,425 | 125 | 176,929 | | | | | | | | | | | | | | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 29. Insurance contract liabilities/assets (continued) The analysis of liabilities for remaining coverage and liabilities for incurred claims is as follows (continued): | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | | | | | | | | | | | | | Contracts not measured under the premium allocation approach | | | | | Contracts measured under the premium allocation approach | | | | | | | | Liabilities for remaining coverage | | Liabilities for incurred claims | Total | | Liabilities for remaining coverage | | Liabilities for incurred claims | | Total | | | | Excluding loss component | Loss component | | Excluding loss component | Loss component | Estimates of the present value of future cash flows | Risk adjustment for non-financial risk | | **Insurance service result** | | (61,214) | 1,980 | 30,362 | (28,872) | | (137,016) | 194 | 130,425 | 125 | (6,272) | | Insurance finance expenses | | 92,832 | 120 | 792 | 93,744 | | 1,022 | - | 1,321 | - | 2,343 | | Other changes recognised in other comprehensive income | | - | - | - | - | | (4) | - | 4 | 1 | 1 | | **Total changes of other comprehensive income** | | 31,618 | 2,100 | 31,154 | 64,872 | | (135,998) | 194 | 131,750 | 126 | (3,928) | | **Investment components** | | (59,592) | - | 59,592 | - | | (12,202) | - | 12,202 | - | - | | Premium received | | 249,781 | - | - | 249,781 | | 207,829 | - | - | - | 207,829 | | Insurance acquisition cash flows paid | | (22,492) | - | - | (22,492) | | (46,267) | - | - | - | (46,267) | | Claims and other insurance service expenses paid | | - | - | (91,203) | (91,203) | | - | - | (139,817) | - | (139,817) | | Other cash flows | | 761 | - | - | 761 | | (9,179) | - | - | - | (9,179) | | **Total cash flows** | | 228,050 | - | (91,203) | 136,847 | | 152,383 | - | (139,817) | - | 12,566 | | Other movements | | (498) | - | (438) | (936) | | (690) | - | (989) | - | (1,679) | | **Net liabilities of insurance contracts as at 31 December** | | 1,709,879 | 8,279 | 28,951 | 1,747,109 | | 48,041 | 8,126 | 67,097 | 1,912 | 125,176 | | Insurance contract assets as at 31 December | | - | - | - | - | | (3,480) | 411 | 2,677 | 57 | (335) | | Insurance contract liabilities as at 31 December | | 1,709,879 | 8,279 | 28,951 | 1,747,109 | | 51,521 | 7,715 | 64,420 | 1,855 | 125,511 | | | | | | | | | | | | | | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 29. Insurance contract liabilities/assets (continued) The analysis of liabilities for remaining coverage and liabilities for incurred claims is as follows (continued): | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2022 | | | | | | | | | | | | | Contracts not measured under the premium allocation approach | | | | | Contracts measured under the premium allocation approach | | | | | | | | Liabilities for remaining coverage | | Liabilities for incurred claims | Total | | Liabilities for remaining coverage | | Liabilities for incurred claims | | Total | | | | Excluding loss component | Loss component | | Excluding loss component | Loss component | Estimates of the present value of future cash flows | Risk adjustment for non-financial risk | | Insurance contract liabilities as at 1 January | | 1,344,172 | 3,487 | 30,502 | 1,378,161 | | 46,767 | 7,099 | 52,946 | 1,462 | 108,274 | | Insurance contract assets as at 1 January | | - | - | - | - | | (97) | - | (148) | - | (245) | | **Net liabilities of insurance contracts****as at 1 January** | | 1,344,172 | 3,487 | 30,502 | 1,378,161 | | 46,670 | 7,099 | 52,798 | 1,462 | 108,029 | | Contracts under the fair value approach | | (4,591) | - | - | (4,591) | | - | - | - | - | - | | Contracts under the modified retrospective approach | | (72,614) | - | - | (72,614) | | (644) | - | - | - | (644) | | Other contracts | | (4,105) | - | - | (4,105) | | (167,791) | - | - | - | (167,791) | | **Insurance revenue** | | (81,310) | - | - | (81,310) | | (168,435) | - | - | - | (168,435) | | Incurred claims and other expenses | | - | (1,429) | 30,337 | 28,908 | | - | - | 120,187 | 918 | 121,105 | | Amortisation of insurance acquisition cash flows | | 21,722 | - | - | 21,722 | | 42,138 | - | - | - | 42,138 | | Losses on onerous contracts and reversals of those losses | | - | 4,076 | - | 4,076 | | - | 833 | - | - | 833 | | Changes in liabilities for incurred claims | | - | - | (2,154) | (2,154) | | - | - | (2,039) | (601) | (2,640) | | **Insurance service expenses** | | 21,722 | 2,647 | 28,183 | 52,552 | | 42,138 | 833 | 118,148 | 317 | 161,436 | | | | | | | | | | | | | | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 29. Insurance contract liabilities/assets (continued) The analysis of liabilities for remaining coverage and liabilities for incurred claims is as follows (continued): | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2022 | | | | | | | | | | | | | Contracts not measured under the premium allocation approach | | | | | Contracts measured under the premium allocation approach | | | | | | | | Liabilities for remaining coverage | | Liabilities for incurred claims | Total | | Liabilities for remaining coverage | | Liabilities for incurred claims | | Total | | | | Excluding loss component | Loss component | | Excluding loss component | Loss component | Estimates of the present value of future cash flows | Risk adjustment for non-financial risk | | **Insurance service result** | | (59,588) | 2,647 | 28,183 | (28,758) | | (126,297) | 833 | 118,148 | 317 | (6,999) | | Insurance finance expenses | | 57,042 | 45 | 742 | 57,829 | | 971 | - | 1,053 | - | 2,024 | | Other changes recognised in other comprehensive income | | - | - | - | - | | 1 | - | 25 | 6 | 32 | | **Total changes of other comprehensive income** | | (2,546) | 2,692 | 28,925 | 29,071 | | (125,325) | 833 | 119,226 | 323 | (4,943) | | **Investment component** | | (55,284) | - | 55,284 | - | | (8,697) | - | 8,697 | - | - | | Premium received | | 242,610 | - | - | 242,610 | | 184,281 | - | - | - | 184,281 | | Insurance acquisition cash flows paid | | (17,754) | - | - | (17,754) | | (42,931) | - | - | - | (42,931) | | Claims and other insurance service expenses paid | | - | - | (84,384) | (84,384) | | - | - | (115,932) | - | (115,932) | | Other cash flows | | (400) | - | - | (400) | | (8,755) | - | - | - | (8,755) | | **Total cash flows** | | 224,456 | - | (84,384) | 140,072 | | 132,595 | - | (115,932) | - | 16,663 | | Other movements | | (497) | - | (481) | (978) | | (695) | - | (838) | 1 | (1,532) | | **Net liabilities of insurance contracts as at 31 December** | | 1,510,301 | 6,179 | 29,846 | 1,546,326 | | 44,548 | 7,932 | 63,951 | 1,786 | 118,217 | | Insurance contract assets as at 31 December | | - | - | - | - | | (120) | - | (185) | - | (305) | | Insurance contract liabilities as at 31 December | | 1,510,301 | 6,179 | 29,846 | 1,546,326 | | 44,668 | 7,932 | 64,136 | 1,786 | 118,522 | | | | | | | | | | | | | | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 29. Insurance contract liabilities/assets (continued) The analysis by measurement component of contracts not measured under the premium allocation approach is as follows: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | | | | | | | | | | Present value of future cash flows | Risk adjustment for non-financial risk | Contractual service margin | | | | Total | | | | Contracts under the fair value approach | Contracts under the modified retrospective approach | Other contracts | Subtotal | | | | | | | | | | | | **Insurance contract liabilities as at 1 January** | | 1,198,000 | 20,664 | 12,304 | 305,352 | 10,006 | 327,662 | 1,546,326 | | Amortisation of contractual service margin | | - | - | (1,447) | (23,719) | (1,036) | (26,202) | (26,202) | | Changes in risk adjustment for non-financial risk | | - | (1,132) | - | - | - | - | (1,132) | | Experience adjustments | | (3,644) | - | - | - | - | - | (3,644) | | Changes that relate to current services | | (3,644) | (1,132) | (1,447) | (23,719) | (1,036) | (26,202) | (30,978) | | Contracts initially recognised in the year | | (12,864) | 2,643 | - | - | 12,550 | 12,550 | 2,329 | | Changes in estimates that adjust the contractual service margin | | (2,052) | (3,522) | 2,574 | 1,866 | 1,134 | 5,574 | - | | Changes in estimates that do not adjust the contractual service margin | | 1,272 | (51) | - | - | - | - | 1,221 | | Changes that relate to future services | | (13,644) | (930) | 2,574 | 1,866 | 13,684 | 18,124 | 3,550 | | Adjustments to liabilities for incurred claims | | (1,302) | (142) | - | - | - | - | (1,444) | | Changes that relate to past services | | (1,302) | (142) | - | - | - | - | (1,444) | | **Insurance service result** | | (18,590) | (2,204) | 1,127 | (21,853) | 12,648 | (8,078) | (28,872) | | | | | | | | | | | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 29. Insurance contract liabilities/assets (continued) The analysis by measurement component of contracts not measured under the premium allocation approach is as follows (continued): | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | | | | | | | | | | Present value of future cash flows | Risk adjustment for non-financial risk | Contractual service margin | | | | Total | | | | Contracts under the fair value approach | Contracts under the modified retrospective approach | Other contracts | Subtotal | | | | | | | | | | | | **Insurance finance expenses** | | 86,659 | 943 | 474 | 5,019 | 649 | 6,142 | 93,744 | | **Total changes of other comprehensive income** | | 68,069 | (1,261) | 1,601 | (16,834) | 13,297 | (1,936) | 64,872 | | Premiums received | | 249,781 | - | - | - | - | - | 249,781 | | Insurance acquisition cash flows paid | | (22,492) | - | - | - | - | - | (22,492) | | Claims and other insurance service expenses paid | | (91,203) | - | - | - | - | - | (91,203) | | Other cash flows | | 761 | - | - | - | - | - | 761 | | **Total cash flows** | | 136,847 | - | - | - | - | - | 136,847 | | Other movements | | (936) | - | - | - | - | - | (936) | | **Insurance contract liabilities as at 31 December** | | 1,401,980 | 19,403 | 13,905 | 288,518 | 23,303 | 325,726 | 1,747,109 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 29. Insurance contract liabilities/assets (continued) The analysis by measurement component of contracts not measured under the premium allocation approach is as follows (continued): | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2022 | | | | | | | | | | Present value of future cash flows | Risk adjustment for non-financial risk | Contractual service margin | | | | Total | | | | Contracts under the fair value approach | Contracts under the modified retrospective approach | Other contracts | Subtotal | | | | | | | | | | | | **Insurance contract liabilities as at 1 January** | | 1,015,946 | 18,781 | 12,399 | 331,025 | 10 | 343,434 | 1,378,161 | | Amortisation of contractual service margin | | - | - | (1,516) | (26,068) | (286) | (27,870) | (27,870) | | Changes in risk adjustment for non-financial risk | | - | (1,115) | - | - | - | - | (1,115) | | Experience adjustments | | (1,695) | - | - | - | - | - | (1,695) | | Changes that relate to current services | | (1,695) | (1,115) | (1,516) | (26,068) | (286) | (27,870) | (30,680) | | Contracts initially recognised in the year | | (10,189) | 2,119 | - | - | 9,533 | 9,533 | 1,463 | | Changes in estimates that adjust the contractual service margin | | 3,879 | (269) | 938 | (5,157) | 609 | (3,610) | - | | Changes in estimates that do not adjust the contractual service margin | | 2,568 | 45 | - | - | - | - | 2,613 | | Changes that relate to future services | | (3,742) | 1,895 | 938 | (5,157) | 10,142 | 5,923 | 4,076 | | Adjustments to liabilities for incurred claims | | (2,085) | (69) | - | - | - | - | (2,154) | | Changes that relate to past services | | (2,085) | (69) | - | - | - | - | (2,154) | | **Insurance service result** | | (7,522) | 711 | (578) | (31,225) | 9,856 | (21,947) | (28,758) | | | | | | | | | | | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 29. Insurance contract liabilities/assets (continued) The analysis by measurement component of contracts not measured under the premium allocation approach is as follows (continued): | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2022 | | | | | | | | | | Present value of future cash flows | Risk adjustment for non-financial risk | Contractual service margin | | | | Total | | | | Contracts under the fair value approach | Contracts under the modified retrospective approach | Other contracts | Subtotal | | | | | | | | | | | | **Insurance finance expenses** | | 50,482 | 1,172 | 483 | 5,552 | 140 | 6,175 | 57,829 | | **Total changes of other comprehensive income** | | 42,960 | 1,883 | (95) | (25,673) | 9,996 | (15,772) | 29,071 | | Premiums received | | 242,610 | - | - | - | - | - | 242,610 | | Insurance acquisition cash flows paid | | (17,754) | - | - | - | - | - | (17,754) | | Claims and other insurance service expenses paid | | (84,384) | - | - | - | - | - | (84,384) | | Other cash flows | | (400) | - | - | - | - | - | (400) | | **Total cash flows** | | 140,072 | - | - | - | - | - | 140,072 | | Other movements | | (978) | - | - | - | - | - | (978) | | **Insurance contract liabilities as at 31 December** | | 1,198,000 | 20,664 | 12,304 | 305,352 | 10,006 | 327,662 | 1,546,326 | | | | | | | | | | | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 29. Insurance contract liabilities/assets (continued) As of 31 December 2023, the Group expects that 65% (31 December 2022: 67%) of the contractual service margin of insurance contracts that do not apply the premium allocation approach will be recognised in profit or loss within the next 10 years. The impact on the balance sheet of the current period��s initial recognition of insurance contracts that do not measure under the premium allocation approach is as follows: | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | | | | | Profitable contracts issued | Onerous contracts issued | Total | | Estimates of present value of future cash outflows - insurance acquisition cash flows | | 18,094 | 5,257 | 23,351 | | Estimates of present value of future cash outflows - others | | 107,329 | 44,309 | 151,638 | | Subtotal of estimates of present value of future cash outflows | | 125,423 | 49,566 | 174,989 | | Estimates of present value of future cash inflows | | (139,959) | (47,894) | (187,853) | | Risk adjustment for non-financial risk | | 1,986 | 657 | 2,643 | | Contractual service margin | | 12,550 | - | 12,550 | | Impact of contracts initially recognised in the current year | | - | 2,329 | 2,329 | | | | | | | | --- | --- | --- | --- | --- | | | | 2022 | | | | | | Profitable contracts issued | Onerous contracts issued | Total | | Estimates of present value of future cash outflows - insurance acquisition cash flows | | 14,249 | 3,470 | 17,719 | | Estimates of present value of future cash outflows- others | | 89,117 | 38,719 | 127,836 | | Subtotal of estimates of present value of future cash outflows | | 103,366 | 42,189 | 145,555 | | Estimates of present value of future cash inflows | | (114,589) | (41,155) | (155,744) | | Risk adjustment for non-financial risk | | 1,690 | 429 | 2,119 | | Contractual service margin | | 9,533 | - | 9,533 | | Impact of contracts initially recognised in the current year | | - | 1,463 | 1,463 | **VII.** **NOTES TO THE FINANCIAL STATEMENTS (continued)** 29. Insurance contract liabilities/assets (continued) The following table describes the composition of the assets or liabilities and their fair values of the underlying items corresponding to insurance contracts with direct participation in profit-sharing features: | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Available-for-sale financial assets | | - | | 374,925 | | Held-to-maturity financial assets | | - | | 163,379 | | Investments classified as loans and receivables | | - | | 257,813 | | Financial assets at fair value through profit or loss | | 286,162 | | - | | Debt investments at fair value through other comprehensive income | | 574,582 | | - | | Equity investments at fair value through other comprehensive income | | 63,107 | | - | | Others | | 104,316 | | 173,599 | | | | | | | | | | 1,028,167 | | 969,716 | **VII.** **NOTES TO THE FINANCIAL STATEMENTS (continued)** 30. Reinsurance contract liabilities/assets The analysis of reinsurance contract assets for remaining coverage and reinsurance contract assets for incurred claims is as follows: | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | | | | | | | | | | | | | Contracts not measured under the premium allocation method | | | | | Contracts measured under the premium allocation method | | | | | | | | Assets for remaining coverage | | Assets for incurred claims | Total | | Assets for remaining coverage | | Assets for  incurred claims | | Total | | | | Excluding loss-recovery component | Loss- recovery component | | Excluding loss-recovery component | Loss- recovery component | Estimates of the present value of future cash flows | Risk adjustment for non-financial risk | | Reinsurance contract assets as at 1 January | | 10,547 | 201 | 318 | 11,066 | | 1,445 | 1,017 | 19,369 | 308 | 22,139 | | Reinsurance contract liabilities as at 1 January | | - | - | - | - | | (322) | - | (487) | - | (809) | | **Net assets of reinsurance contracts as at 1 January** | | 10,547 | 201 | 318 | 11,066 | | 1,123 | 1,017 | 18,882 | 308 | 21,330 | | Allocation of reinsurance premiums | | (621) | - | - | (621) | | (15,217) | - | - | - | (15,217) | | Amounts recoverable for claims and other related expenses incurred during the year | | - | (30) | 226 | 196 | | - | - | 15,580 | 226 | 15,806 | | Recognition and reversals of loss-recovery component | | - | 240 | - | 240 | | - | 184 | - | - | 184 | | Changes in fulfillment cash flows related to reinsurance contracts assets for incurred claims | | - | - | (9) | (9) | | - | - | (1,821) | (169) | (1,990) | | Effect of changes in non-performance of reinsurers | | - | - | - | - | | - | - | (28) | - | (28) | | Recoveries of insurance service expenses from reinsurers | | - | 210 | 217 | 427 | | - | 184 | 13,731 | 57 | 13,972 | | **R****e****insurance service results** | | (621) | 210 | 217 | (194) | | (15,217) | 184 | 13,731 | 57 | (1,245) | | | | | | | | | | | | | | **VII.** **NOTES TO THE FINANCIAL STATEMENTS (continued)** 30. Reinsurance contract liabilities/assets (continued) The analysis of reinsurance contract assets for remaining coverage and reinsurance contract assets for incurred claims is as follows (continued): | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | | | | | | | | | | | | | Contracts not measured under the premium allocation method | | | | | Contracts measured under the premium allocation method | | | | | | | | Assets for remaining coverage | | Liabilities for incurred claims | Total | | Assets for remaining coverage | | Assets for  incurred claims | | Total | | | | Excluding loss-recovery component | Loss- recovery component | | Excluding loss-recovery component | Loss- recovery component | Estimates of the present value of future cash flows | Risk adjustment for non-financial risk | | **Reinsurance finance income for reinsurance contracts held** | | 679 | 8 | 1 | 688 | | 169 | - | 312 | - | 481 | | Other changes recognised in other comprehensive income | | - | - | - | - | | (3) | - | (3) | - | (6) | | **Total changes in other comprehensive income** | | 58 | 218 | 218 | 494 | | (15,051) | 184 | 14,040 | 57 | (770) | | Investment components | | (211) | - | 211 | - | | (5,080) | - | 5,080 | - | - | | Reinsurance premiums paid | | 665 | - | - | 665 | | 20,092 | - | - | - | 20,092 | | Amounts received from recoveries of claims and other related expenses incurred | | - | - | (130) | (130) | | - | - | (14,399) | - | (14,399) | | Other cash flows | | (24) | - | - | (24) | | 1,430 | - | - | - | 1,430 | | **Total cash flows** | | 641 | - | (130) | 511 | | 21,522 | - | (14,399) | - | 7,123 | | **Reinsurance contract assets as at 31 December** | | 11,035 | 419 | 617 | 12,071 | | 2,514 | 1,201 | 23,603 | 365 | 27,683 | | | | | | | | | | | | | | **VII.** **NOTES TO THE FINANCIAL STATEMENTS (continued)** 30. Reinsurance contract liabilities/assets (continued) The analysis of reinsurance contract assets for remaining coverage and reinsurance contract assets for incurred claims is as follows (continued): | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2022 | | | | | | | | | | | | | Contracts not measured under the premium allocation method | | | | | Contracts measured under the premium allocation method | | | | | | | | Assets for remaining coverage | | Liabilities for incurred claims | Total | | Assets for remaining coverage | | Assets for  incurred claims | | Total | | | | Excluding loss-recovery component | Loss- recovery component | | Excluding loss-recovery component | Loss- recovery component | Estimates of the present value of future cash flows | Risk adjustment for non-financial risk | | Reinsurance contract assets as at 1 January | | 10,440 | 100 | 348 | 10,888 | | 3,136 | 872 | 16,816 | 271 | 21,095 | | Reinsurance contract liabilities as at 1 January | | - | - | - | - | | (339) | - | (405) | - | (744) | | **Net assets of reinsurance contracts as at 1 January** | | 10,440 | 100 | 348 | 10,888 | | 2,797 | 872 | 16,411 | 271 | 20,351 | | Allocation of reinsurance premiums | | (681) | - | - | (681) | | (14,746) | - | - | - | (14,746) | | Amounts recoverable for claims and other related expenses incurred during the year | | - | (14) | 19 | 5 | | - | - | 14,076 | 73 | 14,149 | | Recognition and reversals of loss-recovery component | | - | 112 | - | 112 | | - | 145 | - | - | 145 | | Changes in fulfillment cash flows related to reinsurance contracts assets for incurred claims | | - | - | 34 | 34 | | - | - | (1,784) | (39) | (1,823) | | Effect of changes in non-performance of reinsurers | | - | - | - | - | | - | - | (13) | - | (13) | | Recoveries of insurance service expenses from reinsurers | | - | 98 | 53 | 151 | | - | 145 | 12,279 | 34 | 12,458 | | **R****e****insurance service results** | | (681) | 98 | 53 | (530) | | (14,746) | 145 | 12,279 | 34 | (2,288) | | | | | | | | | | | | | | **VII.** **NOTES TO THE FINANCIAL STATEMENTS (continued)** 30. Reinsurance contract liabilities/assets (continued) The analysis of reinsurance contract assets for remaining coverage and reinsurance contract assets for incurred claims is as follows (continued): | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2022 | | | | | | | | | | | | | Contracts not measured under the premium allocation method | | | | | Contracts measured under the premium allocation method | | | | | | | | Assets for remaining coverage | | Liabilities for incurred claims | Total | | Assets for remaining coverage | | Assets for  incurred claims | | Total | | | | Excluding loss-recovery component | Loss- recovery component | | Excluding loss-recovery component | Loss- recovery component | Estimates of the present value of future cash flows | Risk adjustment for non-financial risk | | **Reinsurance finance income for reinsurance contracts held** | | 653 | 3 | - | 656 | | 228 | - | 224 | - | 452 | | Other changes recognised in other comprehensive income | | - | - | - | - | | (7) | - | 1 | 3 | (3) | | **Total changes in other comprehensive income** | | (28) | 101 | 53 | 126 | | (14,525) | 145 | 12,504 | 37 | (1,839) | | Investment components | | (199) | - | 199 | - | | (3,773) | - | 3,773 | - | - | | Reinsurance premiums paid | | 396 | - | - | 396 | | 17,345 | - | - | - | 17,345 | | Amounts received from recoveries of claims and other related expenses incurred | | - | - | (282) | (282) | | - | - | (13,806) | - | (13,806) | | Other cash flows | | (62) | - | - | (62) | | (721) | - | - | - | (721) | | **Total cash flows** | | 334 | - | (282) | 52 | | 16,624 | - | (13,806) | - | 2,818 | | **Net assets of reinsurance contracts at 31 December** | | 10,547 | 201 | 318 | 11,066 | | 1,123 | 1,017 | 18,882 | 308 | 21,330 | | Reinsurance contract assets at 31 December | | 10,547 | 201 | 318 | 11,066 | | 1,445 | 1,017 | 19,369 | 308 | 22,139 | | Reinsurance contract liabilities at 31 December | | - | - | - | - | | (322) | - | (487) | - | (809) | | | | | | | | | | | | | | **VII.** **NOTES TO THE FINANCIAL STATEMENTS (continued)** 30. Reinsurance contract liabilities/assets (continued) The analysis by measurement component of contracts not measured under the premium allocation approach is as follows: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | | | | | | | | | | Present value of future cash flows | Risk adjustment for non-financial risk | Contractual service margins | | | | Total | | | | Contracts under the fair value approach | Contracts under the modified retrospective approach | Other contracts | Subtotal | | | | | | | | | | | | **Reinsurance contract assets as at 1 January** | | 8,138 | 213 | 2,630 | - | 85 | 2,715 | 11,066 | | Amortisation of contractual service margin | | - | - | (186) | - | (8) | (194) | (194) | | Changes in risk adjustment for non-financial risk | | - | (4) | - | - | - | - | (4) | | Experience adjustments | | (227) | - | - | - | - | - | (227) | | Changes that relate to current services | | (227) | (4) | (186) | - | (8) | (194) | (425) | | Reinsurance contracts initially recognised in the year | | (25) | 7 | - | - | 18 | 18 | - | | Changes in estimates that adjust the contractual service margin | | 255 | (36) | (140) | - | (79) | (219) | - | | Recognition and reversals of loss-recovery component | | - | - | 42 | - | 198 | 240 | 240 | | Changes that relate to future services | | 230 | (29) | (98) | - | 137 | 39 | 240 | | Adjustments to reinsurance amortisation of assets for incurred claims | | (7) | (2) | - | - | - | - | (9) | | Changes related to past services | | (7) | (2) | - | - | - | - | (9) | | **Insurance service result** | | (4) | (35) | (284) | - | 129 | (155) | (194) | | | | | | | | | | | **VII.** **NOTES TO THE FINANCIAL STATEMENTS (continued)** 30. Reinsurance contract liabilities/assets (continued) The analysis by measurement component of contracts not measured under the premium allocation approach is as follows (continued): | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | | | | | | | | | | Present value of future cash flows | Risk adjustment for non-financial risk | Contractual service margins | | | | Total | | | | Contracts under the fair value approach | Contracts under the modified retrospective approach | Other contracts | Subtotal | | **Reinsurance finance income for reinsurance contracts held** | | 589 | 10 | 85 | - | 4 | 89 | 688 | | **Total changes of other comprehensive income** | | 585 | (25) | (199) | - | 133 | (66) | 494 | | Reinsurance premiums paid | | 665 | - | - | - | - | - | 665 | | Amounts received from recoveries of claims and other related expenses incurred | | (130) | - | - | - | - | - | (130) | | Other cash flows | | (24) | - | - | - | - | - | (24) | | **Total cash flows** | | 511 | - | - | - | - | - | 511 | | **Reinsurance contract assets at 31 December** | | 9,234 | 188 | 2,431 | - | 218 | 2,649 | 12,071 | | | | | | | | | | | **VII.** **NOTES TO THE FINANCIAL STATEMENTS (continued)** 30. Reinsurance contract liabilities/assets (continued) The analysis by measurement component of contracts not measured under the premium allocation approach is as follows (continued): | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2022 | | | | | | | | | | Present value of future cash flows | Risk adjustment for non-financial risk | Contractual service margins | | | | Total | | | | Contracts under the fair value approach | Contracts under the modified retrospective approach | Other contracts | Subtotal | | | | | | | | | | | | **Reinsurance contract assets as at 1 January** | | 8,461 | 202 | 2,225 | - | - | 2,225 | 10,888 | | Amortisation of contractual service margin | | - | - | (204) | - | (22) | (226) | (226) | | Changes in risk adjustment for non-financial risk | | - | (3) | - | - | - | - | (3) | | Experience adjustments | | (447) | - | - | - | - | - | (447) | | Changes that relate to current services | | (447) | (3) | (204) | - | (22) | (226) | (676) | | Reinsurance contracts initially recognised in the year | | (108) | 19 | - | - | 89 | 89 | - | | Changes in estimates that adjust the contractual service margin | | (425) | (17) | 454 | - | (12) | 442 | - | | Recognition and reversals of loss-recovery component | | - | - | 84 | - | 28 | 112 | 112 | | Changes that relate to future services | | (533) | 2 | 538 | - | 105 | 643 | 112 | | Adjustments to reinsurance amortisation of assets for incurred claims | | 35 | (1) | - | - | - | - | 34 | | Changes related to past services | | 35 | (1) | - | - | - | - | 34 | | **Insurance service result** | | (945) | (2) | 334 | - | 83 | 417 | (530) | | | | | | | | | | | **VII.** **NOTES TO THE FINANCIAL STATEMENTS (continued)** 30. Reinsurance contract liabilities/assets (continued) The analysis by measurement component of contracts not measured under the premium allocation approach is as follows (continued): | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 2022 | | | | | | | | | | Present value of future cash flows | Risk adjustment for non-financial risk | Contractual service margins | | | | Total | | | | Contracts under the fair value approach | Contracts under the modified retrospective approach | Other contracts | Subtotal | | **Reinsurance finance income for reinsurance contracts held** | | 570 | 13 | 71 | - | 2 | 73 | 656 | | **Total changes of other comprehensive income** | | (375) | 11 | 405 | - | 85 | 490 | 126 | | Reinsurance premiums paid | | 396 | - | - | - | - | - | 396 | | Amounts received from recoveries of claims and other related expenses incurred | | (282) | - | - | - | - | - | (282) | | Other cash flows | | (62) | - | - | - | - | - | (62) | | **Total cash flows** | | 52 | - | - | - | - | - | 52 | | **Reinsurance contract assets at 31 December** | | 8,138 | 213 | 2,630 | - | 85 | 2,715 | 11,066 | | | | | | | | | | | **VII.** **NOTES TO THE FINANCIAL STATEMENTS (continued)** 30. Reinsurance contract liabilities/assets (continued) As of 31 December 2023, the Group expects that 63% (31 December 2022: 70%) of the contractual service margin of reinsurance contracts that do not apply the premium allocation approach will be recognised in profit or loss within the next 10 years. The impact of reinsurance contracts that do not initially recognised under the premium allocation approach on the balance sheet is as follows: | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Estimates of present value of future cash inflows | | 353 | | 541 | | Estimates of present value of future cash outflows | | (378) | | (649) | | Risk adjustment for non-financial risk | | 7 | | 19 | | Contractual service margin | | 18 | | 89 | | | | | | | | Impact of contracts initially recognised during the year | | - | | - | **VII.** **NOTES TO THE FINANCIAL STATEMENTS (continued)** 31. Other liabilities | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Other payables | (1) | 30,512 | | 26,990 | | Accrued expenses | | 2,100 | | 2,315 | | Insurance security fund | | 372 | | 544 | | Dividends payable | | 4 | | 4 | | Others | | 4,390 | | 4,080 | | | | | | | | Total | | 37,378 | | 33,933 | (1) Other payables | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Payables to third-party investors of consolidated structured entities | | 13,845 | | 20,854 | | Payables related to asset-backed securities | | 8,308 | | - | | Payables to be claimed by customers | | 1,885 | | 1,635 | | Co-insurance payable | | 1,229 | | 489 | | Payables for purchases | | 1,210 | | 1,491 | | Payables for construction and purchasing office building | | 940 | | 1,153 | | Deposits | | 801 | | 533 | | Payables for securities purchased but not settled | | 289 | | 206 | | Compulsory automobile insurance rescue fund | | 287 | | 273 | | Reimbursement payables | | 97 | | 60 | | Others | | 1,621 | | 296 | | | | | | | | Total | | 30,512 | | 26,990 | The account balance does not include any amount attributable to shareholders holding 5% or more of the voting rights of the Company. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 32. Issued capital Shares of the Company as well as the percentages of shareholding are shown below. | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | 1 January 2023 | | Increase of number of shares | | 31 December 2023 | | | | Number of shares | Percentage of shareholding | Newly issued | Others | Number of shares | Percentage of shareholding | | | | | | | | | | I. Shares with trading restrictions | | | | | | | | Shares held by domestic non-state owned legal persons | - | 0% | - | - | - | 0% | | | | | | | | | | Sub-total | - | 0% | - | - | - | 0% | | | | | | | | | | II. Shares without trading restrictions | | | | | | | | Ordinary shares denominated in RMB | 6,844 | 71% | - | - | 6,844 | 71% | | Foreign shares listed overseas | 2,776 | 29% | - | - | 2,776 | 29% | | | | | | | | | | Sub-total | 9,620 | 100% | - | - | 9,620 | 100% | | | | | | | | | | III. Total | 9,620 | 100% | - | - | 9,620 | 100% | As at 31 December 2023, the number of shares which the Company issued and fully paid at RMB 1 per share was 9,620 million. As at 31 December 2022, the number of shares which the Company issued and fully paid at RMB 1 per share was 9,620 million. 33. Capital reserves | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Capital premium | | 79,008 | | 79,008 | | Impact of capital injection to subsidiaries, etc. | | 2,105 | | 2,105 | | Impact of equity transactions with non-controlling interests | | (131) | | (131) | | Impact of other changes in the equity of investees accounted for using the equity method | | 351 | | 66 | | Redistribution of cumulative changes in fair value of available-for-sale financial assets when purchasing equity from non-controlling interests | | (1,413) | | (1,413) | | Impact of phased business combinations | | 28 | | 28 | | Others | | 2 | | 2 | | | | | | | | Total | | 79,950 | | 79,665 | Capital reserves mainly represents share premiums from issuance of shares and the deemed disposal of an equity interest in CPIC Life to certain foreign investors in December 2005, and the subsequent repurchase of the shares mentioned above in the same subsidiary by the Company in April 2007. In addition, the Company issued GDRs and listed on the LSE in 2020 which also increased the capital reserves. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 34. Surplus reserves | | | | | | | --- | --- | --- | --- | --- | | | | | | Statutory surplus reserve (the ��SSR��) | | | | | | | | 1 January 2022 | | | | 5,114 | | Appropriations | | | | - | | 31 December 2022 and 31 December 2023 | | | | 5,114 | 35. General reserves In accordance with relevant regulations, general risk provisions should be made to cover catastrophic risks or losses as incurred by companies engaged in the insurance, banking, trust, securities, futures, fund management, leasing and financial guarantee businesses. Companies undertaking insurance activities are required to set aside 10% of their net profit to general reserves, while companies undertaking asset management activities are required to set aside 10% of their management fee income to the risk reserves until the balance reaches 1% of the balance of products under management. In accordance with relevant regulations, as part of the profit distribution and as presented in their annual financial statements, the Group��s subsidiaries engaged in the above-mentioned businesses make appropriations to their general reserves on the basis of their annual net profit, year-end risk assets or management fee income from products under management where appropriate. Such general reserves cannot be used for dividends distribution or conversion to capital. | | | | | | | --- | --- | --- | --- | --- | | | | | | General reserves | | | | | | | | 31 December 2021 | | | | 19,521 | | Changes in accounting policy of new insurance standard | | | | (2,669) | | | | | | | | 1 January 2022 | | | | 16,852 | | Appropriations | | | | 4,219 | | | | | | | | 31 December 2022 | | | | 21,071 | | Changes in accounting policy of new financial instruments standards | | | | 1,621 | | | | | | | | 1 January 2023 | | | | 22,692 | | Appropriations | | | | 2,770 | | | | | | | | 31 December 2023 | | | | 25,462 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 36. Profit distribution and retained profits According to the Articles of Association of the Company, the amount of retained profits available for distribution of the Company should be the amount determined under CASs, or determined under CASs if permissible by local rules where the Company is listed. According to the Articles of Association of the Company and applicable laws and regulations, the Company��s profit distribution is made the following order: (1) Making up for losses brought forward from prior years; (2) Appropriating to SSR at 10% of the net profit; (3) Making appropriation to the discretionary surplus reserve (��DSR��) in accordance with the resolution of the general shareholders�� meeting; and (4) Paying dividends to shareholders. The Company can cease the appropriation to SSR when SSR accumulates to more than 50% of the registered capital. The SSR may be used to make up for losses, if any, and, subject to the approval of the general shareholders�� meeting, may also be converted into capital to make to fund an issue of new shares to shareholders on a proportionate basis. However, the conversion of SSR to capital should not bring the retained SSR to below 25% of the registered capital. The balance of SSR reached 50% of the respective registered capital. The Company does not set aside SSR in 2023. After making necessary appropriations to the SSR, the Company and its subsidiaries in the PRC may also appropriate a portion of their net profit to the DSR upon the approval of the shareholders in general meetings. Subject to the approval of the shareholders, the DSR may be used to offset accumulated losses, if any, and may be converted into capital. The Company does not set aside DSR in 2023. Pursuant to the resolution of the 2nd meeting of the 10th Board of Directors of the Company held on 28 March 2024, a final dividend of approximately RMB 9,813 million (equivalent to annual cash dividend of RMB 1.02 per share (including tax)) was proposed. The profit distribution plan is subject to the approval of the general shareholders�� meeting. Of the Group��s retained profits in the consolidated financial statements, RMB 23,929 million as at 31 December 2023 (31 December 2022: RMB 20,666 million) represents the Company��s share of its subsidiaries�� surplus reserve fund. According to the resolution of the 27th meeting of the 7th Board of Directors of CPIC Property on April 21 2023, CPIC Property proposed to appropriate RMB 2,522 million of DSR from retained profits. The proposal was approved by the general meeting of shareholders of CPIC Property on 18 May 2023. 37. Non-controlling interests | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | CPIC Property | | 827 | | 773 | | CPIC Life\* | | 14,029 | | 1,243 | | Changjiang Pension | | 1,536 | | 1,523 | | CPIC Funds | | 589 | | 554 | | PAAIC | | 998 | | 964 | | Pacific Care Home at Dali | | 139 | | 138 | | | | | | | | Total | | 18,118 | | 5,195 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 37. Non-controlling interests (continued) \* On 5 December 2023, CPIC Life issued an undated capital bond with a total face value of RMB 12,000 million in the interbank market. The duration of the bond is aligned with the duration of CPIC Life considered as going concern. CPIC Life shall have the right to redeem the bond in whole or in part at face value five years after the date of issue on each interest payment date (including the fifth interest payment date after the date of issue). As of 31 December 2023, non-controlling interests of the Group included RMB 12,029 million of perpetual bonds issued by CPIC Life. The perpetual bonds are classified as an equity instrument and presented as non-controlling interests in the Group's consolidated financial statements. 38. Insurance revenue | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | **Insurance contracts not measured under the premium allocation approach** | | | | | | Amounts relating to the changes in the liability for remaining coverage | | 61,214 | | 59,588 | | Amortisation of contractual service margin | | 26,202 | | 27,870 | | Changes in the risk adjustment for non-financial risk | | 1,274 | | 1,175 | | Insurance service expenses expected to be incurred in the period | | 31,983 | | 29,166 | | Experience adjustments for premium receipts relating to current and past services | | 1,755 | | 1,377 | | Amortisation of insurance acquisition cash flows | | 21,752 | | 21,722 | | **Subtotal of insurance contracts not measured under the premium allocation approach** | | 82,966 | | 81,310 | | **Insurance contracts measured under the premium allocation approach** | | 183,201 | | 168,435 | | | | | | | | **Total of insurance revenue** | | 266,167 | | 249,745 | 39. Interest income (only applicable for 2023) | | | | | | | --- | --- | --- | --- | --- | | | | | | 2023 | | | | | | | | Interest income of debt investments at fair value through other comprehensive income | | | | 45,764 | | Interest income of term deposits | | | | 7,480 | | Interest income of financial assets at amortised cost | | | | 4,069 | | Interest income of restricted statutory deposits | | | | 277 | | Interest income of securities purchased under agreements to resell | | | | 224 | | Others | | | | 448 | | | | | | | | Total | | | | 58,262 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 40. Investment income | | | | | | | --- | --- | --- | --- | --- | | | | | | 2023 | | | | | | | | Realised gains/(losses) | | | | | | Financial instruments held for trading and other financial instruments at fair value through profit or loss | | | | (12,078) | | Debt investments at fair value through other comprehensive income | | | | 712 | | Net gains on disposal of derivatives | | | | 55 | | | | | | | | Gains during the holding period | | | | | | Financial instruments held for trading and other financial instruments at fair value through profit or loss | | | | 13,981 | | Dividend income from equity investments at fair value through other comprehensive income that terminated | | | | 351 | | Dividend income from equity investments at fair value through other comprehensive income that still hold | | | | 4,418 | | | | | | | | Share of losses of associates and joint ventures | | | | (386) | | | | | | | | Total | | | | 7,053 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 40. Investment income (continued) | | | | | | | --- | --- | --- | --- | --- | | | | | | 2022 | | | | | | | | Net gains on disposal of stock investments | | | | 1,093 | | Net gains on disposal of fund investments | | | | 269 | | Net gains on disposal of bond investments | | | | 476 | | Interest on securities purchased under agreements to resell | | | | 173 | | Interest income from debt investments | | | | 51,648 | | Interest income from other fixed-interest investments | | | | 9,959 | | Fund dividend income | | | | 2,570 | | Stock dividend income | | | | 4,707 | | Income from other equity investments | | | | 6,253 | | Share of profits of associates and joint ventures | | | | 401 | | Others | | | | (39) | | | | | | | | Total | | | | 77,510 | As at the balance sheet date, there was no significant restriction on the repatriation of the Group's investment income. (1) Interest and dividend income | | | | | | --- | --- | --- | --- | | | | | 2022 | | | | | | | Financial assets at fair value through profit or loss | | | | | - Fixed maturity investments | | | 55 | | - Funds | | | 35 | | - Other equity investments | | | 525 | | | | | | | Sub-total | | | 615 | | | | | | | Held-to-maturity financial assets | | | | | - Fixed maturity investments | | | 19,684 | | | | | | | Loans and receivables | | | | | - Fixed maturity investments | | | 30,379 | | | | | | | Available-for-sale financial assets | | | | | - Fixed maturity investments | | | 11,662 | | - Funds | | | 2,535 | | - Stocks | | | 4,709 | | - Other equity investments | | | 5,706 | | | | | | | Sub-total | | | 24,612 | | | | | | | Total | | | 75,290 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 40. Investment income (continued) (2) Realised gains | | | | | | --- | --- | --- | --- | | | | | 2022 | | | | | | | Financial assets at fair value through profit or loss | | | | | - Fixed maturity investments | | | 86 | | - Funds | | | 3 | | - Stocks | | | 3 | | - Other equity investments | | | 8 | | - Derivative instruments | | | (41) | | | | | | | Sub-total | | | 59 | | | | | | | Available-for-sale financial assets | | | | | - Fixed maturity investments | | | 390 | | - Funds | | | 266 | | - Stocks | | | 1,090 | | - Other equity investments | | | 14 | | | | | | | Sub-total | | | 1,760 | | | | | | | Total | | | 1,819 | 41. Losses arising from changes in fair value | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Bond investments | | (3,591) | - | 178 | | Fund investments | | 2,143 | - | (21) | | Derivatives | | 193 | - | 69 | | Stock investments | | 13,940 | - | 3 | | Others | | (973) | - | (168) | | | | - | - | - | | Total | | 11,712 | - | 61 | 42. Other operating income | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Income from asset management fee | | 2,022 | | 2,187 | | Rental income from investment properties | | 727 | | 703 | | Others | | 993 | | 764 | | | | | | | | Total | | 3,742 | | 3,654 | 43. Gains on disposal of assets | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Gains on disposal of fixed assets | | 23 | | 24 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 44. Total investment results of insurance business segment and net insurance finance result | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | **Investment** **return** | | | | | | Interest income | | 56,071 | | - | | Investment income | | 7,048 | | 76,840 | | Losses arising from changes in fair value | | (12,898) | | (119) | | Impairment losses on financial assets | | (2,007) | | - | | Impairment losses on other assets | | (225) | | - | | Asset impairment losses | | - | | (5,694) | | **Total amounts recognised in the profit or loss** | | 47,989 | | 71,027 | | **Total amounts recognised in other** **comprehensive income** | | 51,795 | | (32,873) | | **Total investment** **return** | | 99,784 | | 38,154 | | | | | | | | **Insurance finance income/(expenses) from insurance contracts issued** | | | | | | Changes in fair value of underlying items of insurance contracts with direct participation features | | (40,179) | | (13,594) | | Interest accreted on insurance contracts and effect of changes in interest rates and other financial assumptions | | (55,912) | | (46,225) | | Net foreign exchange gains/(losses) | | 4 | | (34) | | **Total insurance finance income/(expenses)** **from insurance contracts issued** | | (96,087) | | (59,853) | | Represented by: | | | | | | Amounts recognised in profit or loss | | (46,741) | | (58,074) | | Amounts recognised in other comprehensive income/(loss) | | (49,346) | | (1,779) | | | | | | | | **Reinsurance finance income/(expenses) from reinsurance contracts held** | | 1,169 | | 1,108 | | Represented by: | | | | | | Amounts recognised in profit or loss | | 1,174 | | 1,108 | | Amounts recognised in other comprehensive income/(loss) | | (5) | | - | | | | | | | | **Investment results** | | 4,866 | | (20,591) | | Represented by: | | | | | | Amounts recognised in profit or loss | | 2,422 | | 14,061 | | Amounts recognised in other comprehensive income/(loss) | | 2,444 | | (34,652) | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 45. Interest expenses | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Securities sold under agreements to repurchase | | 1,851 | | 1,941 | | Debt | | 496 | | 508 | | Interest expenses on lease liabilities | | 93 | | 101 | | Others | | 188 | | 202 | | | | | | | | Total | | 2,628 | | 2,752 | 46. Taxes and surcharges | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | City maintenance and construction tax | | 386 | | 380 | | Educational surcharge | | 283 | | 280 | | Others | | 514 | | 461 | | | | | | | | Less: Insurance acquisition cash flows incurred in the year | | (690) | | (636) | | Other insurance fulfilment cash flows incurred in the year | | (48) | | (61) | | | | | | | | Total | | 445 | | 424 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 47. Operating and administrative expenses The Group��s operating and administrative fee details by items are as follows: | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Payroll and welfare benefits | | 23,950 | | 23,589 | | Advertising expenses (including business publicity expenses) | | 6,777 | | 5,951 | | Professional service fees | | 5,151 | | 3,900 | | Outsourcing service fees | | 2,727 | | 2,235 | | General office expenses | | 2,566 | | 2,528 | | Insurance security funds withdrawal | | 2,159 | | 1,335 | | Prevention expenses | | 1,644 | | 1,755 | | Depreciation of right-of-use assets | | 1,299 | | 1,337 | | Depreciation of fixed assets | | 1,265 | | 1,343 | | Amortisation of intangible assets | | 1,142 | | 940 | | Property management fees | | 806 | | 808 | | Labour costs | | 645 | | 720 | | Consulting fees | | 538 | | 629 | | Amortisation of other long-term assets | | 449 | | 423 | | Entrusted management fees | | 261 | | 392 | | Travel expenses | | 199 | | 106 | | Compulsory automobile rescue fund | | 158 | | 123 | | Transportation expenses | | 85 | | 87 | | Rent for short-term and low-value asset leases | | 77 | | 84 | | Audit fee | | 35 | | 25 | | Others | | 3,392 | | 4,464 | | | | | | | | Subtotal | | 55,325 | | 52,774 | | | | | | | | Less: Insurance acquisition cash flows incurred in the year | | (36,227) | | (35,481) | | Other insurance fulfilment cash flows incurred in the year | | (11,701) | | (11,089) | | | | | | | | Total | | 7,397 | | 6,204 | 48. Impairment losses on financial assets (only applicable for 2023) | | | | | | | --- | --- | --- | --- | --- | | | | | | 2023 | | | | | | | | Impairment loss of debt investments at fair value through other comprehensive income | | | | 1,324 | | Impairment loss of financial assets at amortised cost | | | | 563 | | Impairment loss of term deposits | | | | (16) | | Impairment loss of others | | | | 142 | | | | | | | | Total | | | | 2,013 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 49. Asset impairment losses (only applicable for 2022) | | | | | | | --- | --- | --- | --- | --- | | | | | | 2022 | | | | | | | | Provision for available-for-sale financial assets impairment, net | | | | 4,258 | | Provision for held-to-maturity financial assets impairment, net | | | | (173) | | Provision for investments classified as loans and receivables impairment, net | | | | 941 | | Provision for bad debts, net | | | | 3 | | Provision for long-term equity investments impairment | | | | 274 | | | | | | | | Total | | | | 5,303 | 50. Other operating expenses | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Interest expenses for policyholders�� investment contract liabilities | | 55 | | 46 | | Depreciation of investment properties | | 473 | | 448 | | Others | | 620 | | 542 | | | | | | | | Total | | 1,148 | | 1,036 | 51. Non-operating income | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Custody fees of entrusted operation | | 62 | | 55 | | Government subsidies unrelated to ordinary activities | | 6 | | 13 | | Others | | 68 | | 79 | | | | | | | | Total | | 136 | | 147 | 52. Non-operating expenses | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Charitable donations and commercial sponsorship | | 73 | | 55 | | Government fines & confiscations and liquidated damages | | 37 | | 32 | | Overdue tax payment and fines | | 4 | | 5 | | Others | | 81 | | 112 | | | | | | | | Total | | 195 | | 204 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 53. Income tax | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Current income tax | | 2,756 | | 5,049 | | Deferred income tax | | 1,334 | | (788) | | | | | | | | Total | | 4,090 | | (4,261) | The relationship between income tax expenses and total profit is shown below: | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Total profit | | 32,001 | | 42,483 | | | | | | | | Taxes calculated at the statutory tax rate of 25% | | 8,000 | | 10,621 | | | | | | | | Income tax adjustment for prior years | | (241) | | (208) | | Non-taxable income | | (7,369) | | (6,779) | | Non-deductible expenses | | 450 | | 334 | | Others | | 3,250 | | 293 | | | | | | | | Income tax calculated at applicable tax rates | | 4,090 | | (4,261) | The income tax of the Group is provided at applicable tax rate in accordance with the estimated taxable income obtained in Mainland China. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries/jurisdictions in which the Group operates, based on existing legislation, interpretations and practices in respect thereof. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 54. Other comprehensive income/(loss) | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Other comprehensive income in balance sheet | | | | Other comprehensive income/(loss) in income statement | | | | | | | | | 1 January 2023 | Attributable to the Company - net of tax | 31 December 2023 | | Amount incurred before income tax | Less: Recognised in  other comprehensive income/(loss) in previous period but transferred to profit or loss in current year | Less: Recognised in  other comprehensive income in previous period but transferred to retained profits in current year | Less: Income tax expenses | Attributable to the Company - net of tax | Attributable to the non-controlling interests - net of tax | | | | | | | | | | | | | | | Other comprehensive income/(loss) that will not be reclassified to profit or loss | | (122) | 385 | 263 | | 533 | - | (6) | (133) | 385 | 9 | | Changes in the fair value of equity investments at fair value through other comprehensive income | | 593 | 1,060 | 1,653 | | 1,452 | - | (5) | (363) | 1,060 | 24 | | Insurance finance income/(expenses) for insurance contracts issued that will not be reclassified to profit or loss | | (715) | (675) | (1,390) | | (919) | - | (1) | 230 | (675) | (15) | | | | | | | | | | | | | | | Other comprehensive income/(loss) that will be reclassified to profit or loss | | 6,592 | 1,137 | 7,729 | | 846 | 740 | - | (434) | 1,137 | 15 | | Share of other comprehensive income/(loss) that will be reclassified to profit or loss of investees accounted for using the equity method | | (47) | (53) | (100) | | (72) | - | - | 18 | (53) | (1) | | Changes in the fair value of debt instruments at fair value through other comprehensive income | | 42,188 | 35,972 | 78,160 | | 49,445 | (603) | - | (12,250) | 35,972 | 620 | | Changes in provisions for credit risks of debt instruments at fair value through other comprehensive income | | 2,136 | 909 | 3,045 | | 1,316 | (83) | - | (308) | 909 | 16 | | Exchange differences on translation of foreign operations | | 45 | 15 | 60 | | 15 | - | - | - | 15 | - | | Insurance finance income/(expenses) for insurance contracts issued that will be reclassified to profit or loss | | (37,730) | (35,701) | (73,431) | | (49,853) | 1,426 | - | 12,106 | (35,701) | (620) | | Insurance finance income/(expenses) for reinsurance contracts held that will be reclassified to profit or loss | | - | (5) | (5) | | (5) | - | - | - | (5) | - | | | | | | | | | | | | | | | Total | | 6,470 | 1,522 | 7,992 | | 1,379 | 740 | (6) | (567) | 1,522 | 24 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 54. Other comprehensive income/(loss) (continued) | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Other comprehensive income in balance sheet | | | | Other comprehensive income/(loss) in income statement | | | | | | | | | 1 January 2022 | Attributable to the Company - net of tax | 31 December 2022 | | Amount incurred before income tax | Less: Transferred from other comprehensive income/(loss) in current year | Amount recognised in impairment loss of available-for-sale financial assets in current year | Less: Income tax expenses | Attributable to the Company - net of tax | Attributable to Non-controlling interests - net of tax | | | | | | | | | | | | | | | Other comprehensive income/(loss) that will be reclassified to profit or loss | | | | | | | | | | | | | Share of other comprehensive income/(loss) that will be reclassified to profit or loss of investees accounted for using the equity method | | - | (47) | (47) | | (47) | - | - | - | (47) | - | | Gains or losses arising from changes in fair value of available-for-sale financial assets | | 34,182 | (23,551) | 10,631 | | (63,153) | 26,843 | 4,258 | 8,044 | (23,551) | (457) | | Exchange differences on translation of foreign operations | | (52) | 44 | (8) | | 46 | - | - | - | 44 | 2 | | Insurance finance income/(expenses) for insurance contracts issued that will be reclassified to profit or loss | | (20,826) | (1,331) | (22,157) | | 69 | 832 | (2,680) | 435 | (1,331) | (13) | | | | | | | | | | | | | | | Total | | 13,304 | (24,885) | (11,581) | | (63,085) | 27,675 | 1,578 | 8,479 | (24,885) | (468) | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 55. Earnings per share if !supportLists(1) endif Basic earnings per share Basic earnings per share was calculated by dividing the net profit of the current period attributable to the shareholders of the parent by the weighted average number of ordinary shares issued by the parent. | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Consolidated net profit for the year attributable to shareholders of the parent | | 27,257 | | 37,381 | | | | | | | | Weighted average number of ordinary shares in issue (million shares) | | 9,620 | | 9,620 | | | | | | | | Basic earnings per share (RMB Yuan) | | 2.83 | | 3.89 | if !supportLists(2) endif Diluted earnings per share The Company had no dilutive potential ordinary shares in 2023 and 2022. **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 56. Notes to items in consolidated statement of cash flow (1) Significant payments related to other operating activities are listed below: | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Surrenders | | 23,122 | | 21,434 | | Advertising expenses (including business publicity expenses) | | 6,777 | | 5,951 | | Professional service fees | | 5,151 | | 3,900 | | General office expenses | | 2,566 | | 2,528 | | Outsourcing service fees | | 2,727 | | 2,235 | | Prevention expenses | | 1,644 | | 1,755 | | Consulting fees | | 573 | | 654 | | Property management fees | | 806 | | 808 | | Labour costs | | 645 | | 720 | | Entrusted management fees | | 261 | | 392 | if !supportLists(2) endifSignificant receipts related to other financing activities are listed below: | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Cash received related to non-controlling interests of consolidated structured entities, net | | 1,649 | | 11,672 | | Cash proceeds from the issue of asset-backed securities | | 9,000 | | 713 | if !supportLists(3) endifSignificant payments related to other financing activities are listed below: | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Cash paid for principal elements of lease payments | | 1,980 | | 1,686 | 57. Cash and cash equivalents | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Cash: | | | | | | Cash at bank and on hand | | 2 | | - | | Cash at bank readily available for payments | | 29,833 | | 31,836 | | Other cash balances readily available for payments | | 1,097 | | 849 | | Cash equivalents: | | | | | | Investments with an initial term within 3 months | | 2,808 | | 21,124 | | | | | | | | Total | | 33,740 | | 53,809 | **VII.****NOTES TO THE FINANCIAL STATEMENTS (continued)** 58. Supplementary information to the cash flow statements if !supportLists(1) endifReconciliation of net profit to cash flows from operating activities: | | | | | | --- | --- | --- | --- | | | 2023 | | 2022 | | | | | | | Net profit | 27,911 | | 38,222 | | Add:  Impairment losses on financial assets | 2,013 | | - | | Impairment losses on other assets | 253 | | - | | Asset impairment losses | - | | 5,303 | | Depreciation of fixed assets and investment properties | 1,857 | | 1,883 | | Depreciation of right-of-use assets | 1,328 | | 1,371 | | Amortisation of intangible assets | 1,196 | | 980 | | Amortisation of other long-term assets | 454 | | 428 | | Net gains on disposal of fixed assets, intangible assets and other long-term assets | (23) | | (24) | | Investment income | (7,053) | | (77,510) | | Interest income | (58,262) | | - | | Losses arising from changes in fair value | 11,712 | | 61 | | Interest expenses | 2,628 | | 2,752 | | Exchange gains | (159) | | (1,085) | | Deferred income tax | 1,334 | | (788) | | Changes in insurance contract liabilities/ assets, net | 158,395 | | 176,574 | | Changes in reinsurance contract liabilities/ assets, net | (7,363) | | (1,157) | | Increase in operating receivables | (1,432) | | (798) | | Increase in operating payables | 3,074 | | 2,452 | | | | | | | Net cash flows from operating activities | 137,863 | | 148,664 | (2) Net increase in cash and cash equivalents: | | | | | | --- | --- | --- | --- | | | 2023 | | 2022 | | | | | | | Cash at the end of year | 30,932 | | 32,685 | | Less: Cash at the beginning of year | (32,685) | | (32,195) | | Cash equivalents at the end of year | 2,808 | | 21,124 | | Less: Cash equivalents at the beginning of year | (21,124) | | (13,432) | | | | | | | Net (decrease)/ increase in cash and cash equivalents | (20,069) | | 8,182 | if !supportLists(3) endifThe changes in liabilities arising from financing activities are as follows: | | | | | | | --- | --- | --- | --- | --- | | | 2023 | | | | | | | | | | | | Bonds payable | Securities sold under agreements to repurchase | Lease liabilities | Others | | | | | | | | Balance at the beginning of year | 10,302 | 119,831 | 2,718 | 134 | | Cash activities | (508) | (5,863) | (1,980) | 8,113 | | Non-cash activities | 491 | 1,851 | 2,357 | 197 | | Balance at the end of year | 10,285 | 115,819 | 3,095 | 8,444 | **VIII.****SEGMENT INFORMATION** The Group presents segment information based on its major operating segments. For management purpose, the Group is organised into business units based on their products and services. Different operating segments provide products and services with different risks and rewards. The Group��s operating segments are listed as follows: if !supportLists· endifThe life and health insurance segment (mainly including CPIC Life, CPIC Health and CPIC Life (H.K.)) offers a wide range of life and health insurance in RMB and foreign currencies; if !supportLists· endifThe property and casualty insurance segment (including CPIC Property, PAAIC and CPIC H.K.) provides a wide range of property and casualty insurance in RMB and foreign currencies; if !supportLists· endifOther businesses segment mainly provides corporation management and asset management services, etc. Intersegment sales and transfers are measured based on the actual transaction price. More than 99% of the Group��s revenue is derived from its operations in Mainland China. More than 99% of the Group��s assets are located in Mainland China. In 2023, the scale premium of the top five external customers amounted to 0.46% (in 2022: 0.54%) of the Group��s total scale premium. **VIII.****SEGMENT INFORMATION (continued)** | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | 2023 | | | | | | | Items | Life and health insurance | Property and casualty insurance | Others | Eliminations | Total | | | | | | | | | | | Insurance revenue | 87,217 | 179,488 | - | (538) | 266,167 | | | Interest income | 50,297 | 5,422 | 2,556 | (13) | 58,262 | | | Investment income | 6,474 | 1,148 | 10,031 | (10,600) | 7,053 | | | Including: Share of profits/(losses) of associates and joint ventures | 9 | 19 | (395) | (19) | (386) | | | Other income | 24 | 84 | 143 | - | 251 | | | Gains/(Losses) arising from changes in fair value | (12,277) | (481) | 1,053 | (7) | (11,712) | | | Exchange gains | 22 | 7 | 130 | - | 159 | | | Other operating income | 1,425 | 247 | 8,716 | (6,646) | 3,742 | | | Gains/(Losses) on disposal of assets | 25 | 2 | (4) | - | 23 | | | | | | | | | | | Operating income | 133,207 | 185,917 | 22,625 | (17,804) | 323,945 | | | | | | | | | | | Insurance service expenses | (59,194) | (172,454) | - | 625 | (231,023) | | | Allocation of reinsurance premiums | (1,814) | (14,520) | - | 496 | (15,838) | | | Less: Recoveries of insurance service expenses from reinsurers | 1,160 | 13,680 | - | (441) | 14,399 | | | Insurance finance expenses for insurance contracts issued | (41,922) | (2,622) | - | (2,197) | (46,741) | | | Less: Reinsurance finance income for reinsurance contracts held | 670 | 529 | - | (25) | 1,174 | | | Others | (10,717) | (2,607) | (7,134) | 6,602 | (13,856) | | | | | | | | | | | Operating expenses | (111,817) | (177,994) | (7,134) | 5,060 | (291,885) | | | | | | | | | | | Operating profit | 21,390 | 7,923 | 15,491 | (12,744) | 32,060 | | | Add:  Non-operating income | 13 | 102 | 21 | - | 136 | | | Less: Non-operating expenses | (62) | (80) | (53) | - | (195) | | | | | | | | | | | Profit before tax | 21,341 | 7,945 | 15,459 | (12,744) | 32,001 | | | Less: Income tax | (1,896) | (1,446) | (747) | (1) | (4,090) | | | | | | | | | | | Net profit for the year | 19,445 | 6,499 | 14,712 | (12,745) | 27,911 | | **VIII.****SEGMENT INFORMATION (continued)** | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | 2023 | | | | | | | Items | Life and health insurance | Property and casualty insurance | Others | Eliminations | Total | | | | | | | | | | | Supplementary information: | | | | | | | | Capital expenditure | 865 | 1,348 | 2,594 | - | 4,807 | | | Depreciation and amortisation | 2,144 | 1,598 | 1,049 | - | 4,791 | | | Impairment losses on financial assets | 1,247 | 772 | (6) | - | 2,013 | | | | | | | | | | | As at 31 December 2023 | | | | | | | | Long-term equity investments | 105,822 | 230 | 2,732 | (85,600) | 23,184 | | | Financial assets\* | 1,730,738 | 133,180 | 146,721 | (1,286) | 2,009,353 | | | Insurance contract assets | - | 335 | - | - | 335 | | | Reinsurance contract assets | 13,378 | 27,660 | - | (1,284) | 39,754 | | | Term deposits | 133,197 | 24,487 | 7,817 | - | 165,501 | | | Others | 38,972 | 32,097 | 39,535 | (4,769) | 105,835 | | | Segment assets | 2,022,107 | 217,989 | 196,805 | (92,939) | 2,343,962 | | | | | | | | | | | Insurance contract liabilities | 1,748,571 | 125,266 | - | (1,217) | 1,872,620 | | | Bonds payable | - | 10,285 | - | - | 10,285 | | | Securities sold under agreements to repurchase | 102,584 | 5,228 | 8,007 | - | 115,819 | | | Others | 38,475 | 20,768 | 24,619 | (6,328) | 77,534 | | | Segment liabilities | 1,889,630 | 161,547 | 32,626 | (7,545) | 2,076,258 | | \*Financial assets include financial assets at fair value through profit or loss, derivative financial assets, financial assets at amortised cost, debt investments at fair value through other comprehensive income and equity investments at fair value through other comprehensive income. **VIII.****SEGMENT INFORMATION (continued)** | | | | | | | | --- | --- | --- | --- | --- | --- | | | 2022 | | | | | | Items | Life and health insurance | Property and casualty insurance | Others | Eliminations | Total | | | | | | | | | Insurance revenue | 89,601 | 160,519 | - | (375) | 249,745 | | Investment income | 70,612 | 8,093 | 10,883 | (12,078) | 77,510 | | Including: Share of profits/(losses) of associates and joint ventures | 557 | 54 | (189) | (21) | 401 | | Other income | 39 | 40 | 104 | - | 183 | | Gains/(Losses) arising from changes in fair value | (245) | (95) | 279 | - | (61) | | Exchange gains | 200 | 148 | 737 | - | 1,085 | | Other operating income | 1,527 | 206 | 7,694 | (5,773) | 3,654 | | Gains on disposal of assets | 2 | 2 | 20 | - | 24 | | | | | | | | | Operating income | 161,736 | 168,913 | 19,717 | (18,226) | 332,140 | | | | | | | | | Insurance service expenses | (61,307) | (153,058) | - | 377 | (213,988) | | Allocation of reinsurance premiums | (2,398) | (13,414) | - | 385 | (15,427) | | Less: Recoveries of insurance service expenses from reinsurers | 597 | 12,604 | - | (592) | 12,609 | | Insurance finance expenses for insurance contracts issued | (57,308) | (2,198) | - | 1,432 | (58,074) | | Less: Reinsurance finance income for reinsurance contracts held | 656 | 471 | - | (19) | 1,108 | | Others | (10,788) | (2,893) | (7,945) | 5,798 | (15,828) | | | | | | | | | Operating expenses | (130,548) | (158,488) | (7,945) | 7,381 | (289,600) | | | | | | | | | Operating profit | 31,188 | 10,425 | 11,772 | (10,845) | 42,540 | | Add:  Non-operating income | 32 | 104 | 11 | - | 147 | | Less: Non-operating expenses | (84) | (80) | (40) | - | (204) | | | | | | | | | Profit before tax | 31,136 | 10,449 | 11,743 | (10,845) | 42,483 | | Less: Income tax | (1,505) | (2,256) | (491) | (9) | (4,261) | | | | | | | | | Net profit for the year | 29,631 | 8,193 | 11,252 | (10,854) | 38,222 | **VIII.****SEGMENT INFORMATION (continued)** | | | | | | | | --- | --- | --- | --- | --- | --- | | | 2022 | | | | | | Items | Life and health insurance | Property and casualty insurance | Others | Eliminations | Total | | | | | | | | | Supplementary information: | | | | | | | Capital expenditure | 1,019 | 749 | 6,979 | - | 8,747 | | Depreciation and amortisation | 2,348 | 1,570 | 711 | - | 4,629 | | Asset impairment losses | 5,659 | 860 | (1,216) | - | 5,303 | | | | | | | | | As at 31 December 2022 | | | | | | | Long-term equity investments | 99,866 | 218 | 10,590 | (84,845) | 25,829 | | Financial assets\* | 1,396,703 | 118,074 | 139,221 | (636) | 1,653,362 | | Insurance contract assets | - | 305 | - | - | 305 | | Reinsurance contract assets | 12,988 | 21,346 | - | (1,129) | 33,205 | | Term deposits | 159,875 | 33,963 | 10,679 | - | 204,517 | | Other | 88,848 | 29,508 | 40,230 | (4,468) | 154,118 | | Segment assets | 1,758,280 | 203,414 | 200,720 | (91,078) | 2,071,336 | | | | | | | | | Insurance contract liabilities | 1,550,569 | 115,432 | - | (1,153) | 1,664,848 | | Reinsurance contract liabilities | - | 809 | - | - | 809 | | Bonds payable | - | 9,999 | - | - | 9,999 | | Securities sold under agreements to repurchase | 107,018 | 2,206 | 10,441 | - | 119,665 | | Other | 27,491 | 22,097 | 30,123 | (5,368) | 74,343 | | Segment liabilities | 1,685,078 | 150,543 | 40,564 | (6,521) | 1,869,664 | \*Financial assets include financial assets at fair value through profit or loss, derivative financial assets, held-to-maturity investments, available-for-sale financial assets and investments classified as loans and receivables. **IX.** **NOTES TO THE COMPANY��S FINANCIAL STATEMENTS** 1.Cash at bank and on hand | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2023 | | | | | | | Currency | Original currency | | Exchange rate | | RMB | | | | | | | | | | Bank deposits | RMB | 2,042 | | 1.00000 | | 2,042 | | | USD | 598 | | 7.08270 | | 4,235 | | | HKD | 9 | | 0.90622 | | 8 | | | | | | | | | | | Sub-total | | | | | 6,285 | | | | | | | | | | Other cash balances | RMB | 1 | | 1.00000 | | 1 | | | | | | | | | | Total | | | | | | 6,286 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2022 | | | | | | | Currency | Original currency | | Exchange rate | | RMB | | | | | | | | | | Bank deposits | RMB | 78 | | 1.00000 | | 78 | | | USD | 924 | | 6.96460 | | 6,434 | | | HKD | 102 | | 0.89327 | | 91 | | | | | | | | | | | Sub-total | | | | | 6,603 | | | | | | | | | | Other cash balances | RMB | 7 | | 1.00000 | | 7 | | | | | | | | | | Total | | | | | | 6,610 | As of 31 December 2023, the Company��s cash at bank and on hand deposited overseas amounted equivalent to RMB 2 million (31 December 2022: amounted equivalent to RMB 99 million). 2.Financial assets at fair value through profit or loss (only applicable for 2022) | | | | | --- | --- | --- | | | | 31 December 2022 | | | | | | Debt investments | | | | Corporate bonds | | 2 | | Total | | 2 | Financial assets at fair value through profit or loss are all financial assets held for trading, and there is no significant restriction on the realisation of investments. **IX.** **NOTES TO THE COMPANY��S FINANCIAL STATEMENTS (continued)** 3.Term deposits | | | | | | | --- | --- | --- | --- | --- | | Term to maturity | | 31 December 2023 | | 31 December 2022 | | | | | | | | Within 1 year (inclusive) | | 1,558 | | 4,699 | | 1 to 2 years (inclusive) | | 2,877 | | 1,500 | | 2 to 3 years (inclusive) | | 507 | | 2,800 | | 3 to 4 years (inclusive) | | - | | - | | 4 to 5 years (inclusive) | | 519 | | - | | | | | | | | Less: Impairment provisions | | (4) | | - | | | | | | | | Total | | 5,457 | | 8,999 | 4. Available-for-sale financial assets (only applicable for 2022) Available-for-sale financial assets are summarised by category as follows: | | | | | --- | --- | --- | | | | 31 December 2022 | | | | | | Debt investments | | | | Government bonds | | 4,101 | | Finance bonds | | 7,169 | | Corporate bonds | | 11,645 | | Wealth management products | | 394 | | Equity investments | | | | Funds | | 10,108 | | Stocks | | 1,115 | | Investments in other equity instruments | | 3,160 | | | | | | Total | | 37,692 | **IX.** **NOTES TO THE COMPANY��S FINANCIAL STATEMENTS (continued)** 4. Available-for-sale financial assets (only applicable for 2022) (continued) Related information of available-for-sale financial assets is analysed as follows: | | | | | --- | --- | --- | | | | 31 December 2022 | | | | | | Debt investments | | | | Fair value | | 23,309 | | Including: Amortised cost | | 22,900 | | Accumulated amount recognised in other comprehensive income/(loss) | | 545 | | Total impairment provisions | | (136) | | | | | | Equity investments | | | | Fair value | | 14,383 | | Including: Cost | | 14,356 | | Accumulated amount recognised in other comprehensive income/(loss) | | 183 | | Total impairment provisions | | (156) | | | | | | Total | | | | Fair value | | 37,692 | | Including: Amortised cost/Cost | | 37,256 | | Accumulated amount recognised in other comprehensive income/(loss) | | 728 | | Total impairment provisions | | (292) | 5.Investments classified as loans and receivables (only applicable for 2022) | | | | | --- | --- | --- | | | | 31 December 2022 | | | | | | Debt investments | | | | Debt investment plans | | 10,875 | | Wealth management products | | 4,668 | | | | | | Total | | 15,543 | **IX.** **NOTES TO THE COMPANY��S FINANCIAL STATEMENTS (continued)** 6.Financial assets at fair value through profit or loss (only applicable for 2023) | | | | | | | --- | --- | --- | --- | --- | | | | | | 31 December 2023 | | | | | | | | Listed | | | | 1,365 | | Unlisted | | | | 15,890 | | | | | | | | Total | | | | 17,255 | | | | | | | | Bonds | | | | 6,154 | | Government bonds | | | | 93 | | Finance bonds | | | | 6,059 | | Corporate bonds | | | | 2 | | Stocks | | | | 818 | | Funds | | | | 3,508 | | Investment in wealth management products | | | | 3,702 | | Unlisted equity shares investments | | | | 3,073 | | | | | | | | Total | | | | 17,255 | 7. Financial assets at amortised cost (only applicable for 2023) | | | | | | | --- | --- | --- | --- | --- | | | | | | 31 December 2023 | | | | | | | | Listed | | | | - | | Unlisted | | | | 12,655 | | | | | | | | Subtotal | | | | 12,655 | | | | | | | | Less: Impairment provisions | | | | (11) | | | | | | | | Net value | | | | 12,644 | | | | | | | | Debt investment plans | | | | 8,017 | | Investment trust | | | | 3,104 | | Others | | | | 1,534 | | | | | | | | Subtotal | | | | 12,655 | | | | | | | | Less: Impairment provisions | | | | (11) | | | | | | | | Net value | | | | 12,644 | **IX.** **NOTES TO THE COMPANY��S FINANCIAL STATEMENTS (continued)** 8. Debt investments at fair value through other comprehensive income (only applicable for 2023) | | | | | | | --- | --- | --- | --- | --- | | | | | | 31 December 2023 | | | | | | | | Listed | | | | 4,105 | | Unlisted | | | | 19,035 | | | | | | | | Total | | | | 23,140 | | | | | | | | Bonds | | | | 23,140 | | Government bonds | | | | 12,620 | | Finance bonds | | | | 1,731 | | Corporate bonds | | | | 8,789 | | | | | | | | Total | | | | 23,140 | | | | | | | | Including: | | | | | | Amortised cost | | | | 22,552 | | Accumulated changes in fair value | | | | 588 | As at 31 December 2023, the impairment provision for the Company��s debt investment at fair value through other comprehensive income is RMB 78 million. 9. Equity investments at fair value through other comprehensive income (only applicable for 2023) | | | | | | | --- | --- | --- | --- | --- | | | | | | 31 December 2023 | | | | | | | | Stocks | | | | 1,062 | | Perpetual bonds | | | | 322 | | Others | | | | 1,127 | | | | | | | | Total | | | | 2,511 | | | | | | | | Including: | | | | | | Cost | | | | 2,612 | | Accumulated changes in fair value | | | | (101) | The equity instruments at fair value through other comprehensive income, designated by the Company, are the non-trading equity investments with the primary objective of being held for a long time or obtain dividends during the holding period. For the year ended 31 December 2023, the Company disposed equity investments at fair value through other comprehensive income of RMB 109 million because of the optimisation of asset allocation and asset and liability management. Due to the sale of the above equity investments, RMB 9 million transferred from other comprehensive income to retained profits. For the year ended 31 December 2023, the received dividends from the above equity investments are disclosed in Note IX.16. **IX.** **NOTES TO THE COMPANY��S FINANCIAL STATEMENTS (continued)** 10.Long-term equity investments | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Subsidiaries | | | | | | CPIC Property | | 20,424 | | 20,424 | | CPIC Life | | 42,366 | | 42,366 | | CPIC Asset Management | | 1,360 | | 1,360 | | CPIC H.K. | | 240 | | 240 | | CPIC Real Estate | | 115 | | 115 | | CPIC Investment (H.K.) | | 21 | | 21 | | CPIC Online Services | | 200 | | 200 | | CPIC Health | | 3,081 | | 3,081 | | CPIC Technology | | 700 | | 700 | | | | | | | | Consolidated structured entities | | 2,310 | | 1,093 | | | | | | | | Associate | | | | | | Shanghai Health & Elderly Care Co.,Ltd. | | 295 | | 300 | | HTCP CAPITAL LPF | | 138 | | - | | | | | | | | Total | | 71,250 | | 69,900 | The Company does not have any other items that substantially constitute net investment in subsidiaries. **IX.** **NOTES TO THE COMPANY��S FINANCIAL STATEMENTS (continued)** 11. Investment properties | | | | | | --- | --- | --- | --- | | | | | Buildings | | | | | | | Cost: | | | | | 1 January 2022 | | | 4,454 | | Transfer from fixed assets, net | | | 532 | | | | | | | 31 December 2022 | | | 4,986 | | Transfer to fixed assets, net | | | (16) | | Transfer from intangible assets, net | | | 34 | | | | | | | 31 December 2023 | | | 5,004 | | | | | | | Accumulated depreciation: | | | | | 1 January 2022 | | | (1,462) | | Provision | | | (154) | | Transfer from fixed assets, net | | | (96) | | | | | | | 31 December 2022 | | | (1,712) | | Provision | | | (169) | | Transfer to fixed assets, net | | | 7 | | Transfer from intangible assets, net | | | (7) | | | | | | | 31 December 2023 | | | (1,881) | | | | | | | Carrying amount: | | | | | 31 December 2023 | | | 3,123 | | | | | | | 31 December 2022 | | | 3,274 | The fair values of investment properties of the Company as at 31 December 2023 amounted to RMB 6,582 million (31 December 2022: RMB 6,667 million), which were estimated by the Company based on the independent appraisers�� valuations. The Company leases part of its investment properties to CPIC Property, CPIC Life, Changjiang Pension, CPIC Senior Living Investment, CPIC Health, Pacific Insurance Agency and CPIC Technology, and charges rentals based on the areas occupied by the respective entities. These properties are categorised as fixed assets of the Group in the consolidated balance sheet. 12. Other assets | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Receivables from subsidiaries | | 273 | | 268 | | Improvements of right-of-use assets | | 52 | | 57 | | Dividends receivable | | 22 | | 63 | | Others | | 123 | | 176 | | | | | | | | Total | | 470 | | 564 | **IX****.****NOTES TO THE COMPANY��S FINANCIAL STATEMENTS (continued)** 13. Securities sold under agreements to repurchase | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Securities - bonds | | | | | | Inter-bank market | | 2,026 | | 2,919 | | Stock exchange | | - | | 1,000 | | | | | | | | Total | | 2,026 | | 3,919 | As at 31 December 2023, the Company��s bond investments of approximately RMB 2,110 million (31 December 2022: RMB 3,174 million) were pledged for inter-bank securities sold under agreements to repurchase. As at 31 December 2023, the Company has no standardised bonds were pledged for securities sold at stock exchange under agreements to repurchase (As at 31 December 2022, the pledged amount is RMB 1,000 million). 14.  Other liabilities | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Payables to subsidiaries | | 199 | | 277 | | Payables for construction and purchasing office buildings | | 6 | | 8 | | Others | | 573 | | 601 | | | | | | | | Total | | 778 | | 886 | 15. Capital reserves | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Capital premium | | 79,008 | | 79,008 | | Asset evaluation appreciation | | 301 | | 301 | | Others | | 3 | | 3 | | | | | | | | Total | | 79,312 | | 79,312 | **IX****.****NOTES TO THE COMPANY��S FINANCIAL STATEMENTS (continued)** 16. Investment income | | | | | | | --- | --- | --- | --- | --- | | | | | | 2023 | | | | | | | | Realised gains | | | | | | Financial instruments held for trading and other financial instruments at fair value through profit or loss | | | | 23 | | Debt investments at fair value through other comprehensive income | | | | 40 | | | | | | | | Gains during the holding period | | | | | | Financial instruments held for trading and other financial instruments at fair value through profit or loss | | | | 215 | | Dividend income from derecognised equity investments at fair value through other comprehensive income | | | | 3 | | Dividend income from equity investments at fair value through other comprehensive income held | | | | 106 | | Dividend income from subsidiaries | | | | 10,244 | | | | | | | | Share of losses of associates and joint ventures | | | | (26) | | | | | | | | Total | | | | 10,605 | | | | | | | | --- | --- | --- | --- | --- | | | | | | 2022 | | | | | | | | Net gains on sales of stock investments | | | | 143 | | Net gains on sales of bond investments | | | | 16 | | Net gains on sales of fund investments | | | | 93 | | Interest income from securities purchased under agreements to resell | | | | 11 | | Interest income from debt investments | | | | 1,677 | | Interest income from other fixed-interest investments | | | | 399 | | Stock dividend income | | | | 40 | | Fund dividend income | | | | 187 | | Income from other equity investments | | | | 28 | | Dividend income from subsidiaries | | | | 11,547 | | | | | | | | Total | | | | 14,141 | **IX****.****NOTES TO THE COMPANY��S FINANCIAL STATEMENTS (continued)** 17. Other comprehensive income/(loss) | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Other comprehensive income in balance sheet | | | | Other comprehensive income/(loss) in income statement | | | | | | | | 1 January 2023 | Attributable to the Company - net of tax | 31 December 2023 | | Amount incurred before income tax | Less: Recognised in other comprehensive income/(loss) in previous period but transferred to profit or loss in current year | Less: Recognised in  other comprehensive income in previous period but transferred to retained profits in current year | Less: Income tax expenses | Attributable to the Company - net of tax | | | | | | | | | | | | | | Other comprehensive income/(loss) that will not be reclassified to profit or loss | | (13) | (63) | (76) | | (75) | - | (9) | 21 | (63) | | Changes in the fair value of equity investments at fair value through other comprehensive income | | (13) | (63) | (76) | | (75) | - | (9) | 21 | (63) | | | | | | | | | | | | | | Other comprehensive income/(loss) that will be reclassified to profit or loss | | 402 | 97 | 499 | | 173 | (43) | - | (33) | 97 | | Changes in the fair value of debt instruments at fair value     through other comprehensive income | | 295 | 145 | 440 | | 237 | (43) | - | (49) | 145 | | Changes in provisions for credit risks of debt instruments at fair value through other comprehensive income | | 107 | (48) | 59 | | (64) | - | - | 16 | (48) | | | | | | | | | | | | | | Total | | 389 | 34 | 423 | | 98 | (43) | (9) | (12) | 34 | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | Other comprehensive income in balance sheet | | | | Other comprehensive income/(loss) in income statement | | | | | | | | 1 January 2022 | Attributable to the Company-net of tax | 31 December 2022 | | Amount incurred before income tax | Less: Transfer from other comprehensive income/(loss) in current year | Amount recognised in impairment loss of available-for-sale financial assets in current year | Less: Income tax expenses | Attributable to the Company-net of tax | | | | | | | | | | | | | | Other comprehensive income/(loss) that will be reclassified to profit or loss | | | | | | | | | | | | Gains or losses arising from changes in fair value of available-for-sale financial assets | | 1,354 | (808) | 546 | | (875) | (259) | 57 | 269 | (808) | **IX****.****NOTES TO THE COMPANY��S FINANCIAL STATEMENTS (continued)** 18. Supplementary information to the cash flow statements | | | --- | | (1) Reconciliation of net profit to cash flows from operating activities: | | | | | | | --- | --- | --- | --- | | | 2023 | | 2022 | | | | | | | Net profit | 10,980 | | 13,020 | | Add: Impairment losses on financial assets | (60) | | - | | Asset impairment losses | - | | 57 | | Depreciation of fixed assets and investment properties | 325 | | 304 | | Depreciation of right-of-use assets | 80 | | 70 | | Amortisation of intangible assets | 86 | | 105 | | Amortisation of other long-term assets | 33 | | 42 | | Investment income | (10,605) | | (14,141) | | Losses arising from changes in fair value | 434 | | - | | Interest income | (2,027) | | - | | Interest expenses | 27 | | 29 | | Exchange gains | (130) | | (738) | | Deferred income tax | (128) | | (28) | | Decrease in operating receivables | 15 | | 433 | | (Decrease)/Increase in operating payables | (17) | | 281 | | | | | | | Net cash flows used in operating activities | (987) | | (566) | | | | --- | | (2) Net increase in cash and cash equivalents: | | | | | | | --- | --- | --- | --- | | | 2023 | | 2022 | | | | | | | Cash at the end of year | 6,286 | | 6,610 | | Less: Cash at the beginning of year | (6,610) | | (5,261) | | Cash equivalents at the end of year | - | | - | | Less: Cash equivalents at the beginning of year | - | | (10) | | | | | | | Net (decrease)/increase in cash and cash equivalents | (324) | | 1,339 | **Ⅹ****.****RELATED PARTIES AND RELATED PARTY TRANSACTIONS** 1. Major related parties During the reporting period, the Company's major related parties comprise: if !supportLists(1) endif  Subsidiaries of the Company; if !supportLists(2) endif  Investors who exert significant influence on the Company; if !supportLists(3) endif  Joint ventures and associates of the Company; if !supportLists(4) endif   Key management personnel of the Company and close family members of such individuals; if !supportLists(5) endif  Enterprise annuity fund established by the Group; and if !supportLists(6) endif  Legal entities or other organisations other than the Company and its holding subsidiaries, in which the Company's associated natural persons serve as directors and senior management personnel. Except for being controlled by the state together with the Company, an enterprise that has no other related party relations with the Company is not a related party to the Company. 2. Related party relationships (1) Related parties controlled by the Company Related parties controlled by the Company are mainly subsidiaries of the Company. Their basic information and relationships with the Company are set out in Note VI. (2) The movements of registered capital and the percentages of the equity or shares held by the Company are as follows: | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Name of investee | Registered capital | | | | Shares or equity held by the Company | | | | | 1 January 2023 | Movements for the current year | 31 December 2023 | | 1 January 2023 | Movements for the current year | 31 December 2023 | | | | | | | | | | | CPIC Property | 19,470 | 478 | 19,948 | | 98.50% | - | 98.50% | | CPIC Life | 8,628 | - | 8,628 | | 98.29% | - | 98.29% | | CPIC Asset Management | 2,100 | - | 2,100 | | 99.67% | - | 99.67% | | Changjiang Pension | 3,000 | - | 3,000 | | 61.10% | - | 61.10% | | CPIC H.K. | HKD 250 million | - | HKD 250 million | | 100.00% | - | 100.00% | | CPIC Real Estate | 115 | - | 115 | | 100.00% | - | 100.00% | | CPIC Investment (H.K.) | HKD 200 million | - | HKD 200 million | | 99.71% | - | 99.71% | | City Island | USD 50,000 | - | USD 50,000 | | 98.29% | - | 98.29% | | Great Winwick Limited | USD 50,000 | - | USD 50,000 | | 98.29% | - | 98.29% | | Great Winwick (Hong Kong) Limited | HKD 10,000 | - | HKD 10,000 | | 98.29% | - | 98.29% | | Newscott Investments Limited | USD 50,000 | - | USD 50,000 | | 98.29% | - | 98.29% | | Newscott (Hong Kong) Investments Limited | HKD 10,000 | - | HKD 10,000 | | 98.29% | - | 98.29% | | Xin Hui Property | USD 15,600 thousand | - | USD 15,600 thousand | | 98.29% | - | 98.29% | | He Hui Property | USD 46,330  thousand | - | USD 46,330  thousand | | 98.29% | - | 98.29% | | CPIC Online Services | 200 | - | 200 | | 100.00% | - | 100.00% | | Tianjin Trophy | 354 | - | 354 | | 98.29% | - | 98.29% | | CPIC Senior Living Investment | 5,000 | - | 5,000 | | 98.29% | - | 98.29% | | CPIC Health | 3,600 | - | 3,600 | | 99.74% | - | 99.74% | | PAAIC | 1,080 | - | 1,080 | | 66.76% | - | 66.76% | | Pacific Medical & Healthcare | 1,000 | - | 1,000 | | 98.29% | - | 98.29% | | CPIC Funds | 150 | - | 150 | | 50.83% | - | 50.83% | | Pacific Insurance Agency | 50 | - | 50 | | 100.00% | - | 100.00% | | Chengdu Project Company | 1,000 | - | 1,000 | | 98.29% | - | 98.29% | | Hangzhou Project Company | 1,200 | - | 1,200 | | 98.29% | - | 98.29% | | Xiamen Project Company | 900 | - | 900 | | 98.29% | - | 98.29% | | Pacific Care Home at Chengdu | 60 | - | 60 | | 98.29% | - | 98.29% | **X.****RELATED PARTIES AND RELATED PARTY TRANSACTIONS (continued)** 2. Related party relationships (continued) (2) The movements of registered capital and the percentages of the equity or shares held by the Company are as follows (continued): | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Name of investee | Registered capital | | | | Shares or equity held by the Company | | | | | 1 January 2023 | Movements for the current year | 31 December 2023 | | 1 January 2023 | Movements for the current year | 31 December 2023 | | | | | | | | | | | Nanjing Project Company | 220 | 482 | 702 | | 98.29% | - | 98.29% | | Pacific Care Home at Dali | 608 | - | 608 | | 74.70% | - | 74.70% | | Shanghai (Putuo) Project Company | 250 | - | 250 | | 98.29% | - | 98.29% | | Pacific Care Home at Hangzhou | 60 | - | 60 | | 98.29% | - | 98.29% | | Wuhan Project Company | 980 | - | 980 | | 98.29% | - | 98.29% | | CPIC Capital | 100 | - | 100 | | 99.67% | - | 99.67% | | Pacific Care Home at Shanghai (Chongming) | 1,253 | - | 1,253 | | 98.29% | - | 98.29% | | Pacific Care Home at Shanghai (Putuo) | 30 | - | 30 | | 98.29% | - | 98.29% | | Borui Heming | 52 | - | 52 | | 98.29% | - | 98.29% | | CPIC Life (H.K.) | HKD 1,000 million | - | HKD 1,000 million | | 98.29% | - | 98.29% | | Qingdao Project Company | 227 | - | 227 | | 98.29% | - | 98.29% | | Pacific Care Home at Xiamen | 40 | - | 40 | | 98.29% | - | 98.29% | | Zhengzhou Project Company | 650 | - | 650 | | 98.29% | - | 98.29% | | Beijing Project Company | 800 | - | 800 | | 98.29% | - | 98.29% | | CPIC Technology | 700 | - | 700 | | 100.00% | - | 100.00% | | Xinbaoyu | 3,650 | - | 3,650 | | 98.46% | - | 98.46% | | CPIC Technology Wuhan | 100 | - | 100 | | 100.00% | - | 100.00% | | Sanya Project Company | 490 | - | 490 | | 98.29% | - | 98.29% | | Pacific Care Home at Nanjing | 30 | - | 30 | | 98.29% | - | 98.29% | | Pacific Care Home at Shanghai (Jing��an) | - | 426 | 426 | | - | 98.29% | 98.29% | | Pacific Care Home at Wuhan | - | 30 | 30 | | - | 98.29% | 98.29% | | Yuanshen Hospital | - | 160 | 160 | | - | 98.29% | 98.29% | **X.****RELATED PARTIES AND RELATED PARTY TRANSACTIONS (continued)** 2. Related party relationships (continued) (3) Other major related parties | | | | | --- | --- | --- | | Name of entity | | Relationship with the Company | | | | | | Hwabao Investments Co., Ltd. | | Shareholder with over 5% voting rights of the Company | | Shenergy (Group) Company Limited | | Shareholder with over 5% voting rights of the Company | | Shanghai State-Owned Assets Operation Co., Ltd. | | Shareholder with over 5% voting rights of the Company | | China Baowu Steel Group Corporation Limited | | Parent company of shareholders holding over 5% voting rights of the Company | | Shanghai International Group Co., Ltd. | | Parent company of shareholders holding over 5% voting rights of the Company | | Baoshan Iron & Steel Co., Ltd. | | Subsidiary of parent company of shareholders holding over 5% voting rights of the Company | | Baowu Carbon Technology Co., Ltd. | | Subsidiary of parent company of shareholders holding over 5% voting rights of the Company | | Shanghai Baoxin Software Co., Ltd. | | Subsidiary of parent company of shareholders holding over 5% voting rights of the Company | | Taiyuan Iron & Steel (Group) Co., Ltd. | | Subsidiary of parent company of shareholders holding over 5% voting rights of the Company | | Ningbo Baoxin Stainless Steel Co., Ltd. | | Subsidiary of parent company of shareholders holding over 5% voting rights of the Company | | Shanghai International Group Asset Management Co., Ltd. | | Subsidiary of parent company of shareholders holding over 5% voting rights of the Company | | Shanghai Gas Co., Ltd. | | Subsidiary of shareholders holding over 5% voting rights of the Company | | Shenergy Company Limited | | Subsidiary of shareholders holding over 5% voting rights of the Company | | Shanghai LNG Company Ltd. | | Subsidiary of shareholders holding over 5% voting rights of the Company | | Binjiang-Xiangrui | | Joint venture of the Company | | Ruiyongjing Real Estate | | Joint venture of the Company | | Shanghai Juche Information Technology Co., Ltd. (��Juche��) | | Associate of the Company | | Zhongdao Automobile Rescue Industry Co., Ltd. (��Zhongdao��) | | Associate of the Company | | Shanghai Shantai Healthcare and Technology Company Limited (��Shantai Healthcare��) | | Associate of the Company | | The Company��s enterprise annuity plan | | Enterprise annuity fund established by the Group | | CPIC Property��s enterprise annuity plan | | Enterprise annuity fund established by the Group | | CPIC Life��s enterprise annuity plan | | Enterprise annuity fund established by the Group | | CPIC Asset Management��s enterprise annuity plan | | Enterprise annuity fund established by the Group | | CPIC Online Services�� enterprise annuity plan | | Enterprise annuity fund established by the Group | | CPIC Health��s enterprise annuity plan | | Enterprise annuity fund established by the Group | | CPIC Senior Living Investment��s enterprise annuity plan | | Enterprise annuity fund established by the Group | | PAAIC��s enterprise annuity plan | | Enterprise annuity fund established by the Group | | CPIC Real Estate��s enterprise annuity plan | | Enterprise annuity fund established by the Group | | Pacific Medical & Healthcare��s enterprise annuity plan | | Enterprise annuity fund established by the Group | | CPIC Fund��s enterprise annuity plan | | Enterprise annuity fund established by the Group | | Pacific Insurance Agency enterprise annuity plan | | Enterprise annuity fund established by the Group | | CPIC Technology enterprise annuity plan | | Enterprise annuity fund established by the Group | | CPIC Capital enterprise annuity plan | | Enterprise annuity fund established by the Group | | Hwabao WP Fund Management Co., Ltd. | | Company of which the Group��s related natural persons serve as directors or senior management personnel in the past 12 months | | Haitong Securities Co., Ltd. | | Company of which the Group��s related natural persons serve as directors or senior management personnel | | Orient Securities Company Limited (��Orient Securities��) | | Company of which the Group��s related natural persons serve as directors or senior management personnel | | Shanghai Haiyan Investment Management Co., Ltd. | | Company of which the Group��s related natural persons serve as directors or senior management personnel | | Swiss Reinsurance Company Ltd. | | Company of which the Group��s related natural persons serve as directors or senior management personnel | | Hwabao Trust Co., Ltd. | | Company of which the Group��s related natural persons serve as directors or senior management personnel | | Baosteel Group Finance Co., Ltd. | | Company of which the Group��s related natural persons serve as directors or senior management personnel | **X.****RELATED PARTIES AND RELATED PARTY TRANSACTIONS (continued)** 3. Major transactions with related parties 3.1 Major transactions between the Group and related parties (1)Sale of insurance contracts | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Baoshan Iron & Steel Co., Ltd. | | 18 | | 21 | | Shenergy Company Limited | | 9 | | - | | Orient Securities | | 4 | | - | | Shanghai LNG Company Ltd. | | 4 | | - | | Shanghai Gas Co., Ltd. | | 3 | | 2 | | Shanghai International Group Co., Ltd. | | 2 | | 2 | | Taiyuan Iron & Steel (Group) Co., Ltd. | | 2 | | 1 | | Shanghai Baoxin Software Co., Ltd. | | 2 | | 1 | | China Baowu Steel Group Corporation Limited | | 1 | | 5 | | Shanghai International Group Asset Management Co., Ltd. | | 1 | | 2 | | Shanghai State-Owned Assets Operation Co., Ltd. | | 1 | | 1 | | Baowu Carbon Technology Co., Ltd. | | 1 | | 1 | | Haitong Securities Co., Ltd. | | - | | 1 | | Ningbo Baoxin Stainless Steel Co., Ltd. | | - | | 1 | | | | | | | | Total | | 48 | | 38 | Sale of insurance contracts to shareholders who individually own more than 5% of voting rights of the Company and the shareholders�� parent company was RMB 4 million for the year ended 2023 (For the year ended 2022: RMB 8 million). The Group��s above related party transactions were entered into based on normal commercial terms during the normal course of insurance business. The proportion of the scale premium of related parties to the total scale premium of the Group��s was less than 1% for both year ended 2023 and 2022. Note: The transaction amount for the period was calculated since the entity was identified as a related party of the Group. (2) Fund subscription and redemption transactions | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Hwabao WP Fund Management Co., Ltd. | | 151 | | 366 | (3) Transaction of asset management products | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Haitong Securities Co., Ltd. | | 1,000 | | - | | Hwabao Trust Co., Ltd. | | 58 | | 37 | | Baosteel Group Finance Co., Ltd. | | - | | 1,030 | | | | | | | | Total | | 1,058 | | 1,067 | **X.****RELATED PARTIES AND RELATED PARTY TRANSACTIONS (continued)** 3. Major transactions with related parties (continued) 3.1 Major transactions between the Group and related parties (continued) (4) Transaction of selling and buying bonds | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Orient Securities | | 410 | | - | (5) Distribution of cash dividends | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Shenergy (Group) Company Limited | | 1,431 | | 1,386 | | Hwabao Investments Co., Ltd. | | 1,310 | | 1,284 | | Shanghai State-Owned Assets Operation Co., Ltd. | | 665 | | 634 | | Shanghai Haiyan Investment Management Co., Ltd. | | 519 | | 516 | | | | | | | | Total | | 3,925 | | 3,820 | Distribution of cash dividends to shareholders who individually own more than 5% of voting rights of the Company was RMB 3,406 million in 2023 (2022: RMB 3,304 million). (6) Premiums ceded to reinsurers (transaction amount) | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Swiss Reinsurance Company Ltd Note | | 3,163 | | 3,372 | (7) Expense recoveries from reinsurers (recovered amount) | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Swiss Reinsurance Company Ltd Note | | 1,074 | | 1,048 | (8) Claim recoveries from reinsurers (recovered amount) | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Swiss Reinsurance Company Ltd Note | | 2,075 | | 1,964 | Note: The transaction amount is based on the period during which the entity was identified as a related party of the Group during the reporting period. (9) Remuneration of key management | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Salary and other benefits | | 38 | | 37 | Note: For the remuneration of key management disclosed above, in accordance with the requirements of relevant policies, and after assessment and confirmation by the competent authorities, the supplemental disclosure of the remuneration of the relevant personnel during the relevant tenure in the Company in 2022, excluding the amount disclosed above, is as follows: the remuneration of the relevant personnel was RMB 8.712 million (before tax) (including director��s and supervisors�� remuneration disclosed in Note XIX 1). **X.****RELATED PARTIES AND RELATED PARTY TRANSACTIONS (continued)** 3. Major transactions with related parties (continued) 3.1 Major transactions between the Group and related parties (continued) (10) The related transactions between the Group and the established enterprise annuity fund during the years are as follows: | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Contribution to the enterprise annuity plan | | 700 | | 525 | (11) The major related transactions between the Group and joint ventures during the years are as follows: | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Binjiang-Xiangrui | | | | | | Fees for leasing office buildings of Binjiang-Xiangrui | | 86 | | 86 | | | | | | | | Ruiyongjing Real Estate | | | | | | Grant loans | | 601 | | 885 | (12) The major related transactions between the Group and associates during the years are as follows: | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Purchase service | | | | | | Juche | | 133 | | 130 | | Zhongdao | | 161 | | 127 | | Shantai Healthcare | | 106 | | 143 | | | | | | | | Total | | 400 | | 400 | **X.****RELATED PARTIES AND RELATED PARTY TRANSACTIONS (continued)** 3. Major transactions with related parties (continued) 3.2 Major transactions between the Company and related parties (1) The major related transactions between the Company and subsidiaries during the years are as follows: | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Purchase of insurance contracts | | | | | | CPIC Property | | 7 | | 10 | | | | | | | | Rental income from office building | | | | | | CPIC Property | | 96 | | 99 | | CPIC Technology | | 36 | | 28 | | CPIC Life | | 16 | | 20 | | Changjiang Pension | | 9 | | 9 | | CPIC Senior Living Investment | | 4 | | 4 | | CPIC Health | | 1 | | 1 | | | | | | | | Total | | 162 | | 161 | | | | | | | | Shared service centre fee | | | | | | CPIC Property | | 70 | | 131 | | CPIC Life | | 62 | | 121 | | CPIC Health | | 5 | | 6 | | CPIC Asset Management | | 5 | | 8 | | CPIC Technology | | 5 | | 21 | | CPIC Senior Living Investment | | 1 | | 1 | | CPIC Online Services | | 1 | | 1 | | CPIC Capital | | 1 | | 1 | | Pacific Medical & Healthcare | | 1 | | - | | Changjiang Pension | | - | | 1 | | | | | | | | Total | | 151 | | 291 | | | | | | | | IT/Collaboration service fee | | | | | | Changjiang Pension | | - | | 6 | | CPIC Asset Management | | - | | 5 | | | | | | | | Total | | - | | 11 | | | | | | | | Equipment rental fee | | | | | | CPIC Technology | | 45 | | - | | | | | | | | Asset management fee | | | | | | CPIC Asset Management | | 19 | | 62 | | | | | | | | Technology service fee | | | | | | CPIC Technology | | 260 | | 199 | | | | | | | | Commission fee | | | | | | CPIC Real Estate | | 12 | | 12 | | | | | | | | Medical examination fee | | | | | | CPIC Health | | 2 | | 4 | **X.****RELATED PARTIES AND RELATED PARTY TRANSACTIONS (continued)** 3. Major transactions with related parties (continued) 3.2 Major transactions between the Company and related parties (continued) if !supportLists(1) endifThe major related transactions between the Company and subsidiaries during the years are as follows (continued): | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Rental fee | | | | | | CPIC Property | | 5 | | 3 | | CPIC Life | | 2 | | 1 | | CPIC Real Estate | | - | | 5 | | | | | | | | Total | | 7 | | 9 | | | | | | | | Publicity expenses | | | | | | CPIC Technology | | 1 | | - | | | | | | | | Consulting service fee | | | | | | CPIC Asset Management | | 2 | | - | | | | | | | | Cash dividends received | | | | | | CPIC Life | | 5,852 | | 6,869 | | CPIC Property | | 4,027 | | 4,411 | | CPIC Asset Management | | 320 | | 240 | | CPIC H.K. | | 45 | | - | | | | | | | | Total | | 10,244 | | 11,520 | | | | | | | | Capital injection to subsidiaries | | | | | | CPIC Life | | - | | 2,458 | | | | | | | | Investment of setting up subsidiaries | | | | | | CPIC Technology | | - | | 700 | | | | | | | | Fixed assets transfer | | | | | | CPIC Technology | | - | | 9 | The rent of the office building charged by the Company from CPIC Property, CPIC Technology, CPIC Life, Changjiang Pension, CPIC Senior Living Investment and CPIC Health is determined at the price negotiated by both parties. The shared service centre fee charged by the Company from CPIC Property, CPIC Life, CPIC Health, CPIC Asset Management, CPIC Technology, CPIC Senior Living Investment, CPIC Online Services, CPIC Capital, Pacific Medical & Healthcare and Changjiang Pension, is based on the cost of the service provider and distributed in the proportion mutually agreed by both parties. The IT service or collaboration service fees charged by the Company from Changjiang Pension and CPIC Asset Management is determined at the price negotiated by both parties. The equipment rental fees charged by the Company from CPIC Technology are determined at the price negotiated by both parties. The asset management fee charged by CPIC Asset Management to the Company is determined by considering the type of entrusted assets, the size of the entrusted assets and the actual operating costs. The technology service fee charged by CPIC Technology to the Company is determined at the price negotiated by both parties. The commission fee charged by CPIC Real Estate to the Company is determined at the price negotiated by both parties. **X.****RELATED PARTIES AND RELATED PARTY TRANSACTIONS (continued)** 3. Major transactions with related parties (continued) 3.2 Major transactions between the Company and related parties (continued) if !supportLists(1) endifThe major related transactions between the Company and subsidiaries during the years are as follows (continued): The medical examination fee incurred between the Company and CPIC Health is determined at the price negotiated by both parties. The rent of the office building incurred among the Company, CPIC Property, CPIC Life and CPIC Real Estate is determined at the price negotiated by both parties. Publicity expenses charged by CPIC Technology to the Company are determined at the price negotiated by both parties. Consulting service fee charged by CPIC Asset Management to the Company is determined at the price negotiated by both parties. if !supportLists(2) endifThe major related transactions between the Company and other related parties of the Group during the years are as follows: | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | | | Fees for leasing office buildings | | | | | | Binjiang-Xiangrui | | 43 | | 42 | | Xinbaoyu | | 2 | | 1 | | | | | | | | Total | | 45 | | 43 | 4. Receivables from and payables to related parties if !supportLists(1) endifReceivables and payables between the Company and its subsidiaries are as follows: | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Dividends receivable | | | | | | CPIC H.K. | | - | | 45 | | | | | | | | Other receivables | | | | | | CPIC Property | | 136 | | 149 | | CPIC Life | | 90 | | 76 | | CPIC Technology | | 40 | | 36 | | CPIC Health | | 3 | | 2 | | CPIC Asset Management | | 2 | | 4 | | CPIC Senior Living Investment | | 1 | | 1 | | CPIC Online Services | | 1 | | 1 | | | | | | | | Total | | 273 | | 269 | | | | | | | | Other payables | | | | | | CPIC Technology | | 172 | | 207 | | CPIC Asset Management | | 22 | | 65 | | CPIC Real Estate | | 6 | | 5 | | | | | | | | Total | | 200 | | 277 | **X.****RELATED PARTIES AND RELATED PARTY TRANSACTIONS (continued)** 4. Receivables from and payables to related parties (continued) (2) Receivables and payables between the Group and its joint ventures are as follows: | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | Other receivables | | | | | | Binjiang-Xiangrui | | 1,772 | | 1,775 | | | | | | | | Other payables | | | | | | Binjiang-Xiangrui | | 266 | | 245 | | | | | | | | | | | | | | Debt investments at fair value through other comprehensive income | | | | | | Ruiyongjing Real Estate | | 5,312 | | - | | | | | | | | Investments classified as loans and receivables | | | | | | Ruiyongjing Real Estate | | - | | 4,339 | The receivable due from Binjiang-Xiangrui is interest free with no determined maturity date. if !supportLists(3) endifReceivables and payables between the Group and other related parties are as follows: | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Swiss Reinsurance Company Ltd | | 1,186 | | 1,163 | | | | | | | | Swiss Reinsurance Company Ltd | | 361 | | 764 | **XI.****CONTINGENCIES** In light of the nature of the insurance business, the Group makes estimates for contingencies and legal proceedings in the ordinary course of business, both in the capacity as plaintiff or defendant in litigation and as claimant or respondent in arbitration proceedings. Legal proceedings mostly involve claims on the Group��s insurance policies. Provisions have been made for the probable losses to the Group, including those claims where directors can reasonably estimate the outcome of the litigations taking into account legal advice, if any. No provision is made for contingencies and legal proceedings when the outcome cannot be reasonably estimated or the probability of loss is extremely low. In addition to the legal proceedings of the above natures, as at 31 December 2023, the Group was the defendant in certain pending litigations. Provisions were made for the possible losses based on estimates by the Group and the Group would only be contingently liable for any claim that is in excess of the provision made. No provision was made for contingencies and legal proceedings when the outcome cannot be reasonably estimated by the management or the probability of loss is extremely low. **XII.****COMMITMENTS** 1. Major projects with capital commitments | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Capital commitments | | | | | | Contracted, but not provided for | (1)(2)(3)(4)(5)(6) | 14,289 | | 13,772 | | Authorised, but not contracted for | (1)(2) | 8,337 | | 6,630 | | | | | | | | | | 22,626 | | 20,402 | As at 31 December 2023, major projects with capital commitments are as follows: if !supportLists(1) endifCPIC Life and the third party joined together to bid for the use right of the land located at Huangpu District, Shanghai. All parties set up a project company named Ruiyongjing Real Estate as the owner of the land use right to this parcel of land and construction development subject. The estimated total investment of Ruiyongjing Real Estate is approximately RMB 21,400 million, CPIC Life agreed to provide additional loan of no more than RMB 250 million for Ruiyongjing Real Estate. The registered capital of Ruiyongjing Real Estate is RMB 14,050 million, of which CPIC Life shall make a contribution of RMB 9,835 million, representing 70% of the registered capital. In addition, CPIC Life will provide shareholder��s loans to Ruiyongjing Real Estate, which are estimated to be approximately RMB 7,600 million. The total amount of the above two contributions to be made by CPIC Life is estimated to be RMB 17,435 million. As at 31 December 2023, the cumulative amount incurred by CPIC Life amounted to approximately RMB 14,775 million. Of the balance, approximately RMB 510 million was disclosed as a capital commitment contracted but not provided for and approximately RMB 2,150 million was disclosed as a capital commitment authorised but not contracted for. if !supportLists(2) endifCPIC Life and CPIC Senior Living Investment obtained the use rights of fourteen parcels of land located at Wenjiang District in Chengdu, Sichuan, etc., and set up fourteen project companies named Chengdu Project Company, etc., accordingly as the owners of the land use rights to parcels of land and construction development subjects for the construction project ��CPIC Home��. The estimated total investment of the above eleven projects is approximately RMB 16,191 million. As at 31 December 2023, the cumulative amount incurred amounted to approximately RMB 7,209 million. Of the balance, approximately RMB 1,595 million was disclosed as a capital commitment contracted but not provided for and approximately RMB 6,187 million was disclosed as a capital commitment authorised but not contracted for. if !supportLists(3) endifCPIC Life and a third party jointly established Taijiashan. The total investment of this project is approximately RMB 5,050 million. Among which CPIC Life subscribed capital contribution of RMB 5,000 million, accounted for 99.01% of the capital. As at 31 December 2023, CPIC Life has cumulatively made a capital contribution of RMB 2,662 million. Of the balance, RMB 2,338 million was disclosed as a capital commitment contracted but not provided for. **XII.****COMMITMENTS (continued)** 1. Major projects with capital commitments (continued) if !supportLists(4) endifAs at December 31 2023, CPIC Life and CPIC Capital together subscribed 99.98% of the shares of China Pacific Changhang. As of December 31 2023, China Pacific Changhang has invested in two unlisted equities and ten equity investment funds (not including consolidated structured entities included in the scope of the Group) with a total subscribed contribution of RMB 4,843 million, paid-in contribution of RMB 2,860 million, and uncontributed capital of RMB 1,983 million, which are listed as a capital commitment contracted but not provided for. if !supportLists(5) endifAs at December 31 2023, the Company, CPIC Life and CPIC Capital together subscribed 90.90% of the shares of CPIC Health Fund. As of December 31 2023, CPIC Health Fund has invested in seventeen equity investment funds (not including consolidated structured entities included in the scope of the Group), with a total subscribed contribution of RMB 4,210 million, paid-in contribution of approximately RMB 3,004 million, and uncontributed capital of approximately RMB 1,206 million, which are listed as signed but unallocated capital commitments. if !supportLists(6) endifAs at December 31 2023, CPIC Life and CPIC Capital together subscribed 99.99% of the shares of Nanjing Taibao Xinhui Zhiyuan Equity Investment Fund Management Partnership (Limited Partnership) (��Xinhui Zhiyuan��). As of December 31 2023, Xinhui Zhiyuan has invested in four equity investment funds with a total subscribed contribution of RMB 4,120 million, paid-in contribution of approximately RMB 1,590 million, and uncontributed capital of approximately RMB 2,530 million, which are listed as a capital commitment contracted but not provided for. 2. Operating lease rental receivables The Group leases its investment properties under various rental agreements. Future minimum lease receivables under non-cancellable operating leases are as follows: | | | | | | --- | --- | --- | --- | | | | 31 December 2023 | 31 December 2022 | | | | | | | Within 1 year (inclusive) | | 379 | 854 | | 1 to 2 years (inclusive) | | 290 | 458 | | 2 to 3 years (inclusive) | | 146 | 351 | | 3 to 5 years (inclusive) | | 85 | 203 | | More than 5 years | | 72 | 124 | | | | | | | | | 972 | 1,990 | **XIII.****RISK MANAGEMENT** 1. Insurance risk if !supportLists(1) endif Category of insurance risk and concentration of insurance risk The risk under an insurance contract arises from the possibility of occurrence of an insured event and the uncertainty of the amount as well as time of any resulting claim. The major risk the Group faces under such contracts is that the actual claims payments and the costs of claims settlement exceed the carrying amount of insurance contract reserves, which are affected by factors such as claim frequency, severity of claim, actual benefits paid and subsequent development of long-term claims. Therefore, the objective of the Group is to ensure that sufficient reserves are available to cover these liabilities. Insurance risk could occur due to any of the following factors: Occurrence risk - the possibility that the number of insured events will differ from that expected; Severity risk - the possibility that the cost of the events will differ from that expected; Development risk - the possibility that changes may occur in the amount of an insurer��s obligation at the end of the contract period. The above risk exposure is mitigated by the diversification across a large portfolio of insurance contracts. The variability of risks is also reduced by careful selection and implementation of underwriting strategy and guidelines, as well as the use of reinsurance arrangements. The businesses of the Group mainly comprise long-term life insurance contracts (mainly including life insurance and long-term health insurance), short-term life insurance contracts (mainly including short-term health insurance and accident insurance) and property and casualty insurance contracts. For contracts where death is the insured risk, the significant factors that could increase the overall frequency of claims are epidemics, widespread changes in lifestyle and natural disasters, resulting in earlier or more claims than expected. For contracts where survival is the insured risk, the most significant factor is continued improvement in medical science and social conditions that would increase longevity. For property and casualty insurance contracts, claims are often affected by natural disasters, calamities, terrorist attacks, etc. Currently, the Group��s insurance risk does not vary significantly in relation to the locations of the risks insured by the Group whilst undue concentration by amounts could have an impact on the severity of benefit payments on a portfolio basis. There would be no significant mitigating terms and conditions that reduce the insured risk accepted for contracts with fixed and guaranteed benefits and fixed future premiums. Meanwhile, insurance risk is also affected by the policyholders�� rights to terminate the contract, to pay reduced premiums, to refuse to pay premiums or to avail the guaranteed annuity option. Thus, the resultant insurance risk is subject to the policyholders�� behaviour and decisions. **XIII.****RISK MANAGEMENT (continued)** 1. Insurance risk (continued) if !supportLists(1) endif  Category of insurance risk and concentration of insurance risk (continued) In order to manage insurance risks more effectively, the Group manages insurance risks through reinsurance to reduce the effect of potential losses to the Group. Three major types of reinsurance agreements, ceding on a quota share basis or a surplus basis or excess reinsurance, are usually used to cover insurance liability risk, with retention limits varying by product line and territory. The reinsurance contract basically covers all insurance contracts with risk liability. Although the Group has reinsurance arrangements, it is not relieved of its direct obligations to its policyholders. The Group��s placement of reinsurance is diversified such that neither it is dependent on a single reinsurer nor are the operations of the Group substantially dependent upon any single reinsurance contract. Currently, the Group��s insurance risk does not vary significantly in relation to the locations of the risks insured by the Group whilst undue concentration by amounts could have an impact on the severity of benefit payments on a portfolio basis. **XIII.****RISK MANAGEMENT****(continued)** 1. Insurance risk (continued) (2) Assumptions and sensitivities Long-term life insurance contracts *Assumptions* Material judgement is required in choosing discount rate assumption, insurance incident occurrence rate assumption (mainly including mortality and morbidity), surrender rate assumption, expense assumption and policy dividend assumption relating to long-term life insurance contracts. These measurement assumptions are based on current information available at the balance sheet date. *Sensitivities* As the relationship between the various assumptions cannot be reliably measured, the Group has measured the impact on insurance contract liabilities of long-term life insurance contracts using sensitivity analysis for reasonably possible movements in key assumptions with all other assumptions held constant. | | | | | | | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | Changes in assumptions | Impact on profit before tax | | Impact on equity before tax | | | | Gross of reinsurance | | Gross of reinsurance | | | | | | | | Mortality rate | +10% | (132) | | (627) | | -10% | (235) | | 314 | | Morbidity rate | +10% | (1,907) | | (3,290) | | -10% | 1,524 | | 2,958 | | Expenses | +10% | (911) | | (1,202) | | -10% | 909 | | 1,200 | | Policy dividend | +5% | (1,037) | | (1,037) | | Surrender rate | +10% | 1,591 | | 1,666 | | -10% | (1,609) | | (1,518) | | | | | | | | --- | --- | --- | --- | --- | | | 31 December 2022 | | | | | | Changes in assumptions | Impact on profit before tax | | Impact on equity before tax | | | | Gross of reinsurance | | Gross of reinsurance | | | | | | | | Mortality rate | +10% | (109) | | (588) | | -10% | (383) | | 141 | | Morbidity rate | +10% | (1,965) | | (3,059) | | -10% | 1,471 | | 2,601 | | Expenses | +10% | (940) | | (1,147) | | -10% | 896 | | 1,102 | | Policy dividend | +5% | (1,039) | | (1,039) | | Surrender rate | +10% | 1,405 | | 629 | | -10% | (1,499) | | (564) | Reinsurance contracts do not have significant influence on the Group��s long-term life insurance contracts, therefore the impact on profit before tax and equity of net of reinsurance is similar to the above sensitivity analysis. **XIII.****RISK MANAGEMENT** **(continued)** 1. Insurance risk (continued) (2) Assumptions and sensitivities (continued) Property and casualty and short-term life insurance contracts *Assumptions* The calculation for liability for incurred claims is based on the Group��s past claim development experience, including assumptions in respect of average claim costs, claim expenses, inflation factors and number of claims for each accident period. Additional qualitative judgement is used to assess the extent to which past trends may not apply in the future (for example, changes in external factors such as one-off events, public attitudes to claims, market factors such as economic conditions, judicial decisions and government legislation, as well as changes in internal factors such as portfolio mix, policy conditions and claims handling procedures). Other key assumptions include risk adjustment for non-financial risk, delays in settlement, etc. *Sensitivities* Changes in above key assumptions will affect the liability for incurred claims for property and casualty and short-term life insurance. The sensitivity of certain variables including legislative change, uncertainty in the estimation process, etc., is not possible to quantify. The Group has measured the impact on insurance contract liabilities of property and casualty and short-term life insurance using sensitivity analysis for reasonably possible movements in key assumptions with all other assumptions held constant. | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | | | Changes in assumption | Impact on profit before tax | | | Impact on equity before tax | | | | | Gross of reinsurance | Net of reinsurance | | Gross of reinsurance | Net of reinsurance | | | | | | | | | | Loss ratio | +5% | (3,743) | (2,684) | | (3,743) | (2,684) | | -5% | 3,743 | 2,684 | | 3,743 | 2,684 | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2022 | | | | | | | | Changes in assumption | Impact on profit before tax | | | Impact on equity before tax | | | | | Gross of reinsurance | Net of reinsurance | | Gross of reinsurance | Net of reinsurance | | | | | | | | | | Loss ratio | +5% | (3,573) | (2,613) | | (3,573) | (2,613) | | -5% | 3,573 | 2,613 | | 3,573 | 2,613 | **XIII.****RISK MANAGEMENT** **(continued)** 1�� Insurance risk (continued) (2) Assumptions and sensitivities (continued) Property and casualty and short-term life insurance contracts (continued) The table below presents the claim reserves of gross of reinsurance for the property and casualty insurance of the Group: | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | Property and casualty insurance (Accident year) | | | | | | | | 2019 | 2020 | 2021 | 2022 | 2023 | Total | | **Gross of reinsurance** | | | | | | | | Undiscounted estimate of ultimate claim cost as of: | | | | | | | | Accident year | 71,637 | 81,244 | 101,908 | 109,894 | 128,386 | | | One year later | 71,010 | 80,052 | 98,801 | 104,854 | | | | Two years later | 70,608 | 79,948 | 98,681 | | | | | Three years later | 70,072 | 79,394 | | | | | | Four years later | 70,037 | | | | | | | | | | | | | | | Cumulative claims payments | (69,446) | (77,701) | (93,552) | (89,049) | (88,293) | | | Sub-total | 591 | 1,693 | 5,129 | 15,805 | 40,093 | 63,311 | | Adjustment for previous years, unallocated loss adjustment expenses, risk adjustment for non-financial risk, discounting and other impacts | | | | | | 5,896 | | | | | | | | | | Liability for incurred claims | | | | | | 69,207 | The table below presents the claim reserves of net of reinsurance for the property and casualty insurance of the Group: | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Property and casualty insurance (Accident year) | | | | | | | | | 2019 | 2020 | 2021 | 2022 | 2023 | Total | | | **Ne****t of reinsurance** | | | | | | | | | Undiscounted estimate of ultimate claim cost as of: | | | | | | | | | Accident year | 62,405 | 71,681 | 89,762 | 96,915 | 111,921 | | | | One year later | 61,783 | 70,520 | 87,173 | 93,658 | | | | | Two years later | 61,350 | 70,334 | 87,049 | | | | | | Three years later | 60,897 | 69,764 | | | | | | | Four years later | 60,942 | | | | | | | | | | | | | | | | | Cumulative claims payments | (60,583) | (68,520) | (83,065) | (80,330) | (79,037) | | | | Sub-total | 359 | 1,244 | 3,984 | 13,328 | 32,884 | 51,799 | | | Adjustment for previous years, unallocated loss adjustment expenses, risk adjustment for non-financial risk, discounting and other impacts | | | | | | (3,623) | | | | | | | | | | | | Liability for incurred claims, net | | | | | | 48,176 | | | Total asset for incurred claims | | | | | | 21,031 | | | Liability for incurred claims | | | | | | 69,207 | | **XIII.****RISK MANAGEMENT** **(continued)** 1. Insurance risk (continued) (2) Assumptions and sensitivities (continued) Property and casualty and short-term life insurance contracts (continued) The table below presents the claim reserves of gross of reinsurance for short-term life insurance contracts of the Group: | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Short-term life insurance (Accident year) | | | | | | | | | 2019 | 2020 | 2021 | 2022 | 2023 | Total | | | **Gross of reinsurance** | | | | | | | | | Undiscounted estimate of ultimate claim cost as of: | | | | | | | | | Accident year | 4,628 | 4,696 | 4,913 | 4,075 | 4,548 | | | | One year later | 4,307 | 4,266 | 4,547 | 3,801 | | | | | Two years later | 4,358 | 4,180 | 4,408 | | | | | | Three years later | 4,330 | 4,138 | | | | | | | Four years later | 4,330 | | | | | | | | | | | | | | | | | Cumulative claims payments | (4,330) | (4,130) | (4,354) | (3,553) | (3,090) | | | | Sub-total | - | 8 | 54 | 248 | 1,458 | 1,768 | | | Adjustment for previous years, unallocated loss adjustment expenses, risk adjustment for non-financial risk, discounting and other impacts | | | | | | 3,880 | | | | | | | | | | | | Liability for incurred claims | | | | | | 5,648 | | The table below presents the claim reserves of net of reinsurance for short-term life insurance contracts of the Group: | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | Short-term life insurance (Accident year) | | | | | | | | | 2019 | 2020 | 2021 | 2022 | 2023 | Total | | | **Ne****t of reinsurance** | | | | | | | | | Undiscounted estimate of ultimate claim cost as of: | | | | | | | | | Accident year | 3,058 | 3,440 | 3,967 | 3,436 | 4,300 | | | | One year later | 3,163 | 3,339 | 3,733 | 3,240 | | | | | Two years later | 3,222 | 3,244 | 3,626 | | | | | | Three years later | 3,195 | 3,208 | | | | | | | Four years later | 3,195 | | | | | | | | | | | | | | | | | Cumulative claims payments | (3,195) | (3,200) | (3,571) | (3,011) | (2,944) | | | | Sub-total | - | 8 | 55 | 229 | 1,356 | 1,648 | | | Adjustment for previous years, unallocated loss adjustment expenses, risk adjustment for non-financial risk, discounting and other impacts | | | | | | 3,866 | | | | | | | | | | | | Liability for incurred claims, net | | | | | | 5,514 | | | Total asset for incurred claims | | | | | | 134 | | | Liability for incurred claims | | | | | | 5,648 | | **XIII.****RISK MANAGEMENT** **(continued)** 2. Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk principally comprises three types of risks, namely interest rate risk arising from market interest rates, price risk arising from market prices and currency risk arising from foreign exchange rates. The following policies and procedures are in place to mitigate the Group��s exposure to market risk: if !supportLists· endifA market risk policy of the Group setting out the assessment and determination of what constitutes market risk for the Group. Compliance with the policy is monitored and exposures and breaches are reported to the risk management and related party transactions committee of the Group. The policy is reviewed regularly by the management of the Group for pertinence and for changes in the risk environment. if !supportLists· endifWith proper asset allocation and risk limits on portfolio level, the Group ensures both that assets are sufficient for specific insurance contract liabilities and that assets are held to deliver income and gains expected by policyholders. (1)     Currency risk Currency risk is the risk that the fair value or future cash flow of a financial instrument will fluctuate because of changes in foreign exchange rates. Since the Group operates principally in Mainland China, the Group has only limited exposure to currency risk, which arises primarily from certain insurance policies denominated in foreign currencies, bank deposits and securities denominated in the foreign currency. **XIII.****RISK** **MANAGEMENT****(continued)** 2. Market risk (continued) (1)     Currency risk (continued) The following tables summarise the Group��s financial assets and financial liabilities by major currency: | | | | | | | | --- | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | | RMB | USD (in RMB) | HKD (in RMB) | Other currencies (in RMB) | Total | | | | | | | | | Cash at bank and on hand | 25,925 | 5,340 | 188 | 2 | 31,455 | | Derivative financial instruments | - | 17 | - | - | 17 | | Securities purchased under agreements to resell | 2,808 | - | - | - | 2,808 | | Term deposits | 164,256 | 1,222 | 23 | - | 165,501 | | Financial investments: | | | | | | | Financial assets at fair value through profit or loss | 564,127 | 14,662 | 2,466 | 347 | 581,602 | | Financial assets at amortised cost | 82,334 | - | - | - | 82,334 | | Debt investments at fair value through other comprehensive income | 1,246,792 | 643 | - | - | 1,247,435 | | Equity investments at fair value through other comprehensive income | 97,937 | 1 | 27 | - | 97,965 | | Restricted statutory deposits | 7,105 | - | - | - | 7,105 | | Others | 11,101 | 97 | 28 | 8 | 11,234 | | | | | | | | | Sub-total | 2,202,385 | 21,982 | 2,732 | 357 | 2,227,456 | | | | | | | | | --- | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | | RMB | USD (in RMB) | HKD (in RMB) | Other currencies (in RMB) | Total | | | | | | | | | Derivative financial liabilities | 2 | 12 | - | 7 | 21 | | Securities sold under agreements to repurchase | 115,819 | - | - | - | 115,819 | | Bonds payable | 10,285 | - | - | - | 10,285 | | Commission and brokerage payable | 5,846 | - | 15 | - | 5,861 | | Lease liabilities | 3,077 | - | 18 | - | 3,095 | | Others | 33,458 | 302 | 119 | - | 33,879 | | | | | | | | | Sub-total | 168,487 | 314 | 152 | 7 | 168,960 | | | | | | | | | Net value | 2,033,898 | 21,668 | 2,580 | 350 | 2,058,496 | **XIII.****RISK** **MANAGEMENT****(continued)** 2. Market risk (continued) if !supportLists(1) endifCurrency risk (continued) The following tables summarise the Group��s financial assets and financial liabilities on the balance sheet by major currency (continued): | | | | | | | | --- | --- | --- | --- | --- | --- | | | 31 December 2022 | | | | | | | RMB | USD (in RMB) | HKD (in RMB) | Other currencies (in RMB) | Total | | | | | | | | | Cash at bank and on hand | 24,202 | 8,175 | 756 | 1 | 33,134 | | Financial assets at fair value through profit or loss | 26,240 | 320 | - | - | 26,560 | | Derivative financial assets | - | 197 | - | - | 197 | | Securities purchased under agreements to resell | 21,124 | - | - | - | 21,124 | | Interest receivables | 19,628 | 28 | - | - | 19,656 | | Term deposits | 203,096 | 1,421 | - | - | 204,517 | | Available-for-sale financial assets | 700,410 | 12,001 | 2,409 | 265 | 715,085 | | Held-to-maturity financial assets | 514,115 | 135 | - | - | 514,250 | | Investments classified as loans and receivables | 397,270 | - | - | - | 397,270 | | Restricted statutory deposits | 7,290 | - | - | - | 7,290 | | Others | 8,456 | 83 | 477 | 7 | 9,023 | | | | | | | | | Sub-total | 1,921,831 | 22,360 | 3,642 | 273 | 1,948,106 | | | | | | | | | --- | --- | --- | --- | --- | --- | | | 31 December 2022 | | | | | | | RMB | USD (in RMB) | HKD (in RMB) | Other currencies (in RMB) | Total | | | | | | | | | Derivative financial liabilities | 1 | 1 | - | 6 | 8 | | Securities sold under agreements to repurchase | 119,665 | - | - | - | 119,665 | | Interest payable | 469 | - | - | - | 469 | | Bonds payable | 9,999 | - | - | - | 9,999 | | Commission and brokerage payable | 4,638 | - | 1 | - | 4,639 | | Lease liabilities | 2,683 | - | 35 | - | 2,718 | | Others | 29,820 | 223 | 138 | - | 30,181 | | | | | | | | | Sub-total | 167,275 | 224 | 174 | 6 | 167,679 | | | | | | | | | Net amount | 1,754,556 | 22,136 | 3,468 | 267 | 1,780,427 | **XIII.****RISK MANAGEMENT** **(continued)** 2. Market risk (continued) if !supportLists(1) endifCurrency risk (continued) The following tables summarise the Group��s insurance contract assets/ liabilities and reinsurance contract assets/ liabilities by major currency: | | | | | | | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | RMB | USD (in RMB) | HKD (in RMB) | Total | | | | | | | | Insurance contract assets | 335 | - | - | 335 | | Reinsurance contract assets | 35,695 | 3,579 | 480 | 39,754 | | Insurance contract liabilities | 1,865,226 | 6,556 | 838 | 1,872,620 | | | | | | | | --- | --- | --- | --- | --- | | | 31 December 2022 | | | | | | RMB | USD (in RMB) | HKD (in RMB) | Total | | | | | | | | Insurance contract assets | - | - | 305 | 305 | | Reinsurance contract assets | 30,944 | 1,822 | 439 | 33,205 | | Insurance contract liabilities | 1,661,639 | 2,864 | 345 | 1,664,848 | | Reinsurance contract liabilities | - | - | 809 | 809 | Exchange rates used by the Group by major currencies: | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2023 | | | 31 December 2022 | | | | | USD | HKD | | USD | HKD | | | | | | | | | | Exchange rate | | 7.08270 | 0.90622 | | 6.96460 | 0.89327 | **XIII.****RISK MANAGEMENT** **(continued)** 2. Market risk (continued) (1)     Currency risk (continued) *Sensitivities* The analysis below is performed for reasonably possible movements in foreign exchange rate with all other variables held constant, for the following financial instruments, showing the pre-tax impact on profit before tax and equity. Sensitivity analysis below shows changes in spot and forward exchange rates and reflects the pre-tax impact on profit before tax and equity arising from monetary financial assets and liabilities, insurance contract assets/ liabilities and reinsurance contract assets/ liabilities denominated in foreign currency as at the dates indicated. | | | | | | --- | --- | --- | --- | | | | 31 December 2023 | | | USD, HKD and other currencies to RMB exchange rate | | Impact on profit before tax | Impact on equity before tax | | | | | | | +5% | | 353 | 1,088 | | -5% | | (353) | (1,088) | | | | | | | --- | --- | --- | --- | | | | 31 December 2022 | | | USD, HKD and other currencies to RMB exchange rate | | Impact on profit before tax | Impact on equity before tax | | | | | | | +5% | | 662 | 1,337 | | -5% | | (662) | (1,337) | The impact on equity arising from monetary financial assets and liabilities, insurance contract assets/ liabilities and reinsurance contract assets/ liabilities denominated in foreign currency shown above is the total impact from both profit before tax and fair value change. **XIII.****RISK MANAGEMENT** **(continued)** 2. Market risk (continued) (2)     Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Floating rate instruments expose the Group to cash flow interest risk, whereas fixed interest rate instruments expose the Group to fair value interest risk. The Group��s interest risk policy requires it to manage interest rate risk by maintaining an appropriate mix of fixed and floating rate instruments. The policy also requires it to manage the maturity of interest-bearing financial assets and interest-bearing financial liabilities. Interest on floating rate instruments is generally repriced once a year. Interest on fixed rate instruments is priced on initial recognition of related financial instruments and remains constant until maturity date. The Group is not exposed to significant concentration risks. The tables below summarise major interest-bearing financial instruments of the Group by contractual/estimated re-pricing date or maturity date. Other financial instruments not included in the following tables are interest free and not exposed to interest rate risk: | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2023 | | | | | | | | | | | | Within 1 year | 1 to 3 years | | 3 to 5 years | Over 5 years | | Floating rate | | Non-interest bearing | | Total | | | | | | | | | | | | | | | Financial assets: | | | | | | | | | | | | | Cash at bank and on hand with maturity of no more than three months | 549 | - | | - | - | | 30,901 | | 3 | | 31,453 | | Securities purchased under agreements to resell | 2,808 | - | | - | - | | - | | - | | 2,808 | | Term deposits | 49,777 | 59,485 | | 51,545 | 500 | | - | | 4,194 | | 165,501 | | Financial investments: | | | | | | | | | | | | | Financial assets at fair value through profit or loss | 10,671 | 18,102 | | 12,588 | 160,723 | | - | | 3,400 | | 205,484 | | Financial assets at amortised cost | 14,651 | 18,737 | | 5,884 | 42,962 | | 100 | | - | | 82,334 | | Debt investments at fair value through other comprehensive income | 48,318 | 114,044 | | 71,084 | 1,002,494 | | - | | 11,495 | | 1,247,435 | | Restricted statutory deposits | 3,442 | 2,273 | | 1,040 | - | | - | | 350 | | 7,105 | | | | | | | | | | | | | | | Financial liabilities: | | | | | | | | | | | | | Securities sold under agreements to repurchase | 115,695 | - | | - | - | | - | | 124 | | 115,819 | | Bonds payable | - | - | | 9,999 | - | | - | | 286 | | 10,285 | | | | | | | | | | | | | | **XIII.****RISK MANAGEMENT** **(continued)** 2. Market risk (continued) if !supportLists(2) endifInterest rate risk (continued) The tables below summarise major interest-bearing financial instruments of the Group by contractual/estimated re-pricing date or maturity date. Other financial instruments not included in the following tables are interest free and not exposed to interest rate risk (continued): | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2022 | | | | | | | | Within 1 year | 1 to 3 years | 3 to 5 years | Over 5 years | Floating rate | Total | | | | | | | | | | Financial assets: | | | | | | | | Deposits with original maturity of no more than three months | 659 | - | - | - | 32,475 | 33,134 | | Debt investments at fair value through profit or loss | 945 | 768 | 1,639 | 3,159 | - | 6,511 | | Securities purchased under agreements to resell | 21,124 | - | - | - | - | 21,124 | | Term deposits | 77,215 | 71,137 | 56,165 | - | - | 204,517 | | Available-for-sale debt investments | 36,296 | 46,472 | 36,843 | 178,508 | - | 298,119 | | Held-to-maturity financial assets | 13,215 | 23,622 | 8,640 | 468,773 | - | 514,250 | | Investments classified as loans and receivables | 21,465 | 119,877 | 56,313 | 199,615 | - | 397,270 | | Restricted statutory deposits | 1,459 | 4,221 | 1,610 | - | - | 7,290 | | | | | | | | | | Financial liabilities: | | | | | | | | Securities sold under agreements to repurchase | 119,665 | - | - | - | - | 119,665 | | Bonds payable | 5,000 | - | - | 4,999 | - | 9,999 | | | | | | | | | Interest rates on floating rate bonds/liabilities are re-priced when the benchmark interest rates are adjusted. **XIII.****RISK MANAGEMENT** **(continued)** 2. Market risk (continued) (2)     Interest rate risk (continued) *Sensitivities* The analysis below is performed for reasonably possible movements in interest rate with all other variables held constant, for the following financial instruments, showing the pre-tax impact on profit before tax and equity. Since almost all financial instruments of the Group that bear interest rate risks are financial instruments denominated in RMB, the sensitivity analysis below only shows the pre-tax impact of RMB financial instruments on the Group��s profit before tax and equity when RMB interest rate changes. *Sensitivities on fixed-rate financial instruments* As at the balance sheet date, the Group��s fixed-rate financial instruments exposed to interest rate risk mainly include financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income (2022:available-for-sale financial assets). The following tables show the pre-tax impact of fair value change of debt investments on profit before tax and equity. | | | | | | --- | --- | --- | --- | | | | 31 December 2023 | | | Change in RMB interest rate | | Impact on profit before tax | Impact on equity before tax | | | | | | | +50 basis points | | (3,121) | (52,577) | | -50 basis points | | 3,276 | 58,879 | | | | | | | --- | --- | --- | --- | | | | 31 December 2022 | | | Change in RMB interest rate | | Impact on profit before tax | Impact on equity before tax | | | | | | | +50 basis points | | (98) | (6,936) | | -50 basis points | | 103 | 7,691 | The above impact on equity represents adjustments to profit before tax and changes in fair value of fixed-rate financial instruments. **XIII.****RISK MANAGEMENT** **(continued)** 2. Market risk (continued) (2)     Interest rate risk (continued) *Sensitivities (continued)* *Sensitivities on floating-rate financial instruments* The following tables show the pre-tax impact that floating-rate financial assets and liabilities have on the Group��s profit before tax and equity due to changes in interest rate as at the balance sheet date. | | | | | | --- | --- | --- | --- | | | | 31 December 2023 | | | Change in RMB interest rate | | Impact on profit before tax | Impact on equity before tax | | | | | | | +50 basis points | | 155 | 155 | | -50 basis points | | (155) | (155) | | | | | | | --- | --- | --- | --- | | | | 31 December 2022 | | | Change in RMB interest rate | | Impact on profit before tax | Impact on equity before tax | | | | | | | +50 basis points | | 122 | 122 | | -50 basis points | | (122) | (122) | *Sensitivities on insurance contract liabilities* The following tables show the pre-tax impact that insurance contract liabilities have on the Group��s profit before tax and equity due to changes in interest rate as at the balance sheet date. | | | | | | --- | --- | --- | --- | | | | 31 December 2023 | | | Change in RMB interest rate | | Impact on profit before tax | Impact on equity before tax | | | | | | | +50 basis points | | 4,261 | 68,027 | | -50 basis points | | (5,082) | (78,143) | | | | | | | --- | --- | --- | --- | | | | 31 December 2022 | | | Change in RMB interest rate | | Impact on profit before tax | Impact on equity before tax | | | | | | | +50 basis points | | 3,165 | 56,979 | | -50 basis points | | (6,268) | (68,221) | **XIII.****RISK MANAGEMENT** **(continued)** 2. Market risk (continued) (3)     Price risk Price risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), regardless of whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. The Group��s price risk policy requires it to manage such risk by setting and monitoring investment objectives, adopting related strategies and managing fluctuations arising from price risk in operating performance. Financial investments exposed to market price risk mainly consist of stocks and equity investment funds under financial assets at fair value through profit or loss and equity investments at fair value through other comprehensive income. Assuming that the market price of listed stocks and equity investment funds rises or falls by 10% (based on the book value as at the balance sheet date, taking into account the impact on listed equities and securities investment funds and insurance contract liabilities) and other variables remain unchanged, the impact of the above financial instruments on the Group��s equity and net profit based at the end of the reporting date is as follows. For the sensitivity analyisis, for equity investements at fair value through other comprehensive income, the effect is considered as the fair value change of equity investements at fair value through other comprehensive income, other than the impairment losses on financial assets which would impact the income statement (only applicable for 2022). | | | | | | | | --- | --- | --- | --- | --- | --- | | | | 31 December 2023 | | | | | Changes in prices of equity investments | | Impact on equity investments | Impact on insurance contract liabilities | Impact on profit before tax | Impact on equity  before tax | | | | | | | | | +10% | | 30,743 | 12,430 | 10,688 | 18,313 | | -10% | | (30,743) | (12,430) | (10,688) | (18,313) | | | | | | | | | --- | --- | --- | --- | --- | --- | | | | 31 December 2022 | | | | | Changes in prices of equity investments | | Impact on equity investments | Impact on insurance contract liabilities | Impact on profit before tax | Impact on equity before tax | | | | | | | | | +10% | | 23,289 | 12,622 | 411 | 10,667 | | -10% | | (23,289) | (12,622) | (411) | (10,667) | **XIII.****RISK MANAGEMENT** **(continued)** 3. Credit risk Credit risk is the risk that one party to a financial instrument or an insurance contract will cause a financial loss to the other party by failing to discharge an obligation. The Group is exposed to credit risks primarily associated with deposit arrangements with commercial banks, financial assets at amortised cost, debt investments at fair value through other comprehensive income, securities purchased under agreements to resell, reinsurance contract assets and other assets. Due to the restriction of The National Administration of Financial Regulation, majority of the Group��s financial assets are government bonds, government institutional bonds, corporate bonds, term deposits, debt investment plans and wealth management products. Term deposits are placed with national commercial banks or comparatively sound financial institutions, and most of corporate bonds, debt investment plans and wealth management products are guaranteed by qualified institutions. Hence, the related credit risk of the investment should be regarded as relatively low. Meanwhile, the Group will perform credit assessments and risk appraisals for each investment before signing contracts and determine to invest in those programs released by highly rated issuers and project initiators. For securities purchased under agreements to resell and policy loans, there is a security pledge, and the maturity period is less than one year. Premium receivables from life insurance are mainly renew premium within grace period. Hence, the related credit risk should not have significant impact on the Group��s consolidated financial statements. The Group grants a short credit period and arranges instalment payment to reduce the property and casualty insurance businesses credit risk. The Group performs regular credit assessment of the reinsurance companies. Reinsurance of the Group is mainly entered into with highly rated reinsurance companies. The Group mitigates credit risk by utilising credit control policies, undertaking credit analysis on potential investments, and imposing aggregate counterparty exposure limits. *Measurement of expected credit loss* In accordance with the new accounting standard for financial instruments, the Group applies the ��expected credit loss model�� to measure the impairment of financial assets such as financial assets at amortised cost and debt investments at fair value through other comprehensive income. **XIII.****RISK MANAGEMENT** **(continued)** 3. Credit risk (continued) *Measurement**of expected credit loss* *(continued)* Criteria for judging significant changes in credit risk Under the new financial instruments accounting standard, the Group assesses at each balance sheet date whether the credit risk of the relevant financial instruments has changed significantly since its initial recognition when considering the credit risk stages of financial assets. When determining the impairment stage of financial assets, the Group fully considers all reasonable and well-founded information, including forward-looking information, that reflects whether there has been a significant change in its credit risk. The main factors to be considered are regulatory and operating environment, internal and external credit rating, solvency, operating capacity, etc. The Group based on individual financial instruments or portfolios of financial instruments with similar credit risk characteristics to determine the stage classification of financial instruments by comparing the credit risks of the financial instruments at the reporting date with initial recognition. The Group sets quantitative and qualitative criteria to determine whether the credit risk of financial instruments has changed significantly since the initial recognition, mainly including changes in the debtor's probability of default (��PD��), changes in credit risk classification, and other circumstances indicating significant changes in credit risk. In determining whether the credit risk of a financial instrument has changed significantly since the initial recognition, the Group considers overdue more than 30 days as one of the criteria for a significant increase in credit risk in accordance with the requirements of the Standard. Definition of financial assets that are credit-impaired The criteria adopted by the Group in determining whether credit impairment has incurred are consistent with internal credit risk management objectives for the relevant financial instruments, taking into account quantitative and qualitative indicators. When assessing whether a debtor has incurred credit impairment, the Group mainly considers the following factors: if !supportLists• endifThe debtor is more than 90 days overdue after the due date of payment in the contract; if !supportLists• endifInternal credit rating is a default rating; if !supportLists• endifFor economic or contractual reasons related to the debtor's financial difficulties, the creditor gives the debtor concessions that the creditor would not otherwise consider; if !supportLists• endifSignificant financial difficulties of the issuer or debtor; if !supportLists• endifBreach of contract by the debtor, such as default or overdue payment of interest or principal; if !supportLists• endifThe debtor is likely to go bankrupt or other financial restructuring; if !supportLists• endifFinancial difficulties of the issuer or debtor lead to the disappearance of an active market for that financial asset; if !supportLists• endifPurchase or originate a financial asset at a significant discount that reflects the fact that a credit loss has occurred. Credit impairment of financial assets may be caused by a combination of multiple events, not necessarily by individually identifiable events. **XIII.****RISK MANAGEMENT** **(continued)** 3. Credit risk (continued) *Measurement**of expected credit loss* *(continued)* Parameters of the expected credit loss measurement The models, parameters and assumptions used in measuring expected credit loss are described as follows: Impairment provisions are measured in terms of expected credit losses over the next 12 months or throughout the lifetime of the assets, based on whether there has been a significant increase in credit risk and whether the asset has undergone credit impairment. The expected credit loss is the result of discounting the product of the company's exposure at default (��EAD��), PD and rate of loss given default (��LGD��) under reasonable and evidence-based forward-looking information that can be obtained without undue cost or effort. if !supportListsi) endifEAD is based on the amounts the Group expects to be owed at the time of default, over the next 12 months or over the remaining lifetime; if !supportListsai) endifPD is the likelihood that the debtor will not be able to meet its payment obligations in the next 12 months or throughout the remaining lifetime; if !supportListsbi) endif LGD is the Group's expectation of the percentage of loss on the EAD will be lost. LGD varies depending on the type of counterparty, the manner and priority of recourse, and the availability of collateral or other credit support. When assessing whether the credit risk of a financial instrument has increased significantly since its initial recognition, the Group takes into account changes in the risk of default over the expected lifetime of the financial instruments. The lifetime PD is derived from the 12-month PD based on the maturity information. Impairment for assets assessed on a collective basis is based on observable historical data and on the assumption that assets with the same credit rating and in the same portfolio for collective assessment are in the same situation. The above analysis is based on industry experience and supported by historical data. *Credit risk exposure* Without regard to the impact of guarantees or other credit enhancement methods, the carrying amount of financial assets in the Group's balance sheet reflects its maximum credit risk exposure at the balance sheet date. **XIII.****RISK MANAGEMENT** **(continued)** 3. Credit risk (continued) *Credit risk exposure* *(continued)* The following table sets out the credit risk exposure of financial instruments under the scope of the expected credit loss assessment (only applicable for 2023): | | | | | | | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | Stage 1 | Stage 2 | Stage 3 | Maximum credit risk exposure | | | | | | | | Cash at bank and on hand | 31,455 | - | - | 31,455 | | Derivative financial assets | 17 | - | - | 17 | | Securities purchased under agreements to resell | 2,808 | - | - | 2,808 | | Term deposits | 165,501 | - | - | 165,501 | | Financial Investments: | 1,324,659 | 1,302 | 3,808 | 1,329,769 | | Financial assets at amortised cost | 81,291 | 155 | 888 | 82,334 | | Debt investments at fair value through other comprehensive income | 1,243,368 | 1,147 | 2,920 | 1,247,435 | | Restricted statutory deposits | 7,105 | - | - | 7,105 | | Others | 10,523 | 683 | 28 | 11,234 | | | | | | | | Total | 1,542,068 | 1,985 | 3,836 | 1,547,889 | As at December 31, 2023, the collateral for the financial assets that have suffered credit impairment is mainly equity. The Group closely monitors collateral for financial assets that have undergone credit impairment. The following table sets out the credit risk exposure of financial instruments as at 31 December 2022: | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2022 | | | | | | | | | | Past due but not impaired | | | | | | | | Not due and not impaired | Within 30 days | 31 to 90 days | More than 90 days | Total past due but not impaired | Financial assets with impairment considered | Total | | | | | | | | | | | Cash at bank and on hand | 33,134 | - | - | - | - | - | 33,134 | | Financial assets at fair value through profit or losses | 6,511 | - | - | - | - | - | 6,511 | | Securities purchased under agreements to resell | 21,124 | - | - | - | - | - | 21,124 | | Interest receivables | 19,656 | - | - | - | - | - | 19,656 | | Term deposits | 204,517 | - | - | - | - | - | 204,517 | | Available-for-sale debt investments | 290,852 | - | - | - | - | 7,267 | 298,119 | | Held-to-maturity financial assets | 514,136 | - | - | - | - | 114 | 514,250 | | Investments classified as loans and receivables | 396,222 | - | - | - | - | 1,048 | 397,270 | | Restricted statutory deposits | 7,290 | - | - | - | - | - | 7,290 | | Others | 8,945 | - | - | 1 | 1 | 77 | 9,023 | | | | | | | | | | | Total | 1,502,387 | - | - | 1 | 1 | 8,506 | 1,510,894 | **XIII.****RISK MANAGEMENT** **(continued)** 3. Credit risk (continued) *Credit risk exposure* *(continued)* The following table sets out the maximum exposure to credit risk of insurance contracts at the end of reporting period: | | | | | | | --- | --- | --- | --- | --- | | | | 31 December 2023 | | 31 December 2022 | | | | | | | | Insurance contracts issued | | 110,425 | | 105,761 | | | | | | | | Reinsurance contracts held | | 39,754 | | 33,205 | The Group assesses the credit standing of ceded reinsurance recipients on the timely basis, including financial performance, solvency level, etc., and then select those companies with high credit qualifications to carry out reinsurance business. At the end of the year, there was no material change in the credit standing of the Group's ceded reinsurance recipients. The following tables explain the changes in the gross carrying amount and impairment provision of the main financial assets for the year: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2023 | | | | | | | | | | | | | Stages transfers | | | | | | Gross carrying amount | Stage | 1 January | Net increase/ (decrease) (Note) | Transfer between Stage 1 and Stage 2 | Transfer between Stage 1 and Stage 3 | Transfer between Stage 2 and Stage 3 | Write-offs | 31 December | | | | | | | | | | | | Financial assets at amortised cost | Stage 1 | 89,716 | (8,262) | (120) | - | - | - | 81,334 | | | Stage 2 | 1,586 | (297) | 120 | - | (1,253) | - | 156 | | | Stage 3 | 944 | 24 | - | - | 1,253 | - | 2,221 | | | | | | | | | | | | Debt investments at fair value through other comprehensive income | Stage 1 | 1,108,746 | 135,114 | (492) | - | - | - | 1,243,368 | | | Stage 2 | 4,204 | (1,029) | 492 | - | (2,520) | - | 1,147 | | | Stage 3 | 6,374 | (5,974) | - | - | 2,520 | - | 2,920 | **XIII.****RISK MANAGEMENT** **(continued)** 3. Credit risk (continued) *Credit risk exposure**(continued)* The following tables explain the changes in the gross carrying amount and impairment provision of the main financial assets for the year (continued): | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2023 | | | | | | | | | | | | | Stages transfers | | | | | | Impairment provision | Stage | 1 January | Net increase/ (decrease) (Note1) | Transfer between Stage 1 and Stage 2 | Transfer between Stage 1 and Stage 3 | Transfer between Stage 2 and Stage 3 | Write-offs | 31 December | | | | | | | | | | | | Financial assets at amortised cost | Stage 1 | 49 | (6) | - | - | - | - | 43 | | | Stage 2 | 112 | (7) | - | - | (104) | - | 1 | | | Stage 3 | 657 | 572 | - | - | 104 | - | 1,333 | | | | | | | | | | | | Debt investments at fair value through other comprehensive income | Stage 1 | 250 | (28) | - | - | - | - | 222 | | | Stage 2 | 257 | (20) | - | - | (226) | - | 11 | | | Stage 3 | 2,177 | 1,293 | - | - | 226 | - | 3,696 | Note: Changes in current year due to purchase, purchased credit-impaired or derecognition except write-offs. The Group internally grades the financial instruments based on the credit quality and risk characteristics. The credit rating of the financial instruments could further be classified as ��low risk��, ��medium risk��, ��high risk�� and ��default�� according to the internal rating scale. ��Low risk�� means that the asset quality is good, there is sufficient evidence to show that the asset is not expected to have default, or there is no reason to suspect that the asset had incurred default. ��Medium risk�� means that the asset quality is acceptable or there are factors revealing potential negative impact on the asset quality, but there is no sufficient reason to suspect that the asset had incurred default. ��High risk�� means that there are factors revealing significant adverse impact on the asset quality, but there is no event indicating incurred default. The criteria of ��default�� are consistent with those of ��credit-impaired��. **XIII.****RISK MANAGEMENT (continued)** 3. Credit risk (continued) *Credit risk exposure**(continued)* The following table analyses the credit risk��s stages of financial assets at amortised cost and debt investments at fair value through other comprehensive income within the scope of ECLs. The net carrying value of the following financial assets disclosed at the balance sheet is their maximum exposure to credit risk: | | | | | | | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | Stage 1 | Stage 2 | Stage 3 | | | | 12-month ECLs | Lifetime ECLs | Lifetime ECLs | Total | | | | | | | | Financial assets at amortised cost | | | | | | | | | | | | Credit level | | | | | | Low | 79,345 | - | - | 79,345 | | Medium | 1,989 | 156 | - | 2,145 | | High | - | - | - | - | | Default | - | - | 2,221 | 2,221 | | | | | | | | Total carrying amount | 81,334 | 156 | 2,221 | 83,711 | | Impairment provisions | (43) | (1) | (1,333) | (1,377) | | | | | | | | Net carrying amount | 81,291 | 155 | 888 | 82,334 | | | | | | | | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | Stage 1 | Stage 2 | Stage 3 | | | | 12-month ECLs | Lifetime ECLs | Lifetime ECLs | Total | | | | | | | | Debt investments at fair value through other comprehensive income | | | | | | | | | | | | Credit level | | | | | | Low | 1,236,417 | 29 | - | 1,236,446 | | Medium | 6,951 | 1,118 | - | 8,069 | | High | - | - | - | - | | Default | - | - | 2,920 | 2,920 | | | | | | | | Net carrying amount | 1,243,368 | 1,147 | 2,920 | 1,247,435 | **XIII.****RISK MANAGEMENT** **(continued)** 4. Liquidity risk Liquidity risk is the risk of capital shortage in the performance of obligations associated with financial liabilities. Liquidity risk may result from the surrender, reduction or early termination of insurance contracts in other forms, the indemnity and payment, and the daily expenses of the Group. Where permitted by the regulatory framework and market environment, the Group seeks to manage the liquidity risk mainly by matching the term of investment assets with the maturity of corresponding insurance liabilities and maintaining sufficient liquidity of investment assets, so as to repay debts and provide funds for investment activities in a timely manner. The following policies and procedures are in place to mitigate the Group��s exposure to liquidity risk: if !supportLists· endifSetting up a liquidity risk policy for the assessment and determination of what constitutes liquidity risk for the Group. Compliance with the policy is monitored, and exposures and breaches of the policy are reported to the Company��s risk management and related party transactions committee. The policy is regularly reviewed by the management of the Group for pertinence and for changes in the risk environment; if !supportLists· endifSetting out guidelines on asset allocation, portfolio limit structures and the maturity profiles of assets, in order to ensure that sufficient funding is available for the Group to meet insurance and investment contract obligations; if !supportLists· endifSetting up emergency fund plans which specify the sources of emergency funds, the minimum amount of daily reserve funds, and the specific events that would trigger such plans. **XIII.****RISK MANAGEMENT** **(continued)** 4. Liquidity risk (continued) The tables below summarise the maturity profiles of the main financial assets and financial liabilities of the Group based on undiscounted contractual cash flows and remaining maturity of expected cash flows: | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | | | | | | On demand/ Overdue | Within 1 year | | 1 to 5 years | Over 5 years | Undated | Total | | | | | | | | | | | | | | | **Financial assets:** | | | | | | | | | | | Cash at bank and on hand | 30,906 | 549 | | - | - | - | 31,455 | | | | Derivative financial assets | - | 17 | | - | - | - | 17 | | | | Securities purchased under agreements to resell | - | 2,809 | | - | - | - | 2,809 | | | | Term deposits | - | 52,866 | | 124,687 | 587 | - | 178,140 | | | | Financial investments: | | | | | | | | | | | Financial assets at fair value through profit or loss | 454 | 26,543 | | 55,426 | 200,178 | 367,031 | 649,632 | | | | Financial assets at amortised cost | - | 17,859 | | 34,492 | 56,912 | - | 109,263 | | | | Debt investments at fair value through other comprehensive income | - | 96,126 | | 347,151 | 1,604,815 | - | 2,048,092 | | | | Equity investments at fair value through other comprehensive income | - | 4,662 | | 25,680 | 1,033 | 69,488 | 100,863 | | | | Restricted statutory deposits | - | 3,883 | | 3,648 | - | - | 7,531 | | | | Others | 958 | 8,612 | | 2,112 | - | 2 | 11,684 | | | | | | | | | | | | | | | Sub-total | 32,318 | 213,926 | | 593,196 | 1,863,525 | 436,521 | 3,139,486 | | | | | | | | | | | | | | | **Financial liabilities:** | | | | | | | | | | | Derivative financial liabilities | - | 10 | 11 | | - | - | | 21 | | | Securities sold under agreements to repurchase | - | 115,892 | - | | - | - | | 115,892 | | | Bonds payable | - | 367 | 11,468 | | - | - | | 11,835 | | | Commission and brokerage payable | 994 | 4,160 | 693 | | 14 | - | | 5,861 | | | Lease liabilities | - | 1,021 | 1,772 | | 731 | - | | 3,524 | | | Others | 405 | 31,660 | 1,814 | | - | - | | 33,879 | | | | | | | | | | | | | | Sub-total | 1,399 | 153,110 | 15,758 | | 745 | - | | 171,012 | | | | | | | | | | | | | | Net amount | 30,919 | 60,816 | 577,438 | | 1,862,780 | 436,521 | | 2,968,474 | | **XIII.****RISK MANAGEMENT** **(continued)** 4. Liquidity risk (continued) The tables below summarise the maturity analysis of the main financial assets and financial liabilities of the Group based on undiscounted contractual cash flows and remaining maturity of expected cash flows (continued): | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2022 | | | | | | | | | | | | | | | On demand/ Overdue | Within 1 year | | 1 to 5 years | | | Over 5 years | | Undated | Total | | | | | | | | | | | | | | | | | | | Financial assets: | | | | | | | | | | | | | | | Cash at bank and on hand | | 32,425 | 712 | | - | | | - | | - | 33,137 | | | | Financial assets at fair value through profit or loss | | - | 7,191 | | 2,828 | | | 3,822 | | 13,936 | 27,777 | | | | Derivative financial assets | | - | 197 | | - | | | - | | - | 197 | | | | Securities purchased under agreements to resell | | - | 21,218 | | - | | | - | | - | 21,218 | | | | Term deposits | | - | 79,706 | | 140,228 | | | - | | - | 219,934 | | | | Available-for-sale financial assets | | 220 | 54,273 | | 129,096 | | | 321,841 | | 406,125 | 911,555 | | | | Held-to-maturity financial assets | | - | 33,879 | | 108,304 | | | 859,015 | | - | 1,001,198 | | | | Investments classified as loans and receivables | | - | 40,430 | | 229,760 | | | 229,204 | | - | 499,394 | | | | Restricted statutory deposits | | - | 1,587 | | 6,420 | | | - | | - | 8,007 | | | | Others | | 1,534 | 5,844 | | 1,797 | | | 2 | | 3 | 9,180 | | | | | | | | | | | | | | | | | | | Sub-total | | 34,179 | 245,037 | | 618,433 | | | 1,413,884 | | 420,064 | 2,731,597 | | | | | | | | | | | | | | | | | | | | Financial liabilities: | | | | | | | | | | | | | | | Derivative financial liabilities | - | | 8 | | - | - | | - | | | 8 | | | | Securities sold under agreements to repurchase | - | | 119,740 | | - | - | | - | | | 119,740 | | | | Commission and brokerage payable | 961 | | 2,939 | | 728 | 11 | | - | | | 4,639 | | | | Bonds payable | - | | 5,505 | | 1,198 | 5,175 | | - | | | 11,878 | | | | Lease liabilities | - | | 606 | | 1,999 | 320 | | - | | | 2,925 | | | | Others | 1,884 | | 26,643 | | 1,654 | - | | - | | | 30,181 | | | | | | | | | | | | | | | | | | | Sub-total | 2,845 | | 155,441 | | 5,579 | 5,506 | | - | | | 169,371 | | | | | | | | | | | | | | | | | | | Net amount | 31,334 | | 89,596 | | 612,854 | 1,408,378 | | 420,064 | | | 2,562,226 | | **XIII.****RISK MANAGEMENT** **(continued)** 4. Liquidity risk (continued) The tables below summarise the maturity analysis of the Group's insurance contract liabilities�� present value of the future cash flows as at the balance sheet date. The maturity analysis does not include the parts of insurance contract liabilities that relate to remaining coverage under the premium allocation approach: | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | | | | Within 1 year | 1 to 2 years | 2 to 3 years | 3 to 4 years | 4 to 5 years | Over 5 years | Total | | | | | | | | | | | Present value of the future cash flows of insurance contact liabilities | (9,116) | (39,497) | 3,874 | 38,773 | 49,016 | 1,423,350 | 1,466,400 | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | | 31 December 2022 | | | | | | | | | Within 1 year | 1 to 2 years | 2 to 3 years | 3 to 4 years | 4 to 5 years | Over 5 years | Total | | | | | | | | | | | Present value of the future cash flows of insurance contact liabilities | (10,730) | (45,578) | (15,832) | 9,346 | 41,357 | 1,283,573 | 1,262,136 | As at the balance sheet date, the cash flows of lease contracts that have been signed by the Group but have not yet been executed are listed below by maturity date: | | | | | | | | --- | --- | --- | --- | --- | --- | | | As at 31 December 2023 | | | | | | | Within 1 year | 1 to 2 years | 2 to 5 years | Over 5 years | Total | | | | | | | | | Future contractual cash     flows not included in     lease liabilities | 62 | 68 | 124 | 108 | 362 | | | | | | | | | | As at 31 December 2022 | | | | | | | Within 1 year | 1 to 2 years | 2 to 5 years | Over 5 years | Total | | | | | | | | | Future contractual cash     flows not included in     lease liabilities | 21 | 17 | 37 | 7 | 82 | **XIII.****RISK MANAGEMENT** **(continued)** 4. Liquidity risk (continued) The table below summarises the expected utilisation or settlement of assets and liabilities: | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | As at 31 December 2023 | | | | | | | | Current | | Non-current | | Total | | | | | | | | | | Assets: | | | | | | | | Cash at bank and on hand | | 31,455 | | - | | 31,455 | | Derivative financial assets | | 17 | | - | | 17 | | Term deposits | | 51,561 | | 113,940 | | 165,501 | | Financial investments: | | | | | | | | Financial assets at fair value through profit or loss | | 386,825 | | 194,777 | | 581,602 | | Financial assets at amortised cost | | 14,056 | | 68,278 | | 82,334 | | Debt investments at fair value through other comprehensive income | | 48,934 | | 1,198,501 | | 1,247,435 | | Equity investments at fair value through other comprehensive income | | 73,209 | | 24,756 | | 97,965 | | Insurance contract assets | | 335 | | - | | 335 | | Reinsurance contract assets | | 21,632 | | 18,122 | | 39,754 | | Others | | 9,262 | | 1,972 | | 11,234 | | | | | | | | | | Total | | 637,286 | | 1,620,346 | | 2,257,632 | | | | | | | | | | Liabilities: | | | | | | | | Derivative financial liabilities | | 10 | | 11 | | 21 | | Securities sold under agreements to repurchase | | 115,819 | | - | | 115,819 | | Bonds payable | | 286 | | 9,999 | | 10,285 | | Insurance contract liabilities | | 56,359 | | 1,816,261 | | 1,872,620 | | Commission and brokerage payable | | 5,154 | | 707 | | 5,861 | | Lease liabilities | | 911 | | 2,184 | | 3,095 | | Others | | 32,065 | | 1,814 | | 33,879 | | | | | | | | | | Total | | 210,604 | | 1,830,976 | | 2,041,580 | **XIII.****RISK MANAGEMENT** **(continued)** 4. Liquidity risk (continued) The table below summarises the expected utilisation or settlement of assets and liabilities (continued): | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | As at 31 December 2022 | | | | | | | | Current | | Non-current | | Total | | | | | | | | | | Assets: | | | | | | | | Cash at bank and on hand | | 33,134 | | - | | 33,134 | | Financial assets at fair value through profit or loss | | 20,994 | | 5,566 | | 26,560 | | Derivative financial assets | | 197 | | - | | 197 | | Term deposits | | 77,215 | | 127,302 | | 204,517 | | Available-for-sale financial assets | | 447,168 | | 267,917 | | 715,085 | | Held-to-maturity financial assets | | 13,215 | | 501,035 | | 514,250 | | Investments classified as loans and receivables | | 21,465 | | 375,805 | | 397,270 | | Insurance contract assets | | 305 | | - | | 305 | | Reinsurance contract assets | | 18,183 | | 15,022 | | 33,205 | | Others | | 7,221 | | 1,802 | | 9,023 | | | | | | | | | | Total | | 639,097 | | 1,294,449 | | 1,933,546 | | | | | | | | | | Liabilities: | | | | | | | | Derivative financial liabilities | | 8 | | - | | 8 | | Securities sold under agreements to repurchase | | 119,665 | | - | | 119,665 | | Bonds payable | | 5,000 | | 4,999 | | 9,999 | | Insurance contract liabilities | | 54,021 | | 1,610,827 | | 1,664,848 | | Reinsurance contract liabilities | | 809 | | - | | 809 | | Commission and brokerage payable | | 3,900 | | 739 | | 4,639 | | Lease liabilities | | 577 | | 2,141 | | 2,718 | | Others | | 28,527 | | 1,654 | | 30,181 | | | | | | | | | | Total | | 212,507 | | 1,620,360 | | 1,832,867 | **XII.****RISK MANAGEMENT (continued)** 5. Operational risk Operation risk is the risk of loss arising from existed issues on internal procedures, employees and information system failure, and impacts from the external events. When controls fail to perform, operational risk can affect the steady development and reputation of the company, give rise to legal or regulatory matters, or lead to financial loss to the Group. The Group is exposed to many types of operational risks, including inadequate, or failure to obtain, proper authorisations or supporting documentation to comply with operational and informational system procedures that prevent frauds or errors by employees. Through the establishment and implementation of internal control manuals, continuous optimisation of information systems, and monitoring and response to potential risks, the Group has established a long-term internal control mechanism to mitigate the impact of operational risks on the Group. The following internal control measures are in place to mitigate the Group��s exposure to operational risk: if !supportLists· endifSetting up effective segregation of duties, access controls, authorisation and reconciliation procedures and user and authority controls for information system; if !supportLists· endifAdopting supervisory measures such as compliance checks, risk investigations and internal audits; if !supportLists· endifRegularly carrying out risk and internal control self-assessment and implementing rectification of defects; if !supportLists· endifImplementing staff education and appraisals. 6. Mismatching risk of assets and liabilities Mismatching risk of assets and liabilities is the risk due to the Group��s inability to match its assets with its liabilities on the basis of duration, cash flow and investment return. Under the current regulatory and market environment, the Group is lack of investment in assets with a duration of sufficient length to match the duration of its medium and long-term life insurance liabilities. When the current regulatory and market environment permits, the Group will increase the profile of securities with fixed investment returns and lengthen the duration of its assets to narrow the gap of duration and investment returns of the existing assets and liabilities. In order to further enhance the management of matching of assets and liabilities, the Group has the Asset-Liability Management Committee to make significant decisions on asset-liability management. The committee has an asset-liability working group which analyses the extent of matching of assets with liabilities. **XIII.****RISK MANAGEMENT** **(continued)** 7. Capital management risk Capital management risk primarily refers to the risk of insufficient solvency as a result of the operation and administration of the Company or certain external events. It is the Group��s objective to maintain a strong credit rating and adequate solvency in order to support its business objectives and to maximise shareholder value. The specific measures are as follows: if !supportLists· endifManaging its capital requirements by assessing shortfalls between reported and targeted capital levels on a regular basis; if !supportLists· endifStepping up efforts to maintain multiple sources of financing in order to meet solvency margin needs arising from future expansion in business activities; if !supportLists· endifContinuously and proactively adjusting the portfolio of insurance business, optimising asset allocation and improving asset quality to enhance operating performance and the profitability. The table below summarises the core capital, actual capital and minimum required capital of the Group and its major insurance subsidiaries determined according to solvency supervision rules: | | | | | | --- | --- | --- | --- | | **Group** | | 31 December 2023 | 31 December 2022 | | | | | | | Core capital | | 303,908 | 332,414 | | Actual capital | | 456,938 | 479,073 | | Minimum required capital | | 178,017 | 187,333 | | | | | | | Core solvency margin ratio | | 171% | 177% | | Comprehensive solvency margin ratio | | 257% | 256% | | | | | | | --- | --- | --- | --- | | **CPIC Life** | | 31 December 2023 | 31 December 2022 | | | | | | | Core capital | | 173,981 | 207,848 | | Actual capital | | 312,005 | 344,222 | | Minimum required capital | | 148,723 | 157,802 | | | | | | | Core solvency margin ratio | | 117% | 132% | | Comprehensive solvency margin ratio | | 210% | 218% | | | | | | | --- | --- | --- | --- | | **CPIC Property** | | 31 December 2023 | 31 December 2022 | | | | | | | Core capital | | 47,415 | 45,266 | | Actual capital | | 61,775 | 55,154 | | Minimum required capital | | 28,898 | 27,246 | | | | | | | Core solvency margin ratio | | 164% | 166% | | Comprehensive solvency margin ratio | | 214% | 202% | **XIII.****RISK MANAGEMENT** **(continued)** 7. Capital management risk (continued) The table below summarises the core capital, actual capital and minimum required capital of the Group and its major insurance subsidiaries determined according to solvency supervision rules (continued): | | | | | | --- | --- | --- | --- | | **CPIC Health** | | 31 December 2023 | 31 December 2022 | | | | | | | Core capital | | 3,134 | 3,089 | | Actual capital | | 3,488 | 3,225 | | Minimum required capital | | 1,352 | 1,216 | | | | | | | Core solvency margin ratio | | 232% | 254% | | Comprehensive solvency margin ratio | | 258% | 265% | | | | | | | --- | --- | --- | --- | | **PAAIC** | | 31 December 2023 | 31 December 2022 | | | | | | | Core capital | | 2,836 | 2,759 | | Actual capital | | 3,128 | 3,020 | | Minimum required capital | | 831 | 818 | | | | | | | Core solvency margin ratio | | 341% | 337% | | Comprehensive solvency margin ratio | | 376% | 369% | **X****I****V.****STRUCTURED ENTITIES** The Group uses structured entities in the normal course of business for a number of purposes, for example, structured transactions for institutions, to provide finance to public and private section infrastructure projects, and to generate fees for managing assets on behalf of third-party investors. These structured entities are operated based on the contracts. Refer to Note III 6 for the Group��s consolidation consideration related to structured entities. The following table shows the total assets of the Group��s unconsolidated structured entities and the amount of funding provided by the Group to these unconsolidated structured entities. The table also shows the Group��s maximum exposure to the unconsolidated structured entities representing the Group��s maximum possible risk exposure that could occur as a result of the Group��s arrangements with structured entities. The maximum exposure is contingent in nature and approximates the sum of funding provided by the Group. As at 31 December 2023, the size of unconsolidated structured entities and the Group��s funding and maximum exposure are shown below: | | | | | | | | --- | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | | Size | Funding provided by the Group | The Group��s maximum exposure | Carrying amount of the Group��s investment | Interest held by the Group | | | | | | | | | Pension funds and endowment insurance products managed by the Group | 410,993 | - | - | - | Management fee | | Insurance asset management products managed by the Group | 361,581 | 166,438 | 167,464 | 167,464 | Investment income and management fee | | Securities investment funds managed by the Group | 82,365 | 12,253 | 11,379 | 11,379 | Investment income and management fee | | Insurance asset management products managed by third parties | Note1 | 146,777 | 149,699 | 149,699 | Investment income | | Trust products managed by third parties | Note1 | 570 | 570 | 570 | Investment income | | Bank wealth management products and asset management products managed by third parties | Note1 | 10,254 | 10,335 | 10,335 | Investment income | | Securities investment funds managed by third parties | Note1 | 9,935 | 9,674 | 9,674 | Investment income | | Total | | 346,227 | 349,121 | 349,121 | | Note 1: These structured entities are sponsored by third party financial institutions and the information related to size of these structured entities was not publicly available. The Group��s interests in unconsolidated structured entities are included in the investment in wealth management products, debt investment plans and funds under financial assets at fair value through profit or loss, debt investment plans and trust products under financial assets at amortised cost, and debt investment plans, trust products and long-term equity investments under debt investments at fair value through other comprehensive income. **XV.****FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES** Fair value estimates are made at a specific point in time based on relevant market information and information about financial instruments. When an active market exists, such as an authorised securities exchange, the market value is the best reflection of the fair value of financial instruments. For financial instruments where there is no active market, fair value is determined using valuation techniques (Note III 29). The Group��s financial assets mainly include cash at bank and on hand, financial assets at fair value through profit or loss, securities purchased under agreements to resell, term deposits, available-for-sale financial assets, financial assets at fair value through profit or loss, financial assets at amortised cost, debt investments at fair value through other comprehensive income, equity investments at fair value through other comprehensive income, held-to-maturity financial assets, investments classified as loans and receivables and restricted statutory deposits, etc. The Group��s financial liabilities mainly include securities sold under agreements to repurchase and bonds payable, etc. Fair value of financial assets and liabilities not carried at fair value The following table summarises the carrying values and estimated fair values of financial assets at amortised cost, and bonds payable (31 December 2022: held-to-maturity financial assets, investments classified as loans and receivables, and bonds payable) whose fair values are not presented in the consolidated balance sheet. | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2023 | | | | 31 December 2022 | | | | | | Carrying amount | | Fair value | | Carrying amount | | Fair value | | | | | | | | | | | | Financial assets: | | | | | | | | | | Held-to-maturity financial assets | | - | | - | | 514,250 | | 557,800 | | Investments classified as loans and receivables | | - | | - | | 397,270 | | 400,272 | | Financial assets at amortised cost | | 82,334 | | 84,956 | | - | | - | | | | | | | | | | | | Financial liabilities: | | | | | | | | | | Bonds payable | | 10,285 | | 10,462 | | 9,999 | | 10,382 | The carrying amounts of other financial assets and financial liabilities approximate their fair values. **XV****I****.****FAIR VALUE MEASUREMENT** Determination of fair value and fair value hierarchy All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy. The fair value hierarchy prioritises the inputs to valuation techniques used to measure fair value into three broad levels. The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. The levels of the fair value hierarchy are as follows: if !supportLists(1) endifFair value is based on quoted prices (unadjusted) in active markets for identical assets or liabilities (��Level 1��); if !supportLists(2) endifFair value is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices) (��Level 2��); and if !supportLists(3) endifFair value is based on inputs for the asset or liability that are not based on observable market data (unobservable inputs) (��Level 3��). The level of fair value calculation is determined by the lowest level input with material significance in the overall calculation. As such, the significance of the input should be considered from an overall perspective in the calculation of fair value. For Level 2 financial instruments, valuations are generally obtained from third party pricing services for identical or comparable assets, or through the use of valuation methodologies using observable market inputs, or recent quoted market prices. Valuation service providers typically gather, analyse and interpret information related to market transactions and other key valuation model inputs from multiple sources, and through the use of widely accepted internal valuation models, provide a theoretical quote on various securities. Debt securities traded among Chinese interbank market are classified as Level 2 when they are valued at recent quoted prices from Chinese interbank market or from valuation service providers. Substantially most financial instruments classified within Level 2 of the fair value hierarchy of the Group are debt investments denominated in RMB. Fair value of debt investments denominated in RMB is determined based upon the valuation results by the China Central Depository & Clearing Co., Ltd. All significant inputs are observable in the market. For Level 3 financial instruments, prices are determined using valuation methodologies such as discounted cash flow models and other similar techniques. Determination to classify fair value measures within Level 3 of the valuation hierarchy is generally based on the significance of the unobservable factors to the overall fair value measurement, and valuation methodologies such as discounted cash flow models and other similar techniques. The Group��s valuation team may choose to apply internally developed valuation method to the assets or liabilities being measured, determine the main inputs for valuation, and analyse the change of the valuation and report it to management. Key inputs involved in internal valuation services are not based on observable market data. They reflect assumptions made by management based on judgements and experiences. For assets and liabilities that are recognised at fair value on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. **XV****I****.****FAIR VALUE MEASUREMENT (continued)** Determination of fair value and fair value hierarchy (continued) The following table provides the fair value measurement hierarchy of the Group��s assets and liabilities: | | | | | | | --- | --- | --- | --- | --- | | | 31 December 2023 | | | | | | Level 1 | Level 2 | Level 3 | Total fair value | | | | | | | | Assets measured at fair value | | | | | | Term deposits measured at fair value | - | - | 131,307 | 131,307 | | | | | | | | Financial assets at fair value through profit or loss | | | | | | - Stocks | 160,555 | - | 790 | 161,345 | | - Funds | 58,491 | 7,326 | - | 65,817 | | - Bonds | 9,113 | 190,384 | 454 | 199,951 | | - Others | 14,482 | 22,379 | 117,628 | 154,489 | | | | | | | | | 242,641 | 220,089 | 118,872 | 581,602 | | | | | | | | Debt investments at fair value through other comprehensive income | | | | | | - Bonds | 542 | 937,447 | - | 937,989 | | - Others | - | 604 | 308,842 | 309,446 | | | | | | | | | 542 | 938,051 | 308,842 | 1,247,435 | | | | | | | | Equity investments at fair value through other comprehensive income | | | | | | - Stocks | 23,963 | - | 3,147 | 27,110 | | - Preferred stocks | - | 12,597 | - | 12,597 | | - Others | - | 28,477 | 29,781 | 58,258 | | | | | | | | | 23,963 | 41,074 | 32,928 | 97,965 | | | | | | | | Derivative financial assets | - | 17 | - | 17 | | | | | | | | Liabilities measured at fair value | | | | | | Derivative financial liabilities | - | 21 | - | 21 | | | | | | | | Assets for which fair values are disclosed | | | | | | Financial assets at amortised cost (Note XV) | - | 27,579 | 57,377 | 84,956 | | Investment properties (Note VII 16) | - | - | 15,783 | 15,783 | | | | | | | | Liabilities for which fair values are disclosed (Note XV) | | | | | | Bonds payable | - | - | 10,462 | 10,462 | **XV****I****.****FAIR VALUE MEASUREMENT (continued)** Determination of fair value and fair value hierarchy (continued) The following table provides the fair value measurement hierarchy of the Group��s assets and liabilities (continued): | | | | | | | --- | --- | --- | --- | --- | | | 31 December 2022 | | | | | | Level 1 | Level 2 | Level 3 | Total fair value | | | | | | | | Assets measured at fair value | | | | | | Financial assets at fair value through profit or loss | | | | | | - Stocks | 9 | - | - | 9 | | - Funds | 474 | 3,251 | - | 3,725 | | - Bonds | 3,394 | 3,084 | - | 6,478 | | - Others | - | 6,502 | 9,846 | 16,348 | | | | | | | | | 3,877 | 12,837 | 9,846 | 26,560 | | | | | | | | Available-for-sale financial assets | | | | | | - Stocks | 170,204 | 3 | 11,966 | 182,173 | | - Funds | 74,314 | 8,846 | - | 83,160 | | - Bonds | 1,572 | 288,132 | 5,022 | 294,726 | | - Others | 85 | 39,094 | 115,847 | 155,026 | | | | | | | | | 246,175 | 336,075 | 132,835 | 715,085 | | | | | | | | Derivative financial assets | - | 197 | - | 197 | | Liabilities measured at fair value | | | | | | Derivative financial liabilities | - | 8 | - | 8 | | | | | | | | Assets for which fair values are disclosed | | | | | | Held-to-maturity financial assets (Note XV) | 160 | 557,640 | - | 557,800 | | Investments classified as loans and receivables (Note XV) | - | - | 400,272 | 400,272 | | Investment properties (Note VII 16) | - | - | 16,100 | 16,100 | | | | | | | | Liabilities for which fair values are disclosed (Note XV) | | | | | | Bonds payable | - | - | 10,382 | 10,382 | For the year ended 31 December 2023, due to changes in availability of quoted prices (unadjusted) in active markets, the Group transferred certain bonds between Level 1 and Level 2. For the year ended 31 December 2023, the Group has no bond transferred from Level 1 to Level 2 and from Level 2 to Level 1. For the year ended 31 December 2022, the Group transferred the bonds with a carrying amount of approximately RMB 22,545 million from Level 1 to Level 2 and no bond was transferred from Level 2 to Level 1. **XV****I****.****FAIR VALUE MEASUREMENT (continued)** Determination of fair value and fair value hierarchy (continued) Reconciliation of movements in Level 3 financial instruments measured at fair value is as follows: | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2023 | | | | | | | | | | Beginning of year | Increase | Decrease | Transferred to Level 3 | Transferred out Level 3 | Gains or losses recognised in profit or loss | Gains/ losses recognised  in other comprehensive income | End of year | | | | | | | | | | | | Financial assets at fair value through profit or loss | 105,822 | 34,852 | (18,000) | 52 | (4,396) | 542 | - | 118,872 | | - Stocks | 8,897 | 1,327 | (5,831) | 52 | (3,010) | (645) | - | 790 | | - Bonds | 2,544 | - | (1,281) | - | (1,386) | 577 | - | 454 | | - Others | 94,381 | 33,525 | (10,888) | - | - | 610 | - | 117,628 | | | | | | | | | | | | Debt investments at fair value through other comprehensive income | 342,224 | 70,736 | (105,163) | - | (1,664) | (114) | 2,823 | 308,842 | | - Bonds | 3,119 | - | (1,400) | - | (1,664) | (61) | 6 | - | | - Others | 339,105 | 70,736 | (103,763) | - | - | (53) | 2,817 | 308,842 | | | | | | | | | | | | Equity investments at fair value through other comprehensive income | 34,045 | 5,076 | (6,755) | - | - | - | 562 | 32,928 | | - Stocks | 3,070 | - | - | - | - | - | 77 | 3,147 | | - Others | 30,975 | 5,076 | (6,755) | - | - | - | 485 | 29,781 | | | | | | | | | | | **XV****I****.****FAIR VALUE MEASUREMENT (continued)** Determination of fair value and fair value hierarchy (continued) Reconciliation of movements in Level 3 financial instruments measured at fair value is as follows (continued): | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2022 | | | | | | | | | | Beginning of year | Increase | Decrease | Transferred to Level 3 | Transferred out Level 3 | Gains or losses recognised in profit or loss | Gains/ losses recognised  in other comprehensive income | End of year | | | | | | | | | | | | Financial assets at fair value through profit or loss | | | | | | | | | | - Wealth management products | 15 | - | (12) | - | - | - | - | 3 | | - Debt investment plans | 16 | 14 | - | - | - | - | - | 30 | | - Other equity investments | 9,663 | - | (1) | - | - | 151 | - | 9,813 | | | | | | | | | | | | Available-for-sale financial assets | | | | | | | | | | - Stocks | 5,286 | 9,392 | (1,831) | - | - | - | (881) | 11,966 | | - Preferred shares | 12,519 | - | (12,519) | - | - | - | - | - | | - Other equity investments | 95,768 | 24,531 | (4,755) | - | - | (383) | (809) | 114,352 | | - Finance bonds | 2,076 | 3,000 | - | - | - | - | (54) | 5,022 | | - Debt investment plans | - | 700 | - | - | - | - | - | 700 | | - Wealth management products | 1,947 | 800 | (1,947) | - | - | - | (5) | 795 | | | | | | | | | | | **XV****I****.****FAIR VALUE MEASUREMENT (continued)** Valuation techniques The fair value of the unquoted debt investments is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities, with appropriate adjustment where applicable. The fair value of the equity investments has been determined using valuation techniques such as discounted cash flow method, comparison method of listed companies, recent transaction prices of the same or similar instruments, etc., with appropriate adjustments have been made where applicable, for example, for lack of liquidity using option pricing models. The valuation requires management to use parameters as unobservable inputs to the model, major assumptions include the expected time-to-market of unlisted equity investments, and the major parameters include discount rate from 3.34% to 5.36%, etc. The fair value of investment properties is determined using discounted cash flow method with unobservable inputs including estimated rental value per square metre per month and discount rate, etc. This method involves the projection of a series of cash flows from valuation date to economic life maturity date. To this projected cash flow series, a market-derived discount rate is applied to establish the present value of the income stream associated with the asset. **XV****II****.****EVENTS AFTER THE BALANCE SHEET DATE** The Group does not have significant post balance sheet events. **XV****III****.****COMPARATIVE FIGURES** As stated in NoteIV, due to the adoption of the new insurance standard, the accounting treatment and presentation of certain items and balances in the consolidated financial statements have been revised to comply with the new requirements. Accordingly, certain prior year adjustments have been made, and certain comparative amounts have been restated to conform with the current year��s presentation and accounting treatment, and a third statement of consolidated balance sheet as at 1 January 2022 has been presented. **XIX.****OTHER IMPORTANT EVENT** 1. Directors�� and supervisors�� remuneration | | | | | | --- | --- | --- | --- | | (in RMB thousand) | | **2023** | **2022** | | | | | | | Fees | | 1,350 | 1,350 | | Other remuneration | | | | | - Salaries, allowances and other short-term benefits | | 5,526 | 5,852 | | - Contributions to defined contribution plans | | 1,491 | 1,431 | | - Deferred bonus (Note) | | - | - | | - Other emoluments paid or receivable in respect of director��s other services in connection with the management of the affairs of the company or its subsidiary undertaking | | - | - | | | | | | | Sub-total | | 7,017 | 7,283 | | | | | | | Total | | 8,367 | 8,633 | Note: In order to motivate senior management and certain key employees, the Group operates deferred bonus plans. (1) Independent non-executive directors Included in the fees is an amount of RMB 1,350 thousand paid to independent non-executive directors for the year ended 31 December 2023 (2022: RMB 1,350 thousand). There were no other emoluments payable to the independent non-executive directors during the year ended 31 December 2023. | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | (in RMB thousand) | **2023** | | | | | | | | Fees | Deferred bonus | Salaries, allowances and other short-term benefits | Contributions to defined contribution plans | Other emoluments paid or receivable in respect of director��s other services in connection with the management of the affairs of the company or its subsidiary undertaking | Total | | LAM Tyng Yih, Elizabeth | 350 | - | - | - | - | 350 | | CHEN Jizhong | - | - | - | - | - | - | | JIANG Xuping | 350 | - | - | - | - | 350 | | LIU Xiaodan | 350 | - | - | - | - | 350 | | WOO Ka Biu, Jackson1 | 175 | - | - | - | - | 175 | | LO Yuen Man, Elaine2 | 125 | - | - | - | - | 125 | | | | | | | | | | | 1,350 | - | - | - | - | 1,350 | if !supportLists1 endifIn July 2023, Mr. WOO Ka Biu, Jackson ceased to serve as the independent non-executive director. if !supportLists2 endifIn July 2023, Ms. LO Yuen Man, Elaine started to serve as the independent non-executive director. **XIX.****OTHER IMPORTANT EVENT (continued)** 1. Directors�� and supervisors�� remuneration (continued) (1) Independent non-executive directors (continued) | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | (in RMB thousand) | **2022** | | | | | | | | Fees | Deferred bonus | Salaries, allowances and other short-term benefits | Contributions to defined contribution plans | Other emoluments paid or receivable in respect of director��s other services in connection with the management of the affairs of the company or its subsidiary undertaking | Total | | LAM Tyng Yih, Elizabeth | 350 | - | - | - | - | 350 | | CHEN Jizhong | - | - | - | - | - | - | | JIANG Xuping | 350 | - | - | - | - | 350 | | LIU Xiaodan | 350 | - | - | - | - | 350 | | WOO Ka Biu, Jackson | 300 | - | - | - | - | 300 | | | | | | | | | | | 1,350 | - | - | - | - | 1,350 | (2) Executive directors and non-executive directors | | | | | | | | --- | --- | --- | --- | --- | --- | | (in RMB thousand) | **2023** | | | | | | | Deferred bonus | Salaries, allowances and other  short-term benefits | Contributions to defined contribution plans | Other emoluments paid or receivable in respect of director��s other services in connection with the management of the affairs of the company or its subsidiary undertaking | Total | | | | | | | | | Executive directors: | | | | | | | KONG Qingwei1 | - | 856 | 373 | - | 1,229 | | FU Fan2 | - | 1,015 | 373 | - | 1,388 | | | | | | | | | Non-executive directors: | | | | | | | HUANG Dinan | - | - | - | - | - | | CHEN Ran | - | 300 | - | - | 300 | | WU Junhao | - | - | - | - | - | | WANG Tayu | - | 300 | - | - | 300 | | ZHOU Donghui | - | - | - | - | - | | John Robert Dacey | - | - | - | - | - | | LU Qiaoling | - | 300 | - | - | 300 | | | | | | | | | | - | 2,771 | 746 | - | 3,517 | if !supportLists1 endifThe final amount of remuneration of Mr. KONG Qingwei is yet to be reviewed and approved. The final remuneration will be disclosed when confirmed. if !supportLists2 endifThe final amount of remuneration of Mr. FU Fan is yet to be reviewed and approved. The final remuneration will be disclosed when confirmed. if !supportLists3 endif **XIX****OTHER IMPORTANT EVENT (continued)** 1. Directors�� and supervisors�� remuneration (continued) (2)  Executive directors and non-executive directors (continued) | | | | | | | | --- | --- | --- | --- | --- | --- | | (in RMB thousand) | **2022** | | | | | | | Deferred bonus | Salaries, allowances and other  short-term benefits | Contributions to defined contribution plans | Other emoluments paid or receivable in respect of director��s other services in connection with the management of the affairs of the company or its subsidiary undertaking | Total | | | | | | | | | Executive directors: | | | | | | | KONG Qingwei1 | - | 973 | 360 | - | 1,333 | | FU Fan1 | - | 1,129 | 360 | - | 1,489 | | | | | | | | | Non-executive directors: | | | | | | | HUANG Dinan | - | - | - | - | - | | CHEN Ran | - | 300 | - | - | 300 | | WU Junhao | - | - | - | - | - | | WANG Tayu | - | 300 | - | - | 300 | | ZHOU Donghui | - | - | - | - | - | | LIANG Hong2 | - | - | - | - | - | | John Robert Dacey | - | - | - | - | - | | LU Qiaoling | - | 300 | - | - | 300 | | | | | | | | | | - | 3,002 | 720 | - | 3,722 | if !supportLists1 endifFor the remuneration of executive directors and non-executive directors disclosed above, in accordance with the requirements of relevant policies, and after assessment and confirmation by the competent authorities, the supplemental disclosure of the remuneration of the relevant personnel during the relevant tenure in the Company in 2022, excluding the amount disclosed above, is as follows: Mr. KONG Qingwei RMB 734,000 (before tax), Mr. FU Fan RMB 2.716 million (before tax). if !supportLists2 endifIn September 2022, due to work change, Ms. LIANG Hong ceased to serve as non-executive director of the Company. Pursuant to the resolution of the 2018 annual general meeting, the allowance for each of the existing directors (excluding executive directors) is RMB300,000 (before tax) per year. The 2018 annual general meeting also resolved to grant an additional allowance of RMB 50,000 (before tax) per year to each of those directors who take the role of chairman in special committees established under the board of directors. Mr. HUANG Dinan, Mr. WU Junhao, Mr. ZHOU Donghui and Mr. John Robert Dacey, the non-executive director, waived remuneration during 2023 (2022: HUANG Dinan, WU Junhao, ZHOU Donghui, LIANG Hong and John Robert Dacey), Mr. CHEN Jizhong, the independent non-executive director, temporarily waived remuneration during 2023 (2022: CHEN Jizhong). Except for Mr. HUANG Dinan, Mr. WU Junhao, Mr. ZHOU Donghui, Mr. John Robert Dacey and Mr. CHEN Jizhong, there was no other arrangement under which a director waived or agreed to waive any remuneration during 2023. **XIX.****OTHER IMPORTANT EVENT (continued)** 1. Directors�� and supervisors�� remuneration (continued) (3)  Supervisors | | | | | | | | --- | --- | --- | --- | --- | --- | | (in RMB thousand) | **2023** | | | | | | | Deferred bonus | Salaries, allowances and other  short-term benefits | Contributions to defined contribution plans | Other emoluments paid or receivable in respect of director��s other services in connection with the management of the affairs of the company or its subsidiary undertaking | Total | | ZHU Yonghong | - | - | - | - | - | | JI Zhengrong1 | - | 771 | 373 | - | 1,144 | | LU Ning | - | - | - | - | - | | GU Qiang | - | 1,983 | 373 | - | 2,356 | | | | | | | | | | - | 2,754 | 746 | - | 3,500 | if !supportLists1 endifThe final amount of remuneration of Mr. JI Zhengrong is yet to be reviewed and approved. The final remuneration will be disclosed when confirmed. | | | | | | | | --- | --- | --- | --- | --- | --- | | (in RMB thousand) | **2022** | | | | | | | Deferred bonus | Salaries, allowances and other  short-term benefits | Contributions to defined contribution plans | Other emoluments paid or receivable in respect of director��s other services in connection with the management of the affairs of the company or its subsidiary undertaking | Total | | ZHU Yonghong | - | - | - | - | - | | JI Zhengrong1 | - | 879 | 360 | - | 1,239 | | LU Ning | - | - | - | - | - | | GU Qiang | - | 1,971 | 351 | - | 2,322 | | | | | | | | | | - | 2,850 | 711 | - | 3,561 | if !supportLists1 endifFor the remuneration of supervisors disclosed above, in accordance with the requirements of relevant policies, and after assessment and confirmation by the competent authorities, the supplemental disclosure of the remuneration of the relevant personnel during the relevant tenure in the Company in 2022, excluding the amount disclosed above, is as follows: Mr. JI Zhengrong RMB 632,000 (before tax). Pursuant to the resolution of the 2018 annual general meeting, the allowance for each of the existing supervisors (excluding employees�� representative supervisors) is RMB 300,000 (before tax) per year. Mr. ZHU Yonghong and Mr. LU Ning, the supervisor, had waived remuneration during 2023. Except for Mr. ZHU Yonghong and Mr. LU Ning, the supervisor, there was no other arrangement under which a supervisor waived or agreed to waive any remuneration during 2023 (2022: ZHU Yonghong and LU Ning). **XIX.****OTHER IMPORTANT EVENT (continued)** 1. Directors�� and supervisors�� remuneration (continued) (4)  Directors�� retirement benefits There were no retirement benefits paid to directors during 2023 and 2022. (5) Directors�� termination benefits There were no termination benefits paid to directors during 2023 and 2022. (6)  Consideration provided to third parties for making available directors�� services There were no payments to third parties for making available directors�� services during 2023 and 2022. (7) Information about loans, quasi-loans and other dealings in favour of directors, controlled bodies corporate by and connected entities with such directors There were no loans, quasi-loans and other dealings in favour of directors, controlled bodies corporate by and connected entities with such directors entered into by the company or subsidiary undertaking of the Company during 2023 and 2022. (8)  Directors�� material interests in transactions, arrangements or contracts There were no significant transactions, arrangements and contracts in relation to the Group��s business to which the Company was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year. **XIX.****OTHER IMPORTANT EVENT (continued)** 2. Five highest paid individuals The five individuals whose remuneration were the highest for the year ended 31 December 2023 in the Group include no director (2022: no director) whose emoluments were reflected in the analysis presented in Note XIX 1. The number of non-directors, highest paid individuals whose remuneration fell within the following bands is set out below: | | | | | | --- | --- | --- | --- | | | | **2023** | **2022** | | | | | | | HKD 5,500,001 to HKD 6,000,000 | | - | - | | HKD 6,000,001 to HKD 6,500,000 | | - | 1 | | HKD 6,500,001 to HKD 7,000,000 | | - | 1 | | HKD 7,000,001 to HKD 7,500,000 | | - | 1 | | HKD 7,500,001 to HKD 8,000,000 | | - | - | | HKD 8,000,001 to HKD 8,500,000 | | - | - | | HKD 8,500,001 to HKD 9,000,000 | | - | - | | HKD 9,000,001 to HKD 9,500,000 | | 2 | - | | HKD 9,500,001 to HKD 10,000,000 | | 2 | - | | HKD 10,000,001 to HKD 10,500,000 | | - | 1 | | HKD 10,500,001 to HKD 11,000,000 | | - | - | | HKD 11,000,001 to HKD 11,500,000 | | - | - | | HKD 11,500,001 to HKD 12,000,000 | | - | - | | HKD 12,000,001 to HKD 12,500,000 | | - | - | | HKD 12,500,001 to HKD 13,000,000 | | 1 | - | | HKD 13,000,001 to HKD 13,500,000 | | - | 1 | | | | | | | Total | | 5 | 5 | Details of the remuneration of the highest paid non-director individuals are as follows: | | | | | | --- | --- | --- | --- | | (in RMB thousand) | | **2023** | **2022** | | | | | | | Salaries, allowances and other short-term benefits | | 16,728 | 19,118 | | Discretionary bonuses | | 27,184 | 18,468 | | Contributions to defined contribution plans | | 2,737 | 2,204 | | | | | | | | | 46,649 | 39,790 | | | | | | | The number of non-director individuals for the above remuneration | | 5 | 5 | **XX. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS** These consolidated financial statements have been approved for issue by the board of directors of the Company on 28 March 2024. According to the Articles of Association of the Company, these consolidated financial statements will be submitted for the approval of the general shareholders�� meeting. **I.** **NET ASSET RETURN AND EARNINGS PER SHARE** | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 2023 | | | | | | | | Weighted average return on net assets | | Earnings per share (RMB Yuan) | | | | | | | | Basic | | Diluted | | | | | | | | | | Net profit attributable to shareholders of the parent | | 11.4% | | 2.83 | | 2.83 | | Net profit attributable to shareholders of the parent net of non-recurring profit or loss | | 11.4% | | 2.82 | | 2.82 | The Company had no dilutive potential ordinary shares in 2023. | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | | | | 2022 (Restated) | | | | | | | | Weighted average return on net assets | | Earnings per share (RMB Yuan) | | | | | | | | Basic | | Diluted | | | | | | | | | | Net profit attributable to shareholders of the parent | | 19.2% | | 3.89 | | 3.89 | | Net profit attributable to shareholders of the parent net of non-recurring profit or loss | | 19.1% | | 3.87 | | 3.87 | Net profit attributable to shareholders of the parent net of non-recurring profit or loss are listed as follows: | | | | | | | --- | --- | --- | --- | --- | | | | 2023 | | 2022 | | | | | | (Restated) | | | | | | | | Net profit attributable to shareholders of the parent | | 27,257 | | 37,381 | | | | | | | | Add/(Less): Non-recurring profit or loss items | | | | | | Government grants recognised in current profit or loss | | (219) | | (196) | | Gains on disposal of fixed assets, intangible assets and other long-term assets, including write-off of provision for assets impairment | | (23) | | (24) | | Custody fees of entrusted operation | | (62) | | (55) | | Other net non-operating income and expenses other than aforesaid items | | 128 | | 125 | | | | | | | | Effect of income tax relating to non-recurring profit or loss | | 53 | | 45 | | | | | | | | Net profit less non-recurring gains | | 27,134 | | 37,276 | | | | | | | | Less: Net non-recurring profit or loss attributable to non-controlling interests | | 1 | | 1 | | | | | | | | Net profit attributable to shareholders of the parent net of non-recurring profit or loss | | 27,135 | | 37,277 | In accordance with the Explanatory Announcement No. 1 on Information Disclosure of the Companies Issuing Securities Publicly - Non-Recurring Profit or Loss (Revised in 2023) issued by the CSRC in December 2023, the Group has adjusted the disclosure of non-recurring profit or loss for the year 2023 without adjusting the comparative figures The affected pre-tax amount regarding the decrease of non-recurring profit for the year 2022 is RMB 42 million.